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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) November 4, 1999
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COASTAL FINANCIAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 0-19684 57-0925911
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(State or other Jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
2619 Oak Street, Myrtle Beach, South Carolina 29577
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(Address of principal executive offices)
(843) 448-5151
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS.
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On November 4, 1999, Coastal Federal Savings Bank, Myrtle Beach, South
Carolina, the wholly-owned subsidiary of the Registrant, and First Federal
Savings & Loan Association of Cheraw, Cheraw, South Carolina, the wholly-owned
subsidiary of Great Pee Dee Bancorp, Inc., entered into a definitive agreement
providing for the sale of Coastal Federal's branch office located in Florence,
South Carolina. The deposits of the Florence branch totaled approximately $23
million as of the date of the agreement.
A copy of the definitive agreement (without exhibits) is attached as
Exhibit 2.1.
A copy of the Registrant's press release announcing the definitive
agreement is attached as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS AND OTHER EXHIBITS.
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Exhibit 2.1 Agreement to Purchase Assets and Assume Liabilities (without
exhibits)
Exhibit 99.1 Press Release dated November 5, 1999
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: November 9, 1999 By: /s/ Michael C. Gerald
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Michael C. Gerald
President and Chief Executive Officer
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EXHIBIT 2.1 AGREEMENT TO PURCHASE ASSETS AND ASSUME LIABILITIES
(WITHOUT EXHIBITS)
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AGREEMENT TO PURCHASE ASSETS
AND ASSUME LIABILITIES
BETWEEN
COASTAL FEDERAL SAVINGS BANK
AND
FIRST FEDERAL SAVINGS & LOAN
ASSOCIATION OF CHERAW
DATED: NOVEMBER 4, 1999
THIS AGREEMENT CONTAINS AN ARBITRATION PROVISION PURSUANT TO THE SOUTH CAROLINA
- -------------------------------------------------------------------------------
UNIFORM ARBITRATION ACT, S.C. CODE SECTIONS 15-48-10 ET. SEQ.
- -------------------------------------------------------------
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AGREEMENT TO PURCHASE ASSETS AND ASSUME LIABILITIES
BETWEEN COASTAL FEDERAL SAVINGS BANK
AND FIRST FEDERAL SAVINGS & LOAN ASSOCIATION OF CHERAW
TABLE OF CONTENTS
Page
Recitals................................................................ 1
ARTICLE I - DEFINITIONS
1.1 Defined Terms..................................................... 1
1.2 Other Definitional Provisions..................................... 4
ARTICLE II - TERMS OF PURCHASE
2.1 Purchase and Sale of Assets....................................... 4
2.2 Purchase Price.................................................... 4
2.3 Names and Marks................................................... 4
2.4 Assumption of Liabilities......................................... 5
2.5 Premium........................................................... 5
2.6 Reimbursement for Target Deposits................................. 6
2.7 Prorations........................................................ 6
ARTICLE III - TRANSFER OF ASSETS
3.1 Acceptable Assets................................................. 6
3.2 Cash on Hand...................................................... 6
3.3 Loans............................................................. 6
3.4 Records........................................................... 6
ARTICLE IV - CLOSING
4.1 Closing........................................................... 7
4.2 Closing Payment................................................... 7
4.3 Deliveries by Buyer and Seller.................................... 8
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER
5.1 Organization and Authority........................................ 8
5.2 Binding Agreement................................................. 8
5.3 Litigation........................................................ 9
5.4 Governmental Notices.............................................. 9
5.5 Consents.......................................................... 9
5.6 Brokers and Finders............................................... 9
5.7 Regulatory Capital and Condition.................................. 9
5.8 Government Proceedings............................................ 9
5.9 Year 2000 Matters................................................. 9
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5.10 Community Reinvestment Act........................................ 10
5.11 Advise of Changes................................................. 10
ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF SELLER
6.1 Organization and Authority........................................ 10
6.2 Binding Agreement................................................. 10
6.3 Litigation........................................................ 10
6.4 Title to Assets and Branch Office................................. 10
6.5 Governmental Notices.............................................. 11
6.6 Consents.......................................................... 11
6.7 Brokers and Finders............................................... 11
6.8 Loans............................................................. 11
6.9 Compliance with Laws.............................................. 11
6.10 Deposit Liabilities............................................... 11
6.11 Deposit Insurance................................................. 12
6.12 Regulatory Capital and Condition.................................. 12
6.13 Government Proceedings............................................ 12
6.14 Community Reinvestment Act........................................ 12
6.15 Environmental Proceedings......................................... 12
6.16 Employee Matters.................................................. 12
6.17 Advise of Changes................................................. 13
ARTICLE VII - COVENANTS OF BUYER
7.1 Assistance in Obtaining Regulatory Approvals...................... 13
7.2 Regulatory Approvals.............................................. 13
7.3 Performance of Liabilities........................................ 13
7.4 Further Assurances................................................ 13
7.5 Consents.......................................................... 13
7.6 Due Diligence..................................................... 13
7.7 Use of Seller's Name.............................................. 14
7.8 Communications with Customers or Employees........................ 14
ARTICLE VIII - COVENANTS OF SELLER
8.1 Access to Records and Information; Personnel; Customers........... 14
8.2 Conduct of Business Pending Closing............................... 14
8.3 Assistance in Obtaining Regulatory Approvals...................... 15
8.4 Regulatory Approvals and Consents................................. 15
8.5 Books and Records................................................. 15
8.6 Signs............................................................. 16
8.7 Services and Maintenance Contracts................................ 16
8.8 Environmental Matters............................................. 16
8.9 Real Estate, Title and Surveys.................................... 16
8.10 Transfer of Data.................................................. 17
8.11 Forms............................................................. 18
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8.12 Further Assurance................................................. 18
8.13 Covenant Not To Compete........................................... 18
8.14 Best Efforts to Satisfy Conditions................................ 19
ARTICLE IX - CONDITIONS TO CLOSING
9.1 Conditions to the Obligations of Seller........................... 19
9.2 Conditions to the Obligations of Buyer............................ 20
ARTICLE X - TERMINATION................................................. 22
ARTICLE XI - EMPLOYEES
11.1 Hiring of Employees............................................... 22
11.2 Salaries, Bonuses, etc............................................ 23
11.3 Hirings........................................................... 23
ARTICLE XII - OTHER AGREEMENTS
12.1 Checking Deposit Account Owners................................... 23
12.2 Seller and Buyer Processing Duties................................ 23
12.3 Returned Items.................................................... 24
12.4 Settlement........................................................ 24
12.5 Interest Reporting................................................ 25
12.6 Notices to Depositors............................................. 25
12.7 Deposit Histories................................................. 25
12.8 ATM Cards......................................................... 25
12.9 Backup Withholding................................................ 25
12.10 Electronic Installation........................................... 26
ARTICLE XIII - GENERAL PROVISIONS
13.1 Survival.......................................................... 27
13.2 Indemnification................................................... 27
13.3 Arbitration....................................................... 28
13.4 Public Announcements.............................................. 29
13.5 Incorporation of Exhibits......................................... 29
13.6 Expenses.......................................................... 29
13.7 Notices........................................................... 29
13.8 Assignment........................................................ 30
13.9 Successors and Assigns............................................ 30
13.10 Governing Law..................................................... 30
13.11 Entire Agreement.................................................. 30
13.12 Headings.......................................................... 30
13.13 Severability...................................................... 30
13.14 Waiver............................................................ 30
13.15 Amendment......................................................... 30
13.16 Singular and Plural............................................... 31
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13.17 Counterparts...................................................... 31
13.18 Confidentiality................................................... 31
13.19 Third Parties..................................................... 31
iv
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AGREEMENT TO PURCHASE ASSETS AND ASSUME LIABILITIES
This Agreement to Purchase Assets and Assume Liabilities (the "Agreement")
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is made and entered into this 4th day of November 1999, by and between Coastal
Federal Savings Bank (the "Seller"), a federally chartered savings bank, with
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its home office at 2619 Oak Street, Myrtle Beach, South Carolina 29577 and First
Federal Savings & Loan Association of Cheraw (the "Buyer") a federally chartered
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savings and loan association with its principal office at 515 Market Street,
Cheraw, South Carolina 29520.
RECITALS
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A. Buyer desires to acquire certain assets and assume certain liabilities
of Seller and Seller desires to transfer to Buyer such assets and liabilities as
described in detail below.
B. Buyer and Seller propose to apply to the OTS, as hereinafter defined,
and any other regulatory agency for the requisite approvals needed for the
consummation of the transactions contemplated by this Agreement.
C. Buyer and Seller wish to consummate the transactions contemplated by
this Agreement in a timely and effective manner.
In consideration of the foregoing and the representations, covenants and
agreements set forth in this Agreement the parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Defined Terms. As used in this Agreement the following terms have the
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definitions indicated:
"Accrued Deposit Interest" means interest on Target Deposits accrued but
unposted through the Closing Date.
"ACH" means automated clearing house.
"ACH Items" means ACH debits and credits, including but not limited to
Social Security payments, Federal recurring payments, and other payments debited
and/or credited on a regularly scheduled basis to or from Deposit accounts
pursuant to arrangements between the owner of the account and a third party
directly making the credits or debits.
"Affiliate" of a party means any person, partnership, corporation,
association or other legal entity directly or indirectly controlling, controlled
by or under common control with that party.
"Agreement" means this Agreement to Purchase Assets and Assume
Liabilities, and all Exhibits hereto as the same may from time to time be
amended or supplemented by the parties hereto.
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"Acceptable Assets" means the building, land, furniture and fixtures, safe
deposit boxes (exclusive of contents) and bank equipment (including ATM), except
software relating to branch teller and platform automation equipment (which may
be included with the consent of the software providers), as set forth in Exhibit
2.2A at the amount set forth therein. Acceptable Assets shall also include (i)
the Lease and (ii) the parcel of land adjacent to the Branch Office as set forth
in more detail in Exhibit 2.2A.
"ATM" means automated teller machine.
"Branch Office" means the banking office of Seller located at 1385 Alice
Drive in Florence, South Carolina and, except as the context otherwise requires,
shall include the Acceptable Assets set forth in Exhibit 2.2A and the Loans set
forth in Exhibit 2.2D.
"Business Day" means a day on which Seller is open for business and which
is not a Saturday, Sunday, or Federal holiday.
"Cash on Hand" means all petty cash, vault cash, ATM cash, teller cash and
similar cash items located at the Branch Office.
"Closing" means the consummation of the transactions contemplated hereby
on the Closing Date.
"Closing Date" means the date on which the Closing occurs pursuant to
Article IV hereof.
"Closing Time" means 11:59 p.m., Florence, South Carolina time on the
Closing Date.
"Closing Payment" shall have the meaning assigned in Section 4.2(a).
"Depository Institution" means any bank or savings association as those
terms are defined in Sections 3(a)(1) and 3(b)(1), respectively, of the Federal
Deposit Insurance Act, as amended.
"Deposit," "Deposit accounts" and "Deposits" means insured deposit
accounts, as defined in Section 3(m)(1) of the Federal Deposit Insurance Act, as
amended, without regard to whether the same are collected or uncollected funds
and without regard to whether the balance in any such account is in excess of
the limit of the amount of FDIC deposit insurance coverage for the account.
"Encumbrances" means all material mortgages, claims, charges, liens,
encumbrances, easements, restrictions, options, pledges, calls, commitments,
security interests, conditional sales agreements, title retention agreements and
other material restrictions of any kind.
"ERISA" means the Employee Retirement Income Security Act, as amended.
"Federal Funds Rate" means the closing bid price for federal funds as
quoted in the Wall Street Journal for the date in question.
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"FDIC" means the Federal Deposit Insurance Corporation.
"GAAP" means generally accepted accounting principles, consistently
applied.
"IRS" means the Internal Revenue Service.
"Lease" means Seller's leasehold interest pursuant to the lease agreement,
dated November 1, 1995 by and between Richard L. Granger and Coastal Federal
Savings Bank.
"Loans" means all loans of Seller (excluding any loan 60 days or more
delinquent or otherwise on nonaccural status as of the Closing Date) as set
forth in more detail in Exhibit 2.2D.
"Name" means "Coastal Federal Savings Bank," including any logos in
stylized form or the letters in stylized form.
"OTS" means Office of Thrift Supervision.
"Premium Amount" shall have the meaning assigned in Section 2.5.
"Purchase Price" shall have the meaning assigned in Section 2.2.
"Records" means (i) records and original documents specifically pertaining
to the Branch Office, Acceptable Assets and Loans and (ii) records and original
documents specifically relating to the Target Deposits.
"Reimbursement for Target Deposits" shall have the meaning assigned in
Section 2.6.
"Returned Items" shall have the meaning assigned in Section 12.3.
"Target Cost of Funds Rate" means 5.00%, adjusted for the normal change in
market interest rates, which shall be computed as 50% of the change in the
one-year Treasury Bill from the rate as of October 4, 1999, which was 5.23%, to
the rate as of the Closing Date. An example of the calculation is set forth in
Exhibit 2.5.
"Target Deposits" shall mean the aggregate outstanding balance of all
Deposit accounts at the Branch Office as of the Closing Time. For purposes of
calculating the Premium Amount pursuant to Section 2.5 hereof, Target Deposits
shall not include Accrued Deposit Interest and the outstanding balance of any
brokered deposits.
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"TIN" means tax identification number.
1.2 Other Definitional Provisions. The terms defined in Section 1.1 hereof
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do not comprise all the defined terms contained in this Agreement. Capitalized
terms used in this Agreement but not defined in Section 1.1 hereof shall have
the meanings ascribed to them elsewhere herein. Accounting terms used in this
Agreement but not defined herein shall have the respective meanings given to
them under GAAP. The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and shall not be limited to any particular provision.
ARTICLE II
TERMS OF PURCHASE
2.1 Purchase and Sale of Assets. At the Closing and subject to the terms
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and conditions set forth in this Agreement, Seller shall convey, assign and
transfer to Buyer and Buyer shall purchase from Seller all of Seller's right,
title and interest in and to the Branch Office.
2.2 Purchase Price. Seller shall pay to Buyer, in cash and at Closing, an
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amount equal to the Reimbursement for Target Deposits as defined in Section 2.6
minus an amount (the "Purchase Price") computed as follows:
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(a) A sum equal to the net book value of the Branch Office,
including the Acceptable Assets as set forth in Exhibit 2.2A, as shown on the
books of Seller as of August 31, 1999, excluding the loans which are dealt with
in Section 2.2(d) below;
(b) A sum equal to the amount of all Cash on Hand at the Branch
Office as of the Closing Time;
(c) A sum equal to the Premium Amount called for by Section 2.5, of
which $250,000 shall be allocated to Seller's covenants not to compete as set
forth in Section 8.13; and
(d) A sum equal to the principal balance, including accrued but
unpaid interest, as of the Closing Date, of the Loans as set forth in Exhibit
2.2D.
2.3 Names and Marks. Seller is not selling, assigning, conveying,
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transferring or delivering, nor shall Buyer acquire any rights to or interest
in: (i) the Name of Seller or any combination or derivation thereof; or (ii) any
logos, service marks or trademarks, advertising materials or slogans or any
similar items used before, on or after the Closing Date by Seller in connection
with its business.
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2.4 Assumption of Liabilities.
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(a) Target Deposits. At the Closing, subject to the terms and
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conditions set forth in this Agreement, Buyer shall assume liability for the
payment and performance of Seller's obligations on the Target Deposits as of the
Closing Time in accordance with the terms of such Target Deposits in effect at
the Closing Time; provided, however, nothing herein shall preclude Buyer from
thereafter changing the terms and conditions of such Target Deposits to the
extent that it can do so in accordance with the terms of the agreements with
customers associated with the Target Deposits and in accordance with applicable
law.
(b) Related Assets and Obligations. On the Closing Date, Buyer will
------------------------------
assume all obligations of Seller to provide services incidental to the Target
Deposits from and after the Closing Time, including but not limited to,
obligations with regard to ACH Items pursuant to the terms of the Records and
other documents establishing such customer relationships, and Buyer shall be
responsible for modifying the terms of such customer relationships effective as
of the Closing Time as necessary to conform to Buyer's practices.
(c) Actions With Respect to IRA and Keogh Plan Deposit Liabilities.
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Seller shall (i) resign as of the Closing Time as the Trustee/Custodian of each
IRA Deposit Liability and as the Trustee/Custodian of each Keogh Plan Deposit
Liability of which it is the Trustee/Custodian, (ii) to the extent permitted by
the documentation governing each such IRA or Keogh Plan, appoint Buyer as
successor Trustee/Custodian of each such IRA or Keogh Plan, and Buyer agrees to
accept each such trusteeship/custodianship and assume all fiduciary obligations
with respect thereto as of the Closing Time, and (iii) deliver to the grantor or
named fiduciary of each such IRA or Keogh Plan, respectively, such notice of the
foregoing as is required by the documentation governing each IRA or Keogh Plan.
(d) No Other Debts, Obligations or Liabilities Assumed. It is
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expressly understood and agreed that, except as expressly set forth in this
Section 2.4, Buyer shall not assume or be liable for any of the debts,
obligations or liabilities of Seller of any kind and nature whatsoever, known or
unknown, contingent or otherwise, including, but not limited to, any tax or
debt, any liability for unfair labor practices, any liability or obligation of
Seller arising out of any threatened or pending litigation, or any liability
with respect to personal injury or property damage claims, or any liability
under the Environmental Laws (as defined in Section 6.15).
2.5 Premium Amount. Buyer shall pay to Seller a premium, in cash, for the
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Target Deposits and for Seller's covenants not to compete as set forth in
Section 8.13, equal to 8.75% (the "Premium Rate") of the total outstanding
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balance of the Target Deposits in the Branch Office as of the Closing Time (the
"Premium Amount"). The Premium Amount shall be paid on the balance of the Target
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Deposits as of the Closing Date, not to exceed twenty-four million dollars
($24,000,000). It is anticipated that the cost of funds for the Target Deposits
shall not exceed the Target Cost of Funds Rate. If the cost of funds exceeds the
Target Cost of Funds Rate, each basis point above the Target Cost of Funds Rate
shall reduce the Premium Rate by a factor of three. An example of this
calculation is provided in Exhibit 2.5.
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2.6 Reimbursement for Target Deposits. To compensate Buyer for the
------------------------------------
assumption of the Target Deposits, Seller shall reimburse Buyer in cash equal to
the aggregate amount of the Target Deposits, plus Accrued Deposit Interest, as
of the Closing Time (the "Reimbursement for Target Deposits").
---------------------------------
2.7 Prorations. It is the intention of the parties hereto that Seller
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shall operate the Branch Office and Target Deposits for its own account until
the Closing Time and that Buyer shall operate the Branch Office and Target
Deposits for its own account from and after the Closing Time. Notwithstanding
the preceding sentence, items of income and expense related to the Branch Office
including, but not limited to, taxes, including real estate taxes, rentals,
utilities and water and sewage charges, shall be the responsibility of Seller
through the Closing Time and the responsibility of Buyer thereafter. Any charges
for insurance assessments paid to the FDIC on account of the Target Deposits
shall be prorated based upon the actual aggregate amount of the Target Deposits
as of the Closing Time. Any items susceptible of being prorated but which cannot
be prorated by the Closing Date shall be prorated as soon as the requisite
information becomes available. In the event Seller receives, after the Closing
Time, a refund or rebate of all or any portion of an expense prorated hereunder,
including without limitation a refund or rebate of FDIC insurance assessments,
Seller shall pay Buyer a pro rata share of such refund or rebate within five (5)
Business Days of Seller's receipt thereof.
ARTICLE III
TRANSFER OF ASSETS
3.1 Acceptable Assets and Branch Office. At the Closing, Seller agrees to
-----------------------------------
assign to Buyer all of Seller's right, title and interest in and to the Branch
Office, including Acceptable Assets set forth on Exhibit 2.2A. Seller shall
cause a bill of sale substantially in the form attached hereto as Exhibit 3.1
and an inventory of the Acceptable Assets effecting such transfer to be
delivered to Buyer and shall cause a general warranty deed of ownership for the
parcel of real property adjacent to the Branch Office, as set forth in more
detail in Exhibit 2.2.A to be delivered to Buyer.
3.2 Cash on Hand. At the Closing Time, Seller agrees to execute an
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assignment to Buyer in the form of Exhibit 3.2 effecting the transfer to Buyer
of the Cash on Hand, which shall specify the amount of Cash on Hand at the
Closing Time at the Branch Office.
3.3 Loans. At the Closing, Seller agrees to assign to Buyer all of
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Seller's right, title and interest in and to the contracts, agreements and other
documents related to the Loans as set forth in Exhibit 2.2D. Seller shall cause
an assignment of assets substantially in the form attached hereto as Exhibit 3.3
to be delivered to Buyer.
3.4 Records. At the Closing, Seller agrees to deliver to Buyer the Records
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related to the Branch Office and Target Deposits, unless Seller has delivered
such Records to Buyer before the Closing Date.
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ARTICLE IV
CLOSING
4.1 Closing. The Closing shall take place at the main office of the Seller
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at a time and on a date mutually agreed upon by the parties hereto, which shall
be within ten (10) Business Days following (i) satisfaction or waiver of all of
the pre-closing conditions and conditions precedent to Closing set forth in
Article IX hereof, (ii) satisfaction or waiver of all of the pre-closing
conditions contained in any approval of the OTS or any other state or federal
regulatory approval required to be obtained with respect to the transactions
contemplated by this Agreement; and (iii) expiration of all applicable waiting
periods. The Closing shall be deemed to occur, and the transaction contemplated
hereby shall be deemed to be effective, at the Closing Time.
4.2 Closing Payment. The Closing Payment between Buyer and Seller shall be
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made as follows:
(a) Amount. Seller shall pay to Buyer an amount (the "Closing Payment")
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equal to the Reimbursement for Target Deposits (pursuant to Section 2.6) minus
the Purchase Price required to be paid by Buyer (pursuant to Section 2.2), as
adjusted for pro rata payments pursuant to Section 2.7.
(b) Method of Payment. Because the parties acknowledge that certain
------------------
amounts to be paid may not be finally determinable until after the Closing Date,
the Closing Payment will be paid as follows:
(i) On the Closing Date, Seller will transfer to Buyer, by wire
transfer of immediately available funds, an amount which
Seller estimates to be the amount of the Closing Payment (the
"Estimated Closing Payment") based on Seller's Records as of
---------------------------
Seller's close of business on a Business Day not more than
five (5) Business Days prior to the Closing Date. Seller
agrees to effect the wire transfer payment provided for
hereunder by no later than 2:00 p.m. on the Closing Date,
provided all other conditions required for consummating the
Closing have been satisfied by no later than 12:00 noon on the
Closing Date, and, in the event all other conditions required
for consummating the Closing have not been satisfied by 12:00
noon on the Closing Date, Seller agrees to make a good faith
reasonable effort to effect the wire transfer payment provided
for hereunder within one hour following the satisfaction on
the Closing Date of such other conditions.
(ii) Not later than ten (10) Business Days following the Closing
Date (the "Provisional Settlement Date"), Seller and Buyer
-----------------------------
shall determine the actual Closing Payment and, based on such
determination, Seller shall pay to Buyer, or Buyer shall pay
to Seller, as appropriate, in immediately available funds no
later than 2:00 p.m. on the date of payment, by wire transfer
effected in accordance with the written instructions of the
party entitled to receive payment, an amount equal to the
difference between the Estimated Closing
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Payment and the actual Closing Payment plus interest on such
difference for the number of days elapsed from but excluding
the Closing Date to and including the Provisional Settlement
Date, at the Federal Funds Rate on the Closing Date.
(iii) Buyer and Seller agree to recalculate and adjust by
appropriate payment in immediately available funds, by wire
transfer effected in accordance with the written instructions
of the party entitled to receive such payment, thirty (30)
Business Days after the Closing Date (the "Final Settlement
-----------------
Date"), the Closing Payment if the parties shall determine
----
that the amount previously paid to Buyer as the Closing
Payment should be adjusted. Any payment made based on an
adjustment of the Closing Payment by either party to the other
shall include interest on the amount of the adjustment for the
number of days elapsed from but excluding the Closing Date to
and including the Final Settlement Date by no later than 2:00
p.m. on the date of payment, at the Federal Funds Rate on the
Closing Date.
4.3 Deliveries by Buyer and Seller. Delivery of the instruments of
---------------------------------
assignment and transfer to be delivered by Seller, delivery of the instruments
of assumption to be delivered by Buyer, and the other transactions herein
contemplated to take place concurrently with such deliveries, assumptions, and
payments shall take place at the Closing. Any deliveries, assignments or
transfers required under this Agreement, other than the foregoing, shall be made
at the time and date specified in this Agreement or, where not specified, in the
manner and place as may be reasonably requested in writing by the party that is
to receive such delivery, assignment, or transfer.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
5.1 Organization and Authority. Buyer is a federally chartered savings and
--------------------------
loan association duly organized, validly existing, and in good standing under
the laws of the United States, with full power and authority to carry on its
business as now being conducted and to own and operate the properties which it
now owns and operates. The execution, delivery and performance by Buyer of this
Agreement are within Buyer's corporate power, have been duly authorized by all
necessary corporate action on the part of Buyer, and do not contravene or
constitute a default under any provision of applicable law or regulation or of
Buyer's charter or bylaws or any judgment, injunction, order, decree, material
agreement or material instrument binding upon Buyer.
5.2 Binding Agreement. This Agreement is a legal, valid and binding
------------------
obligation of Buyer, enforceable in accordance with its terms. The other
documents delivered at Closing will, on the Closing Date, when executed and
delivered, be legal, valid and binding obligations of Buyer enforceable in
accordance with their respective terms, subject to applicable state and federal
laws and regulations governing Buyer and except as enforceability may be limited
under any applicable
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law pertaining to bankruptcy, receivership, reorganization, fraudulent transfer
or insolvency or similar laws affecting creditors' rights generally and to
general principles of equity.
5.3 Litigation. There is no action, suit or proceeding pending against
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Buyer or to the knowledge of Buyer threatened against or affecting Buyer, before
any court or arbitrator or any governmental body, agency or official which could
materially adversely affect the ability of Buyer to perform its obligations
under this Agreement or which in any manner questions the validity of this
Agreement.
5.4 Governmental Notices. Buyer has received no notice and has no reason
---------------------
to believe that any federal, state or other governmental agency would oppose or
not grant or issue its consent or approval, if required, with respect to the
transactions contemplated hereby.
5.5 Consents. Buyer has or will obtain prior to the Closing Date all
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consents, approvals or authorizations of all governmental authorities or
agencies or third parties required for the execution, delivery and performance
by Buyer of this Agreement and the consummation by it of any transactions
contemplated hereby.
5.6 Brokers, Finders and Advisors. Buyer will pay the expenses related to
-----------------------------
any broker, finder, financial advisor, legal counsel, accountant or similar
agent engaged by Buyer in connection with this Agreement and the transactions
contemplated herein and Buyer will indemnify Seller from any such costs.
5.7 Regulatory Capital and Condition. Buyer is in compliance with all
----------------------------------
applicable capital standards as of the date hereof and has no reason to believe
that it will be unable to obtain the required regulatory approvals for the
transactions contemplated herein solely as a result of its current level of
regulatory capital.
5.8 Government Proceedings. As of the date hereof, there are no pending,
----------------------
or to the best of Buyer's knowledge, threatened legal or governmental
proceedings against Buyer or any affiliate of Buyer that would affect Buyer's
ability to obtain the required regulatory approvals or to satisfy any of the
other conditions required to be satisfied in order to consummate the
transactions contemplated hereby.
5.9 Year 2000 Matters. Buyer has completed a review of its computer
-----------------
systems to identify systems that could be affected by the "Year 2000" issue and
reasonably believes it has identified all such Year 2000 problems. Buyer's
management has developed and commenced implementation of a plan which is
designed to complete any required initial changes to its computer systems and
has completed testing of those changes. Between the date of this Agreement and
the Closing Date, Buyer shall use commercially practicable efforts to implement
and/or continue to undertake such plan. Year 2000 issues are not reasonably
expected to prevent Buyer's ability to obtain the required regulatory approvals
or to satisfy any of the conditions required to be satisfied in order to
consummate the transactions contemplated hereby.
9
<PAGE> 15
5.10 Community Reinvestment Act. The most recent CRA rating received by
----------------------------
Buyer was not less than "satisfactory."
5.11 Advise of Changes. Between the date hereof and the Closing Date,
-----------------
Buyer shall promptly advise Seller in writing of any fact which, if existing or
known as of the date hereof, would have made any of the representations
contained herein inaccurate or untrue in any material respect.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
6.1 Organization and Authority. Seller is a federally chartered savings
--------------------------
bank duly organized, validly existing and in good standing under the laws of the
United States, with full power and authority to carry on its business as now
being conducted and to own and operate the properties which it now owns and
operates. The execution, delivery and performance by Seller of this Agreement
are within Seller's corporate power, have been duly authorized by all necessary
corporate action and do not contravene or constitute a default under any
provision of applicable law or regulation or of Seller's charter or bylaws or
any judgment, injunction, order, decree, material agreement or material
instrument binding upon Seller or to which any of the assets to be transferred
hereby are subject to or result in the creation or imposition of any Encumbrance
on the Branch Office.
6.2 Binding Agreement. This Agreement is a legal, valid and binding
------------------
obligation of Seller enforceable in accordance with its terms, and the other
documents delivered at Closing will, on the Closing Date, when executed and
delivered, be legal, valid and binding obligations of Seller enforceable in
accordance with their respective terms subject to applicable state and federal
laws and regulations governing Seller and all laws pertaining to bankruptcy,
receivership, reorganization, fraudulent transfer or insolvency or affecting
creditors' rights generally and to general principles of equity.
6.3 Litigation. There is no action, suit or proceeding pending against
----------
Seller, or to the knowledge of Seller threatened against or affecting Seller,
before any court or arbitrator or any governmental body, agency or official
which relates to the Branch Office taken as a whole (including the Acceptable
Assets, Loans and the Target Deposits), the ability of Seller to perform its
obligations under this Agreement, or in any manner questions the validity of
this Agreement.
6.4 Title to Assets and Branch Office. Seller has acquired, and on the
---------------------------------
Closing Date Buyer will acquire, good and marketable title to the Acceptable
Assets and Loans, free and clear of all Encumbrances. Delivery to Buyer of the
instruments of transfer of ownership contemplated by this Agreement will vest
good and marketable title to the Acceptable Assets and Loans in Buyer, free and
clear of all Encumbrances. The Branch Office is in good operating condition and
repair, normal wear and tear excepted, does not have any material defects and is
served by all reasonably necessary utilities. Seller enjoys peaceful possession
of all of the Branch Office. The Branch Office is in conformity in all material
respects with all zoning ordinances applicable to it and all certificates,
10
<PAGE> 16
licenses and permits required for the lawful use and occupancy of such property
have been obtained and are in full force and effect.
6.5 Governmental Notices. Seller has received no notice and has no reason
--------------------
to believe that any federal, state or other governmental agency would oppose or
not grant or issue its consent or approval, if required, with respect to the
transactions contemplated hereby.
6.6 Consents. Seller has or will obtain prior to the Closing Date all
--------
consents, approvals or authorizations of all governmental authorities or
agencies or third parties required for the execution, delivery and performance
by Seller of this Agreement and the consummation by it of any transactions
contemplated hereby.
6.7 Brokers, Finders and other Advisors. All costs for services provided
-----------------------------------
by any broker, finder, financial advisor, legal counsel, accountant or similar
agent hired by Seller in connection with this Agreement and the transactions
contemplated herein will be paid by Seller and Seller will indemnify Buyer from
any such costs.
6.8 Loans. Each Loan and every extension of credit made pursuant thereto,
-----
and all actions in connection therewith, comply in all material respects with
all applicable lending laws. To the best of Seller's knowledge, each Loan: (i)
is a legal, valid and binding obligation of the obligor, maker, co-maker,
guarantor, endorser or debtor (such Persons referred to herein as "Obligors")
--------
thereof or thereunder and is evidenced by legal, valid and binding instruments
(such instruments, which will be delivered to Buyer on the Closing Date,
referred to herein as the "Loan Instruments") executed by the respective
-----------------
Obligors, each of whom at the time of such execution had capacity to contract,
and any signature on any Loan Instrument is the true signature of the Obligor on
the loan involved; (ii) is enforceable in accordance with its terms (except as
enforceability may be limited by bankruptcy laws and other laws of similar
nature relating to creditors' rights); and (iii) is not subject to any defense,
counterclaim or set-off of any kind. Each Loan may be assigned to Buyer without
the approval or consent of Obligor. Within five (5) Business Days of the Closing
Date, Seller will have delivered to Buyer the originals of all of the Loan
Instruments, including without limitation the promissory notes and other
documentation relating to the Loans.
6.9 Compliance with Law. The business and operations of the Branch Office
--------------------
are being conducted in all material respects in accordance with all applicable
laws, rules, and regulations of all authorities, including without limitation,
the Federal Truth-in-Lending Act and all regulations pertaining to the receipt
of customer information required by state and federal law concerning taxpayer
identification numbers, social security numbers and the like.
6.10 Deposit Liabilities. All of the Deposit accounts were originated and
-------------------
are in material compliance with the documents governing the relevant type of
Deposit account and all applicable federal and state laws, rules, regulations,
orders, judgments, injunctions, decrees and awards. Seller has properly accrued
interest on the Target Deposits and the records respecting the Target Deposits
accurately reflect such accruals of interest. The aggregate dollar amount of the
Target Deposits, including unpaid accrued interest, is equal to or greater than
$23 million as of the date of this
11
<PAGE> 17
Agreement. Seller has delivered to Buyer a true and complete copy of each of the
documents governing the Target Deposits and a true and correct copy of the
current account forms for each of the types of Target Deposits offered by Seller
out of the Branch Office.
6.11 Deposit Insurance. The Deposit accounts of Seller are insured up to
-----------------
applicable limits by the FDIC, as provided by law.
6.12 Regulatory Capital and Condition. Seller is in compliance with all
---------------------------------
applicable capital standards as of the date hereof and has no reason to believe
that it will be unable to obtain the required regulatory approvals for the
transactions contemplated herein solely as a result of its current level of
regulatory capital.
6.13 Government Proceeding. As of the date hereof, there are no pending
---------------------
or, to the best of Seller's knowledge, threatened legal or governmental
proceedings against Seller or any affiliate of Seller that would affect Seller's
ability to obtain the required regulatory approvals or to satisfy any of the
other conditions required to be satisfied in order to consummate the
transactions contemplated hereby.
6.14 Community Reinvestment Act. The most recent rating from the Office of
--------------------------
Thrift Supervision received by Seller under the Community Reinvestment Act was
not less than "satisfactory."
6.15 Environmental Proceedings. Seller has not used the Branch Office for
-------------------------
the purpose of, nor has Seller caused any surface or subsurface contamination
due to, the manufacture, generation, handling, storage, disposal or treatment of
any hazardous, toxic or dangerous substance, waste or material (specifically
including for purposes of this Agreement any petroleum or crude oil or fraction
thereof, friable asbestos or asbestos-containing material, polychlorinated
biphenyls or urea formaldehyde foam insulation), defined as such in, regulated
by or for the purpose of, or in violation of, any federal, state or local
environmental laws, rules, codes, regulations, orders or directives of any kind,
including without limitation the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 12 U.S.C. 9601 et seq., and the
-------
Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. 6921 et.
---
seq. (collectively, the "Environmental Laws"); and to the best of Seller's
- ---- -------------------
knowledge, neither Seller not its agents have received any notice of any
asserted present or past failure by Seller or by any tenant under any lease or
by any other prior tenant of owner to comply with any Environmental Law or any
rule or regulation adopted pursuant thereto in connection with the Branch
Office.
6.16 Employee Matters. There are no employment contracts between Seller
-----------------
and any of the employees of the Branch Office. Seller is not a party to any
contract or arrangement with any union relating to the business conducted at the
Branch Office, and Seller is not aware of any pending organizational efforts at
the Branch Office. To the best of Seller's knowledge, there has been no
indication to Seller that a union organizational effort or labor disturbance is
likely at the Branch Office prior to the Closing Date. To the extent required by
law, as of the Closing Date, Seller will have provided all required notification
under the Consolidated Omnibus Budget Reconciliation Act
12
<PAGE> 18
of 1985 ("COBRA") to all former employees of Seller at the Branch Office after
-----
the Closing Date and to all other persons who became "qualified beneficiaries"
under COBRA with respect to any group health plans maintained by Seller for its
employees, and Seller will have provided any required COBRA coverage to all such
former employees and other qualified beneficiaries of Seller who elect COBRA
coverage within the time period specified by COBRA and the regulations
promulgated thereunder.
6.17 Advise of Changes. Between the date hereof and the Closing Date,
-----------------
Seller shall promptly advise Buyer in writing of any fact which, if existing or
known as of the date hereof, would have made any of the representations
contained herein inaccurate or untrue in any material respect.
ARTICLE VII
COVENANTS OF BUYER
7.1 Assistance in Obtaining Regulatory Approvals. Buyer agrees to use all
--------------------------------------------
reasonable efforts to assist Seller in obtaining any regulatory approval
necessary for Seller to sell the Branch Office, and Buyer will provide to Seller
or the appropriate regulatory authorities all information within its possession
reasonably required to be submitted by Seller in connection with such approvals.
7.2 Regulatory Approvals. Within fifteen (15) calendar days of the date of
--------------------
this Agreement, or as soon thereafter as is practicable, Buyer shall apply for
approval of all the transactions contemplated by this Agreement to all
governmental agencies having jurisdiction of either Buyer or the transactions
contemplated by this Agreement.
7.3 Performance of Liabilities. From and after the Closing Time, Buyer
---------------------------
agrees to pay, to the extent of sufficient available funds on deposit, all
properly drawn checks and drafts timely presented to it by mail, over its
counters or through clearings by depositors whose deposits or accounts on which
such items are drawn are Target Deposits, whether drawn on the check or draft
forms provided by Seller, for at least sixty (60) calendar days after the
Closing Date.
7.4 Further Assurances. On and after the Closing Date, Buyer shall give
------------------
such further assurances to Seller and upon Seller's request shall execute,
acknowledge and deliver all such acknowledgments and other instruments and take
such further action as may be necessary and appropriate to effectively relieve
and discharge Seller from any obligations remaining with respect to the Target
Deposits assumed by Buyer.
7.5 Consents. Buyer will use its best efforts to obtain all consents,
--------
approvals or authorizations of all governmental authorities or agencies or third
parties required for the execution, delivery and performance by Buyer of this
Agreement and the consummation by it of all transactions contemplated hereby.
7.6 Due Diligence. During a period of ten (10) Business Days after the
-------------
date of this Agreement, Buyer will have the right to conduct a due diligence
examination of the Branch Office,
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<PAGE> 19
including the right to interview Branch Office personnel. Within five (5)
Business days of the end of said 10 days, but no later than November 14, 1999,
Buyer, may, by written notice, terminate this Agreement or indicate any other
conditions that must be satisfied by Seller as a prerequisite to Buyer's
consummation of the transactions contemplated by this Agreement. Seller may
terminate this Agreement upon receipt of such notice or may attempt to cure
Buyer's concerns. If Buyer fails to provide such notice on a timely basis, Buyer
shall not be permitted to terminate this Agreement pursuant to this Section 7.6.
7.7 Use of Seller's Name. On and after the Closing Date, Buyer shall not
---------------------
use the name of Seller in any manner in connection with the operation of the
Branch Office. No activity conducted by Buyer on or after the Closing Date shall
state or imply that Seller is in any way involved as a partner, joint venturer
or otherwise in the business of Buyer.
7.8 Communications with Customers or Employees. Buyer shall not, except as
------------------------------------------
otherwise set forth or contemplated herein or with the prior written consent of
Seller, communicate directly or indirectly with the customers of the Branch
Office in any manner before the Closing Date. Buyer and Seller shall agree on
the timing and general content of all of Buyer's communications directly or
indirectly with any employee of the Branch Office in any manner before the
Closing Date; provided, however, that Seller shall allow Buyer to communicate
with employees of the Branch Office by not later than the time notice of the
transaction is given to customers pursuant to Section 12 hereof.
ARTICLE VIII
COVENANTS OF SELLER
8.1 Access to Records and Information; Personnel; Customers.
-------------------------------------------------------
(a) Between the date of this Agreement and the Closing Date, Seller
shall: (i) afford to Buyer and its authorized agents and representatives full
access, upon twenty-four (24) hours notice, during normal business hours, to the
properties, operations, books, Records, contracts, documents and other
information of, or relating to, the Target Deposits and Branch Office. Seller
shall cause its personnel to provide assistance to Buyer in Buyer's
investigation of matters relating to the Target Deposits and Branch Office;
provided, however, that Buyer's investigations shall be conducted in a manner
which does not unreasonably interfere with Seller's normal operations, customers
and employee relations.
(b) Subject to Section 13.4 of this Agreement, Buyer, with Seller's
prior review, shall, at its own expense, be entitled upon regulatory approval of
the transactions contemplated by this Agreement to communicate with and deliver
information, brochures, bulletins, press releases and other communications to
Target Deposit accountholders concerning the transactions contemplated by this
Agreement.
8.2 Conduct of Business Prior to Closing. Seller will carry on the
----------------------------------------
business of the Branch Office diligently and substantially in the same manner as
on the date hereof, and Seller will not, with
14
<PAGE> 20
respect to the Branch Office, engage in any one or more activities or
transactions that are outside the ordinary course of the business of the Branch
Office, as conducted as of the date hereof, except for activities or
transactions contemplated by this Agreement.
In addition, Seller shall use its reasonable efforts: (i) to preserve its
business operations as conducted at the Branch Office, (ii) to preserve for
Buyer the goodwill of its customers and others doing business with the Branch
Office; (iii) maintain and preserve intact its relationship with the Branch
Office personnel; and (iv) to cooperate with and assist in assuring the orderly
transition of such business from Seller to Buyer. Nothing herein shall be
construed as requiring Seller to engage in any activities or efforts outside the
ordinary course of business as presently conducted.
Except as may be required by regulatory authorities, Seller shall not,
without the prior consent of Buyer: (a) transfer to Seller's other branches any
Acceptable Assets or Loans; (b) transfer to Seller's other branches any Deposit
accounts at the Branch Office except upon the unsolicited request of a depositor
in the ordinary course of business; (c) transfer, assign, encumber or otherwise
dispose of or enter into any contract, agreement or understanding, or negotiate
with any party with respect to entering into a contract, agreement or
understanding, to transfer, assign, encumber or otherwise dispose of any or all
of the Acceptable Assets, Loans or Target Deposits except in the ordinary course
of business or pursuant to this Agreement; (d) invest in any fixed assets or
improvements to the Branch Office which requires aggregate future payments in
excess of $2,500; or (e) enter into any new contract, commitment, lease or other
transaction relating to the Branch Office which requires aggregate future
payments in excess of $2,500.
8.3 Assistance in Obtaining Regulatory Approvals. Seller agrees to use all
--------------------------------------------
reasonable efforts to assist Buyer in obtaining all regulatory approvals
necessary to complete the transactions contemplated hereby, and Seller will
provide to Buyer or to the appropriate regulatory authorities all information
within its possession reasonably required to be submitted by Buyer in connection
with such approvals.
8.4 Regulatory Approvals and Consents. Seller shall cooperate with Buyer
----------------------------------
to apply for regulatory approval of the transactions contemplated by this
Agreement as set forth in Section 7.2 of this Agreement. Further, Seller will
use its best efforts to obtain all consents, approvals or authorizations of all
governmental authorities or agencies or third parties required for the
execution, delivery and performance by Seller of this Agreement and the
consummation by it of any transactions contemplated hereby.
8.5 Records. Seller shall retain all Records relating to the Target
-------
Deposits which are not ordinarily maintained at the Branch Office and are not
otherwise required to be transferred to Buyer under this Agreement and Buyer
shall receive possession of, and right, title and interest to, and in, all
Records which are ordinarily maintained at the Branch Office. In each case,
copies of the Records directly relating to Branch Office operations, assets and
liabilities prior to the Closing Time which are retained by Seller shall be
provided, within a reasonable time period after a request is received for such
Books and Records, to Buyer and its authorized agents, representatives and
regulators during regular business hours after the Closing Time. All Records
relating to the Target
15
<PAGE> 21
Deposits prior to the Closing Time shall be maintained for the period required
by law. Should one party's audit or inspection of records in another party's
possession result in the second party's employees or agents having to devote any
substantial amount of time or such party having to allocate facilities or
equipment or having to incur any substantial costs, then the second party shall
be entitled to reasonable reimbursement for all such costs incurred.
8.6 Signs. Seller shall remove, at its own cost, any or all interior and
-----
exterior signs at the Branch Office identifying Seller. Signs will be removed by
6:00 p.m. on the Closing Date.
8.7 Services and Maintenance Contracts. With respect to services performed
----------------------------------
and contracts related to the Branch Office which are outstanding as of the
Closing Date, Seller shall, if requested by Buyer, use its best efforts to
continue to make such services and the benefits of any such contracts available
to Buyer and Buyer shall pay the contract rate for any desired services to be
rendered to it after the Closing Date, pursuant to any existing contract between
Seller and third parties. With respect to any such contract relating to the
Branch Office, Buyer shall, not later than thirty (30) calendar days prior to
the Closing Date hereof, notify Seller of those contracts which it elects to
assume (to the extent permitted by the relevant contracts and law), and Seller
shall assign all of its rights, title and interest in such contracts so assumed
to Buyer at the Closing.
8.8 Environmental Matters. Seller shall permit Buyer to inspect and
----------------------
review, solely at Buyer's expense, the physical condition of the Branch Office
and all legal and contractual matters relating to the Branch Office during the
period beginning on the date of this Agreement. Seller shall deliver to Buyer
all documents and information requested by Buyer pursuant to this Section and
shall otherwise cooperate with Buyer in the making of its inspections.
8.9 Real Estate, Title and Surveys.
------------------------------
(a) At least thirty (30) calendar days prior to the Closing Date,
Seller shall deliver to Buyer a copy of the deed which it shall deliver on the
Closing Date which shall be a general warranty deed. Seller will convey good and
marketable title to the real estate adjacent to the Branch Office as set forth
in more detail in Exhibit 2.2.A. (the "Real Estate") to Buyer, subject to
------------
Permitted Exceptions (as hereinafter defined).
(b) Not more than thirty (30) calendar days after the date hereof,
Seller shall deliver to Buyer, at Seller's expense, a Commitment for an ALTA
Owner's Form B Title Insurance Policy (the "Title Policy") issued by a title
-------------
insurer reasonably approved by Buyer (the "Title Insurer"), with respect to the
-------------
Real Estate and designating Buyer as the proposed insured (the "Title
-----
Commitment"). The Title Commitment shall:
- ----------
(i) include so-called "extended coverage," that is, insurance over
rights of parties in possession (other than tenants under any lease),
questions of survey, mechanics' liens, easements, taxes and special
assessments, and the other general exceptions otherwise set forth in
Schedule B of such form policy;
16
<PAGE> 22
(ii) include an ALTA Form 3.1 zoning endorsement with respect to the
Real Estate (including parking); and
(iii) be subject only to Permitted Exceptions.
For purposes of the Title Commitment, "Permitted Exceptions" shall mean any
exceptions shown on the Title Commitment to which Buyer does not object in
writing within five (5) Business Days of its receipt of the Title Commitment.
Seller shall deliver the Title Commitment to Buyer upon the execution of this
Agreement. If the Title Commitment delivered pursuant to this Section 8.9
discloses title exceptions other than Permitted Exceptions, Seller shall have
thirty (30) calendar days from the date of receipt of notice thereof (and the
parties shall postpone the Closing Date, if necessary to enable Seller to
undertake such activities ) to have such exceptions cleared, or to have the
Title Insurer commit to insure against loss or damage that may be occasioned by
such exceptions by an endorsement in form and substance satisfactory to Buyer.
If the exceptions are not removed or endorsements over the exceptions are not
obtained, Buyer, upon notice to Seller within fifteen (15) calendar days after
the expiration of the 30-day cure period, may elect (i) to terminate this
Agreement in which case this Agreement shall be null and void and the parties
shall be under no obligation to each other; or (ii) Buyer may elect to take
title notwithstanding the exception and such exception shall be deemed a
Permitted Exception.
(c) The Title Policy in the amount of eighty five thousand dollars
($85,000) shall be paid for by Seller and issued to Buyer upon delivery of deed.
(d) Not more than thirty (30) calendar days after the date hereof,
Seller shall deliver to Buyer, at Seller's expense, a current survey of the Real
Estate (the "Survey"), which current survey (i) shall include easements, if any,
------
that are for the benefit of all or any portion of the Real Estate; (ii) shall be
dated on or after the date hereof; (iii) shall be prepared and certified to
Buyer, the Title Insurer and such other persons as Buyer shall reasonably
request by a registered South Carolina land surveyor as having been prepared in
accordance with the current Minimum Standard Detail Requirements for ALTA/ACSM
Land Surveys as adopted by the American Land Title Association and American
Congress on Surveying and Mapping for Class A-Urban Surveys; and (iv) shall
confirm that the Real Estate is in a Zone C-Area of Minimal Flood Hazard
according to the Flood Insurance Rate Maps prepared by the Federal Emergency
Management Agency.
8.10 Transfer of Data. Seller acknowledges that Buyer may either manually
----------------
convert all of the Target Deposit account data or with the mutual consent of the
parties, electronically transfer the data. From the date hereof through the
Closing Date, Seller shall cooperate and work with Buyer to complete the tasks
required to facilitate the conversion of the Target Deposits. Such tasks
include, but are not limited to, providing Buyer with updated reports and other
items as are necessary to complete the conversion process and related testing
procedures. Seller shall provide, at its sole cost and expense not to exceed
$5,000: (i) a written report to Buyer, in a format acceptable to Buyer,
detailing Target Deposit account data on the Closing Date; and (ii) within
thirty (30) calendar days from the date hereof, Seller shall provide Buyer with
initial reports and related documentation of the Deposit accounts in a format
acceptable to Buyer. Any expenses incurred by Seller to collect such
17
<PAGE> 23
data in excess of $5,000 shall be borne by Buyer. Seller agrees to reasonably
cooperate in resolving any conversion-related issues arising from the conversion
of the Target Deposits for a period of ninety (90) calendar days following the
date that the conversion is completed.
8.11 Forms. Within thirty (30) calendar days from the date of this
-----
Agreement, Seller will provide Buyer with copies of the forms of signature
cards, deposit account forms, Regulation E disclosures, Truth-in-Savings
disclosures, deposit account agreements, and IRA trust agreements and
beneficiary designations, as well as the forms of any other instruments or
agreements presently in use at the Branch Office in connection with the Target
Deposits. For purposes of this paragraph, all referenced documents shall be the
forms used by Seller as of the date of this Agreement for new customers.
8.12 Further Assurances. On and after the Closing Date, Seller shall give
------------------
such further assistance to Buyer and, upon Buyer's request, shall execute,
acknowledge and deliver all such acknowledgments and other instruments and take
such further action as may be necessary and appropriate to effectively transfer
the Branch Office and the Target Deposits to Buyer.
8.13 Covenants Not to Compete. Seller hereby covenants and agrees that:
------------------------
(a) For a period of three (3) years commencing as of the Closing
Date, neither Seller nor any affiliate shall establish, purchase or
acquire any banking office used for mortgage banking operations
within Florence County, South Carolina, nor establish any
correspondent relationship with a mortgage banking operation
headquartered in Florence County, South Carolina. Nothing in this
Section 8.13(i), however, shall prevent Seller or any affiliate from
originating loans to residents of Florence County, South Carolina,
at any of Seller's branch offices located outside of Florence
County, South Carolina. It is understood and agreed that this
Section 8.13(i) shall not prevent the acquisition of Seller by
another depository institution or financial institution (or its
holding company) having a mortgage banking facility then operating
under its separate name within Florence County, South Carolina, or
the acquisition by Seller of a depository institution or financial
institution (or its holding company) having a mortgage banking
facility then operating under its separate name within Florence
County, South Carolina.
(b) For a period of four (4) years commencing as of the Closing
Date, neither Seller nor any affiliate shall establish a de novo
branch office or purchase or acquire a branch office from another
depository institution or financial institution for the purpose of
accepting or soliciting any deposits in Florence County, South
Carolina. Nothing in this Section 8.13(ii), however, shall prevent
Seller from accepting deposits from residents of Florence County,
South Carolina, at any of its branch offices located outside of
Florence County, South Carolina. It is also understood and agreed
that this Section 8.13(ii) shall not prevent the acquisition of
Seller by a depository institution or financial institution (or its
holding company) having a branch facility then operating under its
separate name within Florence County, South
18
<PAGE> 24
Carolina, or the acquisition by Seller of a depository institution
or financial institution (or its holding company) having a branch
facility then operating under its separate name within Florence
County, South Carolina.
(c) For a period of three (3) years commencing as of the Closing
Date, neither Seller nor any affiliate shall establish an electronic
funds transfer terminal (including any ATM) within Florence County,
South Carolina.
(d) For a period of three (3) years commencing as of the Closing
Date, neither Seller nor any affiliate shall directly solicit by
direct mail or telephone any persons who on or before the Closing
Date had any Target Deposit account with the Branch Office;
provided, however, that the foregoing provision shall not limit the
right of Seller to: (i) advertise or solicit for banking business
from the public generally or from customers at other branch offices
of Seller, or (ii) direct random mailings or engage in telemarketing
in accordance with Seller's normal direct mail or telemarketing
operations, provided that Seller may not use the customer lists from
the Branch Office for any purpose.
8.14 Best Efforts to Satisfy Conditions. Seller covenants and agrees that
----------------------------------
it: (a) will use its best efforts to satisfy the conditions to which the
obligations of Buyer are subject pursuant to this Agreement on or prior to the
Closing Date; and (b) will fully cooperate to facilitate the consummation of the
transactions contemplated by this Agreement.
ARTICLE IX
CONDITIONS TO CLOSING
9.1 Conditions to the Obligations of Seller. Unless waived in writing by
----------------------------------------
Seller, the obligations of Seller to consummate the transactions contemplated by
this Agreement are subject to the satisfaction at or prior to the Closing of the
following conditions:
(a) Performance. Each of the acts and undertakings of Buyer to be
-----------
performed at or before the Closing pursuant to this Agreement shall have been
duly performed in all material respects;
(b) Representations and Warranties. The representations and
---------------------------------
warranties of Buyer contained in Article V of this Agreement shall be true and
correct on and as of the Closing Date, with the same effect as though made on
and as of the Closing Date. A Certificate in the form of Exhibit 9.1(b) shall be
signed by the Chief Executive Officer of Buyer dated as of the Closing Date.
(c) Regulatory Approvals and Third Party Consents. All required
------------------------------------------------
licenses, approvals and consents of any relevant state, federal or other
regulatory agencies or third parties shall have been obtained; all applicable
waiting periods shall have expired; and all necessary pre-closing conditions of
those licenses, approvals and consents shall have been fully satisfied.
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<PAGE> 25
(e) Documents. Seller shall have received the following documents
---------
from Buyer:
(1) Resolutions of Buyer's Board of Directors, certified by
its Secretary, authorizing the signing and delivery of
this Agreement and the consummation of the transactions
contemplated hereby.
(2) A certificate of the Secretary of Buyer as to the
incumbency and signatures of officers.
(3) A certificate signed by the Chief Executive Officer of
Buyer stating that the conditions set forth in Sections
9.1(a), (b) and (c) have been fulfilled.
(4) The Assignment and Assumption Agreement substantially in
the form of Exhibit 4.4(a) hereto, duly executed by
Buyer.
(5) The Assignment of Assets substantially in the form of
Exhibit 3.3 hereto, duly executed by Buyer.
(6) The Assignment and Assumption of Lease substantially in
the form of Exhibit 3.4 hereto.
(7) Opinion of counsel to Buyer in the form set forth in
Exhibit 9.1(e).
(8) Such other documents and instruments as Seller may
reasonably request.
9.2 Conditions to the Obligations of Buyer. Unless waived in writing by
----------------------------------------
Buyer, the obligations of Buyer to consummate the transactions contemplated by
this Agreement are subject to the satisfaction at or prior to the Closing of the
following conditions:
(a) Performance. Each of the acts and undertakings of Seller to be
-----------
performed at or before the Closing pursuant to this Agreement shall have been
duly performed in all material respects.
(b) Representations and Warranties. The representations and
---------------------------------
warranties of Seller contained in Article VI of this Agreement shall be true and
correct on and as of the Closing Date, with the same effect as though made on
and as of the Closing Date. A Certificate in the form of 9.2(b) shall be signed
by the Chief Executive Officer of Seller dated as of the Closing Date.
(c) Access to Information. Seller shall have permitted Buyer and its
---------------------
authorized representatives and agents to have reasonable access, after the date
of this Agreement, to all such properties, assets and Records of Seller as are
relevant to this Agreement.
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<PAGE> 26
(d) Regulatory Approvals and Third Party Consents. All required
------------------------------------------------
licenses, approvals and consents of any relevant state, federal or other
regulatory agencies or other third parties shall have been obtained; all
applicable waiting periods shall have expired; and all necessary pre-closing
conditions of those licenses, approvals and consents shall have been fully
satisfied.
(e) No Material Adverse Change. No material adverse change shall
----------------------------
have occurred in the reasonable opinion of Seller and Buyer affecting the Branch
Office or the ability to conduct banking operations at the Branch Office.
(f) Documents. Buyer shall have received the following documents
---------
from Seller:
(1) Resolutions of Seller's Board of Directors, certified by
its Secretary, authorizing the signing and delivery of
this Agreement and the consummation of the transactions
contemplated hereby.
(2) A certificate from the Secretary of Seller as to the
incumbency and signatures of officers.
(3) A certificate signed by the Chief Executive Officer of
Seller stating that the conditions set forth in Sections
9.2(a), (b), (d), (e) and (f) and have been satisfied.
(4) An Assignment and Assumption Agreement, substantially in
the form of Exhibit 4.4(a) hereto, duly executed on
behalf of Seller.
(5) The Assignment substantially in the form of Exhibit 3.3
hereto, duly executed by Seller.
(6) The Assignment and Assumption of Lease substantially in
the form of Exhibit 3.4 hereto.
(7) Opinion of counsel to Seller in the form set forth in
Exhibit 9.1(e).
(8) Such other documents or instruments as Buyer may
reasonably request.
(g) Target Deposits. The balance of the Target Deposits on the
----------------
Closing Date shall not exceed twenty-four million dollars ($24,000,000).
21
<PAGE> 27
ARTICLE X
TERMINATION
This Agreement shall terminate and be of no further force or effect as
between the parties, except as to liability for breach of any duty or obligation
arising prior to the date of termination, upon the occurrence of any of the
following:
(a) The expiration of thirty (30) calendar days after any governmental
(federal or state) agency shall have denied or refused to grant the approvals or
consents required to be obtained pursuant to this Agreement, unless within said
thirty (30) calendar day period Buyer and Seller agree to submit or resubmit an
application to, or appeal the decision of, the regulatory authority which denied
or refused to grant approval thereof.
(b) The expiration of fifteen (15) Business Days from the date that either
party has given notice to the other party of such other party's material breach
or misrepresentation of any condition, warranty, representation or covenant in
this Agreement; provided, however, that no such termination shall take effect if
within said fifteen (15) Business Day period the party so notified shall have
fully and completely corrected the grounds for termination as specified in such
notice.
(c) Upon the failure to close the transactions contemplated by this
Agreement on or before February 29, 2000, unless such date is extended in
writing by mutual agreement of the parties.
(d) Upon mutual consent of the parties in writing.
Notwithstanding anything to the contrary herein contained in this
Agreement, neither party hereto shall have the right to terminate this Agreement
on account of its own breach or any immaterial breach by the other party.
ARTICLE XI
EMPLOYEES
11.1 Hiring of Employees.
-------------------
(a) Buyer agrees to hire on an "at will" basis all Branch Office
personnel of Seller who are actively performing their job duties at the Branch
Office on the Closing Date and retain such personnel for at least one-hundred
eighty (180) days following the Closing Date, except for termination for cause.
The names, positions, dates of hire and current salary levels of such personnel
are set forth in Exhibit 11.1(a).
(b) All personnel of Seller hired by Buyer shall be provided with
the same health and other benefits that Buyer provides to its employees. Such
personnel of Seller shall be credited with prior years of service with Seller
for purposes of eligibility (but not benefits accrual) under Buyer's health and
other benefits plans. Prior to the Closing Date, Buyer shall provide Seller with
copies of the summary plan descriptions of all employee benefit plans of
Purchaser.
22
<PAGE> 28
11.2 Salaries, Bonuses, etc.
----------------------
(a) Seller remains liable for and shall pay within sixty (60) days
after the Closing Date any salaries, wages, bonuses or commissions earned or
accrued prior to the Closing Date. Buyer shall be liable for any salaries,
wages, bonuses or commissions earned or accrued on and after the Closing Date.
(b) Seller shall pay to all personnel all amounts due them under
Seller's pension plan and any other retirement plan at the earliest terminated
employee distribution date under the terms of such plans as of the Closing Date.
11.3 Hirings.
-------
(a) During the period of time from the date of this Agreement
through the Closing Date, Seller shall not increase the number of employees or
the level of employee compensation and benefits of the employees of the Branch
Office other than increases that would have otherwise occurred in the ordinary
course of business.
ARTICLE XII
OTHER AGREEMENTS
12.1 Checking Deposit Account Owners.
-------------------------------
(a) Customer Notification. After receipt of regulatory approval of
----------------------
the transactions contemplated by this Agreement but prior to the Closing Date,
Buyer will notify all Target Deposit account holders that checks or drafts
written after sixty (60) calendar days after the Closing Date on Seller's check
or draft forms will not be honored. Such notice shall be made at Buyer's
expense.
(b) Customers' New Check and Draft Forms. On or within five (5)
--------------------------------------
business days after the Closing Date, Buyer will supply holders of Target
Deposits which may be accessed by checks with Buyer's own check or draft forms.
At Buyer's reasonable request, Seller will cooperate fully with Buyer to provide
necessary information for Buyer to supply such checks and drafts. Buyer will be
fully responsible for all costs of the new check and draft forms, including
postage and notifications.
12.2 Seller and Buyer Processing Duties.
----------------------------------
(a) Checks, Drafts, and Negotiable Orders of Withdrawal. For a
--------------------------------------------------------
period not to exceed sixty (60) calendar days after the Closing Date, Seller
agrees to act as Buyer's limited correspondent for the processing of checks,
drafts, and Negotiable Orders of Withdrawal ("NOW") drawn before or after the
---
Closing on forms provided by Seller on any such accounts assumed by Buyer
hereunder.
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<PAGE> 29
(b) Holds and Stop Payments. Seller will deliver to Buyer at Closing
-----------------------
a schedule of holds and stop-payments placed on particular accounts or
individual checks at the Branch Office and the terms of such holds. Except as
otherwise required by applicable law, Buyer will continue such holds and
stop-payments under the same terms Seller shows on the schedule of holds and
stop-payments.
(c) Risk of Loss. After the Closing, any risk of loss with respect
------------
to stop payments and funds availability and other holds shall be the sole
responsibility of Buyer, provided that: (i) in the case of stop-payments
instituted prior to Closing, Seller has advised Buyer of the existence and terms
of such stop-payments at the Closing; and (ii) in the case of funds availability
and other holds instituted prior to Closing, Seller has advised Buyer of the
existence and terms of such holds at the Closing.
(d) Processing of Electronic Items. Seller will provide Buyer, at
-------------------------------
least twenty (20) Business Days prior to Closing, the list of ACH entries for
electronic transfer accounts domiciled at the Branch Office. Buyer shall
continue such ACH arrangements and such recurring debit arrangements as are
originated and administered by third parties and for which Buyer need act only
as processor. Buyer shall have no obligation to continue any such arrangements
that were originated and administered by Seller and Seller shall terminate such
arrangements on or prior to the Closing Date. Within thirty (30) days after
Closing, Buyer shall notify ACH originators with respect to Target Deposits to
change the routing numbers and account numbers from those of Seller to those of
Buyer. Seller will continue to accept and forward to Buyer ACH entries and
corresponding funds for sixty (60) calendar days following Closing. Seller
agrees that any daily magnetic tapes or electronic transmissions provided to
Buyer shall include a record of all such recurring ACH transfers received by
Seller on the previous Business Day. After the sixty (60) day period, Seller may
discontinue accepting and forwarding ACH entries and funds and return them to
the originators marked "Account Closed."
(e) Account Statements. Within thirty (30) calendar days after the
-------------------
Closing Date, Seller, at its own expense, shall mail to each depositor in
respect of a checking account, NOW account, money market account or other
account which permits deposits to be transferred to third parties by means of
drafts drawn on such Target Deposit account, a final account statement as of the
Closing Time.
12.3 Returned Items. An appropriate allocation or adjustment between Buyer
--------------
and Seller shall be made for any items that were credited for deposit to an
account at the Branch Office and are returned unpaid within sixty (60) calendar
days after the Closing (the "Returned Items"), if after reasonable diligence
---------------
payment for the Returned Item cannot be recovered, including by offset against
an account of obligor. Such allocation and adjustment shall be made by
appropriate payment from Buyer to Seller or Seller to Buyer as soon as feasible.
12.4 Settlement. In settlement of the transactions described in Sections
----------
12.2 and 12.3, Buyer and Seller agree that by 1:00 p.m. on each Business Day,
Seller shall provide Buyer with a daily net settlement figure for all such
transactions then pending to the knowledge of Seller and
24
<PAGE> 30
Buyer shall provide an equivalent figure for all such transactions then pending
to the knowledge of Buyer. The parties agree that the party obligated to remit
any funds thereunder shall do so by 3:00 p.m. of such day. Any such settlement
shall be provisional pending receipt by Buyer of the physical items relating to
such settlement; Buyer shall adjust the next daily settlement to reflect any
adjustments resulting from its receipt of the physical items.
12.5 Interest Reporting. Seller shall report from the first day of the
-------------------
calendar year of closing through the Closing Date all interest credited to,
interest withheld from, and early withdrawal penalties charged to the Target
Deposits which are assumed by Buyer under this Agreement. Buyer shall report
from the day after the Closing Date through the end of the calendar year all
interest credited to, interest withheld from, and early withdrawal penalties
charged to the Target Deposits assumed by Buyer. Said reports shall be made to
the holders of these accounts and to the applicable federal and state regulatory
agencies. Buyer assumes no responsibility for reports with respect to Deposits
other than Target Deposits.
12.6 Notices to Depositors. Seller shall provide Buyer with an
------------------------
intermediate customer list on the Target Deposits together with information
regarding those customers' accounts as of a date that is mutually agreed to by
Buyer and Seller and which is prior to the mailing referred to in this Section
12.6. After the receipt of regulatory approval of the transactions contemplated
by the Agreement but prior to the Closing Date, Seller and Buyer shall notify
the holders of the Target Deposits accounts that, subject to closing
requirements, Buyer will be assuming liability for the Target Deposits and Buyer
shall disclose the details of Buyer's administration of the assumed accounts,
provided Buyer may, but shall not be required to include in such notice any
information concerning plans Buyer may have to change rates or other terms and
conditions of the Target Deposits following the Closing Time. Each party shall
obtain the approval of the other on its notification letter and each party shall
be solely responsible for any costs or expenses incurred in performing the
actions required by this Section 12.6.
12.7 Deposit Histories. In the case of any dispute with or inquiry by an
------------------
account holder whose Target Deposit is subject to this Agreement, which dispute
or inquiry relates to the servicing of such Target Deposit by Seller prior to
the date for which a Target Deposit history has been provided to Buyer, Seller
will provide Buyer with the appropriate information regarding the Target Deposit
and copies of pertinent documents or instruments with respect to such dispute or
inquiry so as to permit Buyer to respond to the account holder within ten (10)
Business Days and in a manner which would comply with standard banking practices
and customs.
12.8 ATM Cards. After the receipt of regulatory approval of the
----------
transactions contemplated by this Agreement but at least fifteen (15) calendar
days before the Closing Date, Seller shall notify depositors at the Branch
Office that their existing ATM cards may not be used to access Target Deposit
accounts at the Branch Office as of the Closing Time.
12.9 Backup Withholding. Any amounts required by any governmental agencies
------------------
to be withheld from any of the Target Deposits (the "Withholding Obligations")
------------------------
will be handled as follows:
25
<PAGE> 31
(a) Any Withholding Obligations required to be remitted to a
governmental agency on or prior to the Closing Time will be withheld and
remitted by Seller prior to the Closing Date.
(b) Any Withholding Obligations with respect to interest payments
posted on or before the Closing Time, which are not required to be remitted to a
government agency until after the Closing Time, shall be remitted by Buyer. At
the Closing, Seller will remit to Buyer all sums withheld by Seller pursuant to
Withholding Obligations which funds are or may be required to be remitted to a
governmental agency on or after the Closing Time.
(c) Any Withholding Obligations with respect to interest payments
posted after the Closing Time will be remitted by Buyer.
(d) Any penalties described on "B" notices from the IRS or any
similar penalties that relate to Target Deposits opened by Seller prior to the
Closing Time will be paid by Seller promptly upon receipt of the notice,
provided such penalty assessment resulted from Seller's acts, policies or
omissions.
12.10 Electronic Installation. Buyer shall have a reasonable right to
------------------------
enter the Branch Office in the thirty (30) calendar day period prior to the
Closing Date for the purpose of installing necessary wiring for Buyer's teller
terminals and data processing equipment to be utilized after the Closing,
subject to satisfaction by Buyer of the following conditions:
(a) reasonable advance notice of such entry shall be given to
Seller, such entry shall comply with Seller's security procedures and Seller
shall have the right to have its employees or contractors present to inspect the
work being done;
(b) all such work shall be done so as not to unreasonably interfere
with Seller's business in the Branch Office; and
(c) all such work will be done in compliance with the laws and
applicable governmental regulations and Buyer shall be responsible for the
procurement, at Buyer's expense, of all required governmental or administrative
permits and approvals.
Buyer agrees that if for any reason the transactions contemplated
hereunder are not consummated, Buyer will, at its sole cost and expense, remove
any installations it shall have made in the Branch Office and shall repair and
restore the Branch Office to its condition immediately prior to such
installation.
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<PAGE> 32
ARTICLE XIII
GENERAL PROVISIONS
13.1 Survival. The representations and warranties made by the parties in
--------
this Agreement, and their respective obligations to be performed under the terms
hereof at, prior to, or after the Closing, shall not expire with, or be
terminated or extinguished by, the Closing, notwithstanding any investigations
of the facts constituting the basis of the representations and warranties of any
party by the other party hereto.
13.2 Indemnification.
---------------
(a) Seller shall indemnify, hold harmless and defend Buyer (and its
affiliates) from and against any and all damage, loss, liability, cost, penalty,
claim or expense (including legal fees and expenses) incurred or suffered by
Buyer (or its affiliates) in connection with:
(1) any misrepresentation or breach of warranty, covenant or
agreement made or to be performed by Seller pursuant to
this Agreement, or
(2) any action taken or omitted to be taken by Seller, or
any transaction or any event occurring prior to the
Closing Time, relating to the operations of the Branch
Office and Target Deposits, and any suits or proceedings
commenced in connection therewith, or
(3) any liability of Seller not assumed by Buyer pursuant to
Section 2.4.
(b) Buyer shall indemnify, hold harmless and defend Seller (and its
affiliates) from and against any and all damage, loss, liability, cost, penalty,
claim or expense (including legal fees and expenses) incurred or suffered by
Seller (or its affiliates) in connection with:
(1) any misrepresentation or breach of warranty, covenant or
agreement made or to be performed by Buyer pursuant to
this Agreement, or
(2) the installation by Buyer of wiring and other electronic
equipment pursuant to Section 12.10 of this Agreement,
or
(3) any action taken or omitted to be taken by Buyer, or any
transaction or any event occurring from or after the
Closing Time, relating to the operations of the Branch
Office and Target Deposits, to the extent that such
operations are assumed by or transferred to Buyer.
(c) A party seeking indemnification pursuant to this Section 13.2
(an "indemnified party") shall give prompt notice to the party from whom such
------------------
indemnification is sought (the "indemnifying party") of the assertion of any
-------------------
claim, or the commencement of any action or proceeding, in respect of which
indemnity may be sought hereunder. The indemnified party shall assist the
indemnifying party in the defense of any such action or proceeding. The
indemnifying party
27
<PAGE> 33
shall have the right to, and shall at the request of the indemnified party,
assume the defense of any such action or proceeding at its own expense. 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:
(1) the indemnifying party and the indemnified party shall
have mutually agreed to the retention of such counsel;
or
(2) 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,
representation of both parties by the same counsel would
be inappropriate due to actual or potential differing
interests between them.
(d) An indemnifying party shall not be liable under this Section
13.2 for any settlement effected without its consent of any claim, litigation or
proceeding in respect of which indemnity may be sought hereunder. The
indemnifying party may settle any claim without the consent of the indemnified
party, but only if the sole relief awarded is monetary damages that are paid in
full by the indemnifying party, and includes as an unconditional term thereof
the giving by the claimant or plaintiff of a release of the indemnified party,
in form and substance satisfactory to the indemnified party and its counsel,
from all liability with respect to such claim, action suit or proceeding. An
indemnified party shall, subject to its reasonable business needs, use
reasonable efforts to minimize the indemnification sought from the indemnifying
party hereunder. Notwithstanding the foregoing, no investigation by an
indemnified party at or prior to the Closing shall relieve an indemnifying party
of any liability hereunder, unless the indemnified party seeks indemnity in
respect of a representation or warranty which it actually had reason to believe
to be incorrect as a result of its investigation prior to the Closing and the
indemnified party intentionally failed to bring such belief to the attention of
the indemnifying party prior to the Closing.
13.3 Arbitration. The parties to this Agreement hereby agree that any
-----------
claim or dispute under this Agreement shall be resolved by arbitration.
Arbitration shall be by single arbitrator experienced in the matters at issue
and selected by the mutual consent of the parties and in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. In the
event the parties cannot agree on an arbitrator, each party shall select an
arbitrator and the two arbitrators shall select a third. The arbitration shall
be held in such place as may be specified by the arbitrator(s) or any place
agreed to by Seller, Buyer and the arbitrator(s), and shall be conducted in
accordance with the Commercial Arbitration Rules in effect at the date thereof
of the American Arbitration Association to the extent not inconsistent with this
Agreement. The decision of the arbitrator(s) shall be final and binding as to
any matters submitted, and any judgment thereon promptly shall be satisfied;
provided, however, that, if necessary, such decision and satisfaction may be
enforced by either Buyer or Seller in any court of record having jurisdiction
over the subject matter or over any of the parties to this Agreement. All costs
and expenses incurred in connection
28
<PAGE> 34
with any such arbitration proceeding shall be borne by the party against whom
the final decision is rendered, or, if no final decision is rendered, or if the
final decision is a compromise, equally by Buyer and Seller.
13.4 Public Announcements. Neither Buyer nor Seller shall cause to be made
--------------------
any advertisement, solicitation or public announcement (including, without
limitation any advertisement, solicitation or announcement to the depositors
whose accounts have been maintained at the Branch Office at any time beginning
with the date of this Agreement) regarding this Agreement or the transactions
contemplated hereby between the date hereof and the Closing Date without the
prior approval of the other party, except as may otherwise be provided in this
Agreement or as may be required by law. In either such event, the other party to
this Agreement shall be provided a reasonable opportunity to review and comment
upon such advertisement, solicitation or public announcement prior to its
dissemination. Any consent or approval required by this Section 13.4 shall not
be unreasonably withheld.
13.5 Incorporation of Exhibits. All exhibits attached hereto and referred
-------------------------
to herein are incorporated in this Agreement as though fully set forth herein.
13.6 Expenses. Except as otherwise stated herein, each party shall bear
--------
the cost of its own attorney's fees and other expenses incurred in connection
with the preparation of this Agreement and consummation of the transactions
described herein. Notwithstanding the foregoing in any action between the
parties seeking enforcement of any of the terms and provisions of this Agreement
or in connection with any of the property described herein, the prevailing party
in such action shall be awarded, in addition to damage, injunctive or other
relief, its reasonable costs and expenses, not limited to taxable costs and
reasonable attorney fees.
13.7 Notices. All notices, requests, demands and other communication
-------
given or required to be given under this Agreement shall be in writing, duly
addressed to the parties as follows:
To Buyer: First Federal Savings & Loan Association of Cheraw
515 Market Street
Cheraw, South Carolina 29520
Attention: Herbert H. Watts,
President and Chief Executive Officer
With a copy to: Luse Lehman Gorman Pomerenk & Schick, P.C.
5335 Wisconsin Avenue, N.W., Suite 400
Washington, D.C. 20015
Attention: John J. Gorman, Esq.
To Seller: Coastal Federal Savings Bank
2619 Oak Street
Myrtle Beach, South Carolina 29577
Attention: Michael C. Gerald,
President and Chief Executive Officer
29
<PAGE> 35
With copy to: Muldoon, Murphy & Faucette LLP
5101 Wisconsin Avenue, N.W.
Washington, DC 20016
Attention: Paul M. Aguggia, Esq.
Any such notice sent by registered or certified mail, return receipt
requested, shall be deemed to have been duly given and received forty-eight (48)
hours after the same is so addressed and mailed with postage prepaid. Notice
sent by any other manner shall be effective only upon actual receipt thereof.
13.8 Assignment. This Agreement may not be assigned by either party
----------
without the prior written consent of the other party and any attempted
assignment in violation of this section is void.
13.9 Successors and Assigns. This Agreement shall be binding upon the
-----------------------
parties hereto and their respective heirs, successors or representatives.
13.10 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of South Carolina.
13.11 Entire Agreement. This Agreement contains all of the agreements of
----------------
the parties to it with respect to the matters contained herein and no prior or
contemporaneous agreement or understanding, oral or written, pertaining to any
such matters shall be effective for any purpose. No provision of this Agreement
may be amended or added to except by an agreement in writing signed by the
parties hereto or their respective successors in interest and expressly stating
that it is an amendment of this Agreement.
13.12 Headings. The headings of this Agreement are for purposes of
--------
reference only and shall not limit or define the meaning of the provisions of
this Agreement.
13.13 Severability. If any paragraph, section, sentence, clause or phrase
------------
contained in this Agreement shall become illegal, null or void or against public
policy, for any reason, or shall be held by any court of competent jurisdiction
to be illegal, null or void or against public policy, the remaining paragraphs,
sections, sentences, clauses or phrases contained in this Agreement shall not be
affected thereby.
13.14 Waiver. The waiver of any breach of any provision under this
------
Agreement by any party hereto shall not be deemed to be a waiver of any
preceding or subsequent breach under this Agreement.
13.15 Amendment. This Agreement may not be amended except by an instrument
---------
in writing, signed by duly authorized officers, on behalf of the parties hereto.
Any duly authorized officer of Seller or Buyer may make, execute and deliver
such amendment or amendments, modifications or supplements to this Agreement as
any one of such officers signing any such amendment, modification or supplement
on behalf of a party may approve, as shall be conclusively
30
<PAGE> 36
evidenced by his signature to any such amendment, modification or supplement in
such manner as may be agreed upon by them in writing at any time.
13.16 Singular and Plural. Whenever the context of this Agreement so
--------------------
requires, the singular includes the plural, the plural includes the singular,
and the whole includes any part thereof.
13.17 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original but all of which shall
constitute one and the same instrument.
13.18 Confidentiality. Buyer and Seller acknowledge that, during the
---------------
period between the date hereof and the Closing Date, each will be provided with
access to certain information of the other that is considered by such party to
be confidential and/or proprietary in nature. Each of Buyer and Seller agree
that they will keep confidential any information (unless readily ascertainable
from public or published information or sources) that belongs to the other party
or any of its agents, employees or representatives. In the event that this
Agreement is terminated and the transactions contemplated herein are not
completed, then promptly after such termination, Seller and Buyer agree to
return to the other party hereto all documents, or other written materials or
electronically encoded information, that belongs to such other party or any of
its agents, employees or representatives in connection with this Agreement and
not previously made public (including all copies thereof). Notwithstanding the
foregoing, nothing in this Agreement shall restrict the ability of either party
hereto to disclose confidential and/or proprietary information of the other if,
and only to the extent that, such party is required to do so by law.
13.19 Third Parties. Nothing in this Agreement, whether expressed or
--------------
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action over against any party to this Agreement.
[Signature page follows]
31
<PAGE> 37
IN WITNESS WHEREOF, the parties hereto have duly authorized and executed
this Agreement as of the date first above written.
COASTAL FEDERAL SAVINGS BANK FIRST FEDERAL SAVINGS & LOAN
ASSOCIATION OF CHERAW
By: /s/ Michael Gerald By: /s/ Herbert W. Watts
-------------------------------------- --------------------------------
Title: President & Chief Executive Officer Title: Chief Executive Officer
Attest Attest
By: /s/ Jerry Rexroad By: /s/ John S. Long
-------------------------------------- --------------------------------
Title: Executive Vice President and Title: Chief Operating Officer
Chief Financial Officer
32
<PAGE> 1
EXHIBIT 99.1 PRESS RELEASE
<PAGE> 2
FIRST FEDERAL COASTAL FEDERAL
CHERAW SAVINGS BANK
515 MARKET STREET 2619 OAK STREET
CHERAW, SOUTH CAROLINA 29520 MYRTLE BEACH, SOUTH CAROLINA 29577
NEWS ANNOUNCEMENT
DATE: NOVEMBER 5, 1999
CONTACT: FIRST FEDERAL COASTAL FEDERAL SAVINGS BANK
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HERBERT W. WATTS MICHAEL C. GERALD
PRESIDENT AND PRESIDENT AND
CHIEF EXECUTIVE OFFICER CHIEF EXECUTIVE OFFICER
TO: NEWS MEDIA
RELEASE DATE: IMMEDIATE
COASTAL FEDERAL SAVINGS BANK AND FIRST FEDERAL CHERAW ANNOUNCE
AGREEMENT ON SALE OF FLORENCE OFFICE
MYRTLE BEACH, S.C., (November 5, 1999).... Coastal Federal Savings Bank, a
subsidiary of Coastal Financial Corporation (Nasdaq CFCP) and First Federal
Savings & Loan Association of Cheraw, a subsidiary of Great Pee Dee Bancorp,
Inc. (Nasdaq PEDE), today announced the signing of a definitive agreement by
which First Federal Cheraw will purchase the Florence, South Carolina branch
office from Coastal Federal Savings Bank. The Florence branch office of Coastal
Federal Savings Bank has total deposits of approximately $23 million. The
transaction is expected to be completed during the first quarter of 2000,
pending regulatory approvals and certain other conditions of closing. The terms
of the transaction were not disclosed.
Herbert W. Watts, President and Chief Executive Officer of First Federal Cheraw,
stated that the two banks will work closely to ensure that the transition is
orderly. Watts continued, "First Federal Cheraw is excited to have the
opportunity to serve additional customers in the Florence market. Our style of
banking is oriented toward personal service to each customer or business, so
customers should appreciate the individual attention that we provide." John S.
Long, COO, added, "This addition fits right in with our growth plans that were
put in place last year. The combined products and services will allow us to
better serve our current customer base in Cheraw, as well as enhance the
financial services currently being offered to our new customers in the Florence
area."
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Michael C. Gerald, President and Chief Executive Officer of Coastal Federal,
said, "We are pleased that the purchaser of our Florence branch is focused on
the goal of serving the banking needs of the residents of the Pee Dee area. Our
decision to sell the Florence office in no way reflects a shift in our community
banking strategy, but merely permits Coastal Federal to focus our efforts and
gain efficiency improvements."
Coastal Financial Corporation, headquartered in Myrtle Beach, South Carolina,
offers a broad range of commercial, consumer and mortgage financial services
through two subsidiaries, Coastal Federal Savings Bank and Coastal Investor
Services. Coastal Federal, with assets over $700 million, is a federally
chartered and FDIC insured community bank with eleven offices serving the
communities of Horry, Florence and Georgetown Counties, South Carolina and
Brunswick County, North Carolina. Coastal Investor Services engages in the sale
of alternative financial products. Additional information about Coastal Federal
is available on its web site at www.coastalfederal.com .
