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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 8, 1996
SOUTHWEST GAS CORPORATION
(Exact name of registrant as specified in its charter)
California 1-7850 88-0085720
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
5241 Spring Mountain Road
Post Office Box 98510
Las Vegas, Nevada 89193-8510
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (702) 876-7237
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Item 5. Other Events
On January 8, 1996, Southwest Gas Corporation (Southwest) reached an agreement
to sell its wholly owned subsidiary PriMerit Bank (PriMerit) to Norwest
Corporation for approximately $175 million in cash. The intended use of the
proceeds will be to reduce outstanding long-term debt, thereby improving
Southwest's equity ratios.
The transaction will result in an estimated $13 million loss from disposition
which includes a pre-tax book loss of approximately $3 million plus income taxes
estimated at $10 million. The income taxes are a result of Southwest's lower
tax basis relative to book basis. The loss will be reported as part of
discontinued operations in the 1995 financial statements.
The sale is expected to be finalized by the third quarter of 1996, following
receipt of shareholder and various governmental approvals and satisfaction of
other customary closing conditions.
Item 7. Exhibits
2.1 Stock Purchase Agreement
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.
SOUTHWEST GAS CORPORATION
Date: January 11, 1996 /s/ Edward A. Janov
Controller and Chief Accounting Officer
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AGREEMENT
Between
SOUTHWEST GAS CORPORATION, a California corporation
THE SOUTHWEST COMPANIES, a Nevada corporation
as SELLERS
and
NORWEST CORPORATION, a Delaware corporation
as BUYER
Dated as of
January 8, 1996<PAGE>
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TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Construction and Interpretation. . . . . . . . . . . . . . . . . . 9
ARTICLE 2. SALE OF BANK STOCK . . . . . . . . . . . . . . . . . . . . . . . .10
2.1 Acquisition. . . . . . . . . . . . . . . . . . . . . . . . . . . .10
2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . .10
ARTICLE 3. THE CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . .11
3.1 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
3.2 Deliveries by Sellers. . . . . . . . . . . . . . . . . . . . . . .12
3.3 Deliveries by Buyer. . . . . . . . . . . . . . . . . . . . . . . .13
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SELLERS. . . . . . . . . . . . .13
4.1 Organization and Related Matters . . . . . . . . . . . . . . . . .13
4.2 Authority; No Violation. . . . . . . . . . . . . . . . . . . . . .14
4.3 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . .15
4.4 Title to Property. . . . . . . . . . . . . . . . . . . . . . . . .15
4.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . .16
4.6 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . .17
4.7 Legal or Other Proceedings . . . . . . . . . . . . . . . . . . . .17
4.8 Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . .17
4.9 Reports and Filings. . . . . . . . . . . . . . . . . . . . . . . .17
4.10 Absence of Certain Changes or Events . . . . . . . . . . . . . . .18
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4.11 Taxes and Tax Returns. . . . . . . . . . . . . . . . . . . . . . .18
4.12 Compliance with Applicable Law . . . . . . . . . . . . . . . . . .19
4.13 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
4.14 Agreements with Regulatory Agencies. . . . . . . . . . . . . . . .19
4.15 Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . .19
4.16 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . .20
4.17 Loan Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . .20
4.18 Mortgage Banking Licenses and Qualifications . . . . . . . . . . .21
4.19 Payment of Taxes, Insurance Premiums, etc. . . . . . . . . . . . .21
4.20 Minute Books . . . . . . . . . . . . . . . . . . . . . . . . . . .21
4.21 Employee Benefit Plans and Employment and Labor Contracts. . . . .21
4.22 Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . .23
4.23 Broker's or Finder's Fees. . . . . . . . . . . . . . . . . . . . .23
4.24 Bank Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . .23
4.25 Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF BUYER. . . . . . . . . . . . . .24
5.1 Organization and Related Matters . . . . . . . . . . . . . . . . .24
5.2 Authority; No Violation. . . . . . . . . . . . . . . . . . . . . .24
5.3 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . .24
5.4 Financing; Capital . . . . . . . . . . . . . . . . . . . . . . . .25
5.5 Broker's or Finder's Fees. . . . . . . . . . . . . . . . . . . . .25
5.6 Investment Intent. . . . . . . . . . . . . . . . . . . . . . . . .25
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5.7 Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . .25
ARTICLE 6. COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
6.1 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
6.2 Conduct of Business of Bank. . . . . . . . . . . . . . . . . . . .26
6.3 Regulatory Approvals: Consents of Third Parties. . . . . . . . . .29
6.4 Public Announcements . . . . . . . . . . . . . . . . . . . . . . .30
6.5 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . .30
6.6 Notification of Certain Matters. . . . . . . . . . . . . . . . . .31
6.7 Corporate Records, Contracts and Financial Statements. . . . . . .31
6.8 Delivery of Records at Closing . . . . . . . . . . . . . . . . . .31
6.9 Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . .31
6.10 Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . .32
6.11 Divestitures . . . . . . . . . . . . . . . . . . . . . . . . . . .32
6.12 Payment by Sellers . . . . . . . . . . . . . . . . . . . . . . . .32
6.13 Termination and Amendment of Certain Employee Benefit Plans. . . .32
6.14 Amendment of Contracts . . . . . . . . . . . . . . . . . . . . . .33
ARTICLE 7. CONDITIONS TO CLOSING. . . . . . . . . . . . . . . . . . . . . . .33
7.1 Reciprocal Conditions. . . . . . . . . . . . . . . . . . . . . . .33
7.2 Conditions to Buyer's Obligations. . . . . . . . . . . . . . . . .34
7.3 Conditions to Sellers' Obligations . . . . . . . . . . . . . . . .35
ARTICLE 8. TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . .35
8.1 Tax Cooperation. . . . . . . . . . . . . . . . . . . . . . . . . .35
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8.2 Carrybacks . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
8.3 Liability for Taxes. . . . . . . . . . . . . . . . . . . . . . . .36
8.4 Termination of Tax Sharing Agreement . . . . . . . . . . . . . . .38
8.5 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
ARTICLE 9. TERMINATION/SURVIVAL/INDEMNIFICATION/
TERMINATION FEE. . . . . . . . . . . . . . . . . . . . . . . . . .39
9.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . .39
9.2 Survival of Representations and Warranties . . . . . . . . . . . .40
9.3 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . .40
9.4 Confidentiality Agreement. . . . . . . . . . . . . . . . . . . . .42
9.5 Limitations on Dividends from SC, Etc. . . . . . . . . . . . . . .42
9.6 Insurance Claims . . . . . . . . . . . . . . . . . . . . . . . . .42
9.7 Termination Fee. . . . . . . . . . . . . . . . . . . . . . . . . .43
ARTICLE 10. EMPLOYEE BENEFIT PLANS . . . . . . . . . . . . . . . . . . . . . .43
ARTICLE 11. PURCHASE AND ASSUMPTION OPTION . . . . . . . . . . . . . . . . . .45
ARTICLE 12. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . .45
12.1 Expenses; Attorneys' Fees. . . . . . . . . . . . . . . . . . . . .45
12.2 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
12.3 Schedules; Exhibits. . . . . . . . . . . . . . . . . . . . . . . .46
12.4 Integration. . . . . . . . . . . . . . . . . . . . . . . . . . . .46
12.5 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . .46
12.6 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
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12.7 No Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . .47
12.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
12.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . .47
12.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . .47
12.11 Alternative Dispute Resolution . . . . . . . . . . . . . . . . . .47
12.12 Further Cooperation. . . . . . . . . . . . . . . . . . . . . . . .48
EXHIBITS
Exhibit A-1 Matters to be Covered in Opinion of O'Melveny & Myers
Exhibit A-2 Matters to be Covered in Opinion of Counsel to Sellers
Exhibit B Matters to be Covered by Opinion of Counsel to Buyer
SCHEDULES
1.1(a) Branches/ATM's/Loan Offices/Other Bank Offices
1.1(b) Employee Benefit Plans/Programs
1.1(c) Intellectual Property
1.1(d) Margarita Village Lien
1.1(e) Material Contracts
1.1(f) Operating Sites
1.1(g) Real Estate Subsidiaries
1.1(h) Requisite Regulatory Approvals
1.1(i) Subsidiaries
4.1 Equity Interests
4.3 Third Party Consents
4.4(a) Real Property
4.5 Financial Statements
4.7 Legal Proceedings
4.8 Undisclosed Liabilities
4.10 Changes or Events
4.11 Taxes
4.13 Insurance
4.15 Affiliate Transactions
4.17 Classified Assets
4.22 Investments
4.24 Bank Accounts
4.25 Deposits
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5.3 Consents & Approvals
6.2 Conduct of Business
6.11(a) Stead Real Property
6.11(b) A/L of Subsidiaries
6.12 Tax Assets
6.14 Amendment of Contract
9.1(h) Filings with Bank Regulators
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AGREEMENT
This AGREEMENT (this "Agreement"), dated as of January 8, 1996, is
entered into by and among SOUTHWEST GAS CORPORATION, a California corporation
("Parent"), THE SOUTHWEST COMPANIES, a Nevada corporation ("SC"), PRIMERIT
BANK, FEDERAL SAVINGS BANK, a federal savings bank ("Bank") (for the limited
purposes set forth herein), and NORWEST CORPORATION, a Delaware corporation
("Buyer"). SC and Parent are collectively referred to herein as "Sellers" and
sometimes individually as a "Seller."
R E C I T A L S :
A. Parent owns all the capital stock of SC.
B. SC owns all of the capital stock of Bank.
C. Buyer desires to acquire all of the outstanding capital stock of
Bank.
D. In the alternative, at Buyer's sole option, Buyer may elect as
provided in Article 11 to acquire certain of the assets, properties and
business of the Bank and assume certain liabilities of the Bank related to
such assets (the "Purchase and Assumption Option").
E. Bank is executing this Agreement in order to facilitate the Purchase
and Assumption Option.
In consideration of the mutual promises and covenants contained herein,
and of other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
ARTICLE 1.
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following definitions
shall apply:
"Acquisition" means the acquisition by Buyer of the Bank Stock pursuant
to the terms of this Agreement.
"Acquisition Event" has the meaning given such term in Section 6.9.
"Acquisition Proposal" has the meaning given such term in Section 6.9.
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"Affiliate" means any Person directly or indirectly controlling,
controlled by, or under common control with, the subject entity through the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such entity whether through the
ownership of voting securities, by contract or otherwise. Without limiting
the foregoing, the ownership, direct or indirect, of a 25 percent interest in
such entity shall be deemed to be control.
"Affiliated Group" means any affiliated group within the meaning of
Section 1504 of the Code or any similar group defined under a similar
provision of state, local or foreign law, including any consolidated, unitary
or combined group of companies.
"Agency" means HUD, FHA, VA, GNMA, FNMA or FHLMC, as applicable.
"Agreement" means this Agreement by and among Sellers, Bank and Buyer, as
amended or supplemented, together with all Exhibits and Schedules,
incorporated by reference or referred to herein.
"Applicable Law" means any domestic, federal, state or local statute,
law, ordinance, rule, administrative interpretation, regulation, order, writ,
injunction, directive, judgment, decree, policy, guideline or other
requirement of any Governmental Entity applicable to Buyer, Sellers, Bank or
the Subsidiaries.
"ATM" means all automated teller machines owned and currently being used
by Bank.
"Bank Regulator" means, one or more of the following, as applicable: the
OTS, the FDIC, the Federal Reserve Board, the Office of the Comptroller of the
Currency and the Nevada Commissioner of Financial Institutions.
"Bank Stock" means the outstanding capital stock of Bank consisting of
56,629 shares of common stock, $1.00 par value per share.
"Bank Subsidiaries" means PriMerit Investors Services, BSF Trustee, First
Nevada Company and Home Trustee, Inc.
"Branch Deposits" mean all deposits as defined in Section 3(1) of the
Federal Deposit Insurance Act, as amended (12 USC Section 1831(1)), at the
Branches.
"Branches" mean each of the branches, loan production offices, other
banking offices and ATMs of Bank, all of which are listed on Schedule 1.1(a).
"Business Day" means any day other than a Saturday, a Sunday, or a day on
which banks in the state of Nevada or Minnesota are generally closed for
regular banking business.
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"Closing" means the consummation of the Acquisition as contemplated by
this Agreement.
"Closing Date" means the date and time of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" means the Confidentiality Agreement dated
November 29, 1995, between Parent and Buyer.
"Contract" or "Contracts" means any rights and interests arising under or
in connection with any agreement, arrangement, bond, commitment, franchise,
guarantee, indemnity, indenture, instrument, lease, license or understanding,
whether written or oral.
"DPC Property" means any voting securities, other personal property or
real property acquired by Bank or a Bank Subsidiary by foreclosure or
otherwise, in the ordinary course of collecting a debt previously contracted
in good faith, retained with the object of sale for a period not longer than
the applicable statutory holding period and recorded in Bank's business
records as such.
"Employee Benefit Plans" mean all employee benefit plans (as defined in
Section 3(3) of ERISA) maintained or contributed to by Bank and in which the
Employees participate, all of which are listed on Schedule 1.1(b).
"Employee Programs" mean all of Bank's payroll practices, personnel
policies, contracts, plans, and arrangements, if any, providing for bonuses,
deferred compensation, retirement payments, profit sharing, incentive pay,
commissions, vacation pay or other benefits in which any Employees or their
dependents participate, and all employment, severance or other agreements with
any director of the Bank or any Bank Subsidiary or any Employee, all of which
are listed on Schedule 1.1(b).
"Employees" mean employees of Bank and the Bank Subsidiaries (including
any such employees on leave or disability who return to work within
three months after the initial date of leave or disability).
"Encumbrance" means any lien, pledge, security interest, claim, charge,
easement, limitation, commitment, encroachment, restriction or encumbrance of
any kind or nature whatsoever.
"Environmental Law" means the federal Clean Water Act, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Superfund Amendment and Reauthorization
Act, the Safe Drinking Water Act and the Toxic Substances Control Act, each as
amended to the date hereof or any regulations thereunder, or any other
Applicable Law relating to (a) the discharge, spill, disposal, emission, or
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other release of any Hazardous Substance; (b) any injury to or death of
individuals or damage to or loss of property caused by or resulting from the
presence of Hazardous Substances; or (c) the generation, storage, handling,
location, disposal or arranging for disposal of Hazardous Substances.
"Equity Interests" mean capital stock, partnership interests (limited or
general), joint venture interests or other equity interests or any securities
or other equity interests convertible into or exchangeable for any of the
foregoing or any other rights, warrants or options to acquire or vote any of
the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"FDIC" means the Federal Deposit Insurance Corporation.
"FHA" means the Federal Housing Administration.
"FHA Loans" mean Loans which satisfy all applicable rules and
requirements to be insured by FHA and which are insured by FHA.
"FHLB" means the Federal Home Loan Bank of San Francisco.
"FHLMC" means the Federal Home Loan Mortgage Corporation.
"Filings" mean all reports, returns, registrations and statements,
together with any amendments required to be made with respect thereto, that
were required to be filed with (a) the OTS, including, but not limited to,
thrift financial reports, annual reports and proxy statements, (b) the FDIC,
and (c) any other applicable Governmental Entity, including taxing
authorities, except where the failure to file such reports, returns,
registrations and statements has not had and is not reasonably expected to
have a material adverse effect on Bank and the Bank Subsidiaries taken as a
whole.
"Final Termination Date" means September 30, 1996.
"Financial Statements" mean the financial statements of Bank and the
Subsidiaries described in Section 4.5.
"FNMA" means the Federal National Mortgage Association.
"GAAP" means generally accepted accounting principles as used in the
United States of America as in effect at the time any applicable financial
statements were prepared or any act requiring the application of GAAP was
performed.
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"GNMA" means the Government National Mortgage Association.
"Governmental Entity" means any court, administrative agency or
commission or other governmental authority or instrumentality, including,
without limitation, each Bank Regulator, the SEC, the California Public
Utilities Commission and the Arizona Corporation Commission.
"Hazardous Substances" mean (a) substances that are defined or listed in,
or otherwise classified pursuant to, any Applicable Laws as "hazardous
substances," "hazardous materials," "hazardous wastes," "toxic substances," or
any other formulation intended to define, list or classify substances by
reason of deleterious properties such as ignitability, corrosivity,
reactivity, carcinogenicity, reproductive toxicity, or "EP Toxicity;" (b) oil
petroleum or petroleum derived substances and drilling fluids, produced
waters, and other wastes associated with the exploration, development, or
production of crude oil, natural gas, or geothermal resources; (c) any
flammable substances or explosives, any radioactive materials, any hazardous
wastes or substances, any toxic wastes or substances or any other materials or
pollutants which pose a hazard to DPC Property or any other property of Bank
or any Bank Subsidiary or to persons on or about such property; and
(d) asbestos, other than non-friable asbestos, or electrical equipment which
contains any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of 50 parts per million.
"HUD" means the Department of Housing and Urban Development.
"Insurer" means a Person who insures or guarantees all or any portion of
the risk of loss upon borrower default on any of the Serviced Mortgage Loans,
including, without limitation the FHA, the VA and any private mortgage
insurer, and providers of life, flood, hazard, disability, title or other
insurance with respect to any of the Serviced Mortgage Loans or the property
securing any such Serviced Mortgage Loan.
"Intellectual Property" means all Marks used in connection with the
conduct of business in the ordinary course at any Branch or Operating Site and
listed on Schedule 1.1(c).
"Investor" means any Person who owns (beneficially or of record) a
Serviced Mortgage Loan, or the servicing rights or master servicing rights to
a Serviced Mortgage Loan, subserviced, serviced or master serviced by Bank or
any Bank Subsidiary pursuant to a Mortgage Servicing Agreement.
"IRS" means the Internal Revenue Service.
"Lease" means any of the real estate leases, or a sublease of Bank's
interest thereunder, for a Branch or any Operating Site.
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"Loans" mean loans originated by Bank or any Bank Subsidiary or purchased
by Bank or any Bank Subsidiary, including loan commitments and the unfunded
portion of existing commitments.
"Loss" means any actual cost, expense or liability, including but not
limited to penalties, fines, damages, legal and other professional fees and
expenses reasonably incurred in the investigation, collection, prosecution and
defense of claims and amounts paid in settlement, that are imposed upon or
otherwise incurred or suffered by the relevant party.
"Margarita Village Lien" means the super priority lien and associated
loan on the project described on Schedule 1.1(d).
"Mark" means any brand name, copyright, patent, service mark, trademark,
trade name, state or federal common law usages and all registrations or
applications for registration of any of the foregoing.
"Material Contracts" mean all Contracts or offers that would become
binding upon acceptance by a third party (a) that obligate Bank or any Bank
Subsidiary to pay or forego receipt of an amount of $50,000 or more in any
12-month period, other than (i) any Branch Deposit or (ii) any Loan made in
the ordinary course of business; (b) that bind Bank or any Bank Subsidiary and
contain a covenant by Bank or such Bank Subsidiary not to compete; (c) that
bind Bank or any Bank Subsidiary or any of its properties and contain a right
of first refusal in favor of a third party; (d) that relate to Technology
Systems; (e) that grant a power of attorney or similar authorization to act on
behalf of Bank or any Bank Subsidiary to any Person; (f) any agreement or
commitment with respect to the Community Reinvestment Act or similar law with
any state or Federal regulatory authority or any other party; or (g) that are
otherwise material to Bank and the Bank Subsidiaries taken as a whole. All
Material Contracts as of the date hereof are listed on Schedule 1.1(e).
"Mortgage" means, with respect to a Mortgage Loan or a Serviced Mortgage
Loan, a mortgage, deed of trust or other security instrument creating a lien
upon real property and any other property described therein which secures a
Mortgage Note, together with any assignment, reinstatement, extension,
endorsement or modification of any thereof.
"Mortgage Loan" means any interest in a Loan secured by a Mortgage.
"Mortgage Loan Regulations" mean (a) all Applicable Laws with respect to
the origination, insuring, purchase, sale, pooling, servicing, subservicing,
master servicing or filing of claims in connection with a Loan, (b) the
responsibilities and obligations set forth in any agreement between Bank or
any of the Bank Subsidiaries and an Investor or private mortgage insurer
(including, without limitation, Mortgage Servicing Agreements and selling and
servicing guides), (c) all Applicable Laws and other requirements of an
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Agency, and all rules, regulations and other requirements of an Investor,
private mortgage insurer, public housing program or Investor program with
respect to the origination, insuring, purchase, sale, pooling, servicing,
subservicing, master servicing or filing of claims in connection with a
Serviced Mortgage Loan, and (d) the terms and provisions of the Serviced
Mortgage Loan documents.
"Mortgage Note" means, with respect to a Mortgage Loan or a Serviced
Mortgage Loan, a promissory note or notes, or other evidence of indebtedness,
with respect to such Mortgage Loan or Serviced Mortgage Loan secured by a
Mortgage or Mortgages, together with any assignment, reinstatement, extension,
endorsement or modification thereof.
"Mortgage Servicing Agreements" mean all contracts or arrangements
between Bank or any of the Bank Subsidiaries and an Investor pursuant to which
Bank or any of the Bank Subsidiaries subservices, services or master services
Serviced Mortgage Loans for such Investor.
"Operating Sites" mean the headquarters building, warehouse and other
non-Branch offices of Bank or any of the Bank Subsidiaries, all of which are
listed on Schedule 1.1(f).
"OTS" means the Office of Thrift Supervision.
"Permitted Encumbrances" mean all Encumbrances that are:
(a) disclosed in any title reports, opinions or insurance binders
delivered or made available to Buyer prior to the execution of this Agreement;
(b) for Taxes or assessments, special or otherwise, either not due and
payable or being contested in good faith and fully accrued or adequately
provided for;
(c) representing mechanics', materialmen's, carriers', warehousemen's,
landlords' and other similar or statutory liens arising in the ordinary course
of business and fully accrued or adequately provided for; or
(d) rights of parties lawfully in possession and any other defect,
exception to title or easement or claim of easement which in all cases does
not materially impair the use, operation or value of the property to which it
relates.
"Person" means any individual, corporation, company, partnership (limited
or general), joint venture, association, limited liability company, trust or
other entity.
"Purchase Price" means the purchase price for the Acquisition set forth
in Section 2.2.
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"Real Estate Liabilities" means all liabilities or obligations (absolute
or contingent) of Bank or any Subsidiary to the extent arising out of any real
estate development activities (past or present) of Bank or any of its
Affiliates, all real estate held for development, all Real Estate
Subsidiaries, the ownership or operation of the Real Estate Subsidiaries by
Bank or any Subsidiary, including without limitation, (i) claims of persons
who have purchased properties or assets from Real Estate Subsidiaries or any
partnership, joint venture, association, project or development in which any
of the Real Estate Subsidiaries may have participated at any time,
(ii) contractual obligations, performance bonds, undertakings, guarantees,
suretyship arrangements, or other obligations of Bank or the Subsidiaries with
respect to the business or obligations of the Real Estate Subsidiaries, and
(iii) liabilities or obligations arising out of the ownership, operation,
formation, dissolution, sale or disposition of any Real Estate Subsidiary.
"Real Estate Subsidiaries" means the entities identified on
Schedule 1.1(g) hereto and all interests or investments (equity, debt, or
otherwise) of the Bank or any Subsidiary, direct or indirect, in any of such
entities.
"Real Property" means all real property of Bank or any Bank Subsidiary,
including fee, leasehold and other interests in real property (including real
property that is DPC Property, but excluding any interest in real property
held solely as a trustee or beneficiary under a deed of trust or mortgagee
under a mortgage).
"Records" mean all records and original documents which pertain to and
are utilized by Bank to administer, reflect, monitor, evidence or record
information respecting the business or conduct of Bank and the Bank
Subsidiaries, including all such records maintained on electronic or magnetic
media in the Technology Systems.
"Regulatory Agreement" means, with respect to Bank or any Bank
Subsidiary, any cease-and-desist or other order issued by, or any written
agreement, consent agreement or memorandum of understanding with, or any order
or directive by, or any extraordinary supervisory letter from, or any board
resolutions adopted at the request of any Bank Regulator or other Governmental
Entity that restricts the conduct of Bank's or any Bank Subsidiary's business
or that in any manner relates to its capital adequacy, its credit policies,
its management or its business.
"Requisite Regulatory Approvals" mean all approvals or consents of or
filings with any Governmental Entity required in order to consummate the
transactions contemplated by this Agreement, all of which are listed in
Schedule 1.1(h).
"SEC" means the United States Securities and Exchange Commission.
"Serviced Mortgage Loan" means any closed Mortgage Loan, whether or not
such Mortgage is included in a securitized portfolio, which is subserviced,
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serviced or master serviced by Bank or any of the Bank Subsidiaries pursuant
to Mortgage Servicing Agreements.
"Software" means all computer programs, software, firmware and related
documentation used in the operation of the Technology Systems.
"Subsidiary" means any Person more than 50 percent of the voting power of
which is owned directly or indirectly by Bank or any Person more than
50 percent of the Equity Interests of which is owned directly or indirectly by
Bank, all of which are listed on Schedule 1.1(i).
"Taxes" means all federal, provincial, territorial, state, municipal,
local, foreign or other taxes, imposts, rates, levies, assessments and other
charges including, without limitation, all income, franchise, gains, capital,
real property, goods and services, transfer, value added, gross receipts,
windfall profits, severance, ad valorem, personal property, production, sales,
use, license, stamp, documentary stamp, mortgage recording, excise,
employment, payroll, social security, unemployment, disability, estimated or
withholding taxes, and all customs and import duties, together with any
interest, additions, fines or penalties with respect thereto or in respect of
any failure to comply with any requirement regarding Tax Returns and any
interest in respect of such additions, fines or penalties.
"Tax Return" means any return, report, information statements, schedule
or other document (including any related or supporting information) with
respect to Taxes, including any document required to be retained or provided
to any Governmental Entity pursuant to 31 USC Sections 5311-5328 and
regulations promulgated thereunder.
"Technology Systems" mean all electronic data processing, communications,
telecommunications, disaster recovery services and other computer systems
which are material to the operation of the Branches and the Operating Sites,
and to the servicing of the Loans and Serviced Mortgage Loans and, including
(a) any computer hardware and Software owned, leased or licensed by Bank that
is used in the operation of the Technology Systems, and (b) any Contracts
pursuant to which Bank is granted rights which are used in the operation of
the Technology Systems, including Software licenses and similar agreements.
"VA" means the Veterans Administration.
"VA Loans" mean Loans which satisfy all applicable rules and regulations
to be guaranteed by the VA and which are guaranteed by the VA.
1.2 Construction and Interpretation.
(a) When used to modify a statement with respect to the Bank or a Bank
Subsidiary, "material," "materially," or similar phrases refer to matters
which are material to the business, condition (financial or otherwise) or
operations of Bank and the Bank Subsidiaries, taken as a whole; provided,
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however, that such terms shall not include (i) changes in Applicable Law, GAAP
or regulatory accounting principles, or thrift laws or regulations, or
interpretations thereof, that affect the thrift industry generally or changes
in the general level of interest rates unless such change affects Bank to a
materially greater extent than thrift institutions generally, (ii) any
assessment imposed on the Bank in connection with the recapitalization of the
Savings Association Insurance Fund of the FDIC or (iii) the write off of any
goodwill on the books of Bank and the Bank Subsidiaries as a result of the
execution and delivery of this Agreement.
(b) Any reference to the "ordinary course of business" shall refer to
the ordinary course of the business of Bank and the Subsidiaries prior to
October 31, 1995.
ARTICLE 2.
SALE OF BANK STOCK
2.1 ACQUISITION. Subject to the terms and conditions of this Agreement,
at the Closing, Sellers shall sell, transfer and deliver to Buyer, and Buyer
shall purchase, the Bank Stock.
2.2 PURCHASE PRICE.
(a) The Purchase Price for the Bank Stock shall be $175,000,000. The
Purchase Price shall be reduced by the after tax amount of any Purchase Price
reduction and increased by the after tax amount of any Purchase Price
increase. The amount of any Purchase Price reduction shall be determined by
adding (x) the amount of Real Estate Liabilities paid in the aggregate by the
Bank or any of the Bank Subsidiaries subsequent to November 30, 1995 but on or
prior to the Closing Date in excess of $1,205,000, and (y) the amount of Taxes
paid by the Bank or any of the Bank Subsidiaries subsequent to October 31,
1995 but on or prior to the Closing Date (other than for Taxes related to
operations subsequent to October 31, 1995 and prior to the Closing Date) in
excess of the amount of Taxes accrued on the balance sheet of the Bank and the
Bank Subsidiaries contained in the Financial Statements as of October 31,
1995. The amount of any Purchase Price increase shall be determined by adding
(x) any amounts received by the Bank or any of the Bank Subsidiaries with
respect to the Margarita Village Lien or the Stead Real Property described in
Schedule 6.11(a) subsequent to November 30, 1995 and prior to the Closing Date
in excess of $200,000 plus the book value of the Margarita Village Lien and
the Stead Real Property on the Bank's Financial Statements at November 30,
1995, and (y) any amounts received by the Bank or any of the Bank Subsidiaries
subsequent to October 31, 1995, but on or prior to the Closing Date with
respect to Tax refunds attributable to periods on or prior to October 31,
1995, except for Tax receivables accrued on the balance sheets of the Bank and
the Bank Subsidiaries contained in the Financial Statements as of October 31,
1995.
(b) Sellers shall prepare an interim closing statement as of a date no
more than five Business Days prior to the Closing Date and as if the Closing
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had occurred on such date setting forth the amount of the Purchase Price. The
interim closing statement shall be delivered by Sellers to Buyer no less than
two Business Days prior to the Closing Date. The Purchase Price paid by the
Buyer on the Closing Date shall be the Purchase Price set forth on the interim
closing statement.
(c) Not more than 30 calendar days after the Closing Date, Sellers shall
deliver to Buyer a final closing statement setting forth its final calculation
of the amount of the Purchase Price.
(d) If within 30 calendar days after delivery of the final closing
statement to Buyer, the Buyer determines in good faith that the Purchase Price
set forth on the final closing statement was inaccurate, Buyer shall give
notice of such determination to Sellers setting forth the amount of the
Purchase Price as determined by Buyer and specifying in reasonable detail the
Buyer's basis for its disagreement with Sellers' determination of the Purchase
Price. The failure by Buyer so to express its disagreement within such 30-day
period shall constitute acceptance of the Purchase Price by Buyer. If the
parties are unable to resolve their disagreement, the items in dispute shall
be referred to KPMG Peat Marwick, LLP ("KPMG") and Arthur Andersen, LLP ("AA")
for determination. KPMG and AA shall make a determination as to the matter in
dispute, which determination shall be in writing, furnished to each of the
parties as promptly as practicable after the matter in dispute has been
referred to KPMG and AA and shall be final, conclusive and binding upon each
of the parties hereto. If KPMG and AA cannot agree, KPMG and AA will jointly
designate another accounting firm to make the determination, which
determination shall be final, conclusive and binding upon each of the parties
hereto. The final closing statement shall thereupon be modified in accordance
with the determination of KPMG and AA. Each of the parties shall pay the fees
and expenses of its accountants and, if a third accountant is appointed as set
forth above, the Sellers, on the one hand, and the Buyer on the other hand
shall share equally the expenses of such third accountant.
(e) If the amount of the Purchase Price paid by Buyer was less than that
set forth on the final closing statement, Buyer shall, subject to the
provisions of Section 2.2(d), promptly pay the difference to Sellers, together
with interest thereon for each day after the Closing Date to the date of such
payment at the closing Federal Funds rate per annum as set forth in the
Western Edition of the WALL STREET JOURNAL published on the day prior to the
date of payment (the "Interest Rate"). If the amount of the Purchase Price
paid by Buyer was greater than that set forth on the final closing statement,
Sellers shall, subject to the provisions of Section 2.3(d), promptly pay the
difference to Buyer, together with interest thereon for each day after the
Closing Date to the date of such payment at the Interest Rate.
ARTICLE 3.
THE CLOSING
3.1 Closing. The Closing shall take place (a) at the offices of Buyer,
Norwest Center, Sixth and Marquette, Minneapolis, MN 55479 within ten (10)
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Business Days following the satisfaction or waiver of all of the conditions in
Article 7 (other than those designating instruments, opinions, certificates or
other documents to be delivered at the Closing), or (b) at such other place
and time as the parties hereto shall agree.
3.2 Deliveries by Sellers. On the Closing Date, Sellers shall deliver
or cause to be delivered the following to Buyer:
(a) a certificate or certificates evidencing all of the Bank Stock,
which shall be properly endorsed for transfer or accompanied by duly executed
stock powers, in either case executed in blank or as otherwise directed by
Buyer and otherwise in a form acceptable for transfer on the books of Bank;
(b) copies of the charters of Bank and each Bank Subsidiary certified as
of a recent date by an appropriate government official of its respective
jurisdiction of incorporation and certified by its respective Secretary or
Assistant Secretary as to the absence of any amendments between the date of
certification by the official and the Closing Date;
(c) a certificate from the appropriate governmental official as to the
good standing of Bank and each Bank Subsidiary in such entity's respective
jurisdiction of incorporation or organization as of a recent date;
(d) a certificate of the Secretary or Assistant Secretary of Bank and
each Bank Subsidiary attaching thereto a true and correct copy of the bylaws
of Bank and each such Bank Subsidiary;
(e) either a "sworn affidavit" or a "qualifying statement" of SC that
complies with Section 1445 of the Code;
(f) copies of resolutions duly adopted by the Board of Directors and
shareholders of each Seller authorizing this Agreement and the transactions
contemplated hereby, certified as of the Closing Date by a Secretary or
Assistant Secretary of such party;
(g) an incumbency certificate executed by a Secretary or Assistant
Secretary of each Seller certifying the names and true signatures of the
officers of such Seller authorized to sign this Agreement and other documents
to be delivered hereunder on behalf of such Seller;
(h) the signed resignations of the directors of Bank effective as of the
Closing Date; and
(i) the documents required to be delivered by Sellers pursuant to
Section 7.2 and such other documents as may be required by this Agreement.
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3.3 Deliveries by Buyer. On the Closing Date, Buyer shall deliver or
cause to be delivered to Sellers the following:
(a) an amount equal to the Purchase Price by wire transfer in
immediately available funds to an account designated in writing to Buyer by
Sellers;
(b) copies of resolutions duly adopted by the Board of Directors of
Buyer authorizing this Agreement and the transactions contemplated hereby,
certified as of the Closing Date by a Secretary or Assistant Secretary of
Buyer;
(c) a certificate from the appropriate government official as to the
good standing of Buyer in its jurisdiction of incorporation as of a recent
date;
(d) an incumbency certificate executed by a Secretary or Assistant
Secretary of Buyer certifying the names and true signatures of the officers of
Buyer authorized to sign this Agreement and other documents to be delivered
hereunder on behalf of Buyer; and
(e) the documents required to be delivered by Buyer pursuant to
Section 7.3 and such other documents as may be required by this Agreement.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant to Buyer as follows:
4.1 Organization and Related Matters.
(a) Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of California. SC is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Nevada. All of the Bank Stock is owned by SC, beneficially and of record,
free and clear of all Encumbrances, other than net worth maintenance and
similar obligations to Bank Regulators, and there are no other outstanding
Equity Interests of Bank.
(b) Bank is a federal savings bank duly organized, validly existing and
in good standing under the provisions of the Home Owners' Loan Act, as amended
(12 USC Section 1461), and is a member in good standing of the Federal Home
Loan Bank System through the FHLB. The Branch Deposits are insured to
applicable limits by the Savings Association Insurance Fund of the FDIC. Bank
has the corporate power and authority to carry on its business as now being
conducted and to own, lease and operate its properties.
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(c) Except as set forth on Schedule 4.1, all of the Equity Interests of
the Bank Subsidiaries are owned beneficially and of record directly or
indirectly by Bank, free and clear of any Encumbrances. Except for the
Subsidiaries, and as set forth on Schedule 4.1, neither Bank nor any Bank
Subsidiary has a direct or indirect Equity Interest in any Person, other than
DPC Property.
(d) The Bank Subsidiaries are duly organized, validly existing and in
good standing under the laws of the jurisdiction of their organization. Each
of the Bank Subsidiaries has the corporate power and authority to carry on its
respective business as now being conducted and to own, lease and operate its
respective properties. Each of the Bank Subsidiaries is duly qualified and
licensed and in good standing to do business as a foreign corporation in each
jurisdiction in which the properties owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so organized or existing or to have
such power and authority or to be so qualified or licensed would not have a
material adverse effect on Bank and the Bank Subsidiaries taken as a whole.
None of the Bank Subsidiaries has engaged in the real estate development
business as an owner, operator, developer, contractor or otherwise.
(e) The authorized capital stock of Bank consists of 100,000 shares of
common stock, $1.00 par value per share, of which 56,629 shares have been duly
issued and are validly outstanding, fully paid, and nonassessable. Bank is
not a party to, and is not obligated by, any commitment, plan or arrangement
to issue or to sell any Equity Interests of Bank or the Bank Subsidiaries or
to sell or otherwise transfer any significant portion of their assets, except
the transactions contemplated by this Agreement and there are no outstanding
subscriptions, contracts, conversion privileges, options, warrants, calls or
preemptive or other rights requiring Bank to sell, dispose of, purchase,
redeem or otherwise acquire the Bank Stock. None of the shares of Bank Stock
has been issued in violation of the preemptive rights of any Person.
4.2 Authority; No Violation.
(a) Each Seller has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
Except for the approval of a majority of the outstanding shares of Parent's
common stock, the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been or will be duly
and validly approved by all requisite corporate action on the part of Sellers
and Bank, and, except for a meeting of the shareholders of Parent and
corporate and partnership actions to be taken in connection with the
divestitures pursuant to Section 6.11, no other corporate proceedings on the
part of Sellers or Bank are necessary to approve this Agreement and to
consummate the transactions contemplated hereby. This Agreement has been or
will be duly and validly executed and delivered by Sellers and Bank and
(assuming the due authorization, execution and delivery of this Agreement by
Buyer) constitutes a valid and binding obligation of Sellers and Bank,
enforceable against Sellers and Bank in accordance with its terms, except as
may be limited by bankruptcy, insolvency, moratorium, reorganization or
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similar laws affecting creditors' rights generally and except as may be
limited by general principles of equity whether applied in a court of law or a
court of equity.
(b) Neither the execution and delivery of this Agreement by Sellers and
Bank nor the consummation by Sellers and Bank of the transactions contemplated
hereby, nor compliance by Sellers and Bank with any of the terms or provisions
hereof, will (i) violate any provision of the respective articles of
incorporation or charter and By-Laws of Sellers or Bank or (ii) assuming that
the Requisite Regulatory Approvals and the consents and approvals referred to
in Section 4.3 are duly obtained, (x) violate in any material respect any
Applicable Law with respect to either Bank, Sellers or any Bank Subsidiary, or
(y) violate, conflict with, result in a breach of any provision of or the loss
of any benefit under, constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under, accelerate the
performance required by, or result in the creation of any Encumbrance upon any
of the respective properties or assets of either Seller, Bank or any of the
Bank Subsidiaries under, any of the terms, conditions or provisions of any
Contract to which either Seller, Bank or any of the Bank Subsidiaries is a
party, or by which either Seller, Bank or any of the Bank Subsidiaries, or any
of their respective properties or assets, may be bound or affected, except for
(i) such violations which arise from the legal or regulatory status of Buyer
or its Affiliates or the businesses in which they are or propose to be engaged
and (ii) such consents and approvals the failure of which to obtain will not,
individually or in the aggregate, have a material adverse effect on the
Sellers and their subsidiaries taken as a whole or the Bank and the Bank
Subsidiaries taken as a whole.
4.3 Consents and Approvals. Except for the Requisite Regulatory
Approvals to be obtained by Sellers and Buyer, the consents and approvals to
be obtained by Buyer and the matters set forth on Schedule 4.3, no consents or
approvals of or filings, notices or registrations with any Governmental Entity
or with any third party are necessary in connection with the execution and
delivery by Sellers and Bank of this Agreement or the consummation by Sellers
and Bank of the transactions contemplated hereby (including, without
limitation the consummation of the Acquisition).
4.4 Title to Property.
(a) Bank and the Bank Subsidiaries own or have the right to use all
property used in the operation of their business. Sellers have furnished to
Buyer Schedule 4.4(a) that sets forth a description (including the character
of the interest of Bank and each Bank Subsidiary) of all Real Property.
Except as set forth on Schedule 4.4(a), Bank and each Bank Subsidiary has good
and marketable title to all Real Property owned in fee and all material items
of personal property reflected as owned on its books, in each case free and
clear of all Encumbrances, except Permitted Encumbrances.
(b) All furniture, fixtures and equipment of Bank and each Bank
Subsidiary that are material to the business, financial condition, results of
operations or prospects of Bank and the Bank Subsidiaries taken as a whole,
are in a good state of maintenance and repair, except for ordinary wear and
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tear, and are adequate for the conduct of the business of Bank and each Bank
Subsidiary as presently conducted. Except as set forth in Schedule 4.4(a),
(i) neither Bank nor any Bank Subsidiary has entered into any Contract
containing a material obligation to improve any Real Property, (ii) each Lease
and other Contract under which Bank or any Bank Subsidiary is a lessee or
holds or operates any material property (real, personal or mixed) owned by any
third party is in full force and effect and is a valid and legally binding
obligation of Bank or such Bank Subsidiary and, to Sellers' knowledge, each
other party thereto; (iii) Bank or such Bank Subsidiary and, to Sellers'
knowledge, each other party to any such Lease or other Contract have performed
in all material respects all the obligations required to be performed by them
to date under such Lease or other Contract and are not in default in any
material respect under any such Lease or other Contract and, to Sellers'
knowledge, there is no pending or threatened proceeding that would interfere
with the quiet enjoyment of such leasehold or such material property by Bank
or any Bank Subsidiary; (iv) to Seller's knowledge, there has not been any
generation, use, handling, transportation, treatment, storage, release or
disposal of any Hazardous Substance in connection with the conduct of the
business of Bank or such Bank Subsidiary and there has never been a use of any
of the Real Property or any of the real property formerly owned by the Bank or
any Bank Subsidiary for which the Bank has any indemnification obligations
that has created or might reasonably be expected to result in any liability
under any Environmental Law; (v) to Seller's knowledge, no underground storage
tanks are on or in the Real Property; and (vi) to Seller's knowledge, no
Hazardous Substances exist on any real property at any time directly or
indirectly owned or operated, whether as beneficial owner or in a fiduciary
capacity, by Bank or any Bank Subsidiary in a manner that could reasonably be
expected to expose Bank or such Bank Subsidiary as a former owner or operator
of such real property to any liability under any Environmental Law.
(c) Sellers have provided Buyer access to copies of all Leases included
on Schedule 4.4(a) and all appraisals and title insurance policies relating to
Real Property.
4.5 Financial Statements. Sellers have previously delivered to Buyer:
(a) the audited consolidated statement of financial condition of Bank and the
Subsidiaries as of December 31, 1994 and related audited consolidated
statements of operations and cash flows for the year ended on such date,
including in each case the related notes and schedules thereto, together with
the related opinion of Arthur Andersen, LLP, independent certified public
accountants to Bank; and (b) the unaudited consolidated statement of financial
condition of Bank and the Subsidiaries as of October 31, 1995. The Financial
Statements referred to in clause (a) above (including the related notes and
schedules thereto), subject to qualifications, if any, noted in the
accompanying opinion, have been prepared in accordance with GAAP or applicable
regulatory accounting principles consistently applied during the periods
involved and fairly present the consolidated financial condition, consolidated
results of operations and consolidated changes in financial position of Bank
and the Subsidiaries as of the date thereof and for the periods covered
thereby. Except for changes in the financial accounting standards as set
forth in Schedule 4.5, the Financial Statements referred to in clause
(b) above have been prepared on a consolidated basis in accordance with GAAP
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or applicable regulatory accounting principles applied on a basis consistent
with those at December 31, 1994, except for the omission of normal recurring
year-end audit adjustments (if any) and notes thereto and fairly present the
consolidated financial condition of Bank and the Subsidiaries as of the date
thereof.
4.6 Material Contracts. Except as set forth on Schedules 1.1(e) or
4.4(a), (a) each Material Contract is a valid and binding obligation of Bank
or a Bank Subsidiary; (b) Bank and each Bank Subsidiary has duly performed all
material obligations under the Material Contracts to be performed by it to the
extent that such obligations to perform have accrued; and (c) to Sellers'
knowledge, there are no breaches, violations or defaults or allegations or
assertions of such by any party under any Material Contract. True copies of
all Material Contracts, including all amendments and supplements thereto, have
been made available to Buyer.
4.7 Legal or Other Proceedings. Except as set forth in Schedule 4.7, as
of the date of this Agreement, neither Bank nor any of the Bank Subsidiaries
is a party to any, and there are no pending or, to Sellers' knowledge,
threatened, legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations of any nature against or
affecting Bank, any of the Bank Subsidiaries or any of their respective
properties or assets or challenging the validity or propriety of the
transactions contemplated by this Agreement and there is no injunction, order,
judgment or decree imposing ongoing obligations upon Bank, any of the Bank
Subsidiaries or the properties or assets of Bank or any of the Bank
Subsidiaries. Except for customary ongoing quality control reviews or as set
forth in Schedule 4.7, no audit, investigation, complaint or inquiry of Bank
or any of the Bank Subsidiaries by any Agency, Investor or Insurer is pending
or, to the knowledge of Sellers, threatened.
4.8 Undisclosed Liabilities. Sellers have furnished to Buyer
Schedule 4.8 which sets forth all liabilities of Bank or any of the
Subsidiaries that are material to Bank and the Subsidiaries taken as a whole,
contingent or otherwise, that are not reflected or reserved against in the
Financial Statements dated as of October 31, 1995, except for liabilities
incurred or accrued since October 31, 1995 in the ordinary course of business,
none of which, individually or in the aggregate, has had or may reasonably be
expected to have a material adverse effect on Bank and the Subsidiaries taken
as a whole.
4.9 Reports and Filings. Since January 1, 1993, Bank and each Bank
Subsidiary has filed all Filings. Bank has made available to Buyer all
Filings filed by Bank or any Bank Subsidiary since January 1, 1993, together
with copies of any orders or other administrative actions taken in connection
with such Filings to the extent permitted to do so by Applicable Law. As of
their respective dates, each of such Filings (a) was true and complete in all
material respects (or was amended so as to be so following discovery of any
discrepancy); (b) complied in all material respects with Applicable Law (or
was amended so as to be so following discovery of any such noncompliance); and
(c) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Any Financial Statement contained in any of such Filings that
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was intended to present the financial position of Bank or any Bank Subsidiary
fairly presented the financial position of Bank or such Bank Subsidiary and
was prepared in accordance with GAAP or applicable regulatory accounting
principles consistently applied, except as stated therein, required by
Applicable Law during the periods involved or as otherwise set forth in
Section 4.5.
4.10 Absence of Certain Changes or Events. Except as contemplated by
Sections 6.2(l) and 6.11 or as set forth on Schedule 4.10, since October 31,
1995, Bank has not declared, set aside or paid any dividend or, other
distribution with respect to, or repurchased any Equity Investments in, Bank.
Except as set forth in Schedule 4.10 or as consented to by Buyer in writing,
during the period from October 31, 1995 to the Closing Date, (a) neither Bank
nor the Bank Subsidiaries has: (i) mortgaged, pledged or subjected to any
Encumbrance or lease any of the Real Property, or permitted or suffered any
such asset to be subjected to any Encumbrance or lease, except in the ordinary
course of business; (ii) other than in the ordinary course of business, (A)
increased the wages, salaries, compensation, pension, or other fringe benefits
or perquisites payable to any executive officer, Employee, or director from
the amount in effect as of October 31, 1995, or granted any severance or
termination pay, (B) entered into any contract to make or grant any severance
or termination pay, or (C) paid any bonus to any such person; (iii) suffered
any strike, work stoppage, slow-down, or other labor disturbance at the
Branches or Operating Sites; (iv) amended, canceled or terminated any
agreement relating to Technology Systems, Software or Intellectual Property,
except in the ordinary course of business; (v) changed its accounting
principles, practices or methods except as required by any change in
Applicable Law, GAAP or regulatory accounting principles; (vi) engaged in any
material sale or purchase of assets, entered into, amended, or terminated any
Material Contract, or engaged in any other material transaction other than for
fair value in the ordinary course of business; or (vii) incurred any damage,
destruction or loss to any of the assets of Bank and the Bank Subsidiaries
which has had or may be reasonably expected to have, individually or in the
aggregate, a material adverse effect on Bank and the Bank Subsidiaries taken
as a whole; and (b) no event has occurred or has failed to occur which has had
or is reasonably expected to have, individually or in the aggregate with any
other event(s), a material adverse effect on Bank and the Subsidiaries taken
as a whole, PROVIDED, HOWEVER, that for purposes of this Section 4.10, no such
material adverse effect shall be deemed to have occurred as a result of
(i) any change in Applicable Law, GAAP or regulatory accounting principles, or
changes in thrift laws or regulations, or interpretations thereof, that affect
the thrift industry generally or changes in the general level of interest
rates unless such change affects Bank to a materially greater extent than
thrift institutions generally, (ii) or any assessment imposed on the Bank in
connection with the recapitalization of the Savings Association Insurance Fund
of the FDIC or (iii) the write-off of any goodwill on the books of Bank and
the Bank Subsidiaries as a result of the execution and delivery of this
Agreement.
4.11 Taxes and Tax Returns.
(a) Except as reflected in Schedule 4.11, or otherwise disclosed, Bank
and each Subsidiary, and any Affiliated Group of which any such entity was a
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member, has duly filed all Tax Returns required to be filed by it on or prior
to the date of this Agreement (all such returns being accurate and complete in
all material respects), has duly paid or made provisions for the payment of
all Taxes that have been incurred or are due or claimed to be due from it by
any taxing authority on or prior to the date of this Agreement other than
Taxes which are not yet delinquent or are being contested in good faith (and
which are set forth in Schedule 4.11) and has not executed an extension or
waiver of any statute of limitations on the assessment or collection of any
Taxes that is currently in effect. Except as set forth in Schedule 4.11,
there is no audit, examination, deficiency, refund litigation, tax claim,
notice of assessment, notice of proposed assessment or any other matter in
controversy with respect to any Taxes that is reasonably likely to result in a
determination materially adverse to Bank and the Bank Subsidiaries taken as a
whole.
(b) No election under Section 341(f) of the Code has been or hereafter
shall be made to treat Bank or any Bank Subsidiary as a consenting corporation
(as defined in Section 341(f) of the Code).
4.12 Compliance with Applicable Law. Bank and each of the Bank
Subsidiaries hold, and have at all times held, all material licenses,
franchises, permits and other authorizations necessary for the lawful
ownership and use of their respective assets and the conduct of their
respective businesses and have complied with and are not in default in any
material respect under any Applicable Law material to Bank and the Bank
Subsidiaries taken as a whole.
4.13 Insurance. All insurance policies and indemnity bonds as of the
date of this Agreement providing coverage for Bank and the Bank Subsidiaries
are listed on Schedule 4.13. As of the date hereof each such insurance policy
or bond is in full force and effect, and, as of the date hereof neither Bank
nor any of the Subsidiaries has received written notice or any other
indication from any insurer or agent of any intent to cancel any such
insurance policy or bond.
4.14 Agreements with Regulatory Agencies. Neither Bank nor any of the
Bank Subsidiaries is currently subject to any Regulatory Agreement, nor has
Bank or any of the Bank Subsidiaries been advised by any Bank Regulator or
other Governmental Entity that it is considering issuing or requesting any
Regulatory Agreement.
4.15 Affiliate Transactions. Except as set forth on Schedule 4.15, no
Person who is an executive officer, director or Affiliate of Bank is an
obligor or guarantor on any Loan, a lessor with respect to any Lease, or
otherwise has any interest in any asset of, Bank or the Bank Subsidiaries.
Except as set forth on Schedule 4.15, Bank and the Subsidiaries on a
consolidated basis do not have any other liabilities or obligation of any kind
to either Seller or any Affiliate, other than Bank or a Bank Subsidiary.
Except as set forth on Schedule 4.15, there are no intercompany payables owed
by or intercompany receivables owed to Bank and the Bank Subsidiaries on a
consolidated basis to or from Sellers or their Affiliates (other than Bank and
the Bank Subsidiaries).
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4.16 Intellectual Property.
(a) Schedule 1.1(c) contains a true and complete list of all
Intellectual Property owned by Bank or any Bank Subsidiary and any licenses or
similar agreements pursuant to which Bank or any Bank Subsidiary is granted
rights with respect to Intellectual Property.
(b) Except as set forth in Schedule 1.1(c), Bank or any Bank Subsidiary
has the unrestricted right to use the Intellectual Property, free and clear of
any claims, by any Person (other than the claims of any licensors under
licensing or similar agreements), and the consummation of the transactions
contemplated by this Agreement will not alter or impair any such right. No
claims have been asserted to either Sellers, Bank or any Bank Subsidiary by
any Person with respect to the use by Bank or any Bank Subsidiary of any
Intellectual Property or challenging or questioning the validity or
effectiveness of any license or similar agreement with respect thereto, and,
to the knowledge of Sellers, there is no basis for any such claim. Except as
set forth in Schedule 1.1(c), no Intellectual Property is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting the
use thereof by Bank or any Bank Subsidiary.
4.17 Loan Portfolio.
(a) Schedule 4.17 sets forth a description, as of October 31, 1995, of
(i) by type and classification, if any, each Loan or lease by Bank in excess
of $500,000; and (ii) by type and classification, all Loans or leases of Bank
of $500,000 or more, that have been classified by its bank examiners, auditors
(external or internal), or credit administration personnel as "Special
Mention," "Substandard," "Doubtful," "Loss" or any comparable classification.
(b) To Sellers' knowledge, each Loan or Serviced Mortgage Loan owned or
held by Bank complied at the time it was made or, if such Loan or Serviced
Mortgage Loan was acquired and not originated by Bank, complied at the time it
was originated, and remains in compliance, in all material respects with
Applicable Law, including the federal Truth-in-Lending Act and other consumer
protection laws, usury, equal credit opportunity, disclosure and recording
laws.
(c) Except in the case of Loans which individually and in the aggregate
are not material or for deficiencies which can be cured without the incurrence
of unreasonable expenditures in the circumstances, to Sellers' knowledge, each
Loan included in the Financial Statements as of October 31, 1995, or acquired
since that date (i) is the legal, valid and binding obligation of the obligor
thereunder, enforceable in accordance with its terms, except (A) as
enforcement may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting creditors' rights generally and
except as may be limited by general principles of equity whether applied in a
court of law or a court of equity, and (B) to the extent Applicable Law
requires the holder of the note with respect to the Loan to foreclose against
the collateral for such note before seeking recovery on such note, or
prohibits a deficiency judgment or other recovery on such note against the
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mortgagor or the grantor of such security interest or any guarantor of such
Loan, (ii) arose in the ordinary course of business and (iii) is secured by a
valid and legally enforceable security interest to the extent reflected in the
loan records with respect thereto except (x) as enforcement may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
affecting creditors' rights generally and except as may be limited by general
principles of equity whether applied in a court of law or a court of equity,
and (y) subject to any requirement of Applicable Law that the holder of the
note with respect to the Loan foreclose against the collateral for such note
before seeking recovery on such note, or prohibiting a deficiency judgment or
other recovery on such note against the mortgagor or the grantor of such
security interest or any guarantor of such Loan.
4.18 Mortgage Banking Licenses and Qualifications. Bank (a) is qualified
and or authorized, as appropriate (i) by FHA as a mortgagee and servicer for
FHA Loans, (ii) by VA as a lender and servicer for VA Loans, (iii) by FNMA and
FHLMC as a seller/servicer of first mortgages to FNMA and FHLMC, and (iv) by
GNMA as an authorized issuer and servicer of GNMA-guaranteed mortgage-backed
securities; and (b) has all other certifications, authorizations, licenses,
permits and other approvals necessary to conduct its current business, and is
in good standing under all Applicable Laws and Mortgage Loan Regulations as a
mortgage lender and servicer.
4.19 Payment of Taxes, Insurance Premiums, etc. To Sellers' knowledge,
the responsibilities of Bank and all prior servicers and originators of the
Serviced Mortgage Loans with respect to all applicable Taxes (including tax
reporting for the period prior to the Closing), special assessments, ground
rents, flood insurance premiums, hazard insurance premiums and mortgage
insurance premiums that are related to the Serviced Mortgage Loans have been
met in all material respects.
4.20 Minute Books. The copies of the articles of incorporation and
bylaws, including amendments, of Bank and each Bank Subsidiary which have been
delivered to Buyer are true, correct and complete. The minute books of Bank
and each Bank Subsidiary made available to Buyer are true, correct and
complete and accurately reflect all material actions duly taken to date by its
respective shareholder or owner, board of directors and committees.
4.21 Employee Benefit Plans and Employment and Labor Contracts.
(a) Sellers have furnished to Buyer Schedule 1.1(b) that sets forth all
Employee Benefit Plans and any collective bargaining agreements, labor
contracts and Employee Programs in which Bank or any Bank Subsidiary
participates, or by which it is bound. Except as set forth in
Schedule 1.1(b), (i) Bank and each Bank Subsidiary is in compliance in all
material respects with the applicable provisions of ERISA and the regulations
and published authorities thereunder currently in effect with respect to all
such Employee Benefit Plans and Employee Programs; (ii) Bank and each Bank
Subsidiary has performed all of its obligations under all such plans and
programs; and (iii) there are no actions, suits or claims (other than routine
claims for benefits) pending or, to the knowledge of Sellers, threatened
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against any such employee benefit plans or the assets of such plans, and to
the knowledge of Sellers, no facts exist which could give rise to any actions,
suits or claims (other than routine claims for benefits) against such plans or
the assets of such plans that might have a material adverse effect on such
plans. True copies of all of the Employee Benefit Plans and Employee Programs
referred to in Schedule 1.1(b), including all amendments and supplements
thereto, and all related summary plan descriptions have been made available to
Buyer.
(b) The Employee Benefit Plans have been duly authorized by the board of
directors of Bank. Each such plan and associated trust intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service and Sellers have no
knowledge of any circumstances likely to result in revocation of any such
determination letter. No event has occurred that will or could subject any
such Employee Benefit Plans to tax under Section 511 of the Code. All costs
of any Employee Benefit Plans subject to Title IV of ERISA have been provided
for on the basis of consistent methods in accordance with actuarial
assumptions and practices. Subject to amendments that are required by the Tax
Reform Act of 1986 and later legislation, since the last valuation date for
each Employee Benefit Plan subject to Title IV of ERISA, there has been no
amendment or change to such Employee Benefit Plan that would increase the
amount of benefits thereunder. Sellers have made available to Buyer for each
of the Employee Benefit Plans, to the extent applicable, (i) a copy of the
Form 5500 which was filed in each of the most recent three plan years,
including, without limitation, all schedules thereto and all financial
statements with attached opinions of independent accountants; (ii) the most
recent determination letter from the IRS; (iii) the statement of assets and
liabilities as of the most recent valuation date; and (iv) the statement of
changes in fund balance and in financial position or the statement of changes
in net assets available for benefits under each Employee Benefit Plan for the
most recently ended plan year. The documents referred to in subdivisions
(iii) and (iv) fairly present the financial condition of each of said Employee
Benefit Plans as at such dates and the results of operations of each of said
plans, all in accordance with GAAP or applicable regulatory accounting
principles applied on a consistent basis.
(c) Neither Bank nor any entity with which Bank has been treated as a
single employer under Section 4001(b) of ERISA sponsors or participates, or
has sponsored or participated, in any Employee Benefit Plan that is a
"multiemployer plan" (within the meaning of Section 3(37) of ERISA) that would
subject such Person to any liability with respect to any such Employee Benefit
Plan.
(d) All group health plans of Bank (within the meaning of
Section 5000(b)(1) of the Code) have been operated in compliance in all
material respects with the group health plan continuation coverage
requirements of Section 4980B of the Code and Section 601 through 609 of
ERISA, to the extent such requirements are applicable.
(e) There have been no acts or omissions by Bank that have given rise to
or may give rise to fines, penalties, taxes, or related charges under
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Sections 502(c), 502(i), 502(1) or 4071 of ERISA or Chapter 43 of the Code
which would be material to Bank and the Bank Subsidiaries taken as a whole.
(f) Schedule 1.1(b) sets forth the name of each director, officer or
Employee of Bank or any Bank Subsidiaries entitled to receive any benefit or
any payment of any amount (including, without limitation, severance,
unemployment compensation, golden parachute or otherwise) under any existing
employment agreement, severance plan or other benefit plan as a result of the
consummation of any transaction contemplated in this Agreement, and with
respect to each such person, the nature of such benefit or the amount of such
payment, the event triggering the benefit or payment, and the date of, and
parties to, such employment agreement, severance plan or other benefit plan.
4.22 Investments. Sellers have furnished to Buyer Schedule 4.22 that,
except for investments that have matured or been sold, sets forth all of the
investments reflected in the consolidated balance sheet of Bank and the Bank
Subsidiaries, contained in the Financial Statements dated October 31, 1995,
and all of the investments made since October 31, 1995 to the date hereof.
Except as set forth in Schedule 4.22, (i) all such investments are legal
investments under Applicable Law for federal savings associations, and
(ii) none of such investments is subject to any restriction, contractual,
statutory or other, that would materially impair the ability of the Bank or
any Bank Subsidiary holding such investment to dispose freely of any such
investment at any time, except restrictions on the public distribution or
transfer of such investments under the Securities Act of 1933, as amended, or
state securities laws.
4.23 Broker's or Finder's Fees. Except for the fees of Merrill, Lynch &
Co. to be paid by Parent, no agent, broker, investment or commercial banker,
or other Person acting on behalf of either Seller, will have any claims
against Buyer or Bank for any broker's or finder's fee or any other commission
or similar fee directly or indirectly in connection with any of the
transactions contemplated in this Agreement.
4.24 Bank Accounts. Schedule 4.24 sets forth an accurate list of each
bank, trust company, savings association or other financial institution with
which the Bank or any Bank Subsidiary has an account or safe deposit box and
the names and identification of all persons authorized to draw thereon or to
have access thereto.
4.25 Deposits. Except as set forth in Schedule 4.25, none of the Bank's
bank deposits is a Brokered Deposit. Except as set forth in Schedule 4.25, no
portion of the deposits represents a deposit by any Affiliate of Bank.
"Brokered Deposits" shall mean all deposits of Bank for which Bank has paid a
commission or an interest rate substantially above that paid by Bank to the
general depositors of Bank at the time of issuance of the deposit.
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ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers and Bank as follows:
5.1 Organization and Related Matters. Buyer is a corporation duly
organized and validly existing in good standing under the laws of the state of
Delaware.
5.2 Authority; No Violation.
(a) Buyer has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by all
requisite corporate action on the part of Buyer, and no other corporate
proceedings on the part of Buyer is necessary to approve this Agreement and to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Buyer and (assuming the due
authorization, execution and delivery of this Agreement by Sellers) constitutes
a valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally and except
as may be limited by general principles of equity whether applied in a court of
law or a court of equity.
(b) Neither the execution and delivery of this Agreement by Buyer nor
the consummation by Buyer of the transactions contemplated hereby, nor
compliance by Buyer with any of the terms or provisions hereof will
(i) violate any provision of the certificate of incorporation or bylaws of
Buyer or (ii) assuming that the Requisite Regulatory Approvals and consents
and approvals referred to in Section 5.3 hereof are duly obtained, (x) violate
in any material respect any Applicable Law applicable to Buyer, or any of its
respective properties or assets, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Encumbrance upon any of the respective
properties or assets of Buyer under, any of the terms, conditions or
provisions of any Contract to which Buyer is a party or by which Buyer, or any
of its properties or assets may be bound or affected, except for such consents
and approvals the failure of which to obtain will not, individually or in the
aggregate, materially adversely affect the ability of Buyer to consummate the
transactions contemplated by this Agreement.
5.3 Consents and Approvals. Except for the Requisite Regulatory
Approvals to be obtained by Sellers and Buyer, the consents and approvals to
be obtained by Sellers and the matters set forth on Schedule 5.3, no consents
or approvals of or filings or registrations with any Governmental Entity or
with any third party are necessary in connection with the execution and
delivery by Buyer of this Agreement or the consummation by Buyer of the
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transactions contemplated hereby (including, without limitation, the
consummation of the Acquisition.
5.4 Financing; Capital. Buyer has current assets, irrevocable credit
lines, or guaranties or other financial arrangements such that at the Closing,
Buyer will have funds sufficient to enable it to carry out its obligations
under this Agreement. After giving effect to the transactions contemplated
hereby, Buyer will have sufficient shareholders' equity to comply with all
regulatory capital adequacy requirements and will be in compliance, in all
material respects, with all other banking laws, regulations, and guidelines
applicable to its business as of the Closing.
5.5 Broker's or Finder's Fees. No agent, broker, investment or
commercial banker or other Person acting on behalf of Buyer will have any
claim against Sellers for any broker's or finder's fee or any other commission
or similar fee directly or indirectly in connection with any of the
transactions contemplated in this Agreement.
5.6 Investment Intent. Buyer is acquiring the Bank Stock for investment
and with no view to the distribution thereof in any transaction or
transactions that would require its registration under the Securities Act of
1933, as amended.
5.7 Proxy Statement. None of the information regarding Buyer and its
subsidiaries supplied by Buyer for inclusion in the proxy statement to be used
in connection with the shareholders' meeting at which the Acquisition will be
considered will on the date mailed be false or misleading with respect to any
material fact, or omit to state any material fact necessary to make the
statements therein not misleading, or at the time of the shareholders' meeting
at which the Acquisition is considered to be false or misleading with respect
to any material fact, or omit to state any material fact necessary to correct
any statement in any earlier communication with respect to the solicitation of
any proxy for such meeting.
ARTICLE 6.
COVENANTS
The parties covenant and agree that during the period prior to the
Closing or, to the extent expressly herein provided, thereafter:
6.1 Access. Upon the reasonable request to Parent, Sellers shall, and
shall cause Bank to, give Buyer and its representatives reasonable access
during normal business hours to all properties, documents, accounts, books and
records of Bank and the Subsidiaries and furnish Buyer with such financial,
operating and environmental data and other information with respect to the
same as Buyer shall from time to time reasonably request, and provide Buyer
with access to Sellers' officers, employees, accountants, counsel and other
representatives, and the officers, employees, accountants, counsel and other
representatives of the Bank and the Subsidiaries, in each case subject to
Applicable Laws relating to the exchange of information. Buyer shall have the
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right at its own expense to make copies of the above-described corporate
records, reports and other documents, subject to Applicable Laws relating to
the exchange of information. In addition, except as may be otherwise agreed
by the parties, Sellers shall provide Buyer with Phase I environmental reports
for each parcel of Real Property owned by the Bank (excluding residential DPC
Property). Oral reports of such environmental assessments shall be delivered
to Buyer as soon as practicable, provided Sellers use their best efforts to
provide such reports no later than six (6) weeks from the date of this
Agreement and written reports shall be delivered to Buyer as soon as
practicable, provided Sellers shall use their best efforts to provide such
reports no later than ten (10) weeks from the date of this Agreement. Sellers
shall also obtain (except as may be otherwise agreed by the parties) Phase II
environmental reports for properties identified by Buyer on the basis of the
results of such Phase I environmental reports. The costs and expenses of all
Phase II environmental reports shall be shared equally by Buyer and Sellers.
Bank shall obtain a survey and assessment of all potential asbestos containing
material in owned properties (other than DPC property) and a written report of
the results shall be delivered to Buyer as soon as practicable, provided
Sellers shall use their best efforts to obtain a report within six (6) weeks
of execution of this Agreement. During the period prior to the Closing, Buyer
shall furnish to Sellers such relevant information as Sellers may reasonably
request regarding the ability of Buyer to perform its obligations under this
Agreement.
6.2 Conduct of Business of Bank. During the period from the date of
this Agreement and continuing until the Closing Date, except as required by
Applicable Law or as expressly permitted by this Agreement, or with the prior
written consent of Buyer, Sellers shall cause Bank and the Bank Subsidiaries
to carry on their respective businesses in the usual and ordinary course, in
accordance with present practices and policies and Applicable Law, and to use
commercially reasonable efforts to pursue their relationships with customers,
suppliers and others having business dealings with them and to maintain the
services of the Employees. Without limiting the generality of the foregoing,
and except as set forth in Schedule 6.2 or as otherwise expressly permitted by
this Agreement or consented to in writing by Buyer, Sellers shall not permit
Bank or any of the Bank Subsidiaries to:
(a) Engage or participate in any material transaction, or incur or
sustain any material obligation, except in the ordinary course of business;
(b) Except for the Branch to be constructed at Crossroads, Henderson,
Nevada, open, close or relocate any Branch or Operating Site, or acquire or
sell or agree to acquire or sell any Branch or Operating Site;
(c) Change its interest rate or fee pricing policies, or materially
alter the mix of rate, terms and account types, with respect to Branch
Deposits, other than in the ordinary course of business;
(d) Make or agree to make any improvements to the Branches or the
Operating Sites, except with respect to commitments for such made on or before
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the date of this Agreement and normal maintenance or refurbishing made in the
ordinary course of business;
(e) Amend, terminate or cancel, or take any other action that may result
in an amendment, termination or cancellation of any Lease or any other
Material Contract of Bank and the Bank Subsidiaries or enter into any Material
Contract (except for the renewal of Contracts with respect to Technology
Systems for terms not to exceed June 30, 1996, or for month to month periods
thereafter);
(f) Foreclose upon or otherwise acquire any real property securing any
Loan except in accordance with the Bank's customary policy with respect to any
such Loan;
(g) Deviate in any material respect from policies and procedures
existing as of the date hereof with respect to (i) classification of assets,
(ii) accrual of interest on assets, (iii) underwriting, pricing, originating,
warehousing, selling and servicing or buying or selling rights to service, any
Loans or Serviced Mortgage Loans, (iv) hedging (which term includes both
buying futures and forward commitments from financial institutions) its
mortgage loan positions or commitments, and (v) obtaining financing and
credit;
(h) Change its method of accounting in effect at October 31, 1995,
except as required by changes in Applicable Law, GAAP or regulatory accounting
principles as concurred to by Buyer's independent auditors;
(i) Except as required by Applicable Law or to maintain qualification
pursuant to the Code and except as required by Section 6.13 of this Agreement,
(i) adopt, amend, renew or terminate any Employee Benefit Plan or Employee
Program, between Bank or any of the Bank Subsidiaries and one or more of its
Employees, except that Bank and the Bank Subsidiaries may hire or terminate
one or more of its Employees in the ordinary course of business, (ii) increase
in any manner the compensation or fringe benefits of any director, officer or
Employee or pay any benefit not required by any Employee Program as in effect
as of the date hereof, except for normal merit increases with respect to
Employees in the ordinary course of business consistent with past practice, or
(iii) enter into or modify any Contract providing for the payment to any
director, officer or Employee of the Bank or any Bank Subsidiaries of
compensation or benefits contingent, or the terms of which are materially
altered, upon the occurrence of any of the transactions contemplated by this
Agreement ("Management Contracts"), provided that the foregoing shall not
prohibit the renewal of any such Management Contracts for a one year term at
the same terms and conditions as currently in effect; or (iv) increase in any
manner the compensation of any Person who is a party to a Management Contract
not required by any Employee Program as in effect on the date hereof;
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(j) Terminate or unilaterally fail to renew any existing insurance
coverage or bonds;
(k) Amend or modify its charter or bylaws;
(l) Declare or pay any cash or property dividends or distributions,
except as set forth in Section 6.11; provided that Bank may pay a cash
dividend on Bank Stock in an amount not to exceed $250,000 for the quarter
ending December 31, 1995, $375,000 for the quarter ending March 31, 1996 and
$375,000 for the quarter ending June 30, 1996 if the Acquisition is not
consummated by such date and dividends at a rate equal to $1,000,000 for the
month ending July 31, 1996 and $1,250,000 for each of the months ending August
31, 1996 and September 30, 1996, which amounts shall be prorated for each day
after July 1, 1996 that the Closing Date does not occur;
(m) Declare or distribute any stock dividend, effect any stock split, or
authorize, issue, or make any distribution of its capital stock or any other
securities, grant or issue any right or option to acquire any such additional
securities, or effect any recapitalization, exchange, or reclassification of
shares;
(n) Merge with or into, or consolidate with, any other Person;
(o) Except as contemplated by Section 6.11, make any direct or indirect
redemption, purchase or other acquisition of any of its Equity Interests;
(p) Except for the Branch under construction or to be constructed at
Crossroads in Henderson, Nevada, make any capital expenditures, including any
capitalized lease obligation, in amounts individually in excess of $50,000 or
in the aggregate in excess of $100,000;
(q) Make any new loan having a principal amount of $2,000,000 or more,
increase the principal amount of any outstanding loan to $2,000,000 or more or
make any commitment for any such loan or increase; provided, however, that
Buyer shall be deemed to have consented in writing to any such loan, increase
or commitment if it has not declined to give its consent within three (3)
Business Days after receipt by Buyer of a request for such consent,
accompanied by all of the credit information used by the Bank in determining
to approve such loan or commitment; provided, that Sellers will cause Bank,
promptly after the making thereof by Bank, to supply Buyer with all reasonably
requested information concerning loans in amounts less than $2,000,000 but
greater than $1,000,000;
(r) Make any investments or enter into any derivative contracts except
investments made in the ordinary course of business for terms of up to one
year and in amounts of $100,000 or less or investments made in the ordinary
course of business with terms of ten Business Days or less;
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(s) Authorize or incur any long term debt (other than deposit
liabilities and Federal Home Loan Bank advances incurred in the ordinary
course of business, consistent with past practices).
(t) Mortgage, pledge or subject to lien or other encumbrance any of its
assets or of any assets of its Bank Subsidiaries, except in the ordinary
course of business
(u) Sell or otherwise dispose of any of its or the Bank Subsidiaries'
assets or properties other than in the ordinary course of business;
(v) Make any capital contribution to any Subsidiary; or
(w) Agree (by contract or otherwise) to do any of the foregoing;
6.3 Regulatory Approvals: Consents of Third Parties.
(a) During the period prior to the Closing, Buyer and Sellers shall
cooperate, in preparing, submitting and filing all applications for all
Requisite Regulatory Approvals, and obtaining such Requisite Regulatory
Approvals and taking such other actions as may be required by Applicable Laws
or court or administrative proceedings with respect to the transactions
contemplated by this Agreement, and shall use all reasonable efforts to obtain
such approvals and to accomplish such actions as expeditiously as possible.
As promptly as practicable after the date of this Agreement, Buyer and Sellers
shall prepare, submit and file or cause to be filed the applications for
Requisite Regulatory Approvals set forth on Schedule 1.1(h). Buyer and
Sellers shall have the right to review in advance, and to the extent
practicable each will consult the other on, in each case subject to Applicable
Laws relating to the exchange of information, all the information which
appears in any filing made with, or written materials submitted to, any third
party or any Governmental Entity in connection with the transactions
contemplated by this Agreement other than any portion of such filings or
submissions that are customarily accorded confidential treatment. In
exercising the foregoing right, each of the parties hereto shall act
reasonably and as promptly as practicable. The parties hereto agree that they
will consult and cooperate with each other with respect to the obtaining of
all Requisite Regulatory Approvals and consents or approvals of third parties
necessary or advisable to consummate the transactions contemplated by this
Agreement and each party will keep the other apprised of the status of matters
relating to completion of the transactions contemplated herein. Each of the
Sellers and Buyer shall use reasonable efforts to take, or cause to be taken,
all actions necessary to comply promptly with all legal requirements which may
be imposed on such party or the Bank and the Subsidiaries with respect to the
transactions contemplated hereby and, subject to the conditions set forth in
Article 7 hereof, to consummate such transactions. Buyer will furnish to
Parent all information concerning Buyer required for inclusion in a proxy
statement or statements to be sent to the shareholders of Parent or in any
statement or application made by Parent in connection with obtaining any
Requisite Regulatory Approvals to be obtained by it pursuant to this
Agreement.
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(b) Each party shall, upon request, furnish each other with all
information concerning themselves, their subsidiaries, directors, officers and
shareholders and such other matters as may be reasonably necessary or
advisable in connection with any statement, filing, notice or application made
by or on behalf of any party or any of their respective subsidiaries to any
Governmental Entity in connection with the transactions contemplated by this
Agreement.
(c) The parties shall use all reasonable efforts to obtain all
approvals, waivers and/or consents of third parties required to consummate the
transactions contemplated by this Agreement (it being understood that Sellers
shall be responsible for obtaining all such approvals, waivers and consents
from such parties with whom Bank or any of the Subsidiaries is in contractual
privity to the extent necessary to consummate the Acquisition). If any
required consent of or waiver by such third parties (excluding Governmental
Entities) is not obtained prior to the Closing, the parties, each without
cost, expense or liability to the other shall cooperate in good faith to
develop an alternative arrangement to achieve the economic results intended,
and the failure to obtain such consent or waiver shall not constitute a
failure to satisfy any condition to Closing set forth in Article 7 of this
Agreement, unless material to the transactions contemplated hereby.
(d) Each party represents that at the date hereof, it does not know of
any facts that would reasonably cause it to believe that all Requisite
Regulatory Approvals could not be obtained and agrees not to take any action
or enter into any agreement or arrangement that reasonably would be expected
to delay or jeopardize its ability to obtain such Requisite Regulatory
Approvals; provided, however, (i) that nothing herein shall require Buyer to
agree to any conditions to the consummation of the Acquisition imposed by any
Governmental Entity with jurisdiction over the Acquisition that are,
individually or together with any other conditions, reasonably deemed by Buyer
in good faith to be unreasonably burdensome upon Buyer or the Bank ("Buyer's
Burdensome Conditions") and (ii) that nothing herein shall require Sellers to
agree to any conditions to the consummation of the transactions contemplated
by this Agreement imposed by any Governmental Entity that are, individually or
together with any other condition, reasonably deemed by Parent in good faith
to be unreasonably burdensome upon Sellers ("Sellers' Burdensome Conditions").
6.4 Public Announcements. Parent and Buyer shall consult with each
other before issuing any press releases or otherwise making any public
statements with respect to this Agreement or the transactions contemplated
hereby, and neither of them shall issue or permit any Affiliate to issue any
such press release or make any such public statement prior to such
consultation unless reasonably satisfactory to the other parties hereto,
except as may be required by law or by the rules or regulations of any
Governmental Entity or securities exchange.
6.5 Further Assurances. Subject to the terms and conditions of this
Agreement, Sellers, Bank and Buyer shall do all things reasonably necessary or
desirable and within their control to effect the consummation of the
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transactions contemplated hereby and cause their respective Affiliates to take
such action as is contemplated hereby or required hereunder.
6.6 Notification of Certain Matters. Each party shall give prompt
notice to the other party of (a) the occurrence, or failure to occur, of any
event or existence of any condition that would be likely to cause any of its
representations or warranties contained in this Agreement to be untrue or
inaccurate in any material respect on the Closing Date, and (b) any failure on
its part to comply with or satisfy, in any material respect, any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement.
6.7 Corporate Records, Contracts and Financial Statements. From the
date hereof through the Closing Date:
(a) Bank will promptly furnish Buyer with copies of the minutes of each
meeting of the shareholder or directors (including committees) of Bank or the
Bank Subsidiaries held after the date of this Agreement and any Material
Contract entered into after the date of this Agreement.
(b) Bank will promptly provide Buyer with copies of all regularly
prepared monthly board reports substantially in the same form as prepared at
the date of this Agreement and quarterly financial statements of Bank and the
Bank Subsidiaries for each month and quarterly period ending between the date
of this Agreement and the Closing Date. Such financial statements shall be
verified by the chief financial officer of Bank and will be prepared in
accordance with GAAP or applicable regulatory accounting principles, except
for the omission of normal recurring year-end audit adjustments (if any) and
notes thereto.
6.8 Delivery of Records at Closing. At or prior to the Closing, to the
extent not otherwise located at any Branch or Operating Site, Sellers shall
deliver to Buyer all Records of the Bank and Bank Subsidiaries.
6.9 Shareholder Approval. Parent shall call a meeting of its
shareholders in conformance with California law to be held as soon as
practicable, but in any event prior to July 17, 1996, for the purpose of
voting on the approval of this Agreement and the transactions contemplated
hereby and shall direct that this Agreement and the Acquisition to be
submitted to a vote at that meeting. The board of directors of Parent shall
recommend shareholder approval of this Agreement and such transactions and use
its best efforts to solicit from Parent's shareholders proxies in favor
thereof, except to the extent, based upon the advice of counsel, the board of
directors of Parent determines in good faith that to do so would or is likely
to violate its fiduciary duties under applicable law. Neither Parent, nor any
director, officer, representative or agent thereof, will directly or
indirectly, solicit, authorize the solicitation of or, except to the extent,
based on the advice of counsel, the board of directors of Parent determines in
good faith that failure to do so would or is likely to violate its fiduciary
duties under applicable law enter into any discussions with any corporation,
partnership, person or other entity or group (other than Buyer) concerning any
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offer or possible offer (an "Acquisition Proposal") (i) to purchase any shares
of common stock, any option or warrant to purchase any shares of common stock,
any securities convertible into any shares of such common stock, or any other
equity security of Bank (ii) to purchase, lease or otherwise acquire the
assets of Bank or any Bank Subsidiary except in the ordinary course of
business, or (iii) to merge, consolidate or otherwise combine with Bank or any
Bank Subsidiary (an "Acquisition Event"). If any corporation, partnership,
person or other entity or group makes an offer or inquiry to Sellers
concerning any of the foregoing, Sellers will promptly disclose such offer or
inquiry, including the terms thereof, to Buyer.
6.10 Resignations. At the request of Buyer, Sellers shall obtain the
resignations, to be effective at the Closing, of the directors of Bank and any
Bank Subsidiary.
6.11 Divestitures. Prior to the Closing Date Sellers shall cause Bank to
(i) cause First Nevada Ltd. to transfer to Bank by way of dividend all of the
Equity Interests held by First Nevada Ltd. in BSF Trustee, Inc., and (ii)
transfer to SC by way of dividend (a) the Real Estate Subsidiaries, (b) the
Margarita Village Lien, (c) the Stead Real Property described on Schedule
6.11(a), and (d) the assets and liabilities reflected on Schedule 6.11(b),
and (iii) transfer to the Southwest Gas Corporation Foundation all of the
assets of the PriMerit Bank, Federal Savings Bank Charitable Foundation (the
"Foundation"). SC hereby agrees to assume, and upon completion of the
divestiture described herein, is deemed to assume all of the liabilities
associated with such assets, and to assume any commitments, liabilities or
obligations of Bank which were to be met or funded by the Foundation. Any
taxes resulting from the foregoing divestitures shall be paid by Sellers.
6.12 Payment by Sellers. Immediately prior to the transfers described in
Section 6.11 Sellers shall make a cash payment to Bank in an amount equal to
the amount set forth on Schedule 6.12 ("Deferred Tax Amount"). It is agreed
that for purposes of Schedule 6.12, that the contingent tax liability related
to real estate shall not exceed the total contingent tax liability recorded on
the books of Bank and the Bank Subsidiaries. Sellers will, upon filing of
their consolidated Tax Return for the year including the Closing Date,
disclose to Buyer the actual Deferred Tax Amount claimed on said return
("Claimed Amount"). If the Claimed Amount is more than 10% greater or less
than the Deferred Tax Amount shown of Schedule 6.11 then within 30 days after
filing such return (i) Sellers shall pay to Buyer such amount if greater than
the amount shown on Schedule 6.11 and (ii) Buyer shall pay to Sellers such
amount if less than the amount shown on Schedule 6.11, said payments to be in
immediately available funds.
6.13 Termination and Amendment of Certain Employee Benefit Plans. At the
request of Buyer, Sellers and the Bank shall use their reasonable efforts, at
the sole cost and expense of Bank, with respect to the following Employee
Benefit Plans, to terminate the following plans and to the extent necessary
under the terms of the Plans, obtain consent of participants in each for lump
sum distributions in connection with such termination:
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(i) The Executive Deferral Plan;
(ii) The Director Deferral Plan;
(iii) The Supplemental Executive Retirement Plan, I;
(iv) The Supplemental Executive Retirement Plan II;
(v) Long-Term Incentive Compensation Plan; and
(vi) Severance Agreement for Sherman Miller.
Notwithstanding the foregoing, it shall not be a condition of Buyer's
obligation to consummate the Acquisition that the above-referenced Employee
Benefit Plans are terminated or that the consents of participants for lump sum
distributions are obtained. Sellers shall obtain the consent of Buyer before
incurring any expense in connection with the foregoing terminations.
6.14 Amendment of Contracts. Sellers shall, and shall cause Bank to, use
their reasonable efforts to take such actions as may be necessary, at the sole
cost and expense of Bank to (i) amend the Agent Bank Agreement between Bank
and National City Bank dated January 3, 1994, as of the Closing Date, on terms
acceptable to the Buyer, to clarify that the non-competition and/or
termination provisions of such contract will not prevent any of Buyer's
Affiliates from issuing credit cards in any state, and (ii) at Buyer's request,
to terminate as of the Closing Date the contracts listed on Schedule 6.14.
Notwithstanding the foregoing, it shall not be a condition of Buyer's obligation
to consummate the Acquisition that the Agent Bank Agreement be amended or the
Contracts set forth on Schedule 6.14 be terminated as of the Closing Date.
Sellers shall obtain the consent of Buyer before incurring any expense in
connection with the foregoing terminations.
ARTICLE 7.
CONDITIONS TO CLOSING
7.1 Reciprocal Conditions. The obligations of each of the Sellers and
Buyer to effect the Closing shall be subject to the following conditions
which, to the extent permitted by Applicable Law, may be waived in writing by
such party as a condition to its own obligations:
(a) No legal administrative, arbitration, investigatory or other
proceedings by any Governmental Entity shall have been instituted and, on what
otherwise would have been the Closing Date, remain pending, to restrain or
prohibit in any material respect the transactions contemplated by this
Agreement, nor shall there be in effect on such date an injunctive order or
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decree of a court of competent jurisdiction restraining or prohibiting in any
material respect the transactions contemplated by this Agreement.
(b) All Requisite Regulatory Approvals shall have been obtained or made
and shall remain in full force and effect, and all necessary waiting periods
under Applicable Law shall have expired; except in any case for matters not
material to the transactions contemplated by this Agreement. All other
material statutory or regulatory requirements for the valid consummation of
the transactions contemplated by this Agreement shall have been satisfied,
including any filings required to be made under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the expiration of any
waiting periods thereunder or under the Bank Holding Company Act of 1956, as
amended, or the Savings and Loan Holding Company Act or otherwise.
(c) All approvals or consents of any other third party required in order
to consummate the transactions contemplated by this Agreement shall have been
obtained and remain in full force and effect, except in any case for matters
not material to the transactions contemplated by this Agreement and except to
the extent otherwise provided in Section 6.3(c).
(d) This Agreement and the transactions contemplated hereby shall have
been approved by the affirmative vote of the holders of the percentage of the
outstanding shares of Parent required for approval of this Agreement in
accordance with the provisions of Parent's Articles of Incorporation and the
California General Corporations Law.
7.2 Conditions to Buyer's Obligations. The obligations of Buyer to
effect the Closing shall be subject to the following additional conditions
which may be waived in writing by Buyer:
(a) The representations and warranties of Sellers contained in this
Agreement shall be true in all material respects as of the date of this
Agreement and on the Closing Date with the same effect as though made at such
time; Sellers shall have performed all obligations and complied in all
material respects with all covenants and conditions required by this Agreement
to be performed or complied with by them at or prior to the Closing Date; and
Sellers shall have delivered to Buyer a certificate dated the Closing Date and
signed in their respective names and on their respective behalf by their
respective chief executive officer and principal financial officer to the
foregoing effect to the best knowledge of such officers;
(b) Opinions of O'Melveny & Myers, counsel to Sellers, and of Sellers' in-
house counsel, covering the matters contemplated by Exhibit A-1 and A-2,
respectively, shall have been delivered to Buyer;
(c) During the period from the date of this Agreement to the Closing
Date, there shall not have been any material adverse change in Bank and the
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Bank Subsidiaries taken as a whole or any injunctions, orders, judgments or
decrees which are material to Bank and the Bank Subsidiaries taken as a whole
and Buyer shall have received a certificate dated the Closing Date signed by
the chief executive officer and the chief financial officer of Bank attesting
to such fact to the best knowledge of such officers;
(d) In connection with any Requisite Regulatory Approvals, no Buyer's
Burdensome Conditions shall be imposed.
7.3 Conditions to Sellers' Obligations. The obligation of Sellers to
effect the Closing shall be subject to the following additional conditions
which may be waived in writing by Sellers:
(a) The representations and warranties of Buyer contained in this
Agreement shall be true in all material respects as of the date of this
Agreement and on the Closing Date with the same effect as though made at such
time; Buyer shall have performed all obligations and complied with all
material covenants and conditions required by this Agreement to be performed
or complied with by them at or prior to the Closing Date; and Buyer shall have
delivered to Sellers a certificate, dated the Closing Date and signed in its
name and on its behalf by its chief executive and principal financial officer
to the foregoing effect to the best knowledge of such officers;
(b) Opinion of Buyer's General Counsel or Senior Counsel, covering the
matters contemplated by Exhibit B, shall have been delivered to Sellers; and
(c) In connection with any Requisite Regulatory Approvals, no Sellers'
Burdensome Conditions shall be imposed.
ARTICLE 8.
TAX MATTERS
8.1 Tax Cooperation. Buyer shall: (a) cooperate fully in preparing for
any audits of or disputes with taxing authorities regarding, any Taxes imposed
on Bank or the Bank Subsidiaries with respect to matters arising prior to the
Closing Date or Taxes imposed on Sellers as a result of the consummation of
the transactions contemplated hereby; (b) make available to the other and to
any taxing authority, as reasonably requested by Sellers, all information,
records and documents relating to Taxes imposed on Bank or the Bank
Subsidiaries with respect to matters arising prior to the Closing Date or
Taxes imposed on Sellers as a result of the consummation of the transactions
contemplated hereby; and (c) provide timely notice to Parent in writing of any
pending or threatened audits or assessments relating to Taxes imposed on the
Bank or the Bank Subsidiaries with respect to matters arising prior to the
Closing Date. Sellers and Buyer shall each (y) cooperate in the preparation
of any Tax Returns which the other is responsible for preparing and filing;
and (z) furnish the other with copies of all correspondence received from any
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taxing authority in connection with any audit or information request with
respect to Taxes imposed on the Bank, the Bank Subsidiaries or Sellers with
respect to matters prior to the Closing Date.
8.2 Carrybacks. Sellers shall pay to Buyer the amount of any tax
benefit (including interest thereon, if any) realized by Sellers as a result
of a Carryback (as defined below) within ten Business Days after such benefit
is received by Sellers as a refund or otherwise, provided that Buyer shall
return to Sellers within ten Business Days of its payment the amount, if any,
by which such benefit is thereafter reduced by further adjustments (including
interest thereon, if any). "Carryback" shall mean any tax loss, deduction,
credit or attribute of Bank or the Bank Subsidiaries for any tax period
beginning after the Closing Date that is available as a carryback to a tax
period ending on or before the Closing Date, but only to the extent such
Carryback does not exceed the benefit that could have been obtained by the
Bank for a Carryback computed as if the Bank's tax return for the year to
which the Carryback is claimed (or would have been claimed had the Bank filed
on a stand-alone basis) was filed on a stand-alone basis. Sellers will
cooperate with Buyer and Bank and the Bank Subsidiaries in obtaining such
refunds (or reduction in tax liability), including through the filing of
amended tax returns or refund claims. Buyer shall permit Sellers to review
such work papers or other documentation as the Sellers reasonably deem
necessary to be provided by Buyer or Bank to support the accuracy of the
Carryback calculation. In addition, any refund remitted to Buyer shall be
reduced by the Sellers' reasonable out of pocket costs incurred in processing
the Carryback, including but not limited to fees paid to Sellers' outside
accountants to review the Carryback claim. Any accounting or legal fees
incurred by Sellers to support the Carryback during an audit or review by the
IRS or other applicable taxing authority shall be borne solely by Buyer or
Bank.
8.3 Liability for Taxes.
(a) Liability of Sellers. To the extent provided in this Section 8.3,
SC and, to the extent permitted by Applicable Law Parent shall be liable for
and indemnify Buyer against all Taxes imposed on Sellers, Bank, and the
Subsidiaries or Buyer (either directly or by virtue of joint and several
liabilities) (i) for any taxable year or period that ends on or before the
Closing Date or (ii) with respect to any taxable year or period beginning
before and ending after the Closing Date, the portion of such taxable year or
period ending on and including the Closing Date, except for Taxes accrued on
the balance sheet of the Bank and the Bank Subsidiaries contained in the
Financial Statements as of October 31, 1995, adjusted to reflect (1) payments
or refunds made or received by the Bank or the Bank Subsidiaries after October
31, 1995 and prior to the Closing Date, (2) payments under Section 6.12, (3)
previous payments or refunds under this Article 8, and (4) accruals for Taxes
related to operations subsequent to October 31, 1995 and prior to the Closing
Date.
(b) Liability of Buyer. To the extent provided in this Section 8.3,
Buyer shall be liable for and indemnify the Sellers against all Taxes imposed
on Bank or any Bank Subsidiary for (i) any taxable year or period that begins
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after the Closing Date and (ii) with respect to any taxable year or period
beginning before and ending after the Closing Date, the portion of such
taxable year beginning on the day after the Closing Date.
(c) Tax Liabilities and Benefits. Except as otherwise provided in this
Section 8.3, Tax liabilities and Tax benefits of Bank and the Bank
Subsidiaries with respect to tax periods or portions thereof ending on or
before the Closing Date shall be for the account of Sellers and Tax
liabilities and Tax benefits of Bank and the Bank Subsidiaries with respect to
tax periods or portions thereof beginning after the Closing Date shall be for
the account of Buyer. For this purpose, Tax liabilities and Tax benefits with
respect to a period which begins on or before and ends after the Closing Date
shall be apportioned between the portion of such period ending on the Closing
Date and the portion of such period beginning on the day after the Closing
Date (x) in the case of real and personal property Taxes, on a per diem basis,
(y) in the case of all Taxes based on income, on the basis of the taxable
income or losses of Bank and the Bank Subsidiaries for such portions of such
period as determined from Bank and the Bank Subsidiaries' books and records
and (z) in the case of all other Taxes, on the basis of activities of Bank and
the Bank Subsidiaries for such portions of such period as determined from Bank
and the Bank Subsidiaries' books and records.
(d) Refunds. Except for Tax receivables accrued on the balance sheet of
the Bank and the Bank Subsidiaries contained in the Financial Statements as of
October 31, 1995, adjusted to reflect (1) refunds received by Bank or the Bank
Subsidiaries after October 31, 1995 and prior to the Closing Date, (2)
payments under Section 6.12, and (3) previous payments or refunds under this
Article 8, (A) any refund of Taxes relating to Bank or the Bank Subsidiaries
received (or the tax benefit of which is otherwise realized) by Buyer after
the Closing Date with respect to any tax period beginning on or before the
Closing Date shall be paid by Buyer to Sellers to the extent provided in
Section 8.3(c) within ten Business Days after such refund is received (or such
benefit is otherwise realized) by Buyer, and (B) any refund of Taxes relating
to Bank or the Bank Subsidiaries received (or the Tax benefit of which is
otherwise realized) by Sellers after the Closing Date with respect to any tax
period ending after the Closing Date shall be paid by Sellers to Buyer to the
extent provided in Section 8.3(c) within ten Business Days after such refund
is received (or such benefit is otherwise realized) by Sellers.
(e) Payments. Except for Taxes accrued on the balance sheet of the Bank
and the Bank Subsidiaries contained in the Financial Statements as of October
31, 1995, adjusted to reflect (1) payments made by the Bank or Bank
Subsidiaries after October 31, 1995 and prior to the Closing Date, (2)
payments under Section 6.12, (3) previous payments or refunds under this
Article 8, and (4) accruals for Taxes related to operations subsequent to
October 31, 1995 and prior to the Closing Date (A) any payment of Taxes
relating to Bank or the Bank Subsidiaries made (or the Tax liability of which
is otherwise realized) by Bank or the Bank Subsidiaries or Buyer after the
Closing Date with respect to any tax period beginning on or before the Closing
Date shall be reimbursed by Sellers to Buyer to the extent provided in
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Section 8.3(c) within ten Business Days after receiving a written notice from
Bank or the Bank Subsidiaries or Buyer, and (B) any payment of Taxes relating
to Bank or the Bank Subsidiaries made (or the Tax liability of which is
otherwise realized) by Sellers after the Closing Date with respect to any tax
period ending after the Closing Date shall be reimbursed by Buyer to Sellers to
the extent provided in paragraph 8.3(c) within ten Business Days after receiving
written notice from Sellers.
(f) Tax Returns.
(i) Sellers shall, to the extent permitted by law and consistent
with prior year practice, include Bank and the Subsidiaries in the
consolidated federal income Tax Returns and in any combined, consolidated
or unitary state or local income Tax Returns filed by Sellers for all tax
periods or portions thereof ending on or prior to the Closing Date. To
the extent such tax returns relate to Bank and the Subsidiaries, Sellers
shall submit copies of such Tax Returns to Buyer (at least 30 days prior
to the extended due date) for its review. Sellers shall prepare and file
such Tax Returns to the extent that they relate to Bank and the
Subsidiaries on a basis consistent with the returns filed by or on behalf
of Sellers for the preceding tax period.
(ii) Sellers shall prepare, submit copies to Buyer (at least 30
days prior to the extended due date) for its review, and thereafter file
all state, county, local and foreign Tax Returns (other than those
referred to in Section 8.3(f)(i) required to be filed by Bank and the
Subsidiaries after the Closing Date for all tax periods ending on or
before the Closing Date. All such returns shall be prepared on a basis
consistent with the returns filed by or on behalf of Sellers for the
preceding tax period.
(iii) Buyer shall, or shall cause Bank and the Bank Subsidiaries,
to prepare and file all state, county, local and foreign Tax Returns
required to be filed by Bank and the Bank Subsidiaries after the Closing
Date for all tax periods ending after the Closing Date. To the extent
that Sellers are responsible for any Taxes in such Tax Returns as set
forth in this Section 8.3, Buyer shall furnish copies of such returns to
Sellers for its review at least 30 days prior to the extended due date.
(iv) Sellers shall pay (or reimburse Bank or the Bank Subsidiaries
for paying) and Buyer shall pay (or reimburse Seller for paying) the
Taxes reportable on the Tax Returns referred to in Sections 8.3(f)(i),
(ii) and (iii) to the extent provided in Section 8.3.
8.4 Termination of Tax Sharing Agreement. Any tax sharing agreement
between Bank and the Subsidiaries and Sellers or any of its other Affiliates
will be terminated as of the Closing Date and will have no further effect for
any taxable year (whether the current year, a future year, or a past year),
except for a final payment thereunder for income Taxes accrued for on the
financial statements of Bank and its Subsidiaries at the Closing Date.
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8.5 Survival. The obligations of the parties under this Article 8 shall
survive until expiration of the applicable statute of limitations (or any
extension).
ARTICLE 9.
TERMINATION/SURVIVAL/INDEMNIFICATION/TERMINATION FEE
9.1 Termination. This Agreement may be terminated by either of the
parties, if the Closing has not yet occurred, on the Final Termination Date
(unless the failure of such occurrence shall be due to the failure of the
party seeking to terminate this Agreement to perform or observe all of the
agreements contained herein required to be performed or observed prior to the
Closing), unless extended by the written consent of Sellers and Buyer, and
this Agreement may be terminated at any other time prior to the Closing Date
as follows and pursuant to Section 9.7 and in no other manner:
(a) by consent of the parties evidenced by their written agreement;
(b) by Sellers or by Buyer, as the case may be, upon written notice to
the other, if the Bank Regulators, or any other Governmental Entity having
jurisdiction over the transactions contemplated by this Agreement, shall
notify Buyer or Sellers in writing that by its final determination it will
refuse to grant an approval or consent to any material aspect of the
transactions necessary to the consummation thereof, unless within 30 days
after receipt of notice of such action, the party against whom the action was
taken shall agree to submit or resubmit an application to, or appeal the
decision of the Bank Regulator or Governmental Entity which denied or refused
to grant approval thereof;
(c) by Sellers and Bank upon written notice of termination to Buyer if
Buyer shall not have filed applications with the Bank Regulators for approval
of the Acquisition of the Stock by 75 days after the date hereof, unless
Buyer's failure to file such applications shall be primarily the result of a
breach of Sellers' covenants under Section 6.3 hereof;
(d) by Sellers and Bank upon written notice of termination to Buyer if
any event occurs which makes it impossible to satisfy, by the Final
Termination Date, one or more of the conditions to the obligations of Sellers
set forth in Section 7.1 or 7.3, and such failure is not waived by Sellers;
(e) by Buyer upon written notice of termination to Sellers and Bank if
any event occurs which makes it impossible to satisfy, by the Final
Termination Date, one or more of the conditions to the obligations of Buyer
set forth in Section 7.1 or 7.2, and such failure is not waived by Buyer;
(f) upon the Election referred to in Article 11 hereof;
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(g) by Buyer pursuant to Section 9.7; and
(h) by Buyer upon written notice of termination to Sellers if Bank shall
not have filed or have attempted in good faith to file applications with the
Bank Regulators set forth on Schedule 9.1(h) by 75 days after the date hereof.
Any such termination shall be without liability to either party, provided
that no such termination shall relieve a party of liability for default in the
performance of any of its obligations or breach of any of its representations
and warranties. Notwithstanding the foregoing, if this Agreement is
terminated for any reason other than as set forth in clause (e) above or
Section 9.7, Buyer shall reimburse Bank for all expenses incurred by Bank
pursuant to Sections 6.13 and 6.14.
9.2 Survival of Representations and Warranties. Except for covenants
with respect to obligations to be performed post-Closing, the respective
representations and warranties and covenants of Sellers and Buyer contained
herein shall survive for a period of one year after the Closing Date;
provided, however, that any representations and warranties contained in
Section 4.11 and the covenants set forth in Section 9.3(c), Section 9.5 and
Section 9.6, and the covenants of the parties set forth in Article 8 shall
survive the Closing until the expiration of any applicable statutes of
limitation (as extended). Following such termination of such representations
and warranties and covenants, no party shall have any liability whatsoever
with respect thereto.
9.3 Indemnification.
(a) From and after the Closing Date, each Seller shall indemnify Buyer
and hold Buyer harmless from and against any and all Loss that Buyer may
suffer, incur or sustain to the extent arising out of (i) any breach of any
representation or warranty made by such Seller pursuant to Article 4 of this
Agreement, and (ii) any breach of any agreement to be performed by it pursuant
to this Agreement.
(b) From and after the Closing Date, Buyer shall indemnify Sellers and
hold them harmless from and against any and all Loss that either Seller may
suffer, incur or sustain to the extent arising out of (i) any representation
or warranty made by Buyer pursuant to Article 5 of this Agreement and (ii) any
breach of any agreement to be performed by Buyer pursuant to this Agreement.
(c) From and after the Closing Date, SC shall indemnify Bank and Buyer
and hold them harmless against any and all Losses relating to or arising out
of (i) the Real Estate Liabilities that the Bank or Buyer or any successor or
assignee of Bank or Buyer may suffer, incur or sustain in excess of $200,000.
In no event shall SC's obligations hereunder exceed the Purchase Price.
(d) To exercise its indemnification rights under Section 9.3 as the
result of the assertion against it of any claim or potential liability for
which indemnification is provided, the indemnified party shall promptly notify
the indemnifying party of the assertion of such claim, discovery of any such
40<PAGE>
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potential liability or the commencement of any action or proceeding in respect
of which indemnity may be sought hereunder. The indemnified party shall
afford the indemnifying party the opportunity, at the indemnifying party's
sole cost and expense, to defend against such claims for liability. In any
such action or proceeding, the indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
its own expense unless (i) the indemnifying party and the indemnified party
mutually agree to the retention of such counsel or (ii) the named parties to
any such suit, action, or proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party, and in the reasonable
judgment of the indemnified party, based upon a written opinion of counsel,
representation of the indemnifying party and the indemnified party by the same
counsel would be inadvisable due to conflicts of interests between them.
(e) The indemnified party shall have the right to settle or compromise
any claim or liability subject to indemnification under Section 9.3, and to be
indemnified from and against all Loss resulting therefrom, unless the
indemnifying party, within 30 calendar days after receiving written notice of
the claim or liability in accordance with Section 9.3(e) above, notifies the
indemnified party that it intends to defend against such claim or liability
and undertakes such defense, or, if required in a shorter time than
30 calendar days, the indemnifying party makes the requisite response to such
claim or liability asserted. Notwithstanding the foregoing, neither Buyer nor
Bank shall be entitled to settle or compromise any claim or liability arising
out of the Real Estate Liabilities without the written consent of SC, which
shall not be unreasonably withheld or delayed.
(f) The indemnified party shall at all times use its reasonable efforts
(at the indemnifying party's expense) to mitigate the Loss for which the
indemnifying party may be liable pursuant to this Agreement. With respect to
any matter for which the indemnifying party may be liable pursuant to the
provisions of this Agreement, the indemnified party shall (at the indemnifying
party's expense) diligently pursue (including, without limitation, the
commencement and pursuit of litigation) any and all rights and remedies under
agreements and contracts, including, without limitation, insurance policies,
with third parties pursuant to which the indemnified party has rights of
recourse or is indemnified or the beneficiary of a guaranty.
(g) Sellers shall not be required to indemnify Buyer under Section
9.3(a) unless the aggregate of all amounts for which indemnity would otherwise
be payable thereunder by Sellers exceed $1,000,000 and in such event Sellers
shall be responsible only for the amount in excess of such $1,000,000. In no
event shall Sellers' obligations under Section 9.3(a) exceed $5,000,000.
(h) Buyer shall not be required to indemnify Sellers or Bank under
Section 9.3(b) unless the aggregate of all amounts for which indemnity would
otherwise be payable thereunder by Buyer exceed $1,000,000 and in such event
Buyer shall be responsible only for the amount in excess of such $1,000,000.
In no event shall Buyer's obligations under Section 9.3(b) exceed $5,000,000.
41<PAGE>
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(i) Any amounts payable by an indemnifying party hereunder shall be net
of the dollar amount of any insurance proceeds recovered by the indemnified
party with respect to such Loss.
(j) The remedies provided in Article 8 and in this Article 9 shall
constitute the sole and exclusive remedy with respect to the matters set forth
in Section 9.3.
9.4 Confidentiality Agreement. The Confidentiality Agreement shall
terminate on the Closing Date, other than with respect to any Evaluation
Material (as defined in the Confidentiality Agreement) concerning Parent, SC
or the Real Estate Subsidiaries.
9.5 Limitations on Dividends from SC, Etc. SC shall not, and Parent
shall not permit SC (i) to pay a dividend to Parent or loan the proceeds of
this transaction in any manner that would cause SC to be unable to satisfy its
obligations under Sections 8.3(a) or 9.3(c), (ii) sell SC or otherwise
transfer, merge, consolidate or dissolve SC or (iii) sell or subject to
Encumbrance or otherwise dispose of any of SC's assets unless the proceeds of
such sale, Encumbrance or disposition are retained by SC or used by SC to
satisfy its obligations under Sections 8.3(a) and 9.3(c). In the event that,
notwithstanding the foregoing, SC is unable to satisfy its obligations under
Sections 8.3(a) or 9.3(c) as a result of the payment of a dividend or loan to
Parent or the actions taken in subclauses (ii) or (iii), Parent shall promptly
repay to SC the amount which SC is unable to pay as a result of the payment of
such dividends or loan or the actions taken in subsection (ii) or (iii).
9.6 Insurance Claims.
(a) Buyer shall cause Bank to make all claims for Losses which Bank may
suffer, incur or sustain with respect to matters covered by insurance policies
for which Bank is the insured and which are disclosed on Schedule 4.13 or of
which Bank is aware and in effect on or prior to the Closing Date and shall do
all such things as may be reasonably requested in connection with the
prosecution of such claims. Buyer shall promptly notify Parent and SC of any
such claims which have been filed and of all material events which occur in
connection with the prosecution of such claims.
(b) To the extent that (i) any insurance policies controlled by Parent
and SC ("Sellers' Insurance Policies"), cover any loss, liability, claim,
damage or expense relating to Bank or the Bank Subsidiaries or their
respective businesses, assets or current or former employees and relating to
or arising out of occurrences prior to the Closing Date and (ii) such Sellers'
Insurance Policies continue to permit claims to be made thereunder after the
Closing Date with respect to Bank and the Bank Subsidiaries' liabilities
relating to or arising out of occurrences prior to the Closing Date ("Subject
Company Claims"), Parent and SC shall cooperate with Buyer in submitting
Subject Company Claims (or pursuing Subject Company Claims previously made) on
behalf of Buyer and/or Bank under Seller's Insurance Policies.
(c) At the request of Buyer, to the extent that any of Sellers' Excess
Liabilities Umbrella Insurance Policies provide for coverage only on a "claims
42<PAGE>
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made" basis, Parent and SC shall use their reasonable efforts to amend such
policies prior to the Closing Date to provide coverage on an "occurrence"
basis or to provide for an extended discovery period thereunder (in either
case for a period not less than seven years following the Closing Date) for
Bank and Bank Subsidiary liabilities that are based on acts or omissions
occurring on or prior to the Closing Date, the cost of which shall be the
responsibility of Buyer. In addition, Sellers shall provide to Buyer a
certified copy of each such policy. Sellers shall advise Buyer before
incurring any out of pocket expense related to any such amendment.
(d) To the extent that, after the Closing Date, Buyer or Sellers require
any information regarding claim data, payroll or other information in order to
satisfy inquiries from insurance carriers, or self-insurance regulators, or
other third parties to whom either party is reasonably required to provide
such information, Sellers shall promptly supply such information to Buyer and
Buyer shall promptly supply such information to Sellers.
9.7 Termination Fee. If (a) an Acquisition Proposal is made, (b) the
board of directors of the Parent fails to recommend shareholder approval of
this Agreement or withdraws or modifies such recommendation in a manner
adverse to Buyer, and (c) either (i) this Agreement is not approved by the
affirmative vote of the holders of the percentage of the outstanding shares of
Parent required for approval of this Agreement in accordance with the
provisions of Parent's Articles of Incorporation and the California General
Corporations Law, or (ii) the meeting of shareholders of the Parent at which
approval of this Agreement and the transactions contemplated hereby is sought
does not occur on or before August 16, 1996, or (d) an Acquisition Event
occurs prior to termination of this Agreement, then Buyer may terminate this
Agreement by written notice of termination to Sellers and Bank, whereupon no
party shall have any liability to any other party except that Sellers shall
pay to Buyer, within ten Business Days after receipt by Sellers of Buyer's
written notice of termination or the occurrence of an Acquisition Event, the
amount of $5,250,000, plus documented expenses incurred by Buyer in connection
with this Agreement and the transactions contemplated herein, including
reasonable accounting and legal fees (for a total of all expenses not to
exceed $1,250,000), such payments to be in immediately available funds to an
account or accounts specified in writing by Buyer to Sellers;
ARTICLE 10
EMPLOYEE BENEFIT PLANS
Each person who is an employee of Bank as of the Closing Date ("Bank
Employees") shall be eligible for participation in the employee welfare and
retirement plans of Buyer, as in effect from time to time, as follows:
(a) Employee Welfare Benefit Plans. Each Bank Employee shall be
eligible for participation in the employee welfare benefit plans of Buyer
listed below subject to any eligibility requirements applicable to such plans
(but not subject to any pre-existing conditions or exclusions except for the
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Norwest Long Term Care Plan) and shall enter each plan not later than the first
day of the calendar quarter which begins at least 32 days after the Closing
Date, provided, however, that until the effective date of coverage for Bank
Employees under the Buyers' employee welfare benefit plans listed below, the
employee welfare benefit plans of Bank, as in effect prior to the Closing Date,
shall be maintained for the benefit of Bank Employees on the terms and
conditions previously in effect, including with respect to employer
contributions, to ensure that no gap in coverage occurs:
Medical Plan
Dental Plan
Vision Plan
Short Term Disability Plan
Long Term Disability Plan
Long Term Care Plan
Flexible Benefits Plan
Basic Group Life Insurance Plan
Group Universal Life Insurance Plan
Dependent Group Life Insurance Plan
Business Travel Accident Insurance Plan
Accidental Death and Dismemberment Plan
Severance Pay Plan
Vacation Program
For the purpose of determining each Bank Employee's benefits for the year in
which the Closing occurs under Buyer's vacation program, vacation taken by a
Bank Employee in the year in which the Acquisition occurs will be deducted
from the total Buyer's benefit. After the Closing Date, Bank Employees will
be subject to Buyer's Vacation Program in accordance with the terms of that
Program, with full credit for years of past service to Bank and the Bank's
Subsidiaries . For purposes of the Short Term Disability Plan and Severance
Policy, Bank Employees will receive full credit for years of past service with
Bank and the Bank Subsidiaries. Each Bank Employee whose employment is
terminated on or after the Closing Date shall be eligible to receive benefits
under Buyer's Severance Pay Plan on the terms and conditions stated therein
with full credit for years of past service with Bank and the Bank
Subsidiaries.
Bank Employees shall not be entitled to past service credit with regard
to retiree medical benefits.
(b) Employee Retirement Benefit Plans.
Each Bank Employee shall be eligible for participation in the Norwest
Savings Investment Plan (the "SIP"), subject to any eligibility requirements
applicable to the SIP (with full credit for years of past service to Bank to
the extent such service was credited in the Bank 401(k) for the purpose of
satisfying any eligibility and vesting periods applicable to SIP), and shall
44<PAGE>
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enter the SIP not later than the first day of the calendar quarter which
begins at least 32 days after the Closing Date.
Each Bank Employee shall be eligible for participation in the Norwest
Pension Plan under the terms thereof with full credit for years of past
service to Bank and the Bank Subsidiaries to the extent such service was
credited in the Bank Pension Plan for the purpose of satisfying any
eligibility and vesting periods applicable to the Norwest Pension Plan (but
not for benefit purposes).
ARTICLE 11.
PURCHASE AND ASSUMPTION OPTION
Buyer, in its sole discretion and option, may at any time after the date
hereof until May 15, 1996 (the "Option Termination Date"), elect ("Election"),
by written notice delivered to Sellers, to consummate the transaction pursuant
to the Purchase and Assumption Agreement attached as Appendix A attached
hereto ("Purchase and Assumption Agreement") and the terms and conditions set
forth therein, in which event parties' obligations to consummate the
transaction pursuant to the Acquisition shall terminate and be of no further
force and effect. Such Election, when given, shall be irrevocable. In the
event such Election is not made on or prior to the Option Termination Date,
Buyer's right to make such Election shall terminate and be of no further force
and effect. By entering into this Agreement, the parties hereto shall be
deemed to have entered into the Purchase and Assumption Agreement without any
further action, in the event Buyer makes the Election.
ARTICLE 12.
MISCELLANEOUS
12.1 Expenses; Attorneys' Fees. Except as otherwise expressly provided
herein, each party shall bear its own expenses and all fees and out-of-pocket
expenses of outside counsel, independent public accountants, investment
bankers, brokers, finders and other consultants shall be paid or provided for
by the party employing such person; provided that Buyer shall be responsible
for any additional costs incurred in connection with any transaction
contemplated by Buyer after the Acquisition and Sellers shall be responsible
for the out-of-pocket expenses of outside counsel, independent public
accountants, investment bankers, brokers, finders and other consultants
incurred prior to the Closing Date by Bank in connection with this Agreement,
except as otherwise provided in this Agreement. Buyer shall reimburse Sellers
for any and all documented out-of-pocket expenses incurred by Sellers,
including reasonable legal and accounting fees and expenses, in connection
with Sellers' or Bank's efforts to obtain the regulatory approvals set forth
in Schedule 9.1(h).
12.2 Amendments. The provisions of this Agreement and any Exhibit or
Schedule attached hereto (or agreement entered into concurrently herewith) may
45<PAGE>
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be amended or waived only in writing by agreement of the parties hereto except
as otherwise provided by law.
12.3 Schedules; Exhibits. Each Schedule and Exhibit delivered in
connection with or pursuant to this Agreement shall be in writing and shall
constitute a part of this Agreement, although such Schedule or Exhibit need
not be attached to each copy of this Agreement. Disclosure of any fact or
item in any Schedule referenced by a particular section of this Agreement
shall be deemed to have been disclosed for any and all purposes under this
Agreement. The specification of any dollar amount in the representations and
warranties contained in this Agreement or the inclusion of any specific items
in any Schedules hereto is not intended to imply that such amounts, or higher
or lower amounts, or the items so included or other items, are or are not
material, and neither party shall use the fact of the setting of such amounts
or the inclusion of any such item in any dispute or controversy between the
parties as to whether any obligation, item or matter not described herein or
included in a Schedule, or otherwise, is or is not material for purposes of
this Agreement. Unless otherwise specified, definitions given to terms in
this Agreement or the Exhibits and Schedules shall apply to all parts of this
Agreement including the Exhibits and Schedules.
12.4 Integration. Except to the extent otherwise provided in Section
9.4, this Agreement supersedes any and all prior agreements or understandings
of the parties in connection herewith or with respect to the subject matter
hereof.
12.5 Governing Law. This Agreement, the legal relations between the
parties and the adjudication and the enforcement thereof shall be governed by
and interpreted and construed in accordance with the substantive laws of the
State of California, and, to the extent applicable, federal law.
12.6 Notices. All notices hereunder shall be in writing, and shall be
deemed given when (a) delivered in person, (b) transmitted by telecopy,
provided that any notice so given is also mailed as provided in clause (c), or
(c) mailed by certified or registered mail, postage prepaid, return receipt
requested, addressed as follows:
If to Buyer:
Norwest Corporation
Norwest Center
Sixth and Marquette
Minneapolis, MN 55479-1026
Attention: Secretary
If to Sellers:
Southwest Gas Corporation
5241 Spring Mountain Road
Las Vegas, Nevada 89102
Attention: Chief Financial Officer
46<PAGE>
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With a copy to:
O'Melveny & Myers
400 South Hope Street
Los Angeles, California 90071-2899
Telecopy: (213) 669-6407
Attention: Frances E. Lossing, Esq.
12.7 No Assignment. Neither this Agreement nor any rights hereunder may
be assigned by any party without the written consent of the other parties
hereto; provided, however, that all rights of the Bank hereunder may be
assigned to any successor of the Bank without the prior consent of any other
party; provided however, that the Buyer may assign its rights and obligations
(other than Buyer's obligation to pay or cause to be paid the Purchase Price)
hereunder to any of the Buyer's direct or indirect subsidiaries; provided,
however, that Buyer shall guarantee, in a form reasonably satisfactory to
Sellers, the performance of the obligations of any of its assignees under this
Agreement.
12.8 Headings. The descriptive headings of the sections of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
12.9 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original but all of which taken together shall
constitute one and the same agreement.
12.10 Severability. If any provision of this Agreement is determined
to be invalid, illegal or unenforceable by any Governmental Entity, the
remaining provisions of this Agreement shall remain in full force and effect,
provided that the essential terms and conditions of this Agreement for both
parties remain valid, binding and enforceable.
12.11 Alternative Dispute Resolution. If a dispute arises between
the parties relating to this Agreement, the following procedure shall be
implemented before either party pursues other available remedies, except that
either party may seek injunctive relief from a court, where appropriate, in
order to maintain the status quo while this procedure is being followed:
(a) The parties shall meet within ten days after either party notifies
the other party in writing of the existence of a dispute to attempt in good
faith to negotiate a resolution of the dispute. The meeting shall be attended
by persons with authority to settle the dispute; PROVIDED, HOWEVER, that no
such meeting shall be deemed to vitiate or reduce the obligations and
liabilities of the parties or be deemed a waiver by either party of any
remedies to which such party otherwise would be entitled.
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(b) If within 15 days after such meeting, the parties have not succeeded
in negotiating a resolution of the dispute, the dispute shall be determined by
arbitration. The arbitration shall be conducted in accordance with the United
States Arbitration Act (Title 9, U.S. Code) and under the Commercial Rules of
the American Arbitration Association; provided, however, that with respect to
Section 30, failure of any party to appear or respond in the arbitration
proceeding shall result in a default award against such party. The
arbitrator(s) shall give effect to statutes of limitation in determining any
claim. Any controversy concerning whether an issue is arbitrable shall be
determined by the arbitrator(s). The award rendered by the arbitrator(s)
shall set forth findings of the facts and conclusions of law and shall be
final, and the judgment may be entered in any court having jurisdiction
thereof. A failure by the arbitrator(s) to make findings of fact and
conclusions of law shall be grounds for overturning the award.
(c) In any arbitration proceeding, the arbitrator(s) is (are) authorized
to apportion costs and expenses, including investigation, legal and other
expense, which will include, if applicable, a reasonable estimate of allocated
costs and expense or in-house legal counsel and legal staff. Such costs and
expenses are to be awarded only after the conclusion of the arbitration and
will not be advanced during the course of such arbitration.
(d) Any arbitration hereunder shall take place in the City of Las Vegas,
Nevada, unless otherwise agreed by the parties.
12.12 Further Cooperation. Sellers acknowledge that Buyer may merge
or consolidate Bank with a banking or thrift Affiliate of Buyer on or after
the Closing Date and contingent on the Closing. Subject to the terms and
conditions herein provided, Sellers agree to, and agree to cause Bank to,
cooperate with Buyer in the preparing, filing, submitting of such notices and
applications and related filings for the obtaining of such consents or
approvals of a Governmental Entity, including any notices or applications
thereto for an internal reorganization of Bank with a bank or thrift affiliate
of Buyer as may be necessary to effect such internal reorganization; provided
that Buyer shall reimburse Sellers for all costs and expenses incurred by
Sellers in connection with any such preparations, filings and submittals; and
provided further that it shall not be a condition of Buyer's obligation to
consummate the Acquisition that any such approvals or consents be obtained.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
SOUTHWEST GAS CORPORATION:
/s/ MICHAEL O. MAFFIE
------------------------------------
Name: MICHAEL O. MAFFIE
Title: PRESIDENT AND CEO
/s/ FAYE J. RINGLER
------------------------------------
Name: FAYE J. RINGLER
Title: ASSISTANT CORPORATE SECRETARY
THE SOUTHWEST COMPANIES:
/s/ MICHAEL O. MAFFIE
------------------------------------
Name: MICHAEL O. MAFFIE
Title: PRESIDENT AND CEO
FAYE J. RINGLER
------------------------------------
Name: FAYE J. RINGLER
Title: ASSISTANT CORPORATE SECRETARY
NORWEST CORPORATION:
/s/ LES BILLER
------------------------------------
Name: LES BILLER
Title: EVP
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The following is executing this Agreement for the purpose only of
entering into the Purchase and Assumption Agreement only. By affixing its
signature, PriMerit Bank is entering into the Purchase and Assumption
Agreement only and to the extent Buyer makes the Election set forth in Article
11 in accordance with the terms thereof.
PRIMERIT BANK, FEDERAL SAVINGS BANK:
/s/ DAN J. CHEEVER
------------------------------------
Name: DAN J. CHEEVER
Title: PRESIDENT AND CEO
/s/ HARRY E. HINDERLITER III
------------------------------------
Name: HARRY E. HINDERLITER III
Title: CHIEF ADMINISTRATIVE OFFICER
AND GENERAL COUNSEL
50
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APPENDIX A<PAGE>
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APPENDIX A
TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Construction and Interpretation . . . . . . . . . . . . . . . . . .11
ARTICLE 2. PURCHASE AND ASSUMPTION . . . . . . . . . . . . . . . . . . . . . .11
2.1 Assets to Be Sold . . . . . . . . . . . . . . . . . . . . . . . . .11
2.2 Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . .12
2.3 Purchase and Assumption Price . . . . . . . . . . . . . . . . . . .12
ARTICLE 3. THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
3.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
3.2 Delivery by Sellers and Bank. . . . . . . . . . . . . . . . . . . .13
3.3 Deliveries by Buyer and Purchaser . . . . . . . . . . . . . . . . .14
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . . . . . . . . . .14
4.1 Organization and Related Matters. . . . . . . . . . . . . . . . . .14
4.2 Authority; No Violation . . . . . . . . . . . . . . . . . . . . . .15
4.3 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . . .16
4.4 Title to Property . . . . . . . . . . . . . . . . . . . . . . . . .16
4.5 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . .17
4.6 Material Contracts. . . . . . . . . . . . . . . . . . . . . . . . .18
4.7 Legal or Other Proceedings. . . . . . . . . . . . . . . . . . . . .18
4.8 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . .18
i<PAGE>
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4.9 Reports and Filings . . . . . . . . . . . . . . . . . . . . . . . .18
4.10 Absence of Certain Changes or Events. . . . . . . . . . . . . . . .19
4.11 Taxes and Tax Returns . . . . . . . . . . . . . . . . . . . . . . .20
4.12 Compliance with Applicable Law. . . . . . . . . . . . . . . . . . .20
4.13 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
4.14 Agreements with Regulatory Agencies . . . . . . . . . . . . . . . .20
4.15 Affiliate Transactions. . . . . . . . . . . . . . . . . . . . . . .20
4.16 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . .21
4.17 Loan Portfolio. . . . . . . . . . . . . . . . . . . . . . . . . . .21
4.18 Mortgage Banking Licenses and Qualifications. . . . . . . . . . . .22
4.19 Payment of Taxes, Insurance Premiums, etc.. . . . . . . . . . . . .22
4.20 Minute Books. . . . . . . . . . . . . . . . . . . . . . . . . . . .22
4.21 Employee Benefit Plans and Employment and Labor Contracts . . . . .22
4.22 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
4.23 Broker's or Finder's Fees . . . . . . . . . . . . . . . . . . . . .24
4.24 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . .24
4.25 Deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . .25
5.1 Organization and Related Matters. . . . . . . . . . . . . . . . . .25
5.2 Authority; No Violation . . . . . . . . . . . . . . . . . . . . . .25
5.3 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . . .26
5.4 Financing; Capital. . . . . . . . . . . . . . . . . . . . . . . . .26
ii<PAGE>
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5.5 Broker's or Finder's Fees . . . . . . . . . . . . . . . . . . . . .26
5.6 Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . .26
ARTICLE 6. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
6.1 Access. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
6.2 Conduct of Business of Bank . . . . . . . . . . . . . . . . . . . .27
6.3 Regulatory Approvals: Consents of Third Parties . . . . . . . . . .30
6.4 Public Announcements. . . . . . . . . . . . . . . . . . . . . . . .32
6.5 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . .32
6.6 Notification of Certain Matters . . . . . . . . . . . . . . . . . .32
6.7 Corporate Records, Contracts and Financial Statements . . . . . . .33
6.8 Delivery of Records at Closing. . . . . . . . . . . . . . . . . . .33
6.9 Shareholder Approval. . . . . . . . . . . . . . . . . . . . . . . .33
6.10 Resignations. . . . . . . . . . . . . . . . . . . . . . . . . . . .34
6.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
6.12 Termination and Amendment of Certain Employee Benefit Plans . . . .34
6.13 Amendment of Contracts. . . . . . . . . . . . . . . . . . . . . . .34
6.14 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
ARTICLE 7. CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . .35
7.1 Reciprocal Conditions . . . . . . . . . . . . . . . . . . . . . . .35
7.2 Conditions to Buyer's Obligations . . . . . . . . . . . . . . . . .36
7.3 Conditions to Sellers' Obligations. . . . . . . . . . . . . . . . .36
iii<PAGE>
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ARTICLE 8. TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
8.1 Liability for Taxes . . . . . . . . . . . . . . . . . . . . . . . .37
8.2 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
8.3 Transfer Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . .38
8.4 Tax Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . .38
ARTICLE 9. TERMINATION/SURVIVAL/INDEMNIFICATION/
TERMINATION FEE . . . . . . . . . . . . . . . . . . . . . . . . . .38
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
9.2 Survival of Representations and Warranties. . . . . . . . . . . . .40
9.3 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . .40
9.4 Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . .42
9.5 Limitations on Dividends from SC, Etc.. . . . . . . . . . . . . . .42
9.6 Insurance Claims. . . . . . . . . . . . . . . . . . . . . . . . . .42
9.7 Termination Payment . . . . . . . . . . . . . . . . . . . . . . . .43
ARTICLE 10. EMPLOYEE BENEFIT PLANS. . . . . . . . . . . . . . . . . . . . .43
ARTICLE 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . .45
11.1 Expenses; Attorneys' Fees . . . . . . . . . . . . . . . . . . . . .45
11.2 Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
11.3 Schedules; Exhibits . . . . . . . . . . . . . . . . . . . . . . . .45
11.4 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
11.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . .46
11.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
11.7 No Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . .46
iv<PAGE>
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11.8 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
11.9 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . .47
11.10 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . .47
11.11 Alternative Dispute Resolution. . . . . . . . . . . . . . . . . . .47
EXHIBITS
Exhibit A Assumption Agreement
Exhibit B Bill of Sale
Exhibit C-1 Matters to be Covered in Opinion of O'Melveny & Myers
Exhibit C-2 Matters to be Covered in Opinion of Counsel to Sellers
Exhibit D Matters to be Covered by Opinion of Counsel to Buyer
SCHEDULES
1.1(a) Branches/ATM's/Loan Offices/Other Bank Offices
1.1(b) Employee Benefit Plans/Programs
1.1(c) Excluded Recorded Intangibles
1.1(d) Stead Real Property
1.1(e) Excluded Other Assets/Liabilities
1.1(f) Intellectual Property
1.1(g) Margarita Village Lien
1.1(h) Material Contracts
1.1(i) Operating Sites
1.1(j) Real Estate Subsidiaries
1.1(k) Requisite Regulatory Approvals
1.1(l) Subsidiaries
4.1 Equity Interests
4.3 Third Party Consents
4.4(a) Real Property
4.5 Financial Statements
4.7 Legal Proceedings
4.8 Undisclosed Liabilities
4.10 Changes or Events
4.11 Taxes
4.13 Insurance
v<PAGE>
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4.15 Affiliate Transactions
4.17 Classified Assets
4.22 Investments
4.24 Bank Accounts
4.25 Deposits
5.3 Consents & Approvals
6.2 Conduct of Business
6.11 Deferred Tax Amount
6.13 Amendment of Contracts
9.1(g) Filings with Bank Regulators
vi<PAGE>
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APPENDIX A
AGREEMENT
This AGREEMENT (this "Agreement"), dated as of ______________, 1996, is
entered into by and among SOUTHWEST GAS CORPORATION, a California corporation
("Parent"), THE SOUTHWEST COMPANIES, a Nevada corporation ("SC"), PRIMERIT
BANK, FEDERAL SAVINGS BANK, a federal savings bank ("Bank"), and NORWEST
CORPORATION, a Delaware corporation ("Buyer"). SC and Parent are
collectively referred to herein as "Sellers" and sometimes individually as a
"Seller."
R E C I T A L S :
A. Parent owns all the capital stock of SC.
B. SC owns all of the capital stock of Bank.
C. Buyer desires to acquire certain of the assets, properties and
business of the Bank and assume certain liabilities of the Bank related to
such assets, all of which assets and liabilities, taken together, constitute
substantially as an entirety a going concern,, pursuant to and in accordance
with the terms and conditions of this Agreement and Sellers desire to cause
Bank to sell and transfer to a wholly-owned bank or thrift subsidiary of
Buyer to be acquired or to be formed by Buyer after the date hereof (the
"Purchaser") certain of the assets, properties and business of the Bank,
pursuant to and in accordance with the terms and conditions of this Agreement
(such asset purchase and liability assumption pursuant to the terms of this
Agreement being referred to as the "Purchase and Assumption").
In consideration of the mutual promises and covenants contained herein,
and of other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
ARTICLE 1.
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following definitions
shall apply:
"Acquisition Agreement" means the Agreement, dated as of January 8,
1996, among Parent, Bank and Buyer to which this Agreement is attached as
Appendix A.
"Acquisition Event" has the meaning given such term in Section 6.9.
1<PAGE>
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"Acquisition Proposal" has the meaning given such term in Section 6.9.
"Affiliate" means any Person directly or indirectly controlling,
controlled by, or under common control with, the subject entity through the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such entity whether through the
ownership of voting securities, by contract or otherwise. Without limiting
the foregoing, the ownership, direct or indirect, of a 25 percent interest in
such entity shall be deemed to be control.
"Affiliated Group" means any affiliated group within the meaning of
Section 1504 of the Code or any similar group defined under a similar
provision of state, local or foreign law, including any consolidated, unitary
or combined group of companies.
"Agency" means HUD, FHA, VA, GNMA, FNMA or FHLMC, as applicable.
"Agreement" means this Agreement by and among Sellers, Bank and Buyer,
as amended or supplemented, together with all Exhibits and Schedules,
incorporated by reference or referred to herein.
"Applicable Law" means any domestic, federal, state or local statute,
law, ordinance, rule, administrative interpretation, regulation, order, writ,
injunction, directive, judgment, decree, policy, guideline or other
requirement of any Governmental Entity applicable to Buyer, Purchaser,
Sellers, Bank or the Subsidiaries.
"Assumed Liabilities" means all Branch Deposits and all other
obligations and liabilities, whether actual or contingent, or known or
unknown, of Bank as of the Closing Date (except Retained Liabilities).
"Assumption Agreement" means the assumption agreement in substantially
the form of Exhibit A.
"ATM" means all automated teller machines owned and currently being used
by Bank.
"Bank Regulator" means, one or more of the following, as applicable:
the OTS, the FDIC, the Federal Reserve Board, the Office of the Comptroller
of the Currency and the Nevada Commissioner of Financial Institutions.
"Bank Subsidiaries" means PriMerit Investor Services, BSF Trustee,
First Nevada Company, and Home Trustee, Inc.
"Bill of Sale" means the bill of sale in substantially the form of
Exhibit B.
"Branch Deposits" mean all deposits as defined in Section 3(1) of the
Federal Deposit Insurance Act, as amended (12 USC Section 1831(1)), at the
Branches.
2<PAGE>
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"Branches" mean each of the branches, loan production offices, other
banking offices and ATMs of Bank, all of which are listed on Schedule 1.1(a).
"Business Day" means any day other than a Saturday, a Sunday, or a day
on which banks in the state of Nevada or Minnesota are generally closed for
regular banking business.
"Closing" means the consummation of the transactions contemplated by
this Agreement.
"Closing Date" means the date and time of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" means the Confidentiality Agreement dated
November 29, 1995, between Parent and Buyer.
"Contract" or "Contracts" means any rights and interests arising under
or in connection with any agreement, arrangement, bond, commitment,
franchise, guarantee, indemnity, indenture, instrument, lease, license or
understanding, whether written or oral that will be included in the Purchased
Assets.
"DPC Property" means any voting securities, other personal property or
real property acquired by Bank or a Bank Subsidiary by foreclosure or
otherwise, in the ordinary course of collecting a debt previously contracted
in good faith, retained with the object of sale for a period not longer than
the applicable statutory holding period and recorded in Bank's business
records as such.
"Employee Benefit Plans" mean all employee benefit plans (as defined in
Section 3(3) of ERISA) maintained or contributed to by Bank and in which the
Employees participate, all of which are listed on Schedule 1.1(b).
"Employee Programs" mean all of Bank's payroll practices, personnel
policies, contracts, plans, and arrangements, if any, providing for bonuses,
deferred compensation, retirement payments, profit sharing, incentive pay,
commissions, vacation pay or other benefits in which any Employees or their
dependents participate, and all employment, severance or other agreements
with any director of the Bank or any Bank Subsidiary or any Employee, all of
which are listed on Schedule 1.1(b).
"Employees" mean employees of Bank and the Bank Subsidiaries (including
any such employees on leave or disability who return to work within
three months after the initial date of leave or disability).
3<PAGE>
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"Encumbrance" means any lien, pledge, security interest, claim, charge,
easement, limitation, commitment, encroachment, restriction or encumbrance of
any kind or nature whatsoever.
"Environmental Law" means the federal Clean Water Act, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Superfund Amendment and Reauthorization
Act, the Safe Drinking Water Act and the Toxic Substances Control Act, each
as amended to the date hereof or any regulations thereunder, or any other
Applicable Law relating to (a) the discharge, spill, disposal, emission, or
other release of any Hazardous Substance; (b) any injury to or death of
individuals or damage to or loss of property caused by or resulting from the
presence of Hazardous Substances; or (c) the generation, storage, handling,
location, disposal or arranging for disposal of Hazardous Substances.
"Equity Interests" mean capital stock, partnership interests (limited or
general), joint venture interests or other equity interests or any securities
or other equity interests convertible into or exchangeable for any of the
foregoing or any other rights, warrants or options to acquire or vote any of
the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" means collectively: (i) any claims, refunds, credits
or overpayments with respect to any Taxes paid or incurred by the Bank and
its Affiliates, or any related interest received from the relevant taxing
authority for periods ending prior to the Closing Date, and the appropriately
prorated portion thereof for periods commencing prior to the Closing Date and
ending on or after the Closing Date; (ii) the rights of the Sellers and Bank
under this Agreement and the Related Documents, including but not limited to
the right to receive the Purchase Price; (iii) any tax sharing agreement
between Bank on the one hand and Sellers or the Real Estate Subsidiaries on
the other hand and any other Contract (except depository contracts between
the Bank or the Bank Subsidiaries and Sellers and the Real Estate
Subsidiaries) between the Bank on the one hand and Sellers and the
Subsidiaries (other than the Bank Subsidiaries) on the other hand and any
claims of the Bank or the Bank Subsidiaries thereunder; (iv) the Real Estate
Subsidiaries; (v) the recorded intangibles reflected on Schedule 1.1(c); (vi)
the Margarita Village Lien, the Stead Real Property described on Schedule
1.1(d) and the assets and liabilities reflected on Schedule 1.1(e); (vii) the
assets of PriMerit Bank, Federal Savings Bank Charitable Foundation; and
(viii) the Bank's charter, non-transferable franchises, licenses, permits,
authorizations and memberships, corporate seals, minute books, stock books
and other corporate records having to do with the corporate organization and
capitalization of Bank and all income tax records; provided, however, that
copies of such corporate and tax reports shall be provided to Buyer at
Buyer's request; (ix) Bank's books of accounts; provided, however, that
copies of such books of accounts shall be provided to Buyer at Buyer's
request; and (x) all corporate records of Bank with respect to the Excluded
Assets set forth in clauses (i) through (ix) hereof.
4<PAGE>
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"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"FDIC" means the Federal Deposit Insurance Corporation.
"FHA" means the Federal Housing Administration.
"FHA Loans" mean Loans which satisfy all applicable rules and
requirements to be insured by FHA and which are insured by FHA.
"FHLB" means the Federal Home Loan Bank of San Francisco.
"FHLMC" means the Federal Home Loan Mortgage Corporation.
"Filings" mean all reports, returns, registrations and statements,
together with any amendments required to be made with respect thereto, that
were required to be filed with (a) the OTS, including, but not limited to,
thrift financial reports, annual reports and proxy statements, (b) the FDIC,
and (c) any other applicable Governmental Entity, including taxing
authorities, except where the failure to file such reports, returns,
registrations and statements has not had and is not reasonably expected to
have a material adverse effect on Bank and the Bank Subsidiaries taken as a
whole.
"Final Termination Date" means September 30, 1996.
"Financial Statements" mean the financial statements of Bank and the
Subsidiaries described in Section 4.5.
"FNMA" means the Federal National Mortgage Association.
"GAAP" means generally accepted accounting principles as used in the
United States of America as in effect at the time any applicable financial
statements were prepared or any act requiring the application of GAAP was
performed.
"GNMA" means the Government National Mortgage Association.
"Governmental Entity" means any court, administrative agency or
commission or other governmental authority or instrumentality, including,
without limitation, each Bank Regulator, the SEC, the California Public
Utilities Commission and the Arizona Corporation Commission.
"Hazardous Substances" mean (a) substances that are defined or listed
in, or otherwise classified pursuant to, any Applicable Laws as "hazardous
substances," "hazardous materials," "hazardous wastes," "toxic substances,"
or any other formulation intended to define, list or classify substances by
reason of deleterious properties such as ignitability, corrosivity,
reactivity, carcinogenicity, reproductive toxicity, or "EP Toxicity;"
5<PAGE>
<PAGE>
(b) oil petroleum or petroleum derived substances and drilling fluids,
produced waters, and other wastes associated with the exploration,
development, or production of crude oil, natural gas, or geothermal
resources; (c) any flammable substances or explosives, any radioactive
materials, any hazardous wastes or substances, any toxic wastes or substances
or any other materials or pollutants which pose a hazard to DPC Property or
any other property of Bank or any Bank Subsidiary or to persons on or about
such property; and (d) asbestos, other than non-friable asbestos, or
electrical equipment which contains any oil or dielectric fluid containing
levels of polychlorinated biphenyls in excess of 50 parts per million.
"HUD" means the Department of Housing and Urban Development.
"Insurer" means a Person who insures or guarantees all or any portion of
the risk of loss upon borrower default on any of the Serviced Mortgage Loans,
including, without limitation the FHA, the VA and any private mortgage
insurer, and providers of life, flood, hazard, disability, title or other
insurance with respect to any of the Serviced Mortgage Loans or the property
securing any such Serviced Mortgage Loan.
"Intellectual Property" means all Marks used in connection with the
conduct of business in the ordinary course at any Branch or Operating Site
and listed on Schedule 1.1(f).
"Investor" means any Person who owns (beneficially or of record) a
Serviced Mortgage Loan, or the servicing rights or master servicing rights to
a Serviced Mortgage Loan, subserviced, serviced or master serviced by Bank or
any Bank Subsidiary pursuant to a Mortgage Servicing Agreement.
"IRS" means the Internal Revenue Service.
"Lease" means any of the real estate leases, or a sublease of Bank's
interest thereunder, for a Branch or any Operating Site.
"Loans" mean loans originated by Bank or any Bank Subsidiary or
purchased by Bank or any Bank Subsidiary, including loan commitments and the
unfunded portion of existing commitments.
"Loss" means any actual cost, expense or liability, including but not
limited to penalties, fines, damages, legal and other professional fees and
expenses reasonably incurred in the investigation, collection, prosecution
and defense of claims and amounts paid in settlement, that are imposed upon
or otherwise incurred or suffered by the relevant party.
"Margarita Village Lien" means the superpriority lien and associated
loan on the project described on Schedule 1.1(g).
6<PAGE>
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"Mark" means any brand name, copyright, patent, service mark, trademark,
trade name, state or federal common law usages and all registrations or
applications for registration of any of the foregoing.
"Material Contracts" mean all Contracts or offers that would become
binding upon acceptance by a third party (a) that obligate Bank or any Bank
Subsidiary to pay or forego receipt of an amount of $50,000 or more in any
12-month period, other than (i) any Branch Deposit or (ii) any Loan made in
the ordinary course of business; (b) that bind Bank or any Bank Subsidiary
and contain a covenant by Bank or such Bank Subsidiary not to compete;
(c) that bind Bank or any Bank Subsidiary or any of its properties and
contain a right of first refusal in favor of a third party; (d) that relate
to Technology Systems; (e) that grant a power of attorney or similar
authorization to act on behalf of Bank or any Bank Subsidiary to any Person;
(f) any agreement or commitment with respect to the Community Reinvestment
Act or similar law with any state or Federal regulatory authority or any
other party; or (g) that are otherwise material to Bank and the Bank
Subsidiaries taken as a whole. All Material Contracts as of the date hereof
are listed on Schedule 1.1(h).
"Mortgage" means, with respect to a Mortgage Loan or a Serviced Mortgage
Loan, a mortgage, deed of trust or other security instrument creating a lien
upon real property and any other property described therein which secures a
Mortgage Note, together with any assignment, reinstatement, extension,
endorsement or modification of any thereof.
"Mortgage Loan" means any interest in a Loan secured by a Mortgage.
"Mortgage Loan Regulations" mean (a) all Applicable Laws with respect to
the origination, insuring, purchase, sale, pooling, servicing, subservicing,
master servicing or filing of claims in connection with a Loan, (b) the
responsibilities and obligations set forth in any agreement between Bank or
any of the Bank Subsidiaries and an Investor or private mortgage insurer
(including, without limitation, Mortgage Servicing Agreements and selling and
servicing guides), (c) all Applicable Laws and other requirements of an
Agency, and all rules, regulations and other requirements of an Investor,
private mortgage insurer, public housing program or Investor program with
respect to the origination, insuring, purchase, sale, pooling, servicing,
subservicing, master servicing or filing of claims in connection with a
Serviced Mortgage Loan, and (d) the terms and provisions of the Serviced
Mortgage Loan documents.
"Mortgage Note" means, with respect to a Mortgage Loan or a Serviced
Mortgage Loan, a promissory note or notes, or other evidence of indebtedness,
with respect to such Mortgage Loan or Serviced Mortgage Loan secured by a
Mortgage or Mortgages, together with any assignment, reinstatement,
extension, endorsement or modification thereof.
7<PAGE>
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"Mortgage Servicing Agreements" mean all contracts or arrangements
between Bank or any of the Bank Subsidiaries and an Investor pursuant to
which Bank or any of the Bank Subsidiaries subservices, services or master
services Serviced Mortgage Loans for such Investor.
"Operating Sites" mean the headquarters building, warehouse and other
non-Branch offices of Bank or any of the Bank Subsidiaries, all of which are
listed on Schedule 1.1(i).
"OTS" means the Office of Thrift Supervision.
"Permitted Encumbrances" mean all Encumbrances that are:
(a) disclosed in any title reports, opinions or insurance binders
delivered or made available to Buyer prior to the execution of this
Agreement;
(b) for Taxes or assessments, special or otherwise, either not due
and payable or being contested in good faith and fully accrued or
adequately provided for;
(c) representing mechanics', materialmen's, carriers',
warehousemen's, landlords' and other similar or statutory liens arising
in the ordinary course of business and fully accrued or adequately
provided for; or
(d) rights of parties lawfully in possession and any other defect,
exception to title or easement or claim of easement which in all cases
does not materially impair the use, operation or value of the property
to which it relates.
"Person" means any individual, corporation, company, partnership
(limited or general), joint venture, association, limited liability company,
trust or other entity.
"Purchase and Assumption Purchase Price" or "Purchase Price" means the
purchase price set forth in Section 2.3.
"Purchased Assets" means all of the assets, properties, rights and
business of the Bank of every type and description, real, personal and mixed,
tangible and intangible, wherever located and whether or not reflected on the
books and records of the Bank, other than the Excluded Assets. Such assets
and property shall include, without limitation, all right, title and interest
of the Bank in all lands, branches, offices, buildings (together with
improvements, appurtenances, licenses and permits), motor vehicles,
equipment, furniture and fixtures, supplies, stationery, cash, loans, the
allowance for loan losses , accrued interest, securities, certificates of
deposit, accounts receivable, cash management accounts, servicing rights,
leases of real and personal property, prepaid expenses, deposits, licenses
and permits, agreements and contracts, claims against third parties
(including warranty claims relating to goods, equipment or real property sold to
8<PAGE>
<PAGE>
the Bank), authorizations and approvals of any third party, the right to
receive mail, payments on loans and accounts receivable and other
communications, prepaid FDIC insurance and assessments and other prepaid
expenses incurred in the ordinary course of business and not related to the
Excluded Assets, computer software used in connection with personal computers
(the "Software"), other files and business records, advertising materials,
customer application forms, the right to use the Bank's ABA transit numbers
and other intangible properties and rights to, refunds and prepayments under
Contracts, Marks and the capital stock and assets of the Bank Subsidiaries,
and the payment referred to in Section 6.11, but shall not include the
Excluded Assets.
"Real Estate Liabilities" means all liabilities or obligations (absolute
or contingent) of Bank or any Subsidiary to the extent arising out of any
real estate development activities (past or present) of Bank or any of its
Affiliates, all real estate held for development, all Real Estate
Subsidiaries, the ownership or operation of the Real Estate Subsidiaries by
Bank or any Subsidiary, including without limitation, (i) claims of persons
who have purchased properties or assets from Real Estate Subsidiaries or any
partnership, joint venture, association, project or development in which any
of the Real Estate Subsidiaries may have participated at any time,
(ii) contractual obligations, performance bonds, undertakings, guarantees,
suretyship arrangements, or other obligations of Bank or the Subsidiaries
with respect to the business or obligations of the Real Estate Subsidiaries,
and (iii) liabilities or obligations arising out of the ownership, operation,
formation, dissolution, sale or disposition of any Real Estate Subsidiary.
"Real Estate Subsidiaries" means the entities identified on
Schedule 1.1(j) hereto and all interests or investments (equity, debt, or
otherwise) of the Bank or any Subsidiary, direct or indirect, in any of such
entities.
"Real Property" means all real property of Bank or any Bank Subsidiary,
including fee, leasehold and other interests in real property (including real
property that is DPC Property, but excluding any interest in real property
held solely as a trustee or beneficiary under a deed of trust or mortgagee
under a mortgage).
"Records" mean all records and original documents which pertain to and
are utilized by Bank to administer, reflect, monitor, evidence or record
information respecting the business or conduct of Bank and the Bank
Subsidiaries, including all such records maintained on electronic or magnetic
media in the Technology Systems.
"Regulatory Agreement" means, with respect to Bank or any Bank
Subsidiary, any cease-and-desist or other order issued by, or any written
agreement, consent agreement or memorandum of understanding with, or any
order or directive by, or any extraordinary supervisory letter from, or any
board resolutions adopted at the request of any Bank Regulator or other
Governmental Entity that restricts the conduct of Bank's or any Bank
Subsidiary's business or that in any manner relates to its capital adequacy,
its credit policies, its management or its business.
9<PAGE>
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"Related Documents" means the Bill of Sale and the Assumption Agreement.
"Requisite Regulatory Approvals" mean all approvals or consents of or
filings with any Governmental Entity required in order to consummate the
transactions contemplated by this Agreement, all of which are listed in
Schedule 1.1(k).
"Retained Liabilities" means all obligations and liabilities of Bank,
whether actual or contingent, or known or unknown, consisting of or arising
out of (i) the Real Estate Subsidiaries or any assets or obligations or
liabilities thereof; (ii) Real Estate Liabilities; (iii) any liabilities or
obligations consisting of or arising out of the Excluded Assets; and (iv) all
Taxes imposed on Sellers, Bank and the Subsidiaries (either directly or by
virtue of joint and several liabilities) (a) for any taxable year or period
that ends on or before the Closing Date or (b) with respect to any taxable
year or period beginning before and ending after the Closing Date, the
portion of such taxable year or period ending on and including the Closing
Date; and any liabilities or obligations consisting of, arising out of, or
related to acts occurring after the Closing Date.
"SEC" means the United States Securities and Exchange Commission.
"Serviced Mortgage Loan" means any closed Mortgage Loan, whether or not
such Mortgage is included in a securitized portfolio, which is subserviced,
serviced or master serviced by Bank or any of the Bank Subsidiaries pursuant
to Mortgage Servicing Agreements.
"Software" means all computer programs, software, firmware and related
documentation used in the operation of the Technology Systems.
"Subsidiary" means any Person, more than 50 percent of the voting power
of which is owned directly or indirectly by Bank or any Person more than
50 percent of the Equity Interests of which is owned directly or indirectly
by Bank, all of which are listed on Schedule 1.1(l).
"Taxes" means all federal, provincial, territorial, state, municipal,
local, foreign or other taxes, imposts, rates, levies, assessments and other
charges including, without limitation, all income, franchise, gains, capital,
real property, goods and services, transfer, value added, gross receipts,
windfall profits, severance, ad valorem, personal property, production,
sales, use, license, stamp, documentary stamp, mortgage recording, excise,
employment, payroll, social security, unemployment, disability, estimated or
withholding taxes, and all customs and import duties, together with any
interest, additions, fines or penalties with respect thereto or in respect of
any failure to comply with any requirement regarding Tax Returns and any
interest in respect of such additions, fines or penalties.
"Tax Return" means any return, report, information statements, schedule
or other document (including any related or supporting information) with
respect to Taxes,
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including any document required to be retained or provided to any
Governmental Entity pursuant to 31 USC Sections 5311-5328 and regulations
promulgated thereunder.
"Technology Systems" mean all electronic data processing,
communications, telecommunications, disaster recovery services and other
computer systems which are material to the operation of the Branches and the
Operating Sites, and to the servicing of the Loans and Serviced Mortgage
Loans and, including (a) any computer hardware and Software owned, leased or
licensed by Bank that is used in the operation of the Technology Systems, and
(b) any Contracts pursuant to which Bank is granted rights which are used in
the operation of the Technology Systems, including Software licenses and
similar agreements.
"VA" means the Veterans Administration.
"VA Loans" mean Loans which satisfy all applicable rules and regulations
to be guaranteed by the VA and which are guaranteed by the VA.
1.2 Construction and Interpretation.
(a) When used to modify a statement with respect to the Bank or a Bank
Subsidiary, "material," "materially," or similar phrases refer to matters
which are material to the business, condition (financial or otherwise) or
operations of Bank and the Bank Subsidiaries, taken as a whole; provided,
however, that such terms shall not include (i) changes in Applicable Law,
GAAP, or regulatory accounting principles, or thrift laws or regulations, or
interpretations thereof, that affect the thrift industry generally or changes
in the general level of interest rates unless such change affects Bank to a
materially greater extent than thrift institutions generally (ii) any
assessment imposed on the Bank in connection with the recapitalization of the
Savings Association Insurance Fund of the FDIC; or (iii) the writeoff of any
goodwill on the books of Bank and the Bank Subsidiaries as a result of the
execution of delivery of this Agreement.
(b) Any reference to the "ordinary course of business" shall refer to
the ordinary course of the business of Bank and the Subsidiaries prior to
October 31, 1995.
ARTICLE 2.
PURCHASE AND ASSUMPTION
2.1 Assets to Be Sold. Subject to the terms and conditions of this
Agreement, at the Closing, the Bank will sell to Purchaser, and Purchaser
will purchase from the Bank the Purchased Assets. Such sale, conveyance,
assignment, transfer and delivery shall be effected by delivery by the Bank
to the Purchaser at the Closing of (i) the duly executed Bill of Sale, (ii)
good and sufficient deeds, in recordable or registrable form, with respect to
all Real Property owned by the Bank and included among the Purchased Assets,
(iii) assignments of mortgages or deeds of trust, security agreements and
security interests and assignments of notes, in recordable form, if
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applicable, relating to the Purchased Assets, and (iv) such other instruments of
conveyance and transfer as the Purchaser shall reasonably request.
2.2 Assumed Liabilities. On the Closing Date Purchaser shall assume
the obligations and liabilities of Bank other than the Retained Liabilities.
Such assumption shall be effected by delivery by the Purchaser to the Bank at
the Closing of (i) the duly executed Assumption Agreement, and (ii) such
other instruments and supporting documents as Sellers, Bank or any applicable
third party may reasonably request. The Purchaser shall not assume or be
liable for the Retained Liabilities.
2.3 Purchase and Assumption Price. (a) The Purchase and Assumption
Purchase Price shall be an amount equal to $190,700,000. The Purchase Price
shall be reduced by the after tax amount of any Purchase Price reduction and
increased by the after tax amount of any Purchase Price increase. The amount
of any Purchase Price reduction shall be determined by adding (x) the amount
of Real Estate Liabilities paid in the aggregate by the Bank or any of the
Bank Subsidiaries subsequent to November 30, 1995 but on or prior to the
Closing Date in excess of $1,205,000, and (y) the amount of Taxes paid by the
Bank or any of the Bank Subsidiaries subsequent to October 31, 1995 but on or
prior to the Closing Date (other than for Taxes related to operations
subsequent to October 31, 1995 and prior to the Closing Date) in excess of
the amount of Taxes accrued on the balance sheet of the Bank contained in the
Financial Statements as of October 31, 1995. The amount of any Purchase
Price increase shall be determined by adding (x) any amounts received by the
Bank or any of the Bank Subsidiaries with respect to the Margarita Village
Lien or the Stead Real Property described in Schedule 1.1(d) subsequent to
November 30, 1995 and prior to the Closing Date in excess of $200,000, plus
the book value of the Margarita Village Lien and the Stead Real Property on
the Bank's Financial Statements at November 30, 1995, and (y) any amounts
received by the Bank or any of the Bank Subsidiaries subsequent to October
31, 1995 but on or prior to the Closing Date with respect to Tax refunds
attributable to periods on or prior to October 31, 1995 except for Tax
receivables on the balance sheets of the Bank contained in the Financial
Statements of October 31, 1995.
(b) Bank shall prepare an interim closing statement as of a date no
more than five Business Days prior to the Closing Date and as if the Closing
had occurred on such date setting forth the amount of the Purchase Price.
The interim closing statement shall be delivered by Bank to Buyer and
Purchaser no less than two Business Days prior to the Closing Date. The
Purchase Price paid by the Buyer on the Closing Date shall be the Purchase
Price set forth on the interim closing statement.
(c) Not more than 30 calendar days after the Closing Date, Bank shall
deliver to Buyer and Purchaser a final closing statement setting forth its
final calculation of the amount of the Purchase Price.
(d) If within 30 calendar days after delivery of the final closing
statement to Buyer and Purchaser, the Buyer and Purchaser determine in good
faith that the Purchase Price set forth on the final closing statement was
inaccurate, Buyer and Purchaser shall give notice of such determination to
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Sellers and Bank setting forth the amount of the Purchase Price as determined by
Buyer and Purchaser and specifying in reasonable detail the Buyer's and
Purchaser's basis for its disagreement with Bank's determination of the Purchase
Price. The failure by Buyer and Purchaser so to express its disagreement within
such 30-day period shall constitute acceptance of the Purchase Price by Buyer
and Purchaser. If the parties are unable to resolve their disagreement, the
items in dispute shall be referred to KPMG Peat Marwick, LLP ("KPMG") and Arthur
Andersen, LLP ("AA") for determination. KPMG and AA shall make a determination
as to the matter in dispute, which determination shall be in writing, furnished
to each of the parties as promptly as practicable after the matter in dispute
has been referred to KPMG and AA and shall be final, conclusive and binding upon
each of the parties hereto. If KPMG and AA cannot agree, KPMG and AA will
jointly designate another accounting firm to make the determination, which
determination shall be final, conclusive and binding upon each of the parties
hereto. The final closing statement shall thereupon be modified in
accordance with the determination of KPMG and AA. Each of the parties shall
pay the fees and expenses of its accountants and, if a third accountant is
appointed as set forth above, the Sellers, on the one hand, and the Buyer on
the other hand shall share equally the expenses of such third accountant.
(e) If the amount of the Purchase Price paid by Buyer and Purchaser was
less than that set forth on the final closing statement, Buyer and Purchaser
shall, subject to the provisions of Section 2.3(d), promptly pay the
difference to Bank together with interest thereon for each day after the
Closing Date to the date of such payment at the rate of the closing Federal
Funds rate per annum as set forth in the Western Edition of THE WALL STREET
JOURNAL published on the day prior to the date of payment (the "Interest
Rate"). If the amount of the Purchase Price paid by Buyer and Purchaser was
greater than that set forth on the final closing statement, Bank shall,
subject to the provisions of Section 2.3(d), promptly pay the difference to
Buyer, together with interest thereon for each day after the Closing Date to
the Date of such payment at the Interest Rate.
ARTICLE 3.
THE CLOSING
3.1 Closing. The Closing shall take place (a) at the offices of Buyer,
Norwest Center, Sixth and Marquette, Minneapolis, MN 55479 within ten (10)
Business Days following the satisfaction or waiver of all of the conditions
in Article 7 (other than those designating instruments, opinions,
certificates or other documents to be delivered at the Closing), or (b) at
such other place and time as the parties hereto shall agree.
3.2 Delivery by Sellers and Bank. On the Closing Date Sellers and Bank
shall deliver or cause to be delivered the following to Buyer and Purchaser:
(a) copies of resolutions duly adopted by the Board of Directors and
shareholders of each Seller and Bank authorizing this Agreement and the
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transactions contemplated hereby, certified as of the Closing Date by thE
Secretary or Assistant Secretary of such party; and
(b) the documents required to be delivered by Sellers and Bank pursuant
to Section 7.2 and such other documentation as may be required by this
Agreement.
3.3 Deliveries by Buyer and Purchaser. On the Closing Date, Buyer and
Purchaser shall deliver or cause to be delivered the following to Bank and
Sellers:
(a) copies of resolutions duly adopted by the Board of Directors and
(if applicable) shareholders of Buyer and Purchaser authorizing this
Agreement and the transactions contemplated hereby, certified as of the
Closing Date by a Secretary or Assistant Secretary of such party;
(b) an amount equal to the Purchase and Assumption Purchase Price by
wire transfer in immediately available funds to an account designated in
writing to Buyer and Purchaser by Bank; and
(c) the documents required to be delivered by Buyer and Purchaser
pursuant to Section 7.3 and such other documents as may be required by this
Agreement.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant to Buyer as follows:
4.1 Organization and Related Matters.
(a) Parent is a corporation duly organized, validly existing and in
good standing under the laws of the State of California. SC is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nevada. All of the Bank Stock is owned by SC, beneficially and of
record, free and clear of all Encumbrances, other than net worth maintenance
and similar obligations to Bank Regulators, and there are no other
outstanding Equity Interests of Bank.
(b) Bank is a federal savings bank duly organized, validly existing and
in good standing under the provisions of the Home Owners' Loan Act, as
amended (12 USC Section 1461), and is a member in good standing of the
Federal Home Loan Bank System through the FHLB. The Branch Deposits are
insured to applicable limits by the Savings Association Insurance Fund of the
FDIC. Bank has the corporate power and authority to carry on its business as
now being conducted and to own, lease and operate its properties.
(c) Except as set forth on Schedule 4.1, all of the Equity Interests of
the Bank Subsidiaries are owned beneficially and of record directly or
indirectly by Bank, free and clear of any Encumbrances. Except for the
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Subsidiaries and as set forth on Schedule 4.1, neither Bank nor any Bank
Subsidiary has a direct or indirect Equity Interest in any Person, other than
DPC Property.
(d) The Bank Subsidiaries are duly organized, validly existing and in
good standing under the laws of the jurisdiction of their organization. Each
of the Bank Subsidiaries has the corporate power and authority to carry on
its respective business as now being conducted and to own, lease and operate
its respective properties. Each of the Bank Subsidiaries is duly qualified
and licensed and in good standing to do business as a foreign corporation in
each jurisdiction in which the properties owned, leased or operated by it or
the nature of the business conducted by it makes such qualification or
licensing necessary, except where the failure to be so organized or existing
or to have such power and authority or to be so qualified or licensed would
not have a material adverse effect on Bank and the Bank Subsidiaries taken as
a whole. None of the Bank Subsidiaries has engaged in the real estate
development business as an owner, operator, developer, contractor or
otherwise.
(e) Bank is not a party to, and is not obligated by, any commitment,
plan or arrangement to issue or to sell any Equity Interests of Bank or the
Bank Subsidiaries or to sell or otherwise transfer any significant portion of
their assets, except the transactions contemplated by this Agreement and
there are no outstanding subscriptions, contracts, conversion privileges,
options, warrants, calls or preemptive or other rights requiring Bank to
sell, dispose of, purchase, redeem or otherwise acquire the capital stock of
the Bank.
4.2 Authority; No Violation.
(a) Each Seller and Bank has full corporate power and authority to
execute and deliver this Agreement and the Related Documents to which it is a
party and to consummate the transactions contemplated hereby. Except for the
approval of a majority of the outstanding shares of Parent's common stock,
the execution and delivery of this Agreement and the Related Documents to
which it is a party and the consummation of the transactions contemplated
hereby have been or will be duly and validly approved by all requisite
corporate action on the part of Sellers and Bank, and, except for a meeting
of the shareholders of Parent and corporate actions to be taken in connection
with the transfer of the Bank Subsidiaries, no other corporate proceedings on
the part of Sellers or Bank are necessary to approve this Agreement and the
Related Documents to which it is a party and to consummate the transactions
contemplated hereby. This Agreement and the Related Documents to which it is
a party have been or will be duly and validly executed and delivered by
Sellers and Bank and (assuming the due authorization, execution and delivery
of this Agreement by Buyer and the Related Documents by Purchaser) constitute
a valid and binding obligation of Sellers and Bank, enforceable against
Sellers and Bank in accordance with their respective terms, except as may be
limited by bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting creditors' rights generally and except as may be limited by general
principles of equity whether applied in a court of law or a court of equity.
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(b) Neither the execution and delivery of this Agreement by Sellers and
Bank or the Related Documents to which they are a party nor the consummation
by Sellers and Bank of the transactions contemplated hereby, nor compliance
by Sellers and Bank with any of the terms or provisions hereof, will
(i) violate any provision of the respective articles of incorporation or
charter and By-Laws of Sellers or Bank or (ii) assuming that the Requisite
Regulatory Approvals and the consents and approvals referred to in
Section 4.3 are duly obtained, (x) violate in any material respect any
Applicable Law with respect to either Bank, Sellers or any Bank Subsidiary,
or (y) violate, conflict with, result in a breach of any provision of or the
loss of any benefit under, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, result
in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any
Encumbrance upon any of the respective properties or assets of either Seller,
Bank or any of the Bank Subsidiaries under, any of the terms, conditions or
provisions of any Contract to which either Seller, Bank or any of the Bank
Subsidiaries is a party, or by which either Seller, Bank or any of the Bank
Subsidiaries, or any of their respective properties or assets, may be bound
or affected, except for (i) such violations which arise from the legal or
regulatory status of Buyer or its Affiliates or the businesses in which they
are or propose to be engaged and (ii) such consents and approvals the failure
of which to obtain will not, individually or in the aggregate, have a
material adverse effect on the Sellers and their Subsidiaries taken as a
whole or the Bank and the Bank Subsidiaries taken as a whole.
4.3 Consents and Approvals. Except for the Requisite Regulatory
Approvals to be obtained by Sellers and Buyer, the consents and approvals to
be obtained by Buyer and Purchaser and the matters set forth on Schedule 4.3,
no consents or approvals of or filings, notices or registrations with any
Governmental Entity or with any Person who is a party to a Material Contract
are necessary in connection with the execution and delivery by Sellers and
Bank of this Agreement or the consummation by Sellers and Bank of the
transactions contemplated hereby (including, without limitation the
consummation of the Purchase and Assumption).
4.4 Title to Property.
(a) Bank and the Bank Subsidiaries own or have the right to use all
property used in the operation of their business. Sellers have furnished to
Buyer Schedule 4.4(a) that sets forth a description (including the character
of the interest of Bank and each Bank Subsidiary) of all Real Property.
Except as set forth on Schedule 4.4(a), Bank and each Bank Subsidiary has
good and marketable title to all Real Property owned in fee and all material
items of personal property reflected as owned on its books, in each case free
and clear of all Encumbrances, except Permitted Encumbrances.
(b) All furniture, fixtures and equipment of Bank and each Bank
Subsidiary that are material to the business, financial condition, results of
operations or prospects of Bank and the Bank Subsidiaries taken as a whole,
are in a good state of maintenance and repair, except for ordinary wear and
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tear, and are adequate for the conduct of the business of Bank and each Bank
Subsidiary as presently conducted. Except as set forth in Schedule 4.4(a),
(i) neither Bank nor any Bank Subsidiary has entered into any Contract
containing a material obligation to improve any Real Property, (ii) to Seller's
knowledge, each Lease and other Contract under which Bank or any Bank Subsidiary
is a lessee or holds or operates any material property (real, personal or mixed)
owned by any third party is in full force and effect and is a valid and legally
binding obligation of Bank or such Bank Subsidiary and, to Sellers' knowledge,
each other party thereto; (iii) Bank or such Bank Subsidiary and, to Sellers'
knowledge, each other party to any such Lease or other Contract have
performed in all material respects all the obligations required to be
performed by them to date under such Lease or other Contract and are not in
default in any material respect under any such Lease or other Contract and,
to Sellers' knowledge, there is no pending or threatened proceeding that
would interfere with the quiet enjoyment of such leasehold or such material
property by Bank or any Bank Subsidiary; (iv) to Seller's knowledge, there
has not been any generation, use, handling, transportation, treatment,
storage, release or disposal of any Hazardous Substance in connection with
the conduct of the business of Bank or such Bank Subsidiary and there has
never been a use of any of the Real Property or any of the real property
formerly owned by the Bank or any Bank Subsidiary for which the Bank or a
Bank Subsidiary has any indemnification obligations that has created or might
reasonably be expected to result in any liability under any Environmental
Law; (v) to Seller's knowledge, no underground storage tanks are on or in the
Real Property; and (vi) to Seller's knowledge, no Hazardous Substances exist
on any real property at any time directly or indirectly owned or operated,
whether as beneficial owner or in a fiduciary capacity, by Bank or any Bank
Subsidiary in a manner that could reasonably be expected to expose Bank or
such Bank Subsidiary as a former owner or operator of such real property to
any liability under any Environmental Law.
(c) Sellers have provided Buyer access to copies of all Leases included
on Schedule 4.4(a) and all appraisals and title insurance policies relating
to Real Property.
4.5 Financial Statements. Sellers have previously delivered to Buyer:
(a) the audited consolidated statement of financial condition of Bank and the
Subsidiaries as of December 31, 1994 and related audited consolidated
statements of operations and cash flows for the year ended on such date,
including in each case the related notes and schedules thereto, together with
the related opinion of Arthur Andersen, LLP, independent certified public
accountants to Bank; and (b) the unaudited consolidated statement of
financial condition of Bank and the Subsidiaries as of October 31, 1995. The
Financial Statements referred to in clause (a) above (including the related
notes and schedules thereto), subject to qualifications, if any, noted in the
accompanying opinion, have been prepared in accordance with GAAP or
applicable regulatory accounting principles consistently applied during the
periods involved and fairly present the consolidated financial condition,
consolidated results of operations and consolidated changes in financial
position of Bank and the Subsidiaries as of the date thereof and for the
periods covered thereby. Except for changes in the financial accounting
standards as set forth in Schedule 4.5, the Financial Statements referred to
in clause (b) above have been prepared on a consolidated basis in accordance
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with GAAP or applicable regulatory accounting principles applied on a basis
consistent with those at December 31, 1994, except for the omission of normal
recurring year-end audit adjustments (if any) and notes thereto and fairly
present the consolidated financial condition of Bank and the Subsidiaries as of
the date thereof.
4.6 Material Contracts. Except as set forth on Schedules 1.1(h) or
4.4(a), (a) each Material Contract is a valid and binding obligation of Bank
or a Bank Subsidiary; (b) Bank and each Bank Subsidiary has duly performed
all material obligations under the Material Contracts to be performed by it
to the extent that such obligations to perform have accrued; and (c) to
Sellers' knowledge, there are no breaches, violations or defaults or
allegations or assertions of such by any party under any Material Contract.
True copies of all Material Contracts, including all amendments and
supplements thereto, have been made available to Buyer.
4.7 Legal or Other Proceedings. Except as set forth in Schedule 4.7,
as of the date of this Agreement, neither Bank nor any of the Bank
Subsidiaries is a party to any, and there are no pending or, to Sellers'
knowledge, threatened, legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations of any nature
against or affecting Bank, any of the Bank Subsidiaries or any of their
respective properties or assets or challenging the validity or propriety of
the transactions contemplated by this Agreement and there is no injunction,
order, judgment or decree imposing ongoing obligations upon Bank, any of the
Bank Subsidiaries or the properties or assets of Bank or any of the Bank
Subsidiaries. Except for customary ongoing quality control reviews or as set
forth in Schedule 4.7, no audit, investigation, complaint or inquiry of Bank
or any of the Bank Subsidiaries by any Agency, Investor or Insurer is pending
or, to the knowledge of Sellers, threatened.
4.8 Undisclosed Liabilities. Sellers have furnished to Buyer
Schedule 4.8 which sets forth all liabilities of Bank or any of the
Subsidiaries that are material to Bank and the Subsidiaries taken as a whole,
contingent or otherwise, that are not reflected or reserved against in the
Financial Statements dated as of October 31, 1995, except for liabilities
incurred or accrued since October 31, 1995 in the ordinary course of
business, none of which, individually or in the aggregate, has had or may
reasonably be expected to have a material adverse effect on Bank and the
Subsidiaries taken as a whole.
4.9 Reports and Filings. Since January 1, 1993, Bank and each Bank
Subsidiary has filed all Filings. Bank has made available to Buyer all
Filings filed by Bank or any Bank Subsidiary since January 1, 1993, together
with copies of any orders or other administrative actions taken in connection
with such Filings to the extent permitted to do so by Applicable Law. As of
their respective dates, each of such Filings (a) was true and complete in all
material respects (or was amended so as to be so following discovery of any
discrepancy); (b) complied in all material respects with Applicable Law (or
was amended so as to be so following discovery of any such noncompliance);
and (c) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
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not misleading. Any Financial Statement contained in any of such Filings that
was intended to present the financial position of Bank or any Bank Subsidiary
fairly presented the financial position of Bank or such Bank Subsidiary and was
prepared in accordance with GAAP or applicable regulatory accounting principles
consistently applied, except as stated therein, required by Applicable Law
during the periods involved or as otherwise set forth in Section 4.5.
4.10 Absence of Certain Changes or Events. Except as contemplated by
Section 6.2(l) or as set forth on Schedule 4.10, since October 31, 1995, Bank
has not declared, set aside or paid any dividend or other distribution with
respect to, or repurchased any Equity Investments in, Bank. Except as set
forth in Schedule 4.10 or as consented to by Buyer in writing, during the
period from October 31, 1995 to the Closing Date, (a) neither Bank nor the
Bank Subsidiaries has: (i) mortgaged, pledged or subjected to any Encumbrance
or lease any of the Real Property, or permitted or suffered any such asset to
be subjected to any Encumbrance or lease, except in the ordinary course of
business; (ii) other than in the ordinary course of business, (A) increased
the wages, salaries, compensation, pension, or other fringe benefits or
perquisites payable to any executive officer, Employee, or director from the
amount in effect as of October 31, 1995, or granted any severance or
termination pay, (B) entered into any contract to make or grant any severance
or termination pay, or (C) paid any bonus to any such person; (iii) suffered
any strike, work stoppage, slow-down, or other labor disturbance at the
Branches or Operating Sites; (iv) amended, canceled or terminated any
agreement relating to Technology Systems, Software or Intellectual Property,
except in the ordinary course of business; (v) changed its accounting
principles, practices or methods except as required by any change in
Applicable Law, GAAP or regulatory accounting principles; (vi) engaged in any
material sale or purchase of assets, entered into, amended, or terminated any
Material Contract, or engaged in any other material transaction other than
for fair value in the ordinary course of business; or (vii) incurred any
damage, destruction or loss to any of the assets of Bank and the Bank
Subsidiaries which has had or may be reasonably expected to have,
individually or in the aggregate, a material adverse effect on Bank and the
Bank Subsidiaries taken as a whole; and (b) no event has occurred or has
failed to occur which has had or is reasonably expected to have, individually
or in the aggregate with any other event(s), a material adverse effect on
Bank and the Subsidiaries taken as a whole, provided, however, that for
purposes of this Section 4.10, no such material adverse effect shall be
deemed to have occurred as a result of (i) any change in Applicable Law, GAAP
or regulatory accounting principles, (ii) changes in thrift laws or
regulations, or interpretations thereof, that affect the thrift industry
generally or changes in the general level of interest rates unless such
change affects Bank to a materially greater extent than thrift institutions
generally, (iii) or any assessment imposed on the Bank in connection with the
recapitalization of the Savings Association Insurance Fund of the FDIC, or
(iv) the write-off of any goodwill on the books of Bank and the Bank
Subsidiaries as a result of the execution and delivery of this Agreement.
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4.11 Taxes and Tax Returns.
(a) Except as reflected in Schedule 4.11, or otherwise disclosed, Bank
and each Subsidiary, and any Affiliated Group of which any such entity was a
member, has duly filed all Tax Returns required to be filed by it on or prior
to the date of this Agreement (all such returns being accurate and complete
in all material respects), has duly paid or made provisions for the payment
of all Taxes that have been incurred or are due or claimed to be due from it
by any taxing authority on or prior to the date of this Agreement other than
Taxes which are not yet delinquent or are being contested in good faith (and
which are set forth in Schedule 4.11) and has not executed an extension or
waiver of any statute of limitations on the assessment or collection of any
Taxes that is currently in effect. Except as set forth in Schedule 4.11,
there is no audit, examination, deficiency, refund litigation, tax claim,
notice of assessment, notice of proposed assessment or any other matter in
controversy with respect to any Taxes that is reasonably likely to result in
a determination materially adverse to Bank and the Bank Subsidiaries taken as
a whole.
(b) No election under Section 341(f) of the Code has been or hereafter
shall be made to treat Bank or any Bank Subsidiary as a consenting
corporation (as defined in Section 341(f) of the Code).
4.12 Compliance with Applicable Law. Bank and each of the Bank
Subsidiaries hold, and have at all times held, all material licenses,
franchises, permits and other authorizations necessary for the lawful
ownership and use of their respective assets and the conduct of their
respective businesses and have complied with and are not in default in any
material respect under any Applicable Law material to Bank and the Bank
Subsidiaries taken as a whole.
4.13 Insurance. All insurance policies and indemnity bonds as of the
date of this Agreement providing coverage for Bank and the Bank Subsidiaries
are listed on Schedule 4.13. As of the date hereof each such insurance policy
or bond is in full force and effect, and, as of the date hereof neither Bank
nor any of the Bank Subsidiaries has received written notice or any other
indication from any insurer or agent of any intent to cancel any such
insurance policy or bond.
4.14 Agreements with Regulatory Agencies. Neither Bank nor any of the
Bank Subsidiaries is currently subject to any Regulatory Agreement, nor has
Bank or any of the Bank Subsidiaries been advised by any Bank Regulator or
other Governmental Entity that it is considering issuing or requesting any
Regulatory Agreement.
4.15 Affiliate Transactions. Except as set forth on Schedule 4.15, no
Person who is an executive officer, director or Affiliate of Bank is an
obligor or guarantor on any Loan, a lessor with respect to any Lease, or
otherwise has any interest in any asset of, Bank or the Bank Subsidiaries.
Except as set forth on Schedule 4.15, Bank and the Bank Subsidiaries on a
consolidated basis do not have any other liabilities or obligation of any
kind to either Seller or any Affiliate, other than Bank or a Bank Subsidiary.
Except as set forth on Schedule 4.15, there are no intercompany payables owed
by or intercompany receivables owed to Bank and the Bank Subsidiaries on a
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consolidated basis to or from Sellers or their Affiliates (other than the Bank
and the Bank Subsidiaries).
4.16 Intellectual Property.
(a) Schedule 1.1(f) contains a true and complete list of all
Intellectual Property owned by Bank or any Bank Subsidiary and any licenses
or similar agreements pursuant to which Bank or any Bank Subsidiary is
granted rights with respect to Intellectual Property.
(b) Except as set forth in Schedule 1.1(f), Bank or any Bank Subsidiary
has the unrestricted right to use the Intellectual Property, free and clear
of any claims, by any Person (other than the claims of any licensors under
licensing or similar agreements), and the consummation of the transactions
contemplated by this Agreement will not alter or impair any such right. No
claims have been asserted to either Sellers, Bank or any Bank Subsidiary by
any Person with respect to the use by Bank or any Bank Subsidiary of any
Intellectual Property or challenging or questioning the validity or
effectiveness of any license or similar agreement with respect thereto, and,
to the knowledge of Sellers, there is no basis for any such claim. Except as
set forth in Schedule 1.1(f), no Intellectual Property is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting the
use thereof by Bank or any Bank Subsidiary.
4.17 Loan Portfolio.
(a) Schedule 4.17 sets forth a description, as of October 31, 1995, of
(i) by type and classification, if any, each Loan or lease by Bank in excess
of $500,000; and (ii) by type and classification, all Loans or leases of Bank
of $500,000 or more, that have been classified by its bank examiners,
auditors (external or internal), or credit administration personnel as
"Special Mention," "Substandard," "Doubtful," "Loss" or any comparable
classification.
(b) To Seller's knowledge, each Loan or Serviced Mortgage Loan owned or
held by Bank complied at the time it was made or, if such Loan or Serviced
Mortgage Loan was acquired and not originated by Bank, complied at the time
it was originated, and remains in compliance, in all material respects with
Applicable Law, including the federal Truth-in-Lending Act and other consumer
protection laws, usury, equal credit opportunity, disclosure and recording
laws.
(c) Except in the case of Loans which individually and in the aggregate
are not material or for deficiencies which can be cured without the
incurrence of unreasonable expenditures in the circumstances, to Sellers'
knowledge, each Loan included in the Financial Statements as of October 31,
1995, or acquired since that date (i) is the legal, valid and binding
obligation of the obligor thereunder, enforceable in accordance with its
terms, except (A) as enforcement may be limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting creditors' rights
generally and except as may be limited by general principles of equity
whether applied in a court of law or a court of equity, and (B) to the extent
Applicable Law requires the holder of the note with respect to the Loan to
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foreclose against the collateral for such note before seeking recovery on such
note, or prohibits a deficiency judgment or other recovery on such note against
the mortgagor or the grantor of such security interest or any guarantor of such
Loan, (ii) arose in the ordinary course of business and (iii) is secured by a
valid and legally enforceable security interest to the extent reflected in the
loan records with respect thereto except (x) as enforcement may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
affecting creditors' rights generally and except as may be limited by general
principles of equity whether applied in a court of law or a court of equity, and
(y) subject to any requirement of Applicable Law that the holder of the note
with respect to the Loan foreclose against the collateral for such note before
seeking recovery on such note, or prohibiting a deficiency judgment or other
recovery on such note against the mortgagor or the grantor of such security
interest or any guarantor of such Loan.
4.18 Mortgage Banking Licenses and Qualifications. Bank (a) is
qualified and or authorized, as appropriate (i) by FHA as a mortgagee and
servicer for FHA Loans, (ii) by VA as a lender and servicer for VA Loans,
(iii) by FNMA and FHLMC as a seller/servicer of first mortgages to FNMA and
FHLMC, and (iv) by GNMA as an authorized issuer and servicer of
GNMA-guaranteed mortgage-backed securities; and (b) has all other
certifications, authorizations, licenses, permits and other approvals
necessary to conduct its current business, and is in good standing under all
Applicable Laws and Mortgage Loan Regulations as a mortgage lender and
servicer.
4.19 Payment of Taxes, Insurance Premiums, etc. To Seller's knowledge,
the responsibilities of Bank and all prior servicers and originators of the
Serviced Mortgage Loans with respect to all applicable Taxes (including tax
reporting for the period prior to the Closing), special assessments, ground
rents, flood insurance premiums, hazard insurance premiums and mortgage
insurance premiums that are related to the Serviced Mortgage Loans have been
met in all material respects.
4.20 Minute Books. The copies of the articles of incorporation and
bylaws, including amendments, of Bank and each Bank Subsidiary which have
been delivered to Buyer are true, correct and complete. The minute books of
Bank and each Bank Subsidiary made available to Buyer are true, correct and
complete and accurately reflect all material actions duly taken to date by
its respective shareholder or owner, board of directors and committees.
4.21 Employee Benefit Plans and Employment and Labor Contracts.
(a) Sellers have furnished to Buyer Schedule 1.1(b) that sets forth all
Employee Benefit Plans and any collective bargaining agreements, labor
contracts and Employee Programs in which Bank or any Bank Subsidiary
participates, or by which it is bound. Except as set forth in
Schedule 1.1(b), (i) Bank and each Bank Subsidiary is in compliance in all
material respects with the applicable provisions of ERISA and the regulations
and published authorities thereunder currently in effect with respect to all
such Employee Benefit Plans and Employee Programs; (ii) Bank and each Bank
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Subsidiary has performed all of its obligations under all such plans and
programs; and (iii) there are no actions, suits or claims (other than routine
claims for benefits) pending or, to the knowledge of Sellers, threatened against
any such employee benefit plans or the assets of such plans, and to the
knowledge of Sellers, no facts exist which could give rise to any actions, suits
or claims (other than routine claims for benefits) against such plans or the
assets of such plans that might have a material adverse effect on such plans.
True copies of all of the Employee Benefit Plans and Employee Programs
referred to in Schedule 1.1(b), including all amendments and supplements
thereto, and all related summary plan descriptions have been made available
to Buyer.
(b) The Employee Benefit Plans have been duly authorized by the board
of directors of Bank. Each such plan and associated trust intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service and Sellers have no
knowledge of any circumstances likely to result in revocation of any such
determination letter. No event has occurred that will or could subject any
such Employee Benefit Plans to tax under Section 511 of the Code. All costs
of any Employee Benefit Plans subject to Title IV of ERISA have been provided
for on the basis of consistent methods in accordance with actuarial
assumptions and practices. Subject to amendments that are required by the
Tax Reform Act of 1986 and later legislation, since the last valuation date
for each Employee Benefit Plan subject to Title IV of ERISA, there has been
no amendment or change to such Employee Benefit Plan that would increase the
amount of benefits thereunder. Sellers have made available to Buyer for each
of the Employee Benefit Plans, to the extent applicable, (i) a copy of the
Form 5500 which was filed in each of the most recent three plan years,
including, without limitation, all schedules thereto and all financial
statements with attached opinions of independent accountants; (ii) the most
recent determination letter from the IRS; (iii) the statement of assets and
liabilities as of the most recent valuation date; and (iv) the statement of
changes in fund balance and in financial position or the statement of changes
in net assets available for benefits under each Employee Benefit Plan for the
most recently ended plan year. The documents referred to in subdivisions
(iii) and (iv) fairly present the financial condition of each of said
Employee Benefit Plans as at such dates and the results of operations of each
of said plans, all in accordance with GAAP or applicable regulatory
accounting principles applied on a consistent basis.
(c) Neither Bank nor any entity with which Bank has been treated as a
single employer under Section 4001(b) of ERISA sponsors or participates, or
has sponsored or participated, in any Employee Benefit Plan that is a
"multiemployer plan" (within the meaning of Section 3(37) of ERISA) that
would subject such Person to any liability with respect to any such Employee
Benefit Plan.
(d) All group health plans of Bank (within the meaning of
Section 5000(b)(1) of the Code) have been operated in compliance in all
material respects with the group health plan continuation coverage
requirements of Section 4980B of the Code and Section 601 through 609 of
ERISA, to the extent such requirements are applicable.
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(e) There have been no acts or omissions by Bank that have given rise
to or may give rise to fines, penalties, taxes, or related charges under
Sections 502(c), 502(i), 502(1) or 4071 of ERISA or Chapter 43 of the Code
which would be material to Bank and the Bank Subsidiaries taken as a whole.
(f) Schedule 1.1(b) sets forth the name of each director, officer or
employee of Bank or any Bank Subsidiaries entitled to receive any benefit or
any payment of any amount (including, without limitation, severance,
unemployment compensation, golden parachute or otherwise) under any existing
employment agreement, severance plan or other benefit plan as a result of the
consummation of any transaction contemplated in this Agreement, and with
respect to each such person, the nature of such benefit or the amount of such
payment, the event triggering the benefit or payment, and the date of, and
parties to, such employment agreement, severance plan or other benefit plan.
4.22 Investments. Sellers have furnished to Buyer Schedule 4.22 that,
except for investments that have matured or been sold, sets forth all of the
investments reflected in the consolidated balance sheet of Bank and the Bank
Subsidiaries, contained in the Financial Statements dated October 31, 1995,
and all of the investments made since October 31, 1995 to January 8, 1996.
Except as set forth in Schedule 4.22, (i) all such investments are legal
investments under Applicable Law for federal savings associations, and
(ii) none of such investments is subject to any restriction, contractual,
statutory or other, that would materially impair the ability of the Bank or
any Bank Subsidiary holding such investment to dispose freely of any such
investment at any time, except restrictions on the public distribution or
transfer of such investments under the Securities Act of 1933, as amended, or
state securities laws.
4.23 Broker's or Finder's Fees. Except for the fees of Merrill, Lynch &
Co. to be paid by Parent, no agent, broker, investment or commercial banker,
or other Person acting on behalf of either Seller, will have any claims
against Buyer, Bank or Purchaser for any broker's or finder's fee or any
other commission or similar fee directly or indirectly in connection with any
of the transactions contemplated in this Agreement.
4.24 Bank Accounts. Schedule 4.24 sets forth an accurate list of each
bank, trust company, savings association or other financial institution with
which the Bank or any Bank Subsidiary has an account or safe deposit box and
the names and identification of all persons authorized to draw thereon or to
have access thereto.
4.25 Deposits. Except as set forth in Schedule 4.25, none of the Bank's
Branch Deposits is a Brokered Deposit. Except as set forth in Schedule 4.25,
no portion of the Branch Deposits represents a deposit by any Affiliate of
Bank. "Brokered Deposits" shall mean all deposits of Bank for which Bank has
paid a commission or an interest rate substantially above that paid by Bank
to the general depositors of Bank at the time of issuance of the deposit.
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ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers and Bank as follows:
5.1 Organization and Related Matters. Buyer is a corporation duly
organized and validly existing in good standing under the laws of the state
of Delaware. The Purchaser will, at the time of Closing, be a bank or
savings bank duly organized and validly existing under the laws of the
jurisdiction of its organization and will have the requisite power and
authority to own, operate and lease its properties and to carry on its
business.
5.2 Authority; No Violation.
(a) Buyer has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby and at
the Closing Date, each of Purchaser and Buyer will have full corporate power
and authority to execute and deliver the Related Documents to which it is a
party and to consummate the transactions contemplated thereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly approved by all requisite
corporate action on the part of Buyer, and no other corporate proceedings on
the part of Buyer are necessary to approve this Agreement or the Related
Documents and to consummate the transactions contemplated hereby and the
transactions contemplated by this Agreement and the Related Documents will be
duly and validly approved by all requisite corporate action on the part of
the Purchaser. This Agreement and the Related Documents have been or will be
duly and validly executed and delivered by Buyer and Purchaser and (assuming
the due authorization, execution and delivery of this Agreement by Sellers
and Bank) constitute a valid and binding obligation of Buyer, enforceable
against Buyer in accordance with their respective terms, except as may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally and except as may be limited by general
principles of equity whether applied in a court of law or a court of equity.
(b) Neither the execution and delivery of this Agreement by Buyer or
the Related Documents to which Buyer or Purchaser is a party nor the
consummation by Buyer and Purchaser of the transactions contemplated hereby,
nor compliance by Buyer with any of the terms or provisions hereof will or
the execution or delivery by the Purchaser or Buyer of the Related Documents
to which it is a party (i) violate any provision of the certificate of
incorporation or bylaws of Buyer or Purchaser or (ii) assuming that the
Requisite Regulatory Approvals and consents and approvals referred to in
Section 5.3 hereof are duly obtained, (x) violate in any material respect any
Applicable Law applicable to either Buyer or Purchaser, or any of its
respective properties or assets, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Encumbrance upon any of the respective properties
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or assets of Buyer or Purchaser under, any of the terms, conditions or
provisions of any Contract to which either Buyer or Purchaser is a party or by
which either Buyer or Purchaser, or any of its properties or assets may be bound
or affected, except for such consents and approvals the failure of which to
obtain will not, individually or in the aggregate, materially adversely
affect the ability of either Buyer or Purchaser to consummate the
transactions contemplated by this Agreement.
5.3 Consents and Approvals. Except for the Requisite Regulatory
Approvals to be obtained by Sellers and Buyer, the consents and approvals to
be obtained by Sellers and the matters set forth on Schedule 5.3, no consents
or approvals of or filings or registrations with any Governmental Entity or
with any third party are necessary in connection with the execution and
delivery by Buyer of this Agreement or the consummation by Buyer or Purchaser
of the transactions contemplated hereby (including, without limitation, the
consummation of the Purchase and Assumption).
5.4 Financing; Capital. Buyer has current assets, irrevocable credit
lines, or guaranties or other financial arrangements such that at the
Closing, Buyer (or Purchaser) will have funds sufficient to enable them to
carry out their obligations under this Agreement. After giving effect to the
transactions contemplated hereby, Buyer (or Purchaser) will have sufficient
shareholders' equity to comply with all regulatory capital adequacy
requirements and will be in compliance, in all material respects, with all
other banking laws, regulations, and guidelines applicable to its respective
business as of the Closing.
5.5 Broker's or Finder's Fees. No agent, broker, investment or
commercial banker or other Person acting on behalf of Buyers will have any
claim against Sellers or Bank for any broker's or finder's fee or any other
commission or similar fee directly or indirectly in connection with any of
the transactions contemplated in this Agreement.
5.6 Proxy Statement. None of the information regarding Buyer and its
subsidiaries supplied by Buyer for inclusion in the proxy statement to be
used in connection with the shareholders' meeting at which the Purchase and
Assumption will be considered will on the date mailed be false or misleading
with respect to any material fact, or omit to state any material fact
necessary to make the statements therein not misleading, or at the time of
the shareholders' meeting at which the Purchase and Assumption is considered
to be false or misleading with respect to any material fact, or omit to state
any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for such meeting.
ARTICLE 6.
COVENANTS
The parties covenant and agree that during the period prior to the
Closing or, to the extent expressly herein provided, thereafter:
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6.1 Access. Upon the reasonable request to Parent, Sellers and Bank
shall give Buyer and its representatives reasonable access during normal
business hours to all properties, documents, accounts, books and records of
Bank and the Subsidiaries and furnish Buyer with such financial, operating
and environmental data and other information with respect to the same as
Buyer shall from time to time reasonably request, and provide Buyer with
access to Sellers' officers, employees, accountants, counsel and other
representatives, and the officers, employees, accountants, counsel and other
representatives of the Bank and the Subsidiaries, in each case subject to
Applicable Laws relating to the exchange of information. Buyer shall have
the right at its own expense to make copies of the above-described corporate
records, reports and other documents, subject to Applicable Laws relating to
the exchange of information. In addition, except as may be otherwise agreed
by the parties, Sellers shall provide Buyer with Phase I environmental
reports for each parcel of Real Property owned by the Bank (excluding
residential DPC Property). Oral reports of such environmental assessments
shall be delivered to Buyer as soon as practicable, provided Sellers use
their best efforts to provide such reports no later than six (6) weeks from
the date of this Agreement and written reports shall be delivered to Buyer as
soon as practicable, provided Sellers shall use their best efforts to provide
such reports no later than ten (10) weeks from the date of this Agreement.
Sellers shall also obtain (except as may be otherwise agreed by the parties)
Phase II environmental reports for properties identified by Buyer on the
basis of the results of such Phase I environmental reports. The costs and
expenses of all Phase II environmental reports shall be shared equally by
Buyer and Sellers. Bank shall obtain a survey and assessment of all
potential asbestos containing material in owned properties (other than DPC
property) and a written report of the results shall be delivered to Buyer as
soon as practicable, provided Sellers shall use their best efforts to obtain
a report within six (6) weeks of execution of this Agreement. During the
period prior to the Closing, Buyer shall furnish to Sellers such relevant
information as Sellers may reasonably request regarding the ability of Buyer
to perform its obligations under this Agreement.
6.2 Conduct of Business of Bank. During the period from the date of
this Agreement and continuing until the Closing Date, except as required by
Applicable Law or as expressly permitted by this Agreement, or with the prior
written consent of Buyer, Sellers shall cause Bank and the Bank Subsidiaries
to carry on their respective businesses in the usual and ordinary course, in
accordance with present practices and policies and Applicable Law, and to use
commercially reasonable efforts to pursue their relationships with customers,
suppliers and others having business dealings with them and to maintain the
services of the Employees. Without limiting the generality of the foregoing,
and except as set forth in Schedule 6.2 or as otherwise expressly permitted
by this Agreement or consented to in writing by Buyer, Sellers shall not
permit Bank or any of the Bank Subsidiaries to:
(a) Engage or participate in any material transaction, or incur or
sustain any material obligation, except in the ordinary course of business;
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(b) Except for the Branch to be constructed at Crossroads, Henderson,
Nevada, open, close or relocate any Branch or Operating Site, or acquire or
sell or agree to acquire or sell any Branch or Operating Site;
(c) Change its interest rate or fee pricing policies, or materially
alter the mix of rate, terms and account types, with respect to Branch
Deposits, other than in the ordinary course of business;
(d) Make or agree to make any improvements to the Branches or the
Operating Sites, except with respect to commitments for such made on or
before the date of this Agreement and normal maintenance or refurbishing made
in the ordinary course of business;
(e) Amend, terminate or cancel, or take any other action that may
result in an amendment, termination or cancellation of any Lease or any other
Material Contract of Bank and the Subsidiaries or enter into any Material
Contract (except for the renewal of Contracts with respect to Technology
Systems for terms not to exceed June 30, 1996, or for month to month periods
thereafter);
(f) Foreclose upon or otherwise acquire any real property securing any
Loan except in accordance with the Bank's customary policy with respect to
any such Loan;
(g) Deviate in any material respect from policies and procedures
existing as of the date hereof with respect to (i) classification of assets,
(ii) accrual of interest on assets, (iii) underwriting, pricing, originating,
warehousing, selling and servicing or buying or selling rights to service,
any Loans or Serviced Mortgage Loans, (iv) hedging (which term includes both
buying futures and forward commitments from financial institutions) its
mortgage loan positions or commitments, and (v) obtaining financing and
credit;
(h) Change its method of accounting in effect at October 31, 1995,
except as required by changes in Applicable Law, GAAP or regulatory
accounting principles as concurred to by Buyer's independent auditors;
(i) Except as required by Applicable Law or to maintain qualification
pursuant to the Code and except as required by Section 6.12 of this
Agreement, (i) adopt, amend, renew or terminate any Employee Benefit Plan or
Employee Program, between Bank or any of the Bank Subsidiaries and one or
more of its Employees, except that Bank and the Bank Subsidiaries may hire or
terminate one or more of its Employees in the ordinary course of business,
(ii) increase in any manner the compensation or fringe benefits of any
director, officer or Employee or pay any benefit not required by any Employee
Program as in effect as of the date hereof, except for normal merit increases
with respect to Employees in the ordinary course of business consistent with
past practice, or (iii) enter into or modify any Contract providing for the
payment to any director, officer or Employee of the Bank or any Bank
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Subsidiaries of compensation or benefits contingent, or the terms of which
are materially altered, upon the occurrence of any of the transactions
contemplated by this Agreement ("Management Contracts"), provided that the
foregoing shall not prohibit the renewal of any such Management Contracts for
a one year term at the same terms and conditions as currently in effect; or
(iv) increase in any manner the compensation of any Person who is a party to
a Management Contract not required by any Employee Program as in effect on
the date hereof;
(j) Terminate or unilaterally fail to renew any existing insurance
coverage or bonds;
(k) Amend or modify its charter or bylaws;
(l) Declare or pay any cash or property dividends or distributions;
provided that Bank may pay a cash dividend on Bank Stock in an amount not to
exceed $250,000 for the quarter ending December 31, 1995, $375,000 for the
quarter ending March 31, 1996 and $375,000 for the quarter ending June 30,
1996 if the Purchase and Assumption is not consummated by such date, and
dividends at a rate equal to $1,000,000 for the month ending July 31, 1996
and $1,250,000 for each of the months ending August 31, 1996 and
September 30, 1996, which amounts shall be pro rated for each day after July
1, 1996 that the Closing Date does not occur;
(m) Declare or distribute any stock dividend, effect any stock split,
or authorize, issue, or make any distribution of its capital stock or any
other securities, grant or issue any right or option to acquire any such
additional securities, or effect any recapitalization, exchange, or
reclassification of shares;
(n) Merge with or into, consolidate with, any other Person;
(o) Except as contemplated by Section 6.11, make any direct or indirect
redemption, purchase or other acquisition of any of its Equity Interests;
(p) Except for the Branch under construction or to be constructed at
Crossroads in Henderson, Nevada, make any capital expenditures, including any
capitalized lease obligation, in amounts individually in excess of $50,000 or
in the aggregate in excess of $100,000;
(q) Make any new loan having a principal amount of $2,000,000 or more,
increase the principal amount of any outstanding loan to $2,000,000 or more
or make any commitment for any such loan or increase; provided, however, that
Buyer shall be deemed to have consented in writing to any such loan, increase
or commitment if it has not declined to give its consent within three (3)
Business Days after receipt by Buyer of a request for such consent,
accompanied by all of the credit information used by the Bank in determining
to approve such loan or commitment; provided, that Sellers will cause Bank,
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promptly after the making thereof by Bank, to supply Buyer with all reasonably
requested information concerning loans in amounts less than $2,000,000 but
greater than $1,000,000;
(r) Make any investments or enter into any derivative contracts except
investments made in the ordinary course of business for terms of up to one
year and in amounts of $100,000 or less or investments made in the ordinary
course of business with terms of ten Business Days or less;
(s) Authorize or incur any long term debt (other than deposit
liabilities and Federal Home Loan Bank advances incurred in the ordinary
course of business, consistent with past practices).
(t) Mortgage, pledge or subject to lien or other encumbrance any of its
assets or of any assets of its Bank Subsidiaries, except in the ordinary
course of business
(u) Sell or otherwise dispose of any of its or the Bank Subsidiaries'
assets or properties other than in the ordinary course of business;
(v) Make any capital contribution to any Subsidiary; or
(w) Agree (by contract or otherwise) to do any of the foregoing;
6.3 Regulatory Approvals: Consents of Third Parties.
(a) During the period prior to the Closing, Buyer, Purchaser, Sellers
and Bank shall cooperate, in preparing, submitting and filing all
applications for all Requisite Regulatory Approvals, and obtaining such
Requisite Regulatory Approvals and taking such other actions as may be
required by Applicable Laws or court or administrative proceedings with
respect to the transactions contemplated by this Agreement, and shall use all
reasonable efforts to obtain such approvals and to accomplish such actions as
expeditiously as possible. As promptly as practicable after the date of this
Agreement, Buyer and Sellers shall prepare, submit and file or cause to be
filed the applications for Requisite Regulatory Approvals set forth on
Schedule 1.1(k). Buyer and Sellers shall have the right to review in ad-
vance, and to the extent practicable each will consult the other on, in each
case subject to Applicable Laws relating to the exchange of information, all
the information which appears in any filing made with, or written materials
submitted to, any third party or any Governmental Entity in connection with
the transactions contemplated by this Agreement other than any portion of
such filings or submissions that are customarily accorded confidential
treatment. In exercising the foregoing right, each of the parties hereto
shall act reasonably and as promptly as practicable. The parties hereto
agree that they will consult and cooperate with each other with respect to
the obtaining of all Requisite Regulatory Approvals and consents or approvals
of third parties necessary or advisable to consummate the transactions
contemplated by this Agreement and each party will keep the other apprised of
the status of matters relating to completion of the transactions contemplated
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herein. Each of the Sellers and Buyer shall use reasonable efforts to take,
or cause to be taken, all actions necessary to comply promptly with all legal
requirements which may be imposed on such party or the Bank and the
Subsidiaries with respect to the transactions contemplated hereby and,
subject to the conditions set forth in Article 7 hereof, to consummate such
transactions. Buyer will furnish to Parent all information concerning Buyer
and Purchaser required for inclusion in a proxy statement or statements to be
sent to the shareholders of Parent or in any statement or application made by
Parent in connection with obtaining any Requisite Regulatory Approvals to be
obtained by it pursuant to this Agreement.
(b) Each party shall, upon request, furnish each other with all
information concerning themselves, their subsidiaries, directors, officers
and shareholders and such other matters as may be reasonably necessary or
advisable in connection with any statement, filing, notice or application
made by or on behalf of any party or any of their respective subsidiaries to
any Governmental Entity in connection with the transactions contemplated by
this Agreement.
(c) The parties shall use all reasonable efforts to obtain all
approvals, waivers and/or consents of third parties required to consummate
the transactions contemplated by this Agreement (it being understood that
Sellers shall be responsible for obtaining all such approvals, waivers and
consents from such parties with whom Bank or any of the Subsidiaries is in
contractual privity to the extent necessary to consummate the Purchase and
Assumption). If any required consent of or waiver by such third parties
(excluding Governmental Entities) is not obtained prior to the Closing, the
parties, each without cost, expense or liability to the other shall cooperate
in good faith to develop an alternative arrangement to achieve the economic
results intended, and the failure to obtain such consent or waiver shall not
constitute a failure to satisfy any condition to Closing set forth in Article
7 of this Agreement, unless material to the transactions contemplated hereby.
(d) Each party represents that at the date hereof, it does not know of
any facts that would reasonably cause it to believe that all Requisite
Regulatory Approvals could not be obtained and agrees not to take any action
or enter into any agreement or arrangement that reasonably would be expected
to delay or jeopardize its ability to obtain such Requisite Regulatory
Approvals; provided, however, (i) that nothing herein shall require Buyer to
agree to any conditions to the consummation of the Purchase and Assumption
imposed by any Governmental Entity with jurisdiction over the Purchase and
Assumption that are, individually or together with any other conditions,
reasonably deemed by Buyer in good faith to be unreasonably burdensome upon
Buyer or the Purchaser ("Buyer's Burdensome Conditions") and (ii) that
nothing herein shall require Sellers to agree to any conditions to the
consummation of the transactions contemplated by this Agreement imposed by
any Governmental Entity that are, individually or together with any other
condition, reasonably deemed by Parent in good faith to be unreasonably
burdensome upon Sellers or Bank ("Sellers' Burdensome Conditions").
(e) To the extent that the assignment of any contract or any license,
permit, approval or qualification issued or to be issued by any government or
agency or instrumentality thereof relating to the business of the Bank or the
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Purchased Assets to be assigned to Purchaser pursuant to this Agreement shall
require the consent of any other party, this Agreement shall not constitute a
contract to assign the same if an attempted assignment would constitute a
breach thereof. Sellers and Bank shall use their reasonable efforts at the
expense of Buyer, and shall cooperate with Purchaser where appropriate, to
obtain any consent necessary to any such assignment. If any such consent is
not obtained, then Sellers and the Bank shall cooperate with Buyer and
Purchaser at the expense of Buyer in any reasonable arrangement requested by
Purchaser designed to provide to Purchaser the benefits under any such
contract, license, permit, approval or qualification, including enforcement
of any and all rights of the Bank against the other party thereto arising out
of breach or cancellation thereof by such other party or otherwise. Sellers
and Bank shall obtain the consent of Buyer before incurring any expense in
connection with the foregoing terminations or consents.
(f) At the reasonable request of Buyer, the Bank will give notice to
terminate any Contract to be included in the Purchased Assets, provided that
the Bank shall not be required to terminate any such Contract (i) if it
believes that such termination may unreasonably disrupt the operation of the
business of Bank or any Bank Subsidiary and (ii) unless it obtains
satisfactory indemnification from Buyer and the Purchaser, which shall
survive the termination of this Agreement, against any related costs or
liabilities. Sellers and Bank shall obtain the consent of Buyer before
incurring any expense in connection with the foregoing terminations or
consents.
6.4 Public Announcements. Parent and Buyer shall consult with each
other before issuing any press releases or otherwise making any public
statements with respect to this Agreement or the transactions contemplated
hereby, and neither of them shall issue or permit any Affiliate to issue any
such press release or make any such public statement prior to such
consultation unless reasonably satisfactory to the other parties hereto,
except as may be required by law or by the rules or regulations of any
Governmental Entity or securities exchange.
6.5 Further Assurances. Subject to the terms and conditions of this
Agreement, Sellers, Bank and Buyer shall, and shall cause Purchaser to, do
all things reasonably necessary or desirable and within their control to
effect the consummation of the transactions contemplated hereby and cause
their respective Affiliates to take such action as is contemplated hereby or
required hereunder.
6.6 Notification of Certain Matters. Each party shall give prompt
notice to the other party of (a) the occurrence, or failure to occur, of any
event or existence of any condition that would be likely to cause any of its
representations or warranties contained in this Agreement to be untrue or
inaccurate in any material respect on the Closing Date, and (b) any failure
on its part to comply with or satisfy, in any material respect, any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement.
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6.7 Corporate Records, Contracts and Financial Statements. From the
date hereof through the Closing Date:
(a) Bank will promptly furnish Buyer with copies of the minutes of each
meeting of the shareholder or directors (including committees) of Bank or the
Bank Subsidiaries held after the date of this Agreement and any Material
Contract entered into after the date of this Agreement.
(b) Bank will promptly provide Buyer with copies of all regularly
prepared monthly board reports substantially in the same form as prepared at
the date of this Agreement and quarterly financial statements of Bank and the
Bank Subsidiaries for each month and quarterly period ending between the date
of this Agreement and the Closing Date. Such financial statements shall be
verified by the chief financial officer of Bank and will be prepared in
accordance with GAAP or applicable regulatory accounting principles, except
for the omission of normal recurring year-end audit adjustments (if any) and
notes thereto.
6.8 Delivery of Records at Closing. At or prior to the Closing, to the
extent not otherwise located at any Branch or Operating Site, Sellers shall
deliver to Buyer all Records (other than corporate minutes and organizational
documents) of the Bank and Bank Subsidiaries.
6.9 Shareholder Approval. Parent shall call a meeting of its
shareholders in conformance with California law to be held as soon as
practicable, but in any event prior to July 17, 1996, for the purpose of
voting on the approval of this Agreement and the transactions contemplated
hereby and shall direct that this Agreement and Purchase and Assumption be
submitted to a vote at that meeting. The board of directors of Parent shall
recommend shareholder approval of this Agreement and such transactions and
use its best efforts to solicit from Parent's shareholders proxies in favor
thereof, except to the extent, based upon the advice of counsel, the board of
directors of Parent determines in good faith that to do so would or is likely
to violate its fiduciary duties under applicable law. Neither Parent, nor
any director, officer, representative or agent thereof, will directly or
indirectly, solicit, authorize the solicitation of or, except to the extent
based on the advice of counsel the board of directors of Parent determines in
good faith that failure to do so would or is likely to violate its fiduciary
duties under applicable law, enter into any discussions with any corporation,
partnership, person or other entity or group (other than Buyer) concerning
any offer or possible offer (an "Acquisition Proposal") (i) to purchase any
shares of common stock, any option or warrant to purchase any shares of
common stock, any securities convertible into any shares of such common
stock, or any other equity security of Bank (ii) to purchase, lease or
otherwise acquire the assets of Bank or any Bank Subsidiary except in the
ordinary course of business, or (iii) to merge, consolidate or otherwise
combine with Bank or any Bank Subsidiary (an "Acquisition Event"). If any
corporation, partnership, person or other entity or group makes an offer or
inquiry to Sellers or Bank or any Bank Subsidiary concerning any of the
foregoing, Sellers, Bank or such Bank Subsidiary will promptly disclose such
offer or inquiry, including the terms thereof, to Buyer.
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6.10 Resignations. Sellers shall obtain the resignations, to be
effective at the Closing, of the directors of the Bank Subsidiaries.
6.11 Taxes. Immediately prior to the Closing Date, Sellers shall make a
cash payment to Bank which shall constitute a Purchased Asset, in an amount
equal to the amount set forth on Schedule 6.11 ("Deferred Tax Amount"). It
is agreed that for purposes of Schedule 6.11, that the contingent tax
liability related to real estate shall not exceed the total contingent tax
liability recorded on the books of Bank and the Bank Subsidiaries. Sellers
will, upon filing of their consolidated Tax Return for the year including the
Closing Date, disclose to Buyer the actual Deferred Tax Amount claimed on
said return ("Claimed Amount"). If the Claimed Amount is more than 10%
greater or less than the Deferred Tax Amount shown on Schedule 6.11, then,
within 30 days after filing such return (i) Sellers shall pay to Buyer such
amount if greater than the amount shown on Schedule 6.11 and (ii) Buyer shall
pay to Sellers such amount if less than the amount shown on Schedule 6.11,
said payments to be in immediately available funds.
6.12 Termination and Amendment of Certain Employee Benefit Plans. At
the request of Buyer, Sellers and the Bank shall use their reasonable
efforts, at the sole cost and expense of Buyer, with respect to the following
Employee Benefit Plans, to terminate the following plans and to the extent
necessary under the terms of the Plans, obtain consent of participants in
each for lump sum distributions:
(i) The Executive Deferral Plan;
(ii) The Director Deferral Plan;
(iii) The Supplemental Executive Retirement Plan, I;
(iv) The Supplemental Executive Retirement Plan II;
(v) Long-Term Incentive Compensation Plan; and
(vi) Severance Agreement for Sherman Miller.
Notwithstanding the foregoing, it shall not be a condition of Buyer's
obligation to consummate the Purchase and Assumption that the above-referenced
Employee Benefit Plans are terminated or that the consents of participants for
lump sum distributions are obtained. Sellers shall obtain the consent of Buyer
before incurring any expense in connection with the foregoing terminations.
6.13 Amendment of Contracts. Sellers and Bank shall their reasonable
efforts to take such actions as may be necessary to (i) amend the Agent Bank
Agreement between Bank and National City Bank dated January 3, 1994, as of
the Closing Date, on terms acceptable to the Buyer, to clarify that the non-
competition and/or termination provisions of such contract will not prevent
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any of Buyer's Affiliates from issuing credit cards in any state, and (ii) to
terminate as of the Closing Date the contracts listed on Schedule 6.13.
Notwithstanding the foregoing, it shall not be a condition of Buyer's obligation
to consummate the Purchase and Assumption that the Agent Bank Agreement be
amended or the Contacts set forth on Schedule 6.13 be terminated as of the
Closing Date. Sellers shall obtain the consent of Buyer before incurring any
expense in connection with the foregoing terminations.
6.14 Employees. As of the Closing Date, Buyer shall cause Purchaser to
employ each Employee who is employed by the Bank on the day before the
Closing Date. The Assumed Liabilities shall include, among other things, all
obligations of Bank and the Bank Subsidiaries for compensation, wages,
bonuses, severance pay, vacation time, pay in lieu of vacation, sickness and
accident benefits, leaves of absence and similar employee benefits provided
by Bank or the Bank Subsidiaries to the Employees prior to the Closing Date
and any obligations relating to the termination of employment of any such
Employee as of the Closing Date or thereafter.
ARTICLE 7.
CONDITIONS TO CLOSING
7.1 Reciprocal Conditions. The obligations of each of the Sellers,
Bank, Buyer and Purchaser to effect the Closing shall be subject to the
following conditions which, to the extent permitted by Applicable Law, may be
waived in writing by such party as a condition to its own obligations:
(a) No legal administrative, arbitration, investigatory or other
proceedings by any Governmental Entity shall have been instituted and, on
what otherwise would have been the Closing Date, remain pending, to restrain
or prohibit in any material respect the transactions contemplated by this
Agreement, nor shall there be in effect on such date an injunctive order or
decree of a court of competent jurisdiction restraining or prohibiting in any
material respect the transactions contemplated by this Agreement.
(b) All Requisite Regulatory Approvals shall have been obtained or made
and shall remain in full force and effect, and all necessary waiting periods
under Applicable Law shall have expired; except in any case for matters not
material to the transactions contemplated by this Agreement. All other
material statutory or regulatory requirements for the valid consummation of
the transactions contemplated by this Agreement shall have been satisfied,
including any filings required to be made under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the expiration of any
waiting periods thereunder or under the Bank Holding Company Act of 1956, as
amended, or the Savings and Loan Holding Company Act or otherwise.
(c) All approvals or consents of any other third party required in
order to consummate the transactions contemplated by this Agreement shall
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have been obtained and remain in full force and effect, except in any case for
matters not material to the transactions contemplated by this Agreement and
except to the extent otherwise provided in Section 6.3(c).
(d) This Agreement and the transactions contemplated hereby shall have
been approved by the affirmative vote of the holders of the percentage of the
outstanding shares of Parent required for approval of this Agreement in
accordance with the provisions of Parent's Articles of Incorporation and the
California General Corporations Law.
7.2 Conditions to Buyer's Obligations. The obligations of Buyer and
Purchaser to effect the Closing shall be subject to the following additional
conditions which may be waived in writing by Buyer:
(a) The representations and warranties of Sellers contained in this
Agreement shall be true in all material respects as of the date of this
Agreement and on the Closing Date with the same effect as though made at such
time; Sellers and Bank shall have performed all obligations and complied in
all material respects with all covenants and conditions required by this
Agreement to be performed or complied with by them at or prior to the Closing
Date; and Sellers and Bank shall have delivered to Buyer and Purchaser a
certificate dated the Closing Date and signed in their respective names and
on their respective behalf by their respective chief executive officer and
principal financial officer to the foregoing effect to the best knowledge of
such officers;
(b) Opinions of O'Melveny & Myers, counsel to Sellers and Bank, and of
Sellers' in-house counsel, covering the matters contemplated by Exhibit C-1
and C-2, respectively, shall have been delivered to Buyer;
(c) During the period from the date of this Agreement to the Closing
Date, there shall not have been any material adverse change in Bank and the
Bank Subsidiaries taken as a whole, or any injunctions, orders, judgments or
decrees which are material to Bank and the Bank Subsidiaries taken as a whole
and Buyer shall have received a certificate dated the Closing Date signed by
the chief executive officer and the chief financial officer of Bank attesting
to such fact to the best knowledge of such officers;
(d) In connection with any Requisite Regulatory Approvals, no Buyer's
Burdensome Conditions shall be imposed.
(e) Bank shall have duly authorized, executed, and delivered to the
Purchaser the Bill of Sale dated as of the Closing Date.
7.3 Conditions to Sellers' Obligations. The obligation of Sellers and
Bank to effect the Closing shall be subject to the following additional
conditions which may be waived in writing by Sellers:
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(a) The representations and warranties of Buyer contained in this
Agreement shall be true in all material respects as of the date of this
Agreement and on the Closing Date with the same effect as though made at such
time; Buyer and Purchaser shall have performed all obligations and complied
with all material covenants and conditions required by this Agreement to be
performed or complied with by them at or prior to the Closing Date; and Buyer
shall have delivered to Sellers a certificate, dated the Closing Date and
signed in its name and on its behalf by its chief executive and principal
financial officer to the foregoing effect to the best knowledge of such
officers;
(b) Opinion of Buyer's General Counsel or Senior Counsel, covering the
matters contemplated by Exhibit D, shall have been delivered to Sellers; and
(c) In connection with any Requisite Regulatory Approvals, no Sellers'
Burdensome Conditions shall be imposed.
(d) The Purchaser shall have duly authorized, executed and delivered to
the Bank the Assumption Agreement dated as of the Closing Date.
ARTICLE 8.
TAX MATTERS
8.1 Liability for Taxes.
(a) Liability of Sellers. SC and, to the extent permitted by
Applicable Law, Parent and Bank shall be liable for and indemnify Buyer and
Purchaser against all Taxes imposed with respect to the Purchased Assets
(i) for any taxable year or period that ends on or before the Closing Date or
(ii) with respect to any taxable year or period beginning before and ending
after the Closing Date, the portion of such taxable year or period ending on
and including the Closing Date, except to the extent such Taxes are accrued
on the balance sheet of the Bank and the Bank Subsidiaries contained in the
Financial Statements as of October 31, 1995, adjusted to reflect (1) payments
or refunds made or received by Bank or the Bank Subsidiaries after October
31, 1995 and prior to the Closing Date, (2) payments under Section 6.11, (3)
previous payments or refunds under this Article 8, and (4) accruals for Taxes
related to operations subsequent to October 31, 1995 and prior to the Closing
Date.
(b) Liability of Buyer. Buyer shall be liable for and indemnify the
Sellers and Bank against all Taxes imposed with respect to the Purchased
Assets for (i) any taxable year or period that begins after the Closing Date
and (ii) with respect to any taxable year or period beginning before and
ending after the Closing Date, the portion of such taxable year beginning on
the day after the Closing Date.
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(c) Accrued Refunds. Buyer shall be entitled to receive any Tax
refunds related to Bank or the Bank Subsidiaries which constitute Tax
receivables accrued on the balance sheet of the Bank and the Bank
Subsidiaries contained in the Financial Statements as of October 31, 1995,
adjusted to reflect (1) refunds received by Bank or the Bank Subsidiaries
after October 31, 1995 and prior to the Closing Date, (2) payments under
Section 6.11, and (3) previous payments or refunds under this Article 8.
(d) Accrued Payments. To the extent that Taxes are accrued on the
balance sheet of the Bank and the Bank Subsidiaries contained in the
Financial Statements as of October 31, 1995, adjusted to reflect (1) payments
or refunds made or received by Bank or the Bank Subsidiaries after October
31, 1995 and prior to the Closing Date, (2) payments under Section 6.11, (3)
previous payments or refunds under this Article 8, and (4) accruals for Taxes
related to operations subsequent to October 31, 1995 and prior to the Closing
Date, Buyer shall be obligated to make payments for such Taxes.
8.2 Survival. The obligations of the parties under this Article 8
shall survive until expiration of the applicable statute of limitations (or
any extension).
8.3 Transfer Taxes. All stamp, transfer, documentary, sales, use,
registration and other such taxes and fees (including any penalties and
interest) incurred in connection with the Purchase and Assumption Option
(collectively, the "Transfer Taxes") shall be paid by Purchaser and Bank
shall properly file on a timely basis all necessary tax returns and other
documentation with respect to any Transfer Tax.
8.4 Tax Cooperation. Buyer and Purchaser shall: (a) cooperate fully
in preparing for any audits of or disputes with taxing authorities regarding,
any Taxes imposed on Bank or the Bank Subsidiaries with respect to matters
arising prior to the Closing Date or Taxes imposed on Sellers or Bank as a
result of the consummation of the transactions contemplated hereby; (b) make
available to the other and to any taxing authority, as reasonably requested
by Sellers and Bank, all information, records and documents relating to Taxes
imposed on Bank or the Bank Subsidiaries with respect to matters arising
prior to the Closing Date or Taxes imposed on Sellers or Bank as a result of
the consummation of the transactions contemplated hereby; and (c) provide
timely notice to Parent in writing of any pending or threatened audits or
assessments relating to Taxes imposed on the Bank or the Bank Subsidiaries
with respect to matters arising prior to the Closing Date. Sellers, Bank,
Purchaser and Buyer shall each (y) cooperate in the preparation of any Tax
Returns which the other is responsible for preparing and filing; and (z)
furnish the other with copies of all correspondence received from any taxing
authority in connection with any audit or information request with respect to
Taxes imposed on the Bank or the Bank Subsidiaries with respect to matters
prior to the Closing Date.
ARTICLE 9.
TERMINATION/SURVIVAL/INDEMNIFICATION/TERMINATION FEE
9.1 Termination. This Agreement may be terminated by either of the
parties, if the Closing has not yet occurred, on the Final Termination Date
(unless the failure of such occurrence shall be due to the failure of the party
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seeking to terminate this Agreement to perform or observe all of the agreements
contained herein required to be performed or observed prior to the Closing),
unless extended by the written consent of Sellers and Buyer, and this Agreement
may be terminated at any other time prior to the Closing Date as follows and in
no other manner:
(a) by consent of the parties evidenced by their written agreement;
(b) by Sellers and Bank or by Buyer, as the case may be, upon written
notice to the other, if the Bank Regulators, or any other Governmental Entity
having jurisdiction over the transactions contemplated by this Agreement,
shall notify Buyer or Sellers in writing that by its final determination it
will refuse to grant an approval or consent to any material aspect of the
transactions necessary to the consummation thereof, unless within 30 days
after receipt of notice of such action, the party against whom the action was
taken shall agree to submit or resubmit an application to, or appeal the
decision of the Bank Regulator or Governmental Entity which denied or refused
to grant approval thereof;
(c) by Sellers and Bank upon written notice of termination to Buyer if
Buyer shall not have filed applications with the Bank Regulators, for
approval of the Purchase and Assumption by March 22, 1996, unless Buyer's
failure to file such applications shall be primarily the result of a breach
of Sellers' covenants under Section 6.3 hereof;
(d) by Sellers and Bank upon written notice of termination to Buyer if
any event occurs which makes it impossible to satisfy, by the Final
Termination Date, one or more of the conditions to the obligations of Sellers
set forth in Section 7.1 or 7.3, and such failure is not waived by Sellers;
(e) by Buyer upon written notice of termination to Sellers and Bank if
any event occurs which makes it impossible to satisfy, by the Final
Termination Date, one or more of the conditions to the obligations of Buyer
set forth in Section 7.1 or 7.2, and such failure is not waived by Buyer;
(f) by Buyer pursuant to Section 9.7; and
(g) by Buyer upon written notice of termination to Sellers and Bank if
Bank shall not have filed or attempted to file in good faith applications
with the Bank Regulators set forth on Schedule 9.1(g) by March 22, 1996.
Any such termination shall be without liability to either party,
provided that no such termination shall relieve a party of liability for
default in the performance of any of its obligations or breach of any of its
representations and warranties. Notwithstanding the foregoing, if this
Agreement is terminated for any reason other than as set forth in clause (e)
above or Section 9.7, Buyer shall reimburse Bank for all expense incurred by
Bank pursuant to Section 6.12 and 6.13.
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9.2 Survival of Representations and Warranties. Except for covenants
with respect to obligations to be performed post-Closing, the respective
representations and warranties and covenants of Sellers, Bank and Buyer
contained herein shall survive for a period of one year after the Closing
Date; provided, however, that any representations and warranties contained in
Section 4.11, the covenants of SC and Bank set forth in Section 9.3(c), the
covenants set forth in Section 9.5 and Section 9.6 and the covenants of the
parties set forth in Section 6.14 and Article 8 shall survive the Closing or
until the expiration of any applicable statutes of limitation (as extended).
Following such termination of such representations and warranties and
covenants, no party shall have any liability whatsoever with respect thereto.
9.3 Indemnification.
(a) From and after the Closing Date, each Seller and Bank shall
indemnify Buyer and Purchaser and hold Buyer and Purchaser harmless from and
against any and all Loss that Buyer may suffer, incur or sustain to the
extent arising out of (i) any breach of any representation or warranty made
by such Sellers pursuant to Article 4 of this Agreement, and (ii) any breach
of any agreement to be performed by Sellers or Bank pursuant to this
Agreement.
(b) From and after the Closing Date, Buyer and Purchaser shall
indemnify Sellers and Bank and hold them harmless from and against any and
all Loss that either Sellers or Bank may suffer, incur or sustain to the
extent arising out of (i) any representation or warranty made by Buyer
pursuant to Article 5 of this Agreement, (ii) any breach of any agreement to
be performed by Buyer or Purchaser pursuant to this Agreement, and (iii) the
Assumed Liabilities (except to the extent such Loss is as a result of a
breach of any representation or warranty made by Sellers pursuant to Article
4 of this Agreement or any breach of any Agreement to be performed by Sellers
or Bank pursuant to this Agreement).
(c) From and after the Closing Date, SC and Bank shall indemnify Buyer
and Purchaser and hold them harmless against any and all Losses relating to
or arising out of the Retained Liabilities. In no event shall SC's or Bank's
obligations hereunder in the aggregate exceed $175,000,000.
(d) To exercise its indemnification rights under Section 9.3 as the
result of the assertion against it of any claim or potential liability for
which indemnification is provided, the indemnified party shall promptly
notify the indemnifying party of the assertion of such claim, discovery of
any such potential liability or the commencement of any action or proceeding
in respect of which indemnity may be sought hereunder. The indemnified party
shall afford the indemnifying party the opportunity, at the indemnifying
party's sole cost and expense, to defend against such claims for liability.
In any such action or proceeding, the indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be
at its own expense unless (i) the indemnifying party and the indemnified
party mutually agree to the retention of such counsel or (ii) the named parties
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to any such suit action, or proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party, and in the reasonable
judgment of the indemnified party, based upon a written opinion of counsel,
representation of the indemnifying party and the indemnified party by the same
counsel would be inadvisable due to conflicts of interests between them.
(e) The indemnified party shall have the right to settle or compromise
any claim or liability subject to indemnification under Section 9.3, and to
be indemnified from and against all Loss resulting therefrom, unless the
indemnifying party, within 30 calendar days after receiving written notice of
the claim or liability in accordance with Section 9.3(d) above, notifies the
indemnified party that it intends to defend against such claim or liability
and undertakes such defense, or, if required in a shorter time than
30 calendar days, the indemnifying party makes the requisite response to such
claim or liability asserted. Notwithstanding the foregoing, neither Buyer
nor Bank shall be entitled to settle or compromise any claim or liability
arising out of the Real Estate Liabilities without the written consent of SC,
which shall not be unreasonably withheld or delayed.
(f) The indemnified party shall at all times use its reasonable efforts
(at the indemnifying party's expense) to mitigate the Loss for which the
indemnifying party may be liable pursuant to this Agreement. With respect to
any matter for which the indemnifying party may be liable pursuant to the
provisions of this Agreement, the indemnified party shall (at the
indemnifying party's expense) diligently pursue (including, without
limitation, the commencement and pursuit of litigation) any and all rights
and remedies under agreements and contracts, including, without limitation,
insurance policies, with third parties pursuant to which the indemnified
party has rights of recourse or is indemnified or the beneficiary of a
guaranty.
(g) Sellers and Bank shall not be required to indemnify Buyer or
Purchaser under Section 9.3(a) unless the aggregate of all amounts for which
indemnity would otherwise be payable thereunder by Sellers exceed $1,000,000,
and in such event Sellers shall be responsible only for the amount in excess
of such $1,000,000. In no event shall Sellers' obligations under Section
9.3(a) exceed $5,000,000.
(h) Buyer and Purchaser shall not be required to indemnify Sellers or
Bank under Section 9.3(b) (i) or (ii) unless the aggregate of all amounts for
which indemnity would otherwise be payable thereunder by Buyer exceed
$1,000,000, and in such event Buyer shall be responsible only for the amount
in excess of such $1,000,000. In no event shall Buyer's and Purchaser's
obligations under Sections 9.3(b) (i) and 9.3(b)(ii) exceed $5,000,000 and in
no event shall Buyer's obligations under Section 9.3(b) (iii) exceed
$175,000,000 less any amounts paid by Purchaser or any of its successors and
assigns with respect thereto.
(i) Any amounts payable by an indemnifying party hereunder shall be net
of the dollar amount of any insurance proceeds recovered by the indemnified
party with respect to such Loss.
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(j) The remedies provided in Article 8 and in this Article 9 shall
constitute the sole and exclusive remedy with respect to the matters set
forth in Section 9.3.
9.4 Confidentiality Agreement. The Confidentiality Agreement shall
terminate on the Closing Date, other than with respect to any Evaluation
Material (as defined in the Confidentiality Agreement) concerning Parent, SC
or the Real Estate Subsidiaries.
9.5 Limitations on Dividends from SC, Etc. SC and Bank shall not, and
Parent shall not permit SC or Bank (i) to pay a dividend to Parent or loan
the proceeds of this transaction to Parent in any manner that would cause SC
or Bank to be unable to satisfy its obligations under Sections 8.1(a) or
9.3(c), (ii) sell SC or otherwise transfer, merge, consolidate or dissolve SC
(other than to or with Bank) or (iii) sell or subject to Encumbrance or
otherwise dispose of any of SC's or Bank's assets other than to SC or Bank
unless the proceeds of such sale, Encumbrance or disposition are retained by
SC or Bank or used by SC or Bank to satisfy its obligations under Sections
8.1(a) or 9.3(c). In the event that, notwithstanding the foregoing, SC or
Bank is unable to satisfy its obligations under Sections 8.1(a) and 9.3(c) as
a result of the payment of a dividend or loan to Parent or the actions taken
in subclauses (ii) or (iii), Parent shall promptly repay to Bank and SC the
amount which Bank or SC are unable to pay as a result of the payment of such
dividends or loan or the actions taken in subsection (i) or (ii).
9.6 Insurance Claims.
(a) To the extent that any policies of insurance of Sellers provide
defense and/or indemnity for claims or losses which occurred with respect to
Bank prior to the Closing Date, Buyer and Purchaser will have the right to
manage such claims/losses and receive any protection afforded thereunder.
Buyer shall promptly notify Parent, SC and Bank of all material events which
have occurred in connection with the prosecution of such claims.
(b) At the request of Buyer, Sellers shall use their reasonable efforts
to amend any of Sellers' insurance policies in effect on the date hereof which
provide for coverage only on a "claims made" basis to an "occurrence" basis or
to provide for an extended discovery period thereunder (in either case for a
period not less than seven years following the Closing Date) for Bank
liabilities that are based on acts or omissions occurring on or prior to the
Closing Date, the cost of which shall be the responsibility of Purchaser and
Buyer. In addition, Parent shall provide to Buyer a certified copy of each
such policy. Sellers shall advise Buyer before incurring any out of pocket
expense related to any such amendment.
(c) Nothing in this Article 9 shall be deemed to limit or supercede any
insurance coverage available to or provided on behalf of any party hereto.
(d) Buyer shall cause each Bank Subsidiary to make all claims for Losses
which any Bank Subsidiary may suffer, incur or sustain with respect to matters
covered by insurance policies for which Bank is the insured and which are
disclosed on Schedule 4.13 of which a Bank Subsidiary is aware and in effect on
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or prior to the Closing Date and shall do all such things as may be reasonably
requested in connection with the prosecution of such claims. Buyer shall
promptly notify Parent and SC of any such claims which have been filed and of
all material events which occur in connection with the prosecution of such
claims.
9.7 Termination Fee. If (a) an Acquisition Proposal is made, (b) the
board of directors of the Parent fails to recommend shareholder approval
of this Agreement or withdraws or modifies such recommendation in a manner
adverse to Buyer, and (c) either (i) this Agreement is not approved by the
affirmative vote of the holders of the percentage of the outstanding shares
of Parent required for approval of this Agreement in accordance with the
provisions of Parent's Articles of Incorporation and the California General
Corporations Law, or (ii) the meeting of shareholders of the Parent at which
approval of this Agreement and the transactions contemplated hereby is sought
does not occur on or before August 16, 1996, or (d) an Acquisition Event
occurs prior to termination of this Agreement, then Buyer may terminate this
Agreement by written notice of termination to Sellers and Bank, whereupon no
party shall have any liability to any other party except that Sellers shall
pay to Buyer, within ten Business Days after receipt by Sellers of Buyer's
written notice of termination or the occurrence of an Acquisition Event, the
amount of $5,250,000, plus documented expenses incurred by Buyer in
connection with this Agreement and the transactions contemplated herein,
including reasonable accounting and legal fees (for a total of all expenses
not to exceed $1,250,000) such payments to be in immediately available funds
to an account or accounts specified in writing by Buyer to Seller.
ARTICLE 10
EMPLOYEE BENEFIT PLANS
Each person who is an employee of Bank as of the Closing Date ("Bank
Employees") shall be eligible for participation in the employee welfare and
retirement plans of Buyer, as in effect from time to time, as follows:
(a) Employee Welfare Benefit Plans. Each Bank Employee shall be
eligible for participation in the employee welfare benefit plans of Buyer
listed below subject to any eligibility requirements applicable to such plans
(but not subject to any pre-existing conditions or exclusions except for the
Norwest Long Term Care Plan) and shall enter each plan not later than the
first day of the calendar quarter which begins at least 32 days after the
Closing Date, provided, however, that until the effective date of coverage
for Bank Employees under the Buyers' employee welfare benefit plans listed
below, the employee welfare benefit plans of Bank, as in effect prior to the
Closing Date, shall be maintained for the benefit of Bank Employees on the
terms and conditions previously in effect, including with respect to employer
contributions, to ensure that no gap in coverage occurs:
Medical Plan
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Dental Plan
Vision Plan
Short Term Disability Plan
Long Term Disability Plan
Long Term Care Plan
Flexible Benefits Plan
Basic Group Life Insurance Plan
Group Universal Life Insurance Plan
Dependent Group Life Insurance Plan
Business Travel Accident Insurance Plan
Accidental Death and Dismemberment Plan
Severance Pay Plan
Vacation Program
For the purpose of determining each Bank Employee's benefits for the year in
which the Closing occurs under Buyer's vacation program, vacation taken by a
Bank Employee in the year in which the Purchase and Assumption occurs will be
deducted from the total Buyer's benefit. After the Closing Date, Bank
Employees will be subject to Buyer's Vacation Program in accordance with the
terms of that Program, with full credit for years of past service to Bank and
the Bank's Subsidiaries . For purposes of the Short Term Disability Plan and
Severance Policy, Bank Employees will receive full credit for years of past
service with Bank and the Bank Subsidiaries. Each Bank Employee whose
employment is terminated on or after the Closing Date shall be eligible to
receive benefits under Buyer's Severance Pay Plan on the terms and conditions
stated therein with full credit for years of past service with Bank and the
Bank Subsidiaries.
Bank Employees shall not be entitled to past service credit with regard
to retiree medical benefits.
(b) Employee Retirement Benefit Plans.
Each Bank Employee shall be eligible for participation in the Norwest
Savings Investment Plan (the "SIP"), subject to any eligibility requirements
applicable to the SIP (with full credit for years of past service to Bank to
the extent such service was credited in the Bank 401(k) for the purpose of
satisfying any eligibility and vesting periods applicable to SIP), and shall
enter the SIP not later than the first day of the calendar quarter which
begins at least 32 days after the Closing Date.
Each Bank Employee shall be eligible for participation in the Norwest
Pension Plan under the terms thereof with full credit for years of past
service to Bank and the Bank Subsidiaries to the extent such service was
credited in the Bank Pension Plan for the purpose of satisfying any
eligibility and vesting periods applicable to the Norwest Pension Plan (but
not for benefit purposes).
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ARTICLE 11.
MISCELLANEOUS
11.1 Expenses; Attorneys' Fees. Except as otherwise expressly provided
herein, each party shall bear its own expenses and all fees and out-of-pocket
expenses of outside counsel, independent public accountants, investment
bankers, brokers, finders and other consultants shall be paid or provided for
by the party employing such person; provided that Buyer shall be responsible
for any additional costs incurred in connection with any transaction
contemplated by Buyer after the Purchase and Assumption and Sellers shall be
responsible for the out-of-pocket expenses of outside counsel, independent
public accountants, investment bankers, brokers, finders and other
consultants incurred prior to the Closing Date by Bank in connection with
this Agreement, except as otherwise provided in this Agreement; provided
further Buyer shall reimburse Sellers for any and all documented out-of-pocket
expenses incurred by Sellers or Bank, including reasonable legal and accounting
fees and expenses, in connection with (i) Sellers' or Bank's efforts to obtain
the regulatory approvals set forth in Schedule 1.1(k) required to be obtained
by Sellers or Bank and the approvals, waivers and/or consents of third parties
required to consummate the transactions contemplated by this Agreement but not
the Acquisition Agreement and (ii) the Bank ceasing to be regulated as an
insured depository institution or savings and loan association. Sellers shall
use their reasonable efforts to consult with Buyer before incurring any expenses
referred to in the last proviso.
11.2 Amendments. The provisions of this Agreement and any Exhibit or
Schedule attached hereto (or agreement entered into concurrently
herewith) may be amended or waived only in writing by agreement of the
parties hereto except as otherwise provided by law.
11.3 Schedules; Exhibits. Each Schedule and Exhibit delivered in
connection with or pursuant to this Agreement shall be in writing and shall
constitute a part of this Agreement, although such Schedule or Exhibit need
not be attached to each copy of this Agreement. Disclosure of any fact or
item in any Schedule referenced by a particular section of this Agreement
shall be deemed to have been disclosed for any and all purposes under this
Agreement. The specification of any dollar amount in the representations and
warranties contained in this Agreement or the inclusion of any specific items
in any Schedules hereto is not intended to imply that such amounts, or higher
or lower amounts, or the items so included or other items, are or are not
material, and neither party shall use the fact of the setting of such amounts
or the inclusion of any such item in any dispute or controversy between the
parties as to whether any obligation, item or matter not described herein or
included in a Schedule, or otherwise, is or is not material for purposes of
this Agreement. Unless otherwise specified, definitions given to terms in
this Agreement or the Exhibits and Schedules shall apply to all parts of this
Agreement including the Exhibits and Schedules.
11.4 Integration. To the extent provided in Section 9.4, this Agreement
supersedes any and all prior agreements or understandings of the parties in
connection herewith or with respect to the subject matter hereof.
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11.5 Governing Law. This Agreement, the legal relations between the
parties and the adjudication and the enforcement thereof shall be governed by
and interpreted and construed in accordance with the substantive laws of the
State of California, and, to the extent applicable, federal law.
11.6 Notices. All notices hereunder shall be in writing, and shall be
deemed given when (a) delivered in person, (b) transmitted by telecopy,
provided that any notice so given is also mailed as provided in clause (c),
or (c) mailed by certified or registered mail, postage prepaid, return
receipt requested, addressed as follows:
If to Buyer:
Norwest Corporation
Norwest Center
Sixth and Marquette
Minneapolis, MN 55479-1026
Attention: Secretary
If to Sellers:
Southwest Gas Corporation
5241 Spring Mountain Road
Las Vegas, Nevada 89102
Attention: Chief Financial Officer
With a copy to:
O'Melveny & Myers
400 South Hope Street
Los Angeles, California 90071-2899
Telecopy: (213) 669-6407
Attention: Frances E. Lossing, Esq.
11.7 No Assignment. Neither this Agreement nor any rights hereunder may
be assigned by any party without the written consent of the other parties
hereto; provided, however, that the Buyer and the Purchaser may assign their
respective rights and obligations (other than Buyer's obligation to pay or
cause to be paid the Purchase and Assumption Purchase Price) hereunder to
each other or any of Buyer's direct or indirect subsidiaries; provided,
however, that Buyer shall guarantee, in a form reasonably satisfactory to
Sellers, the performance of the obligations of any of its assignees under
this Agreement or any of the Related Documents.
11.8 Headings. The descriptive headings of the sections of this
Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
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11.9 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original but all of which taken together shall
constitute one and the same agreement.
11.10 Severability. If any provision of this Agreement is
determined to be invalid, illegal or unenforceable by any Governmental
Entity, the remaining provisions of this Agreement shall remain in full force
and effect, provided that the essential terms and conditions of this
Agreement for both parties remain valid, binding and enforceable.
11.11 Alternative Dispute Resolution. If a dispute arises between
the parties relating to this Agreement, the following procedure shall be
implemented before either party pursues other available remedies, except that
either party may seek injunctive relief from a court, where appropriate, in
order to maintain the status quo while this procedure is being followed:
(a) The parties shall meet within ten days after either party notifies
the other party in writing of the existence of a dispute to attempt in good
faith to negotiate a resolution of the dispute. The meeting shall be
attended by persons with authority to settle the dispute; provided, however,
that no such meeting shall be deemed to vitiate or reduce the obligations and
liabilities of the parties or be deemed a waiver by either party of any
remedies to which such party otherwise would be entitled.
(b) If within 15 days after such meeting, the parties have not
succeeded in negotiating a resolution of the dispute, the dispute shall be
determined by arbitration. The arbitration shall be conducted in accordance
with the United States Arbitration Act (Title 9, U.S. Code) and under the
Commercial Rules of the American Arbitration Association; provided, however,
that with respect to Section 30, failure of any party to appear or respond in
the arbitration proceeding shall result in a default award against such
party. The arbitrator(s) shall give effect to statutes of limitation in
determining any claim. Any controversy concerning whether an issue is
arbitrable shall be determined by the arbitrator(s). The award rendered by
the arbitrator(s) shall set forth findings of the facts and conclusions of
law and shall be final, and the judgment may be entered in any court having
jurisdiction thereof. A failure by the arbitrator(s) to make findings of
fact and conclusions of law shall be grounds for overturning the award.
(c) In any arbitration proceeding, the arbitrator(s) is (are)
authorized to apportion costs and expenses, including investigation, legal
and other expense, which will include, if applicable, a reasonable estimate
of allocated costs and expense or in-house legal counsel and legal staff.
Such costs and expenses are to be awarded only after the conclusion of the
arbitration and will not be advanced during the course of such arbitration.
(d) Any arbitration hereunder shall take place in the City of
Las Vegas, Nevada, unless otherwise agreed by the parties.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
SOUTHWEST GAS CORPORATION:
___________________________________
Name:
Title:
___________________________________
Name:
Title:
THE SOUTHWEST COMPANIES:
___________________________________
Name:
Title:
___________________________________
Name:
Title:
PRIMERIT BANK, FEDERAL SAVINGS BANK:
___________________________________
Name:
Title:
___________________________________
Name:
Title:
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NORWEST CORPORATION:
___________________________________
Name:
Title:
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