PURCHASE AND ASSUMPTION AGREEMENT
THIS PURCHASE AND ASSUMPTION AGREEMENT (the "Agreement") is made and
entered into this 8th day of July 2003, by and between Boston Federal Savings
Bank, a federal savings association with its principal place of business in
Burlington, Massachusetts ("Purchaser") and Encore Bank, a federal savings
association with its principal place of business in Houston, Texas ("Seller").
RECITALS
WHEREAS, Seller has determined to sell certain of its assets and have
certain of its liabilities assumed; and
WHEREAS, Purchaser is interested in acquiring certain assets and
assuming certain liabilities of Seller as defined below in accordance with the
terms and conditions of this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
promises herein set forth and other valuable consideration, Seller and Purchaser
hereby agree as follows:
ARTICLE I
Definitions and Construction
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1.1 In addition to the definitions set forth elsewhere in this
Agreement, the following terms have the indicated meanings for the purposes of
this Agreement:
"Account" means a deposit account relationship at one of the Branches
with a customer of Seller at the time of Closing;
"Accounting Records" means, as they relate to the Assets and
Liabilities of the Branches, the general ledger and subsidiary ledgers and
supporting schedules which support the general ledger balances;
"Accrued Expenses" means the accrued and unpaid expenses appearing as a
liability on the Preliminary Closing Statement or the Final Closing Statement,
respectively, pursuant to Sections 2.4 and 2.5 hereof;
"Accrued Interest" on any Deposit at any date means interest that is
accrued on such Deposit to and including such date and not yet credited to such
deposit Account;
"Assets" means the Prepaid Expenses, Fixed Assets, Security Deposits
and Cash on Hand and NONE OTHER. It is specifically provided that loans are not
included in Assets.
"Assumed Deposits" as of the Closing Date, means all Deposits of
Seller, net of Deposit Overdrafts, existing on the Closing Date which, pursuant
to law and the respective depositor agreement, will be transferred to Purchaser,
together with all Accrued Interest thereon as of the Closing Date as set forth
in SCHEDULE 1.1(h) which has been provided to Purchaser as of the Review Date,
which SCHEDULE shall be amended and updated as of Closing;
"ATMs" means automated teller machines owned or leased by Seller listed
in the SCHEDULE 1.1(a);
"Book Value", with respect to any Liabilities or any Asset or group of
Assets, means the accurate dollar amount reflected on the books and records of
Seller as of the Closing Date, after adjustment for differences or offsets in
accounts, suspense items, unposted debits and credits, depreciation, reserves
and other similar adjustments or corrections all in accordance with generally
accepted accounting principles and regulatory accounting principles;
"Branch Office" or "Branches" mean the branch offices of Seller listed
in SCHEDULE 3.1(l);
"Brokered Deposits" means a brokered deposit as defined in 12 C.F.R.
Section 337.6.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day observed as a bank holiday by the Federal Reserve Bank of Boston;
"Cash on Hand" means, as of any date, all xxxxx cash, vault cash,
teller cash, ATM cash, prepaid postage and cash equivalents held at a Branch;
"Closing" refers to the meeting on the Closing Date whereat the
executed Closing Documents will be delivered to the respective parties;
"Closing Date" refers to a date mutually agreed upon by Seller and
Purchaser which is the earliest date practicable following the satisfaction of
all conditions to Closing, the receipt of all regulatory approvals and the
completion of data processing conversion, with the desired date of Closing being
no later than October 31, 2003;
"Closing Documents" has the meaning given in Article VI;
"Contract" refers to any contracts, agreements and Leases, including
automatic renewals thereof, (other than items which constitute loans) (i)
entered into by Seller and specified on the SCHEDULE 3.1(h) attached hereto or
(ii) entered into by Seller after the Review Date, a copy of which has been
delivered to Purchaser on or before the fifteenth (15th) day prior to Closing
and accepted in writing by Purchaser;
"Deposit" means a deposit, as defined in 12 U.S.C. Section 1813(1),
including, without limitation, all demand deposits, NOW accounts, time deposits,
savings deposits, money market accounts, individual retirement accounts, checks
deposited for collection and all other uncollected items included in the
depositors' balances and credited on the books of Seller at the Branches;
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"Deposit Overdraft" means, as of any date, overdraft balances in any of
the Deposits;
"Dormant Account" means any of the Assumed Deposits not included in
SCHEDULE 1.1(i) which have not had any activity for three years as set forth
under the laws of the Commonwealth of Massachusetts as of the Closing Date. A
list of Dormant Accounts is set forth in SCHEDULE 1.1(b).
"Employee" means any employee employed by Seller at the Branches as of
the Closing, including, without limitation, those employees on medical leave,
family leave, military leave or personal leave;
"Environmental Laws" means the common law and all federal, state, local
and foreign laws or regulations, codes, orders, decrees, judgments or
injunctions issued, promulgated, approved or entered thereunder, now or
hereafter in effect, relating to pollution or protection of public or employee
health or safety or the environment, including, without limitation, laws
relating to (i) emissions, discharges, releases or threatened releases of
Hazardous Materials, into the environment (including, without limitation,
ambient air, indoor air, surface water, ground water, land surface or subsurface
strata), (ii) the manufacture, processing, distribution, use, generation,
treatment, storage, disposal, transport or handling of Hazardous Materials, and
(iii) underground and above ground storage tanks, and related piping, and
emissions, discharges, releases or threatened releases therefrom;
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended;
"Execution Date" means the date on which this Agreement is fully
executed by all parties;
"Facilities" means any premises of Seller included in SCHEDULE 3.1(l)
attached hereto, including the Branches;
"FDIC" means the Federal Deposit Insurance Corporation;
"Regulatory Agency" means the FDIC or the OTS;
"Federal Funds Rate" on any day means the per annum rate of interest
(rounded upward to the nearest 1/100 of 1%) that is the weighted mean of the
high and low rates quoted for Federal Funds in the Money Rates Column of the
Wall Street Journal, Southwestern Edition, in effect on the preceding day;
"Final Closing Statement" means the actual balance sheet of the Assets
and Liabilities as of 12:01 a.m., Boston, Massachusetts time, on the day after
the Closing Date, prepared by Seller on or before the Reconciliation Date in
accordance with generally accepted accounting principles (except as necessary to
reflect amounts prorated under Section 2.5 as Prepaid Expenses or Accrued
Expenses, as the case may be) and in a manner and method consistent with the
Preliminary Closing Statement. The Final Closing Statement shall be in a form
substantially similar to that attached hereto as Appendix "A;"
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"Fixed Assets" means all Owned Real Property, Leasehold Improvements
and Furniture, Fixtures and Equipment described in those respective Schedules;
"Furniture, Fixtures and Equipment" refers to all furniture, fixtures
and equipment owned or leased by Seller as of the Closing Date that are located
in the Branches, all ATMs owned by Seller and located at the Branches and also
includes all security devices and systems on the premises of the Branches as
well as all artwork and other personal property owned by Seller and situated in
or affixed to the Branches, all as set forth in SCHEDULE 1.1(d) attached hereto,
as updated at Closing;
"Hazardous Materials" shall mean any substance which is or contains (i)
any "hazardous substance" as now or hereafter defined or listed in Section
101(14) of the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended (42 U.S.C. ss. 9601 et seq.) ("CERCLA"), or any
regulations promulgated under CERCLA; (ii) any "hazardous waste" as now or
hereafter defined in the Resource Conservation and Recovery Act as amended (42
U.S.C. ss. 6901 et seq.) ("RCRA"), or any regulations promulgated under RCRA;
(iii) any substance regulated by the Toxic Substances Control Act as amended (15
U.S.C. ss. 2601 et seq.) or any regulations promulgated thereunder; (iv)
gasoline, diesel fuel, oil or other petroleum hydrocarbons; (v) asbestos and
asbestos containing materials, in any form, whether friable or non-friable; (vi)
polychlorinated biphenyls; (vii) radon gas; (viii) any "pollutant" as now or
hereafter defined in the Clean Water Act, as amended (42 U.S.C. ss. 1251 et
seq.); and (ix) any additional substances or materials which are now or
hereafter classified or considered to be hazardous or toxic under any state or
federal environmental law or regulation or the common law, or any other
applicable laws relating to any real property, which comprises a portion of
Assets. Hazardous Materials shall include, without limitation, any substance,
the presence of which on any real property comprising a portion of the Assets
(A) requires reporting, investigation or remediation under any Environmental
Law; (B) causes or threatens to cause a nuisance on any real property comprising
a portion of the Assets, or any adjacent property, or poses or threatens to pose
a hazard to the health or safety of persons on any real property, comprising a
portion of the Assets, or any adjacent property; or (C) which, if it emanated or
migrated from any real property comprising a portion of the Assets, could
constitute a trespass;
"IRC" means the Internal Revenue Code of 1986, as amended;
"Knowledge" or "known" means an individual shall be deemed to have
"knowledge" of or to have "known" a particular fact or other matter if such
individual is (i) actually aware of such fact or other matter or (ii) a prudent
individual serving as a director or as an officer with a title of vice president
or above, would reasonably be expected, in the ordinary course of the party's
business and consistent with past practices, to discover or otherwise become
aware of such fact or other matter.
"Lease" means any lease or sublease of a lease by which Seller has
rights to use real property, but only to the extent such leases or subleases are
set forth on SCHEDULE 3.1(h) attached hereto;
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"Leased Property" means all leasehold interests in real estate owned by
Seller pursuant to a lease included in SCHEDULE 3.1(h) attached hereto;
"Leasehold Improvements" means all improvements to the real estate
subject to a Lease, if any, purchased, installed or constructed by or on behalf
of Seller and used in connection with the operation or maintenance of the
Facilities, including, without limitation, buildings, structures, parking
facilities and drive-in teller facilities, all as set forth in SCHEDULE 1.1(e)
attached hereto;
"Liabilities" means only the following liabilities and obligations of
Seller as of the Closing Date, and NONE OTHER:
(a) all Assumed Deposits of Seller;
(b) the unperformed and unfulfilled obligations that are required
to be performed by Seller under the terms of all Contracts
after the Closing Date; however, the term "Liabilities" does
not include any liabilities for money damages or other damages
or losses arising in connection with or as the result of a
default by Seller prior to Closing under such Contracts;
(c) Seller's obligations to provide services after the Closing
Date in connection with the Assets and the Assumed Deposits;
(d) Accrued Expenses;
(e) any liabilities or obligations for compliance with any
Environmental Laws associated with the Real Estate, Leasehold
Improvements or other Assets;
(f) the liabilities to pay the Assumed Deposits, including, but
not limited to, liabilities arising from non-cash collection
items, cash collection items, on-us accounts, returned deposit
items, direct deposit and direct debit arrangements; and
(g) any other liabilities of Seller which Purchaser agrees in
writing to assume at the Closing;
"Lien" means any lien, claim, security interest, charge, encumbrance,
option or adverse claim, except for (i) statutory liens securing payments of
taxes or other matters, not yet due, (ii) obligations relating to Deposits which
become subject to escheat in the year the Closing occurs, and (iii) such
imperfections of title as do not adversely affect the use of the properties or
Assets subject thereto or affected thereby or otherwise unreasonably impair
business operations at such properties;
"Material Agreements" means Contracts scheduled in SCHEDULE 3.1(h)
which are not Non-Material Agreements.
"Non-Material Agreements" means the following contracts scheduled in
SCHEDULE 3.1(h): (i) contracts or commitments for the purchase of materials and
supplies used by a Branch in its operations entered into in the ordinary and
usual course of business which do not involve an amount or value in excess of
$5,000 individually and which have a duration of less than one year; and (ii)
contracts or commitments for the purchase of services by a Branch entered into
in the ordinary and usual course of business which do not involve an amount or
value in excess of
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$5,000 individually and $100,000 in the aggregate and which have a duration of
less than one year;
"OTS" means the Office of Thrift Supervision.
"Owned Real Property" or "Real Estate" means (i) all real property
owned by Seller and used in connection with the operation of Seller's business
at the Branches being transferred to Purchaser, (ii) all real property held for
future expansion of Seller's business at the Branches being transferred to
Purchaser, and (iii) the real property, as set forth on SCHEDULE 1.1(f),
together with all improvements to such real property, including, without
limitation, buildings, structures, parking facilities, ATMs and drive-in teller
facilities;
"Permitted Exceptions" has the meaning given in Section 5.3;
"Plan" shall mean, with respect to the employees of Seller, any
"employee benefit plan," as such term is defined in Section 3(3) of ERISA and
any other employee benefit plan, program, agreement, arrangement, policy,
practice or understanding, including any foreign plan, personnel policy, stock
option plan, bonus plan or arrangement, profit-sharing or pension plan or
arrangement, incentive award plan or arrangement, vacation policy, severance pay
plan, policy or agreement, deferred compensation agreement or arrangement,
executive compensation or supplemental income arrangement, and any collective
bargaining, consulting, employment, termination or change-of-control agreement
or arrangement.
"Preliminary Closing Statement" means the balance sheet of the Assets
and the Liabilities prepared by Seller as of 12:01 a.m. Boston, Massachusetts
time, on a date mutually agreeable to Purchaser and Seller, which date shall not
be more than five (5) business days nor less than two (2) days prior to the
Closing Date, in accordance with generally accepted accounting principles
(except as necessary to reflect amounts prorated under Section 2.5 as Prepaid
Expenses or Accrued Expenses, as the case may be). The Preliminary Closing
Statement shall be in a form substantially similar to that attached hereto as
Appendix "A;"
"Prepaid Expenses" means the prepaid expense(s), as set forth in
SCHEDULE 1.1(g) attached hereto, which SCHEDULE shall be amended and updated as
of Closing;
"Purchase Price" shall be the sum of (i) the dollar amount of the
Assumed Deposits, excluding (a) Dormant Accounts as of the Closing Date and (b)
certificates of deposit that existed on May 31, 2003 that will not reprice or
mature between May 31, 2003 and the Closing Date (a list of which are set forth
in SCHEDULE 1.1(i), multiplied by 2.05%; (ii) amount of Cash on Hand and the
Book Value of Prepaid Expenses, Security Deposits, Furniture, Fixtures and
Equipment and Leasehold Improvements; and (iii) the lesser of either aggregate
Book Value or aggregate appraised market value ("Market Value") of the Real
Estate. Market Value shall be determined by having the Real Estate appraised by
both an appraisal firm with knowledge of and experience in the local real estate
market selected and paid for by Purchaser and an appraisal firm with knowledge
of and experience in the local real estate market selected and paid for by
Seller (provided that in each firm one of the persons signing the appraisal on
behalf of the firm must have an M.A.I. designation), and if there is any
difference as to the aggregate Market Value of the Real Estate, the agreed
Market Value for purposes of the Purchase Price shall be the
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average of the aggregate appraisals from the two appraisal firms; provided that,
in the event that the aggregate amount of one set of the appraisals for all of
the Real Estate is more than 15% greater than the aggregate amount of the lesser
appraisals and one or both of the aggregate appraisals are less than the
aggregate Book Value, Purchaser and Seller shall hire a third appraisal firm
with knowledge of and experience in the local real estate market (provided that
one of the persons signing the appraisal on behalf of such firm must have an
M.A.I. designation) to perform additional appraisals of all of the Real Estate,
and the Market Value shall then be the average of the three aggregate
appraisals. Further, irrespective of any difference in the aggregate Market
Value appraisals, if the difference in the appraised value of any one or more
individual pieces of Real Estate is 15% or greater than the lesser appraisal for
these same properties, a third appraisal firm meeting the standards set forth
above shall perform an additional appraisal, and the Market Value for any such
individual pieces of Real Estate shall be the average of the three appraisals.
The cost of any third appraisals, if required, shall be shared equally by the
Purchaser and Seller.
"Reconciliation Date" means the date on which Seller delivers the Final
Closing Statement to Purchaser, which date shall be as soon as practicable after
the Closing Date, but in no event later than the twenty-first (21st) day after
the Closing Date;
"Record" or "Records" means all papers, microfiche, microfilm and
computer records (including but not limited to, magnetic tape, disk storage and
printed copy) of Seller generated or maintained by Seller that are owned by
Seller and relate to the Assets or the Liabilities, or the Branches, including
without limitation, records pertaining to Assumed Deposits, related policy
statements and manuals, and any other records pertaining to any of the Assets,
Liabilities or Branches;
"Review Date" refers to May 31, 2003, unless another date shall be
specified in a written document, executed on behalf of both Seller and
Purchaser, as the Review Date;
"Security Deposits" means funds that Seller has placed on deposit with
third parties to secure Seller's obligations under Contracts with such parties;
"Title Company" means a Title Insurance Company chosen by Purchaser;
"Transaction" means the transactions contemplated in this Agreement;
"Transfer Instruments" has the meaning ascribed to it in Section 6.2 of
this Agreement;
ARTICLE II
Purchase, Sale and Assumption
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2.1 Purchase Price, Assumption of Liabilities and Transfer of
Assets. At the Closing, and subject to the terms and conditions set forth in
this Agreement, Seller shall convey, assign and transfer to Purchaser and
Purchaser shall purchase from Seller all of Seller's right, title and interest
in and to the Branch Offices and the Assets. In consideration for the Assets and
Branch Offices, Purchaser shall assume at the Closing the Liabilities of Seller
and shall pay to Seller the Purchase Price. Seller shall also transfer to
Purchaser all of Seller's rights and benefits under any
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Contracts and the Records of Seller related to any Liability assumed or Asset
acquired by Purchaser.
2.2 Reimbursement for Assumed Deposits. To compensate Purchaser
for the assumption of the Assumed Deposits, Seller shall reimburse Purchaser in
cash in an amount equal to the Assumed Deposits.
2.3 Preliminary Closing Statement. On or before 10:00 a.m. CST on
the business day prior to the Closing Date, Seller shall present Purchaser with
the Preliminary Closing Statement, and the parties will use the amounts
reflected on the Preliminary Closing Statement to determine all amounts to be
transferred to or from each other at the Closing.
2.4 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the business office of the
Purchaser at a time and on a date mutually agreed upon by the parties hereto.
The Closing Payment (as defined below) between Purchaser and Seller shall be
made as follows:
(a) Amount. The Seller shall pay to Purchaser an amount
(the "Closing Payment") equal to the reimbursement for Assumed Deposits
(pursuant to Section 2.2) minus the Purchase Price required to be paid
by Purchaser, as adjusted for pro rata payments pursuant to Section
2.5.
(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
Purchaser, by wire transfer of immediately available funds, an amount
based on the Preliminary Closing Statement which Seller estimates to be
the amount of the Closing Payment ("Estimated Closing Payment"). Seller
agrees to effect the Fedwire transfer payment provided for hereunder by
no later than 12:00 noon CST on the Closing Date and, in the event all
other conditions required for consummating the Closing have not been
satisfied by 12:00 noon CST 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. Upon Seller's failure to
effect payment to Purchaser in accordance with the provisions of this
Section 2.4, Seller agrees that it shall be required to pay to
Purchaser interest on the amount required to be paid to Purchaser on
the Closing Date for the number of days elapsed from and including the
Closing Date to and including the date on which the required payment is
made, at Seller's average rate on the Assumed Deposits, provided,
however, Seller shall not be required to pay to Purchaser any interest
for the date on which the required payment is made if Seller shall
effect payment to Purchaser at such time so as to afford Purchaser a
reasonable opportunity to invest the funds received (without regard to
whether the funds received are actually invested by Purchaser).
2.5 Adjustments. The assignments, transfers, acceptances and
assumptions of the Assets and the Liabilities and the payment of the amounts due
in respect thereof in accordance
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with Section 2.1 shall be final and without recourse and not subject to any
claim for reimbursement, repayment, rescission or avoidance; provided, however,
that
(a) On the Reconciliation Date, Seller shall deliver the
Final Closing Statement to Purchaser. The Final Closing Statement shall
become final and binding on Purchaser and Seller fifteen (15) Business
Days after its delivery to Purchaser, unless Purchaser gives written
notice to Seller of its disagreement with respect to any item included
in such Final Closing Statement. Seller and Purchaser shall use
reasonable efforts to resolve any disagreement during the fifteen (15)
day period following receipt by Seller of the notice. If the
disagreement is not resolved during such fifteen (15) day period, the
parties agree to submit such disagreement(s) to an independent national
accounting firm mutually acceptable to Seller and Purchaser for
resolution by such accounting firm. Such accounting firm shall be
instructed by Seller and Purchaser to make its determination of the
resolution of such disagreement(s) within thirty (30) days after
submission of such disagreement(s) to such accounting firm. The
determination by such accounting firm shall be set forth in writing and
shall be conclusive and binding on the parties hereto. The Final
Closing Statement shall be thenceforth revised as appropriate to
reflect the determination of such accounting firm, whereupon the Final
Closing Statement shall become final and binding. When the Final
Closing Statement becomes final and binding, Seller shall pay
Purchaser, or Purchaser shall pay Seller, as appropriate, an amount in
cash equal to the difference between the amount paid at the Closing and
the amount calculated in accordance with Section 2.1 based on the
figures on the Final Closing Statement, plus interest accrued from the
Closing Date to the date such payment is made at the Federal Funds Rate
(the "Net Settlement Amount"). The fees and disbursements of the
accounting firm selected to resolve any disagreements shall be shared
and paid equally by Seller and Purchaser.
(b) If any Asset is not assignable as of the Closing Date
for any reason, then Seller shall use reasonable efforts to assign such
Asset to Purchaser as soon as possible after the Closing Date but in no
event later than on the Reconciliation Date. In the event Seller is
unable to assign any such Asset to Purchaser on the Reconciliation Date
without limiting any other remedy Purchaser may have, then Seller shall
(i) no longer have any obligation to assign such Asset to Purchaser,
and (ii) refund to Purchaser within three (3) business days in cash the
Book Value of such Asset, plus interest at the Federal Funds Rate plus
5% from the Closing Date through the date of such refund.
(c) All operating expenses and fees accrued or prepaid on
or prior to the Closing Date, including, without limitation, wages and
salaries of Employees employed by Purchaser on or after the Closing
Date, rent, estimated additional rent, Security Deposits, deposit
insurance premiums, utility payments, telephone charges, maintenance
contract payments, personal property taxes, real property taxes and
assessments, other ordinary operating expenses of the Facilities and
other expenses related to the Assets or Liabilities shall be prorated
between the parties as of the Closing Date. All real and personal
property taxes and current installments of special assessments levied
or assessed with respect to the Real Estate, the Leasehold
Improvements, and the Furniture, Fixtures and Equipment shall be
disclosed to Purchaser in advance of Closing and shall be prorated
between Seller and Purchaser on a daily basis as of the Closing Date
based upon
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the fiscal year of the appropriate taxing authority; provided, however,
if estimated taxes for 2003 are not available on the Closing Date, then
the proration of taxes shall be based on 2002 actual taxes, provided
that any special assessment must be set forth on SCHEDULE 2.5(c) and
delivered with this Agreement. If the proration of taxes is based on
the 2002 actual taxes, then the Seller shall reimburse Purchaser to the
extent estimated taxes for 2003 are greater than the 2002 actual taxes,
and Purchaser shall reimburse Seller to the extent estimated taxes for
2003 are less than the 2002 actual taxes. Utilities and any other
normal maintenance and operating expenses relating to the Real Estate,
and the Leasehold Improvements shall be prorated between Seller and
Purchaser as of the Closing Date on a daily basis. Notwithstanding
Seller's normal practices and procedures, to the extent that Seller has
paid expenses that are expenses allocable to Purchaser pursuant to this
Section 2.5(c), such expenses shall appear as "Prepaid Expenses" on the
Preliminary Closing Statement or, if not allocable as of the date the
Preliminary Closing Statement is calculated (the "Preliminary Closing
Statement Date"), on the Final Closing Statement. Notwithstanding
Seller's normal practices and procedures, to the extent that expenses
have been incurred but not paid by Seller on or prior to the Closing
Date, they shall appear as an Accrued Expense on the Preliminary
Closing Statement or, if not incurred by the Preliminary Closing
Statement Date, on the Final Closing Statement.
(d) With respect to the proration of deposit insurance
premiums, Purchaser shall reimburse Seller for the amount of any
deposit insurance assessments that Seller is required to pay for
periods in which the Assumed Deposits are included in Seller's deposit
insurance assessment base but during which periods Purchaser has
liability for the Assumed Deposits. The amount of such reimbursement,
based on Purchaser's effective assessment rate of 1.6 basis points
(regardless of Seller's assessment rate), will be included as a Prepaid
Expense on the Preliminary Closing Statement and will be adjusted as
necessary on the Final Closing Statement.
2.6 XXX Deposits. With respect to Deposits that are individual
retirement accounts created by a trust for the exclusive benefit of an
individual or his or her beneficiaries in accordance with the provisions of
Section 408 of the IRC ("XXX Deposits") as to which Seller is the custodian or
trustee, Seller will appoint Purchaser as successor custodian of all such XXX
Deposits pursuant to a form of appointment acceptable to Seller and Purchaser.
Effective as of the Closing Date, Purchaser will accept appointment as custodian
with respect to such XXX Deposits and will perform all of the duties so
transferred and comply with the terms of Seller's agreement with the depositor
of the XXX Deposits affected thereby. The form of Seller's agreement for XXX
Deposits is attached as SCHEDULE 2.6.
2.7 Taxes and Bulk Transfer.
(a) Sales Tax. Seller shall be responsible for paying any
sales and use taxes which are payable as a result of the consummation
of the transactions contemplated by this Agreement.
(b) Gains Tax and Real Property Transfer Tax. Any gains
taxes or real estate transfer taxes which are payable or arise as a
result of this Agreement shall be payable by Seller. At the Closing,
Seller shall furnish Purchaser with (i) either the statement of
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tentative assessment or statement that no tax is due provided by the
applicable taxing authority of the Commonwealth of Massachusetts; and
(ii) a real property transfer tax form on the form specified by the
applicable taxing authority. Purchaser and Seller will cooperate in the
preparation of any applicable filings and returns required by
Massachusetts tax law.
(c) Seller hereby indemnifies and holds Purchaser
harmless from and against the Seller's portion of any such taxes
including those arising upon subsequent audit by any taxing authority,
including interest and penalties. This Section shall survive the
Closing.
(d) Bulk Transfer Requirements. Seller and Purchaser
shall comply prior to Closing with any bulk transfer law or regulation
applicable to the transaction contemplated by this Agreement.
(e) Information Reports. With respect to the calendar
year in which the Closing Date occurs, for Federal Income Tax reporting
purposes Seller will report all interest accrued and paid with respect
to all Assumed Deposits up to the Closing Date. Purchaser will report
all interest accrued and paid with respect to all Assumed Deposits
after the Closing Date.
ARTICLE III
Representations and Warranties
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3.1 Representations and Warranties of Seller. Seller has delivered
to Purchaser on the date hereof accurate and complete schedules to this
Agreement in final form as of the Review Date. At the Closing, Seller shall
provide Purchaser with supplemental schedules to this Agreement reflecting
changes thereto based on changes between the Review Date and the day that is two
Business Days prior to the Closing Date as contemplated by this Agreement.
Seller represents and warrants to Purchaser, as of the date of this Agreement
and as of the Closing Date, the following:
(a) Seller is a federal savings association duly
organized, validly existing and in good standing under the laws of the
United States of America and has corporate power and authority to own,
operate and lease the properties owned or leased by it and to carry on
its business as now being conducted.
(b) Seller has the corporate power and authority to enter
into and, subject to obtaining all requisite governmental approvals,
perform its obligations pursuant to this Agreement.
(c) The execution, delivery and performance by Seller of
this Agreement, the Transfer Instruments and the Closing Documents and
the performance by Seller of its obligations hereunder have been duly
and effectively authorized by all necessary corporate action on the
part of Seller. This Agreement has been duly executed and delivered by
Seller, and upon the due authorization, execution, and delivery of this
Agreement by Purchaser, this Agreement will be the legal, valid and
binding obligation
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of Seller, enforceable against Seller in accordance with its terms,
subject to obtaining all requisite governmental approvals and subject
to applicable bankruptcy, insolvency, moratorium, reorganization or
other similar laws relating to or affecting the enforcement of rights
of creditors generally and to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity
or at law). The Transfer Instruments and the Closing Documents (to the
extent required to be executed by Seller), when executed and delivered
by Seller, will constitute legal, valid and binding obligations of
Seller, enforceable in accordance with their respective terms, subject
to obtaining all requisite governmental approvals and subject to
applicable bankruptcy, insolvency, moratorium, reorganization or other
similar laws relating to or affecting the enforcement of rights of
creditors generally and to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or
at law).
(d) The execution, delivery and performance of this
Agreement, the Transfer Instruments and the Closing Documents by Seller
and the consummation of the transactions contemplated hereby by Seller,
subject to obtaining all required regulatory approvals and the
expiration of any mandatory waiting periods, do not and will not
violate any provision of, or constitute a breach of or default under,
(i) Seller's charter documents, or (ii) any applicable law, rule,
regulation, regulatory agreement or instruction, judgment, ruling,
order, writ, applicable law, rule, regulation, judgment, ruling, order,
writ, injunction or decree of any court, government or governmental
agency, or any contract, agreement or instrument (other than contracts,
leases, agreements included as Liabilities to the extent the assignment
of which to Purchaser requires the consent of a third party which
consent is obtained by Seller prior to Closing), or loan to which
Seller is a party or by which Seller is bound, or constitute an event
which with the lapse of time or action by a third party could result in
a default under any of the foregoing or result in the creation of any
lien, charge or encumbrance upon any of the assets or properties of
Seller.
(e) The books and Records of Seller relating to the
Assets and Liabilities, including the Accounting Records, are complete
and correct in all material respects and have been maintained in
accordance with good business practice. The Accounting Records have
been prepared in accordance with applicable laws and generally accepted
accounting principles consistently applied throughout the periods
involved. The Accounting Records fairly present the financial position
of Seller relating to the Assets and Liabilities as of the date
thereof, and the results of operations relating to the Assets and
Liabilities for the periods referred to therein. Seller did not have,
as of the Review Date, any liabilities (absolute or contingent) which
relate to the Assets, Liabilities or Branches and are not reflected or
provided for in the Accounting Records.
(f) Seller has, and prior to the consummation of the
transactions contemplated hereby, Seller will own and have, and upon
consummation of the transactions contemplated hereby Purchaser will own
and have, good and indefeasible title in and to all of the Assets
(other than those assets disposed of in the ordinary course of business
of Seller), in each case, free and clear of all Liens, except (i) as
set forth in the attached SCHEDULE 3.1(F), and (ii) liens for taxes not
yet due and payable (such items described in clauses (i) and (ii) are
collectively referred to as "Permitted Encumbrances").
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(g) Except for matters described in the attached SCHEDULE
3.1(g), there are no legal, quasi-judicial or administrative
proceedings of any kind or nature now pending or, to Seller's
Knowledge, threatened against Seller before any court, government
agency, administrative body or arbitrator which relate to the Assets
and Liabilities to be transferred pursuant to this Agreement or to the
Branches. There is no litigation or proceeding pending or, to Seller's
Knowledge, threatened against Seller which challenges the legality or
enforceability of this Agreement or which seeks to prohibit or delay
the consummation of the transactions contemplated herein.
(h) The Contracts described in SCHEDULE 3.1(h) constitute
all agreements, contracts and real and personal property leases (other
than loans entered into in the ordinary course of business) relating to
the Branches (but excluding any agreement, contract or lease that do
not relate to the Liabilities or the Assets) which, in the case of any
such contract, agreement or lease, involve aggregate expenditures by
the Seller of more than $5,000 during the entire relevant term in
effect as of the date hereof or are not due to be terminated in
accordance with the terms thereof within 12 months after the date
hereof. Except for matters contained in SCHEDULE 3.1(h), Seller is not
a party to or bound by any of the following, to the extent they relate
to the Assets, Liabilities or Branches: (i) employment contract
(including without limitation any collective bargaining contract or
union agreement) (ii) any Plan, including any bonus, stock option,
deferred compensation or profit-sharing, pension or retirement plan or
arrangements; (iii) lease or license with respect to any property, real
or personal, whether as landlord, tenant, licensor or licensee, other
than personal property leases involving annual payments of less than
$5,000; (iv) contract or commitment for capital expenditures in excess
of $5,000 for any one Branch from the date of this Agreement through
Closing; (v) contract or commitment made in the ordinary course of
business for the purchase of materials or supplies or for the
performance of services over a period of more than sixty (60) days from
the date of this Agreement; (vi) agreement or instrument or charter or
other corporate restriction which adversely affects the financial
condition, assets, liabilities, business or prospects of Seller; (vii)
agreement or instrument or charter or other corporate restriction which
adversely affects the Assets or Liabilities; (viii) contract or option
to purchase or sell any real or personal property otherwise than in the
ordinary course of business; (ix) indenture, mortgage, note, debenture,
guaranty, security agreement or other debt instrument or agreement
(exclusive of obligations entered into in the ordinary course of
business) under which Seller has a liability; (x) consulting or other
similar contracts; or (xi) contract, other than the foregoing, not made
in the ordinary course of business. Complete and correct copies of all
such contracts, commitments, leases, agreements, Plans and other
documents described in SCHEDULE 3.1(h) have been made available to
Purchaser.
Seller (to the extent a failure of such performance could reasonably be
expected to cause an adverse change in the Assets or Liabilities) has
in all respects performed all obligations required to be performed by
it to date and is not in default under, and no event has occurred
which, with the lapse of time or action by a third party, could result
in default under, any outstanding indenture, mortgage, contract, lease
or other agreement to which Seller is a party or by which the Assets,
the Liabilities or the Branches are bound or affected. Except as set
forth in SCHEDULE 3.1(h), to the Knowledge of Seller, all contracts,
agreements and commitments disclosed to Purchaser pursuant to this
Section
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3.1-(h) and assumed by the Purchaser pursuant to this Agreement are
valid, binding and in full force and effect, and no event has occurred
and remains uncured which constitutes a material default or results in
a right of acceleration, termination or any similar right by any party
(or would, but for the passage of time or the giving of notice,
constitute a material default or result in a right of acceleration,
termination or similar right) under any such contract.
(i) Except with respect to tax matters and environmental
matters, as to which separate representations are made herein, (i)
Seller is in material compliance in all respects with all applicable
federal, state and local statutes, rules, regulations, orders and
ordinances, including those relating to labor matters, civil rights
matters and occupational safety and health matters relating to the
Branches, Assets and Liabilities, and (ii) except as described in
SCHEDULE 3.1(i), the Seller has not received any written notification
of any asserted past or present, failure to comply with any such
statutes, rules, regulations, orders, ordinances, codes, licenses,
franchises, permits, authorizations, and concessions from any
governmental authority or agency relating to the Branches, Assets and
Liabilities, where such failure has not been cured or waived.
(j) Seller has not received any indication from any
federal, state or other governmental agency that such agency would
oppose or refuse to grant or issue its consent or approval, if
required, with respect to the transactions contemplated hereby,
including any required regulatory approval.
(k) Except for Sandler X'Xxxxx & Partners, L.P.
("Sandler"), Seller has not employed any broker, finder or other
investment advisor or incurred any liability for any brokerage fees,
commissions or finders' fees in connection with the transactions
contemplated by this Agreement.
(l) Attached hereto as SCHEDULE 3.1(l) is a list,
complete and accurate in all respects, of each Branch owned in fee or
leased by the Seller. Such list sets forth the address of each Branch.
All of Seller's Leases with respect to the Branches are assignable,
subject to any required landlord consent.
(m) Seller has provided Purchaser with a true and
complete list of all persons employed by the Seller at the Branches,
including those on leave of absence, disability, layoff and vacation,
as of the date hereof, together with the title, location, date of hire,
compensation of each and, for purposes of benefit plan accrual
calculations, date of birth. With respect to such employees: (i) Seller
is not a party to or bound by any employment agreement or collective
bargaining agreement or other contract or agreement with any labor
organization or other representative of any of the Seller's employees,
nor is any such contract or agreement presently being negotiated, (ii)
there is no unfair labor practice charge or complaint pending or, to
the best Knowledge of the Seller, threatened against or otherwise
affecting the Seller, (iii) there is no labor strike, slowdown, work
stoppage, dispute, lockout or other labor controversy in effect,
threatened against or otherwise affecting the Seller, (iv) there is no
activity or proceeding of any labor organization (or representative
thereof) or employee group to organize any employees of Seller and (v)
Seller is in compliance with all applicable laws respecting employment
and
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employment practices, terms and conditions of employment and wages and
hours, and Seller is not engaged in any unfair labor practice.
(n) The copies of all contracts, leases, reports,
agreements, correspondence and other documents relating in any manner
to the Assets and Liabilities, furnished or made available at any time
to Purchaser by or on behalf of Seller pursuant to this Agreement are
true, accurate and complete in all respects.
(o) SCHEDULE 3.1(o) sets forth in detail: (i) the
categories of Deposits which are anticipated to be Liabilities,
indicating the dollar amount of Deposits in each category and the
percentage which such amount constitutes of all Deposits which are
Liabilities as of the Review Date, (ii) the weighted average interest
rate paid with respect to each such category of Deposits as of the
Review Date and (iii) the weighted average maturity of each such
category of Deposits as of the Review Date. All of the Accounts
accurately reflect the transactions made as to same and have been
administered and, originated in compliance with the documents governing
the relevant type of Account and all applicable laws. Except as set
forth on SCHEDULE 3.1(O), Seller has no knowledge of any facts or
circumstances that could adversely affect items (i) through (iii)
between the Review Date and the Closing Date. The Assumed Deposits do
not include any Brokered Deposits.
(p) Any and all taxes relating to the Assets, the
Liabilities, the Employees and any and all other employees who are no
longer employed as of the Closing Date and the operations of the
Branches which are due and payable on or prior to the Closing Date have
been paid in full, or will be so paid on or prior to the Closing Date.
All tax returns (including extensions or amendments thereto) required
to be filed with any relevant taxing authority for periods ending on or
prior to the Closing Date with respect to any and all taxes relating to
the Assets, Liabilities, or the operations of the Branches have been
timely filed or will be timely filed on or prior to the Closing Date.
With respect to the Assumed Deposits, Seller is in material compliance
with applicable laws and Internal Revenue Service ("IRS") regulations
relative to obtaining from depositors of the assumed Deposits
liabilities executed IRS Forms W-8 and W-9, or is back-up withholding
on such account. All information returns, reports and forms required to
be furnished by Seller and any predecessor of Seller that was an
Affiliate of Seller to any depositor or to any taxing authority with
respect to the Assets, Liabilities, or the Branches have been or will
be furnished to such depositors or such taxing authority within the
time required by applicable law. All employment tax information
reports, returns and forms required to be furnished by Seller and any
such predecessor of Seller, as predecessor employer, regarding the
Employees and any and all other employees who are no longer employed as
of the Closing Date to any Employee of Seller or to any taxing
authority with respect to compensation paid by Seller and any such
predecessor of Seller to such Employee (such as IRS Form W-2) have been
or will be furnished to such Employees within the time required by
applicable law.
(q) Seller has all necessary approvals, authorizations,
consents, permits, licenses and orders of each appropriate Regulatory
Agency or other authority for the business conducted by Seller. To its
Knowledge, Seller has complied with, and is not in default in any
material respect under, any laws, ordinances, requirements,
regulations, or
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orders applicable to its business that might reasonably be expected to
prohibit consummation of the Transaction. Seller is not a party to any
agreement or instrument or subject to any charter or other corporate
restriction or any judgment order, writ, injunction, decree, rule,
regulation, code or ordinance which materially and adversely affects,
or would reasonably be expected to materially and adversely affect,
consummation of the Transaction by Seller.
(r) At its most recent regulatory evaluation of Seller's
performance under the Community Reinvestment Act (the "CRA"), Seller's
record of performance was deemed to be "outstanding" or "satisfactory,"
and no proceedings are pending or, to the Knowledge of Seller,
threatened, that would result in a change in such evaluation. Seller
has not yet received any adverse public comments with respect to its
compliance under the CRA since the date of its most recent regulatory
evaluation of its performance under the CRA.
(s) With respect to any Branch there is no legal,
administrative, or other proceeding, claim, or action of any nature
seeking the imposition of any liability arising from the release of
Hazardous Materials under the Environmental Laws pending or, to the
knowledge of Seller, threatened.
(t) SCHEDULE 3.1(t) sets forth a true and complete list
of all fidelity bonds and insurance policies owned or held by, or
issued in favor of, Seller with respect to the Branches. Such fidelity
bonds and insurance are adequate for the business conducted by Seller
at the Branches in respect of amounts, types and risks insured and will
be maintained by Seller through the Closing Date.
(u) Seller currently has access to the funds necessary to
pay the reimbursement amount set forth in Section 2.2 of this
Agreement.
(v) Seller has had no incidents or suspected incidents of
fraud or defalcation at the Branch Offices during the last two years.
The Seller is fully aware of its responsibilities with respect to the
Bank Secrecy Act requirement as to the filing of Currency Transaction
Reports (CTRs) and Suspicious Activity Reports (SARs). In addition,
Seller is fully aware of its responsibilities with respect to the USA
Patriot Act, Gramm Xxxxx Xxxxxx Act Privacy Provisions, Office of
Foreign Assets Control Regulation (OFAC), Bank Protection Act, all
applicable Financial Crimes Enforcement Network (FinCEN) requirements
and all other related laws. Seller further represents that it has
complied in all material respects with these laws, has properly
monitored transaction activity (including but not limited to wire
transfers), and has filed, to the best of its knowledge, all necessary
CTRs and SARs related to the Branch Offices. Seller also represents, to
the best of its knowledge, that there are no Branch customers, other
than those set forth on the SCHEDULE 3.1(v) that should be particularly
monitored for unusual activity. During the past two years Seller has
filed 3 CTRs and 1 SAR with the appropriate regulatory agencies with
respect to activities related to the Branches.
3.2 Representations and Warranties of Purchaser. Purchaser
represents and warrants to Seller as of the date of this Agreement and as of the
Closing Date, the following:
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(a) Purchaser is a federal savings association duly
organized, validly existing and in good standing under the laws of the
United States of America, and has all requisite corporate power and
authority to own, operate and lease the properties owned or leased by
it, to carry on its business as now being conducted and to enter into
this Agreement and perform its obligations pursuant to this Agreement.
(b) The execution, delivery and performance by Purchaser
of this Agreement, the Transfer Instruments and the Closing Documents
(to the extent required to be executed by Purchaser), have been duly
and effectively authorized by all necessary corporate action on the
part of Purchaser. This Agreement has been duly executed and delivered
by Purchaser and upon the due authorization, execution, and delivery of
this Agreement by Seller, this Agreement will be the legal, valid and
binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms, subject to obtaining all requisite
governmental approvals and subject to applicable bankruptcy,
insolvency, moratorium, reorganization or other similar laws relating
to or affecting the enforcement of rights of creditors generally and to
general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law). The Transfer
Instruments and the Closing Documents (to the extent required to be
executed by Purchaser), when executed and delivered by Purchaser, will
constitute legal, valid and binding obligations of Purchaser,
enforceable in accordance with their respective terms, subject to
obtaining all requisite governmental approvals and subject to
applicable bankruptcy, insolvency, moratorium, reorganization or other
similar laws relating to or affecting the enforcement of rights of
creditors generally and to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or
at law).
(c) The execution, delivery and performance by Purchaser
of this Agreement, the Transfer Instruments and the Closing Documents,
and, subject to obtaining all required regulatory approvals, the
consummation by Purchaser of the transactions contemplated hereby and
thereby, do not and will not violate, with or without the giving of
notice or the passage of time, or both, any provision of law applicable
to Purchaser and do not and will not conflict with or result in a
breach, modification or termination of any provision of, or constitute
a default under, to Purchaser's Charter (as amended), Purchaser's
By-laws (as amended), or any material indenture, mortgage, deed of
trust, lease, contract, agreement or other instrument or any order,
judgment, award, decree, statute, ordinance, regulation binding upon
Purchaser.
(d) Purchaser has all necessary approvals,
authorizations, consents, permits, licenses and orders of each
appropriate Regulatory Agency or other authority for the business
conducted by Purchaser. To its Knowledge, Purchaser has complied with,
and is not in default in any material respect under, any laws,
ordinances, requirements, regulations, or orders applicable to its
business that might reasonably be expected to prohibit consummation of
the Transaction. Purchaser is not a party to any agreement or
instrument or subject to any charter or other corporate restriction or
any judgment, order, writ, injunction, decree, rule, regulation, code
or ordinance which materially and adversely affects, or would
reasonably be expected to materially and adversely affect, consummation
of the Transaction by Purchaser.
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(e) There is no litigation, claim, suit, action,
proceeding or investigation, whether pending or, to Purchaser's
Knowledge, threatened at the present time, except as described in
SCHEDULE 3.2(e), that questions the validity of this Agreement or any
action to be taken in connection with the Transaction or that, if
adversely determined, might reasonably be expected to prohibit
consummation of the Transaction.
(f) Except for Xxxxx, Xxxxxxxx & Xxxxx, Inc., acting as
investment adviser to Purchaser in the Transaction, no broker, finder
or similar agent has been employed by or on behalf of Purchaser in
connection with the Transaction and no person or entity is entitled to
receive from Purchaser any brokerage commission, finder's fee or
similar compensation in connection with this Agreement or the
Transaction.
(g) Purchaser has not received written notice from any
governmental or regulatory authority indicating that it would oppose or
not grant or issue its consent or approval, if required, with respect
to the Transaction, and Purchaser has no reason to believe that the
approvals of the OTS and the FDIC (or any other governmental authority)
to be sought by Purchaser in connection with the Transaction will not
be granted.
(h) At its most recent regulatory evaluation of
Purchaser's performance under the CRA, Purchaser's record of
performance was deemed to be "outstanding" or "satisfactory," and no
proceedings are pending or, to the Knowledge of Purchaser, threatened,
that would result in a change in such evaluation.
ARTICLE IV
Pre-Closing Covenants
---------------------
4.1 General Pre-Closing Covenants of Seller. In addition to
performing other covenants set forth in this Agreement, prior to the Closing
Date Seller shall:
(a) Deliver to Purchaser a copy of the monthly unaudited
balance sheet that relates to the Assets and Liabilities and a
statement of expenses for each month within fifteen (15) days after the
end of each month;
(b) Operate the business of Seller relating to the Assets
and Liabilities only in a prudent manner, consistent with past
practices, including, without limitation, maintaining deposit pricing
within market levels;
(c) Maintain the Fixed Assets in their current repair,
order and condition, consistent with past practices, reasonable wear
and use and damage by fire or casualty excepted, however, it is
specifically provided that in the event of material damage to a Fixed
Asset by fire or casualty, Seller shall consult with Purchaser and at
Purchaser's direction pay to repair the Asset to its original
condition. In the event that Seller fails or refuses to pay to repair
the Asset to its original condition, Purchaser shall have the right, at
its option, to exclude the Branch relating to the Fixed Asset from the
Transaction. If Purchaser elects to exclude the Branch from this
Transaction, such Branch shall not constitute an Asset; provided,
however that the Assumed Deposits of such Branch shall constitute
Liabilities and be assumed by Purchaser as if such Branch had been an
Asset.
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It is specifically provided, however, that no premium shall be paid by
Purchaser on the Assumed Deposits related to any such Branch except the
Lexington Branch Office for which a premium would be payable as set
forth in the definition of Purchase Price contained in this Agreement.
It is further provided, however, that if, as a result of Purchaser not
having to pay a premium on the Assumable Deposits at one or more
Branches, the total amount of Assumed Deposits on which Seller will
receive a premium falls below $185,000,000, Seller has the option to
terminate this Agreement without further liability;
(d) Maintain the books, accounts and Records of Seller
relating to the Branches, Assets and Liabilities in a full and
competent manner, consistent with generally accepted accounting
principles, and in a manner that will accurately reflect the business
and affairs of Seller relating to the Assets and Liabilities;
(e) Comply in all material respects with all laws
applicable to Seller and the conduct of its business as it relates to
the Assets and Liabilities, perform all of its obligations under all
Contracts with Seller's customers and employees, maintain the goodwill
and reputation associated with Seller through Closing, and generally
perform all such obligations without default;
(f) Neither make nor allow any amendment to its charter
or By-laws and enter or agree to enter into no merger or consolidation
with, nor sell all or substantially all of its assets to, any other
person or corporation nor change the character of its business in any
manner if the effect of such transaction would be to impair the ability
of Seller to convey the Assets to Purchaser at the Closing, and not
make or allow any amendment, termination (other than through the
expiration of the term) or modification of any of Seller's Contracts
listed on SCHEDULE 3.1(h), except as approved in advance by Purchaser
in writing;
(g) Neither incur nor suffer to exist a Lien on any of
the Assets not disclosed in a schedule to this Agreement nor extend or
modify any Lien related to any of the Assets, nor agree to sell or
otherwise dispose of any of the Assets (except as set forth in this
Agreement or on SCHEDULE 4.1(g) hereto and except portions of the
Assets sold, used or disposed of in the ordinary course of business of
Seller without having a material adverse effect on the continuing
business of Seller, the Assets or Liabilities);
(h) Other than emergency repairs or where Seller has a
contractual obligation to make repairs, not make any renovation of any
Real Estate of Seller and enter into any lease or agreement with
respect to any of the Assets;
(i) Maintain insurance upon the Assets in accordance with
the insurance coverage reflected in SCHEDULE 3.1(t) hereof in respect
to the kind and amount of risk currently insured against, in accordance
with its current practice;
(j) Timely file all federal, state, city, municipal,
county and local tax returns and reports, including without limitation,
income, franchise, excise, ad valorem and other taxes with respect to
its business and properties and pay all taxes or assessments, except
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for taxes being contested in good faith by appropriate proceedings for
which an adequate reserve has been made, as they become due;
(k) Unless otherwise agreed to by Purchaser in writing,
neither grant nor make an increase in the compensation payable or to
become payable to any Employee, nor enter into any employment agreement
or other contract or arrangement with respect to the performance of
personal services by any Employee other than increases in compensation
consistent with past practices;
(l) Join with Purchaser and cooperate fully in filing, as
soon as possible, any necessary notice or applications to any federal
or state agency the delivery of notice to which or the approval of
which is required by applicable law with respect to the Transaction;
(m) Promptly advise Purchaser in writing of any material
adverse change to the Branches, Assets and Liabilities or any event
which would affect the ability of Seller to consummate the Transaction;
(n) Not take any actions that will injure Purchaser's
present business relations with its depositors, customers and others,
and shall not commit any act, or in any way assist others to commit any
act that materially injures Purchaser or the business heretofore
conducted by Purchaser; provided, however, nothing herein shall
prohibit Seller from taking such actions as required by applicable law;
(o) Pursuant to Seller's agreement with Sandler, have
Seller pay any commissions due and payable to Sandler in connection
with the transactions set forth in this Agreement;
(p) Unless otherwise agreed to by Purchaser in writing,
enter into any lease arrangement with respect to any Real Estate; and
(q) Seller shall use its best efforts to aggressively
negotiate and effect a modification to the existing tenant lease at the
Wellesley Branch Office to provide Purchaser with an additional 900
square feet to be used for branch expansion or, if unsuccessful, Seller
shall use its best efforts to negotiate a termination of the existing
lease before the Closing Date. For purposes of this section, "best
efforts" shall include costs and expenses incurred, including direct
payments to the existing tenant, of up to $400,000 in order to obtain
the desired space. Of any such costs and expenses paid, Seller will pay
the first $200,000 and Purchaser and Seller will share equally any
costs and expenses over and above the first $200,000. In the event that
the desired space cannot be obtained by incurring costs and expenses of
$400,000 or less, Purchaser has the option to terminate this Agreement
without any further liability.
4.2 Inspection. Beginning on the date of this Agreement, Purchaser
and Purchaser's counsel, accountants and other representatives shall have the
right to inspect and shall have access to Seller's Branches, Records, financial
statements relating to the Branches, Assets and Liabilities, and officers and
employees during normal business hours, after reasonable advance notice and
provided such access does not materially disrupt Seller's operations. Seller
shall
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furnish to Purchaser promptly all information requested by Purchaser relating to
Seller which is necessary for inclusion in any filing with any regulatory agency
necessary to obtain approval for or to give notice of the Transaction; all
information so furnished shall be true and correct in all material respects
without omission of any material facts required to be stated to make the
information stated therein not misleading. Purchaser will keep confidential all
information obtained pursuant to this Agreement and in the event of termination
of this Agreement will return to Seller all documents and other information
obtained pursuant thereto.
4.3 Notification of Changes. Seller and Purchaser will promptly
notify the other in writing of the existence or happening of any fact, event or
occurrence that may tend to alter the continuing accuracy or completeness of any
representation or warranty made by such party contained in this Agreement.
4.4 No-Shop. In consideration of the substantial time and expense
to be undertaken by Purchaser in connection with seeking regulatory approval of
the Transaction and complying with the other conditions precedent of this
Agreement, while this Agreement is in effect, Seller, and any officer, director
or shareholder of Seller, collectively or separately, shall not, directly or
indirectly (i) solicit or encourage inquiries or proposals with respect to the
sale of any of the Assets (or the transfer of the Assumed Deposits) of Seller
from any party other than Purchaser or (ii) enter into any agreement with any
party other than Purchaser regarding the sale of any of the Assets of Seller or
the transfer of the Assumed Deposits.
4.5 Public Disclosure. Until the Closing, Purchaser and Seller
will not make any press release or other public disclosure concerning this
Agreement or the Transaction without the prior written consent of the other
parties to this Agreement; provided, however, that notwithstanding the
foregoing, Purchaser and Seller will be permitted to make a public announcement
of the execution of the Agreement and will be permitted to make any public
disclosures or governmental filings as legal counsel may deem necessary to
maintain compliance with or to prevent violations of applicable federal or state
laws or regulations or which may be necessary to obtain regulatory approval for
the Transaction. Each of the parties will consult with the other as to the form
and content of any press release or other public disclosure of matters related
to this Agreement or the transaction. Any such disclosure shall be transmitted
to the other party and its counsel prior to its publication.
4.6 Applications. Purchaser shall use all commercially reasonable
efforts to file, as soon as possible, any necessary notice or applications with
any federal or state agency the delivery of notice to which or the approval of
which is required by applicable law with respect to the Transaction; provided,
however, that Purchaser shall file the notice to the OTS regarding the
Transaction. Seller agrees to use all reasonable efforts to assist Purchaser in
obtaining all regulatory approvals necessary to complete the Transaction, and
Seller will provide to Purchaser or to the appropriate Regulatory Authorities
all information within its possession reasonably required to be submitted by
Purchaser in connection with such approvals.
4.7 Marks, Forms, Materials and Signage. Purchaser and Seller
agree to cooperate and coordinate efforts with respect to the removal of
existing interior and exterior signs at the Branch Offices identifying Seller
and the installation of new signage. Purchaser agrees to arrange for and pay for
the cost of such removal and installation, and Seller agrees to reimburse
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Purchaser for reasonable costs related to signage removal and any repairs
necessary to restore areas bearing previous signage to an acceptable condition.
Signs will be removed and installed as soon as practicable, but no more than
fifteen (15) days, after the Closing Date. Purchaser shall not use, keep or
claim any registered or unregistered trademark, service xxxx or other
identification commonly associated with Seller, or any sign, display or similar
material of Seller or any banking or other forms, stationery, traveler's checks,
cashier's checks, manager's checks or similar banking material of Seller or
bearing Seller's name or other similar marks or identification, or any
proprietary material of Seller not relating to the Assets or Liabilities
including without limitation public relations, explanatory or advertising
materials.
4.8 Branch Operations. Purchaser shall comply with all applicable
branch closing laws, including continuing to operate each of Seller's Branches
at its current location for a period of ninety (90) days after the Closing Date
(unless Seller has been provided written confirmation from Purchaser that any
earlier change in location by Purchaser would comply with or otherwise be exempt
from the notice and other requirements under federal and state laws).
4.9 Business Relations. From the date of this Agreement through
the Closing, Purchaser shall not take any actions that will injure Seller's
present business relations with its depositors, customers and others, and shall
not commit any act, or in any way assist others to commit any act that
materially injures Seller or the business heretofore conducted by Seller;
provided, however, nothing herein shall prohibit Purchaser from taking such
actions as required by applicable law.
4.10 Data Processing Services/Conversion. Purchaser and Seller
agree to cooperate in the scheduling of data processing conversion so that, on
or before the Business Day following the Closing Date, Purchaser shall have
converted all data processing functions pertaining to the Liabilities and
Assets, including without limitation functions related to deposit-taking and
check-clearing activities and processing of ACH items, to Purchaser's own data
processing system or to a third-party provider of such services selected by
Purchaser. Seller shall cooperate in a reasonable manner, at Seller's sole cost
and expense, and upon such other reasonable terms as Seller may specify, in
removing the data from Seller's data processor. Seller shall have no further
obligation to provide data processing services to Purchaser from and after the
Closing Date. Purchaser shall be responsible, at its sole cost and expense, to
install the data on Purchaser's own data processing system. In no event shall
Seller be required to provide any computer programming, source code or changes
in existing file layouts. In the event that data processing conversion is not
completed on or before the Business Day following the Closing Date, Seller
agrees to continue to provide data processing services for Purchaser, for which
services Purchaser agrees to pay Seller a service fee of $500 per day until the
conversion has been completed, but it is specifically provided that if the
conversion does not occur within thirty (30) days after the Closing Date, such
service fee shall be increased to $1,000 per day.
4.11 Continuing Cooperation. The parties to this Agreement agree
that they will act in good faith and use their best efforts (i) to cooperate
with each other to carry out the transactions contemplated by this Agreement and
(ii) to satisfy their respective conditions to Closing set forth in Article VI
of this Agreement.
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ARTICLE V
TITLE AND SURVEY; ENVIRONMENTAL MATTERS; OTHER
----------------------------------------------
5.1 Title Commitments. Seller shall provide Purchaser with a copy
of all title policies in its possession for the Owned Real Property and Leased
Property. Within thirty (30) days from the date of this Agreement, Purchaser
may, at Purchaser's sole cost and expense, obtain a current commitment for title
insurance (the "Title Commitment") for each parcel of Owned Real Property, in
each case for an Owner's Policy of Title Insurance, in a face amount equal to
the Book Value of the respective parcel of Owned Real Property issued by Title
Company. The Title Commitments shall be reasonably satisfactory to Purchaser and
may include endorsements such as access, survey, comprehensive, separate tax
parcel and 3.0 or 3.1 zoning compliance, and such endorsements shall be
considered part of the Title Commitment.
5.2 Surveys. Within forty-five (45) days after the date hereof,
Purchaser may, at Purchaser's sole cost and expense, obtain a survey for each
parcel of Owned Real Property.
5.3 Review of Title Commitments, Surveys and Exception Documents.
In the event that the Surveys or the Title Commitments contain any exceptions to
title other than those matters set forth in the standard printed exceptions (the
"Standard Exceptions") and all exceptions in any Owner's Policy for Title
Insurance previously issued to Seller (which are described in Schedule 5.3),
then Purchaser shall have a period of fifteen (15) days (the "Title Review
Period") commencing with the day Purchaser has received the last to be received
of the Title Commitments and the Survey(s) in which to give written notice to
Seller specifying objections to one or more of those items (the "Objections").
Any such other exception to title contained in the Surveys, and/or Title
Commitments and not objected to in writing by Purchaser as described above shall
be deemed as accepted and approved by Purchaser (all such matters not objected
to by Purchaser, together with the Standard Exceptions and all exceptions in any
Owner's Policy for Title Insurance previously issued to Seller, being
hereinafter referred to as the "Permitted Exceptions").
5.4 Seller's Right to Cure Objections. If Purchaser notifies
Seller of Objections in writing, prior to the expiration of the Title Review
Period, then Seller shall, within fifteen (15) business days after Seller's
receipt of notice, either satisfy the Objections at Seller's sole cost and
expense or promptly notify Purchaser in writing of the Objections that Seller
cannot or will not satisfy at Seller's expense. Notwithstanding the foregoing
sentence, Seller shall, in any event, be obligated to cure those Objections that
are liens, encumbrances or security interests or that have been voluntarily
placed against any of the Assets by Seller after the date hereof. Seller shall
utilize reasonable diligence to cure all other Objections in a manner that does
not impose an unreasonable monetary burden on Seller. Any Objection appearing in
the Title Commitments that is objected to by Purchaser will be deemed to be
cured if the Title Company issues a revised commitment stating that such
exception will not appear in the Owner's Policy of Title Insurance to be issued
pursuant to the Title Commitment. If Seller fails or refuses to satisfy any
Objection (other than objection(s) described in the preceding sentence), then
Purchaser may either (i) waive the unsatisfied Objections by notice in writing
to Seller (in which case such objection(s) shall become a Permitted Exception)
or (ii) notify Seller in writing that it does not wish to purchase the Branch to
which such Objection relates. If Purchaser elects to exclude the Branch from
this
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Transaction, such Branch and any related Assets shall not constitute an
"Asset" and shall not be conveyed to Purchaser at Closing; provided, however,
that the Assumed Deposits of such Branch shall constitute Liabilities and be
assumed by Purchaser as if such Branch had been an Asset. It is specifically
provided, however, that no premium shall be paid by Purchaser on the Assumed
Deposits related to any excluded Branch except the Lexington Branch Office for
which a premium would be payable as set forth in the definition of Purchase
Price contained in this Agreement. It is further provided, however, that if, as
a result of Purchaser not having to pay a premium on the Assumable Deposits at
one or more Branches, the total amount of Assumed Deposits on which Seller will
receive a premium falls below $185,000,000, Seller has the option to terminate
this Agreement without further liability.
5.5 Environmental Matters. Seller has provided Purchaser with all
reports in its possession reflecting the results of a Phase I environmental
assessment (including any asbestos surveys) performed on the Branches ("Seller's
Assessments"). Purchaser acknowledges that Purchaser, within thirty (30) days
after the date hereof, has the right and opportunity to obtain its own
inspections and reviews of the Branches and Real Estate at Purchaser's expense,
and that Purchaser is not purchasing the Branches and Real Estate in reliance
upon Seller's Assessments or upon any representations or warranties of any kind
whatsoever made by Seller (or any representatives, agents or employees of
Seller), except those made pursuant to this Agreement. Purchaser shall indemnify
and hold Seller harmless for all claims against Seller related to or caused by
such inspections. Purchaser shall be responsible for the cost to restore any and
all damage to real estate or property caused by such inspections. Purchaser
shall notify Seller prior to any physical inspections of any such properties,
and Seller may place reasonable restrictions on the timing of such inspections
so as not to unduly interfere with the business of Seller. If the environmental
inspection identifies any conditions that would require a remedial cleanup
action in an aggregate estimated cost at a Branch which is in excess of $25,000,
then Purchaser shall notify Seller of such finding in writing within fifteen
(15) days after the receipt of such report, which notice shall contain a
description of the condition deemed unsuitable and an estimate of the dollar
amount required to correct the unsuitable condition. If Seller fails or refuses
to either correct the unsuitable condition itself or agree to compensate
Purchaser at Closing for the amount in excess of $25,000, Purchaser shall have
the right, at its option, to exclude the Branch from this Transaction. If
Purchaser elects to exclude the Branch from this Transaction, such Branch and
any related Assets shall not constitute an "Asset" and shall not be conveyed to
Purchaser at Closing; provided, however, that the Assumed Deposits of such
Branch shall constitute Liabilities and be assumed by Purchaser as if such
Branch had been an Asset. It is specifically provided, however, that no premium
shall be paid by Purchaser on the Assumed Deposits related to any excluded
Branch except the Lexington Branch Office for which a premium would be payable
as set forth in the definition of Purchase Price contained in this Agreement. It
is further provided, however, that if, as a result of Purchaser not having to
pay a premium on the Assumable Deposits at one or more Branches, the total
amount of Assumed Deposits on which Seller will receive a premium falls below
$185,000,000, Seller has the option to terminate this Agreement without further
liability. If Purchaser does not exercise such right to exclude a Branch from
this Transaction by giving written notice to Seller within fifteen (15) days
after Seller has notified Purchaser that it will not compensate Purchaser for
the excess amount, then such right shall be waived.
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5.6 Structural Inspections. Within thirty (30) days after the date
hereof, Purchaser has the right and opportunity to obtain its own structural
inspections and reviews of the Branch and Real Estate at Purchaser's expense.
Purchaser is not purchasing the Branch and Real Estate in reliance upon any
representations or warranties of any kind whatsoever made by Seller (or any
representatives, agents or employees of Seller), except those made pursuant to
this Agreement. Purchaser shall indemnify and hold Seller harmless for all
claims against Seller related to or caused by such inspections. Purchaser shall
be responsible for the cost to restore any and all damage to real estate or
property caused by such inspections. Purchaser shall notify Seller prior to any
physical inspections of any such properties, and Seller may place reasonable
restrictions on the time of such inspections so as not to unduly interfere with
the business of Seller. If the structural inspection identifies any structural
damage or deficiency that would require a repair in an aggregate estimated cost
at a Branch which is in excess of $25,000, then Purchaser shall notify Seller of
such finding within fifteen (15) days after the receipt of such report, which
notice shall contain a description of the damages or deficiencies and an
estimate of the dollar amount required to correct the damages or deficiencies.
If Seller fails or refuses to either correct the damages or deficiencies itself
or agree to compensate Purchaser at Closing for the amount in excess of $25,000,
Purchaser shall have the right, at its option, to exclude the Branch from this
Transaction. If Purchaser elects to exclude the Branch from this Transaction,
such Branch and any related Assets shall not constitute an "Asset" and shall not
be conveyed to Purchaser at Closing; provided, however, that the Assumed
Deposits of such Branch shall constitute Liabilities and be assumed by Purchaser
as if such Branch had been an Asset. It is specifically provided, however, that
no premium shall be paid by Purchaser on the Assumed Deposits related to any
excluded Branch except the Lexington Branch Office for which a premium would be
payable as set forth in the definition of Purchase Price contained in this
Agreement. It is further provided, however, that if, as a result of Purchaser
not having to pay a premium on the Assumable Deposits at one or more Branches,
the total amount of Assumed Deposits on which Seller will receive a premium
falls below $185,000,000, Seller has the option to terminate this Agreement
without further liability. If Purchaser does not exercise such right to exclude
a Branch from this Transaction by giving written notice to Seller within fifteen
(15) days after the Seller has notified Purchaser that it will not compensate
Purchaser for the excess amount, then such right shall be waived.
ARTICLE VI
Conditions Precedent
--------------------
6.1 Conditions To Obligations of Seller. The obligations of Seller
to be performed at the Closing hereunder are subject to each of the conditions
set forth below. Any conditions to be satisfied by Purchaser may be waived by
Seller, but only in writing and only to the extent that such waiver specifically
identifies the conditions being waived.
(a) Closing Documents. Purchaser shall have delivered to
Seller at Closing the following (the "Closing Documents"):
(i) A copy of resolutions of Purchaser's Board
of Directors approving the Transaction, with the adoption and continued
force and effect thereof certified by the Secretary or an Assistant
Secretary of Purchaser;
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(ii) Evidence of the approval of the Transaction
by the regulatory authorities having jurisdiction over Purchaser, and a
certificate executed by an executive officer of Purchaser stating that
Purchaser has complied with all conditions of such approvals except for
conditions to such approvals which by their terms are to be satisfied
after the Closing;
(iii) A written instrument executed by Purchaser
setting forth Purchaser's assumption of the Liabilities, in the form
mutually acceptable to Purchaser and Seller (to which Purchaser and
Seller shall attach (i) a detailed list of all the Assumed Deposits as
of two (2) Business Days immediately prior to Closing showing name,
account type, account number, current balance, and interest due but
unpaid and (ii) an updated SCHEDULE 3.1(H); and
(iv) A certificate, executed by an executive
officer of Purchaser, attesting to the satisfaction of the conditions
contained in paragraphs (b) and (c) below, which certificate may be
combined with the certificate required in Section 6.1(a)(ii).
(v) Opinion of counsel to Purchaser as to the
matters set forth in Sections 3.2(a), (b) and (c).
(b) Compliance with Terms. On the Closing Date, all the
terms, conditions and covenants of this Agreement to be complied with
and performed by Purchaser on or before the Closing Date shall have
been complied with and performed in all material respects.
(c) Accuracy of Representations and Warranties. The
representations and warranties made by Purchaser in this Agreement
shall be true, correct and complete in all material respects at and as
of the Closing Date with the same force and effect as if made on and as
of the Closing Date.
(d) Actual or Threatened Actions. There shall not be any
actual or threatened actions or proceedings by or before any court or
other governmental body or agency seeking to restrain, prohibit or
invalidate the Transaction.
(e) Consents and Authorizations. Purchaser and Seller
shall have received any necessary governmental approvals, consents or
permits for the performance by Purchaser or Seller of their respective
obligations under this Agreement, including without limitation, the
consent or approval required of the OTS, the FDIC and the Commonwealth
of Massachusetts and such approvals, consents or permits shall not be
subject to any conditions that are not reasonably satisfactory to the
affected party under the circumstances.
6.2 Conditions To Obligations of Purchaser. The obligations of
Purchaser at the Closing hereunder are subject to each of the conditions set
forth below. Any such conditions may be waived by Purchaser, but only in writing
and only to the extent that such waiver specifically identifies the conditions
being waived.
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(a) Transfer Instruments. Seller shall have delivered to
Purchaser at Closing the following (the "Transfer Instruments"), each
of which shall be in form mutually acceptable to Seller and Purchaser:
(i) A general conveyance instrument relating to
all Assets;
(ii) A quitclaim deed for each parcel of Owned
Real Property subject only to the Permitted Exceptions;
(iii) A lease assignment and a landlord's consent
for each Leased Property, if required;
(iv) Estoppel certificates from landlords and
tenants;
(v) A limited power of attorney; and
(vi) Any other Transfer Instruments that Seller
or Purchaser reasonably determine to be necessary or helpful to
consummating the transactions contemplated by this Agreement.
(b) Other Closing Documents. Seller shall have delivered
to Purchaser at Closing all of the following (included in "Closing
Documents"):
(i) Copies of the resolutions of Seller's Board
of Directors, with the adoption and continued force and effect thereof
certified by the Secretary or an Assistant Secretary;
(ii) A computer or other list of all of the
Assumed Deposits, showing the account numbers and up-to-date balances
and accrued interest as of two (2) Business Days prior to the Closing
Date;
(iii) All Records of Seller;
(iv) All blueprints, architectural drawings or
specifications in possession of Seller with respect to the Owned Real
Property;
(v) Certificates, executed by an executive
officer of Seller, attesting to the satisfaction of the conditions set
forth in paragraphs (c) and (d) below;
(vi) Evidence of any necessary approvals of the
Transaction by the regulatory authorities having jurisdiction of Seller
and a certificate executed by an executive officer of Seller, stating
that Seller has complied with all conditions of such approvals except
for conditions to such approvals which by their terms are to be
satisfied after the Closing, which certificate for each entity may be
combined with the certificate required by Section 6.2(b)(v) hereof; and
(vii) Opinion of counsel to Seller as to the
matters set forth in Sections 3.1(a), (b), (c) and (d) in this
Agreement.
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(c) Compliance with Terms. On the Closing Date, all the
terms, conditions and covenants of this Agreement to be complied with
and performed by Seller on or before the Closing Date shall have been
complied with and performed in all material respects.
(d) Accuracy of Representations and Warranties. The
representations and warranties made by Seller in this Agreement shall
be correct and complete in all material respects at and as of the
Closing Date with the same force and effect as if made on and as of the
Closing Date. (e) Consents and Authorizations. Purchaser and Seller
shall have received any necessary governmental approvals, consents or
permits for the performance by Purchaser or Seller of their respective
obligations under this Agreement, including without limitation, the
consent or approval required of the OTS and the FDIC and such
approvals, consents or permits shall not be subject to any conditions
that are not reasonably satisfactory to the affected party under the
circumstances.
(f) Actual or Threatened Actions. There shall not be any
actual or threatened actions or proceedings by or before any court or
other governmental body or agency seeking to restrain, prohibit or
invalidate the Transactions.
(g) Possession; No Encumbrances. Seller shall have
delivered to Purchaser actual and physical possession of the Assets to
be conveyed to Purchaser pursuant to this Agreement, including all
keys, combinations and other means of access to the Assets and all
portions thereof. Purchaser will have attained good and indefeasible
fee simple title to all of the Owned Real Property and interests in
real properties included as part of the Assets, and good and
indefeasible title to all other Assets to be transferred hereunder,
free and clear of all liens, charges, encumbrances, conditional sales
agreements, lease rights, security agreements or rights of third
parties of any kind whatsoever, except Permitted Exceptions and except
as created by Purchaser or as a result of Purchaser's actions or
omissions.
(h) No material adverse change shall have occurred which
affects the conduct of banking operations at the Branch Offices.
(i) Each Branch Office shall be in good condition and
repair, reasonable wear and tear excepted, and shall be served by
utilities reasonably necessary to conduct normal banking operations.
ARTICLE VII
Post-Closing Covenants
----------------------
7.1 Additional Title Documents. At any time, and from time to
time, on the request of Purchaser, Seller shall execute and deliver further
instruments and documents of conveyance which are reasonably necessary or
helpful to vest in Purchaser the full legal or equitable title in and to any and
all of the Assets.
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7.2 Control of Settlements and Disputes. Seller shall notify
Purchaser immediately of any claim presented to it and made with respect to any
Liability assumed or Asset acquired by Purchaser, and Purchaser may conduct and
control all negotiations and proceedings with respect thereto. Purchaser shall
notify Seller immediately of any claim presented to it and made with respect to
any liability or asset retained by Seller, and Seller may conduct and control
all negotiations and proceedings with respect thereto.
7.3 Payment of Checks, Drafts and Orders. Purchaser shall pay all
properly drawn checks, drafts and withdrawal orders presented to it by mail,
over its counters or through clearing by former depositors of Seller, whether
drawn on the check or draft forms provided by Seller, or by Purchaser, to the
extent that the Deposit balances to the credit of respective makers or drawers
assumed by Purchaser pursuant to Section 2.1 of this Agreement are sufficient to
permit the payment thereof in accordance with the requirements of law and
Purchaser's usual business practices and in all other respects to discharge, in
the usual course of conducting a banking business, the duties and obligations of
Seller with respect to the balances due and owing to the former depositors of
Seller relating to the Assumed Deposits.
7.4 Deposit Contracts. Subject to applicable provisions of law,
Purchaser shall pay interest on all Assumed Deposits in accordance with the
terms of each written agreement relating to each such Deposit and honor all the
terms and conditions of these agreements; provided, however, Purchaser shall
have the right to amend the agreements subject to the provisions of the
respective agreements and applicable law. Collection of Deposit Overdrafts, if
any such collection is effected by Purchaser, shall be the sole responsibility
of Purchaser.
7.5 Notice to Depositors. Seller shall provide Purchaser with an
intermediate customer list of the accounts to be assumed prior to the mailing
referred to in this Section 7.5. Purchaser, at Purchaser's sole cost, shall give
notice to depositors of Seller as promptly as practicable prior to Closing Date
(but after the receipt of all necessary regulatory approvals) of Purchaser's
intended assumption of the Assumed Deposit balances of Seller by mailing to each
such depositor a notice of Purchaser's intended assumption. Seller shall, at
Purchaser's expense, cooperate prior to the Closing Date in providing any of
these notices.
7.6 Informational Tax Reporting. Seller shall perform all
obligations of Seller with respect to federal and state income tax reporting
related to all periods prior to the Closing Date. Purchaser will file any tax
reports that are due after the Closing Date for the Liabilities assumed or
Assets acquired. On accounts subject to withholding, Seller will report and
submit all amounts withheld or required to be withheld through the Closing Date,
and Purchaser will report and submit all amounts withheld after the Closing
Date. Purchaser assumes no responsibility for reports with respect to any
deposits other than Assumed Deposits.
7.7 Access to Records. After the Closing, Purchaser shall permit
Seller and its parent companies and their accountants or advisors to have access
to Seller's Records in Purchaser's possession at such times as may be reasonably
requested in writing by Seller or its parent companies during normal business
hours after reasonable notice and provided such access does not materially
disrupt Purchaser's operations for the purpose of preparing and filing federal,
state and local tax returns required to be filed by Seller or its parent
companies with respect to taxable periods ending on or before the Closing and
for the purpose of reviewing or auditing such tax
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returns and with respect to any pending or threatened litigation. Purchaser
further agrees to retain all such Records of Seller or its parent companies
which are reasonably necessary for the preparation, review, audit and filing of
any such return for any taxes for at least six (6) years from the date of
Closing; provided, however, that if Seller or its parent companies give
Purchaser written notice of any proceeding related to such tax information, then
Purchaser shall not dispose of and shall retain such tax information for a
period of one year after its receipt of written notice from Seller or its parent
companies of the final determination of such proceeding. Purchaser agrees to
maintain the records of Seller, including without limitation, records concerning
loan and deposit accounts that are closed prior to the Closing, in a manner that
will enable customers of Seller and governmental authorities to conduct research
into records related to customer accounts, whether open or closed. Purchaser
further agrees to maintain such records for a period of six (6) years after the
Closing Date. Purchaser also agrees to conduct research into such records at a
cost to Seller that does not exceed its standard and customary charges. Seller
shall reimburse Purchaser promptly for such expenses.
7.8 Agreement Not To Compete. For a period of two (2) years from
and after the Closing, Seller shall not (i) establish an office which either
makes loans or accepts deposits in the Boston, Massachusetts SMSA, (ii) solicit
or compete for any banking, lending, deposit taking or any other banking
services business from any customer of Seller whose Deposit Accounts are assumed
or acquired by Purchaser pursuant to this Agreement ("Acquired Customers.") or
(iii) commit any act, or in any way assist others to commit any act that
materially injures Purchaser or the business heretofore conducted by Purchaser;
provided, however, nothing herein shall prohibit Seller from taking such actions
as required by applicable law. It is specifically provided that Seller can
continue its banking relationships at other banking locations not subject to
this Agreement with Acquired Customers who presently have accounts at such
locations.
7.9 Checking Deposit Owners.
(a) Customer Notification. After receipt of OTS approval
of the transactions contemplated by this Agreement but prior to the
Closing Date, Purchaser will notify all Assumed Deposit account holders
whose accounts are housed at the Branch Offices and are to be conveyed
to Purchaser hereunder, that checks or drafts written after thirty (30)
days after the Closing Date on Seller's check or draft forms will not
be honored. Such notice shall be made at Purchaser's expense.
(b) Customers' New Check and Draft Forms. On or within
thirty (30) days after the Closing Date, Purchaser will supply holders
of accounts which may be accessed by checks with Purchaser's own check
or draft forms. At Purchaser's reasonable request, Seller will
cooperate fully with Purchaser to provide necessary information for
Purchaser to supply such checks and drafts. Purchaser will be fully
responsible for all costs of the new check and draft forms, including
postage and notifications.
7.10 Seller and Purchaser Processing Duties.
(a) Checks, Drafts, and Negotiable Orders of Withdrawal.
For a period not to exceed ninety (90) calendar days after the Closing
Date, Seller agrees to act as Purchaser's limited correspondent for the
processing of checks, drafts, and Negotiable
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Orders of Withdrawal drawn before or after the Closing on forms
provided by Seller on any such accounts assumed by Purchaser hereunder.
Seller and Purchaser agree in this regard that:
(i) Seller shall maintain a mechanism to receive
such items on a daily basis and will pass through to Purchaser such
items on a daily basis;
(ii) Seller shall prepare for shipping and ship
to Purchaser all physical items received by it no later than 2:00 p.m.
CST on the Business Day following the Business Day on which such items
are received by Seller, by such means as agreed to by the parties.
(iii) Seller shall provide Purchaser a daily
accounting, on magnetic tape or other form acceptable to both parties,
of debits to its clearing account relating to such items and Purchaser
shall reimburse Seller for such debits on the next Business Day
following receipt of such daily accounting, as part of its daily
settlement;
(iv) Purchaser shall bear any courier or
telephone costs associated with paragraph (a) of this Section 7.10;
(v) Seller shall notify Purchaser of the return
to it of any items deposited in, or cashed at, the Branch Offices prior
to the Closing Date and shall expeditiously forward any such items to
Purchaser; and
(vi) After the ninety (90) day period, Seller
will xxxx items "Refer to Maker" and return the items to the financial
institution of first deposit.
(b) Foreign Checks, Savings Bonds or Coupons. Seller
shall notify Purchaser of any information received regarding the
settlement and clearance of any foreign checks, savings bonds or
coupons deposited with it prior to the Closing Date.
(c) Holds and Stop Payments. Seller will deliver to
Purchaser at Closing a schedule of holds and stop-payments placed on
particular accounts or individual checks at the Branch Offices and the
terms of such holds. Purchaser will continue such holds and
stop-payments under the same terms Seller shows on the schedule of
holds and stop-payments.
(d) Risk of Loss. After the Closing, any risk of loss
with respect to stop payments and funds availability and other holds
shall be the responsibility of Purchaser, provided that: (i) in the
case of stop-payments instituted prior to Closing, that Seller has
advised Purchaser of the existence and terms of such stop-payments at
the Closing in accordance with the provisions of Regulation C adopted
by the Board of Governors of the Federal Reserve System, and (ii) in
the case of funds availability and other holds instituted prior to
Closing, that Seller has advised Purchaser of the existence and terms
of such holds at the closing in accordance with the provisions of
Regulation C adopted by the Board of Governors of the Federal Reserve
System.
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(e) Processing of Electronic Items. Seller will provide
Purchaser, at least twenty (20) Business Days prior to Closing, the
list of ACH entries for electronic transfer accounts domiciled at the
Branch Offices. Within thirty (30) days after Closing, Purchaser shall
notify ACH originators with respect to Assumed Deposits to change the
routing numbers and account numbers from those of Seller to those of
Purchaser. Seller will continue to accept and forward to Purchaser ACH
entries and corresponding funds for ninety (90) calendar days following
Closing. Seller agrees that any daily magnetic tapes or electronic
transmissions provided to Purchaser pursuant to paragraph (a) of this
Section shall include a record of all such recurring ACH transfers
received by Seller on the previous Business Day. After the ninety (90)
day period, Seller may discontinue accepting and forwarding ACH entries
and funds and return them to the originators marked "Account Closed."
(f) Account Statements. Within thirty (30) days after the
Closing Date, Seller 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 Assumed Deposit account, a final account statement
as of the Closing Date.
7.11 Returned Items. Returned items are to include the following
processing for Regulation E Claims (ATM transactions), Social Security
Reclamation items, and Returned Items as follows:
Regulation E Claims: Any claim submitted under "Regulation E," for
transactions processed prior to the Closing Date on Assumed Deposits transferred
to Purchaser shall be settled as follows:
(a) If such claim is submitted to Seller, Seller shall
process the claim under the guidelines specified in "Regulation E," and
if a reimbursement to the customer is determined necessary, Seller
shall directly reimburse the customer; and
(b) If the claim is submitted to Purchaser, Purchaser
shall process the claim under the guidelines specified in "Regulation
E," and if a reimbursement to the customer is determined necessary,
Purchaser shall directly reimburse the customer and notify Seller of
such reimbursement. Seller shall remit, by wire transfer within
twenty-four hours an amount equal to the reimbursement paid by
Purchaser to the customer.
Such settlement shall continue for ninety (90) days following the
Closing Date. All claims submitted after such ninety (90) day period shall be
returned by Seller to the originator of the claim.
Social Security Reclamation Items: Any reclamation item notification
received for a social security deposit that was received prior to the Closing
Date, will be sent by Seller to Purchaser. Purchaser will forward available
funds to satisfy said claim within 24 hours of receipt. If Purchaser determines
that the funds are not available, Purchaser agrees to attempt to recover the
funds. If after 90 days and due diligence efforts have been completed, Purchaser
is unable to recover the funds, then the Seller will credit Purchaser back
within 24 hours.
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Returned Items: Any items that were (i) credited for deposit to, or
(ii) cashed against an account included in the Assumed Deposits prior to the
Closing Date and are returned unpaid within ninety (90) days after the Closing
Date will be handled as follows;
(a) If Purchaser's bank account is charged for the
Returned Item, Purchaser will use its best efforts to obtain
reimbursement from the account to which, or from the party to whom, the
item was credited; provided that if Seller receives notification of a
large Returned Item ($2,500 or more) before 2:00 p.m. on any business
day, Seller will notify Purchaser of such Returned Item as soon as
practicably possible on the same day notification is received. If there
are sufficient funds in the account to which such Returned Item was
credited or any other accounts on deposit with Purchaser standing in
the name of the party liable for such Returned Item, upon proper
identification of such party, Purchaser will debit any or all of such
accounts an amount equal in the aggregate to the Returned Items,
provided that such debit is permissible under Purchaser's agreement
with such party and applicable laws and regulations. If those accounts
which may be debited do not contain funds sufficient to reimburse
Purchaser fully (for reasons other than Purchaser's breach of the above
conditions), Seller will, upon notice from Purchaser, immediately repay
to Purchaser the balance of the Returned Item not reimbursed and
Purchaser will assign the item to Seller for collection.
(b) If Seller's bank account is charged for the Returned
Item and if there are sufficient funds in the account to which such
Returned Item was credited or any other accounts on deposit with
Purchaser standing in the name of the party liable for such Returned
Item, upon proper identification of such party, Seller shall
immediately notify Purchaser, and Purchaser will debit any or all of
such accounts an amount equal in the aggregate to the item, and shall
repay that amount to Seller. If there are not sufficient funds in the
accounts which may be debited (for reasons other than Purchaser's
breach of the above conditions), Purchaser will have no obligation to
repay Seller unless and until Purchaser obtains reimbursement from the
party liable for the Returned Item.
7.12 Settlement. In settlement of the transactions described in
Sections 7.9 and 7.10, Purchaser and Seller agree that by 1:00 p.m. CST on each
Business Day, Seller shall provide Purchaser with a daily net settlement figure
for all such transactions then pending to the knowledge of the Seller and
Purchaser shall provide an equivalent figure for all such transactions then
pending to the knowledge of the Purchaser. The parties agree that the party
obligated to remit any funds thereunder shall do so by 3:00 p.m. CST of such
day. Any such settlement shall be provisional pending receipt by Purchaser of
the physical items relating to such settlement; Purchaser shall adjust the next
daily settlement to reflect any adjustments resulting from its receipt of the
physical items.
7.13 Deposit Histories. In the case of any dispute with or inquiry
by an account holder whose Assumed Deposit is subject to this Agreement, which
dispute or inquiry relates to the servicing of such Assumed Deposit by Seller
prior to the date for which a Assumed Deposit history has been provided to
Purchaser, Seller will provide Purchaser with the appropriate information
regarding the Assumed Deposit and copies of pertinent documents or instruments
with respect to such dispute or inquiry so as to permit Purchaser to respond to
the account holder
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within ten (10) Business Days and in a manner which would comply with standard
banking practices and customs.
7.14 Electronic Installation and Renovation. Purchaser shall have a
reasonable right, with the prior approval of Seller, which approval shall not be
unreasonably withheld, to enter the Branch Offices for the purpose of installing
necessary wiring for Purchaser's teller terminals and data processing equipment
to be utilized after the Closing and Purchaser shall have the opportunity to
renovate the Wellesley Branch Office, subject to satisfaction by Purchaser 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 Offices; and
(c) all such work will be done in compliance with the
laws and applicable governmental regulations and Purchaser shall be
responsible for the procurement, at the Purchaser's expense, of all
required governmental or administrative permits and approvals.
Purchaser agrees that if for any reason the transactions contemplated
hereunder are not consummated, Purchaser will, at its sole cost and expense,
remove any installations it shall have made in the Branch Offices and shall
repair and restore the Branch Offices to their condition immediately prior to
such installation, and with respect to any renovation done to the Wellesley
Branch Office shall either remove any changes made or leave such improvements
for the benefit of the Seller at Purchaser's own expense.
ARTICLE VIII
Termination
-----------
8.1 Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated prior to Closing:
(a) By the mutual written agreement of Seller and
Purchaser;
(b) By either Seller or Purchaser in the event that the
Closing has not occurred by December 15, 2003 or such other date as
Seller and Purchaser shall agree in writing, unless the failure to so
consummate by such time is due to a breach of this Agreement by the
party seeking to terminate;
(c) By either Seller or Purchaser if consummation of the
transactions contemplated hereby would violate any non appealable final
order, decree or judgment of any court or governmental body having
competent jurisdiction;
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(d) By either Seller or Purchaser, in the event of a
breach by the other of any representation, warranty or agreement
contained herein that is not cured or cannot be cured within thirty
(30) days after written notice of such breach has been delivered to the
breaching party; provided, however, that termination pursuant to this
Section 8.l(d) shall not relieve the breaching party of liability for
such breach or otherwise;
(e) By Seller in the event that
A. at the expiration of thirty (30) days after
the date of this Agreement, Purchaser has failed to file substantially complete
applications requesting approval of the transactions contemplated by this
Agreement with all applicable regulatory agencies, other than the notice filing
to the OTS which will be made by Seller ("Purchaser's Regulatory Agencies"); or
B. Purchaser's application is disapproved by
any of Purchaser's Regulatory Agencies and within thirty (30) days Purchaser has
been unsuccessful in appealing such disapproval, or;
C. the conditions to the obligations of Seller
set forth in Section 6.1 are not met at or prior to Closing.
(f) By Purchaser in the event that:
A. Purchaser's application is disapproved by
any of Purchaser's Regulatory Agencies and within thirty (30) days Purchaser has
been unsuccessful in appealing such disapproval; or
B. the conditions to the obligations of
Purchaser set forth in Section 6.2 hereof are not met at or prior to Closing; or
C. the aggregate amount of Assumed Deposits has
decreased below $250.0 million as of the Closing Date.
Any party desiring to terminate this Agreement pursuant to any of the
foregoing clauses shall give notice of such termination to the other party in
accordance with Section 12.8. It is expressly stated that Purchaser may not
terminate this Agreement in the event of Seller's non-material breach of a
representation or warranty.
8.2 Liability for Termination. If this Agreement is terminated as
permitted by Sections 4.1(c), 4.1(q), 5.4, 5.5, 5.6 or 8.l, except as provided
in Section 8.l(d), such termination shall be without liability of either party
(or any shareholder, director, officer, employee, agent, consultant or
representative of such party) to the other party to this Agreement, except as
described below. If this Agreement is terminated other than as permitted by
Sections 4.1(c), 4.1(q), 5.4, 5.5, 5.6 or 8.1 or if such termination pursuant to
Section 8.1 shall result from the willful failure of a party to fulfill a
condition to the performance of the obligations of the other party or to perform
a covenant of this Agreement or from a willful breach by any party to this
Agreement, such party shall pay to the other party, concurrently with such
termination, a
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termination fee of $1,000,000 as the sole remedy for such breach; provided,
however, that the non-breaching party may elect to forego this payment and seek
all remedies available.
8.3 Procedures Upon Termination. In the event of termination
pursuant to the terms of this Agreement, and except as otherwise stated herein,
written notice thereof shall be given to the other party, and this Agreement
shall terminate immediately upon receipt of such notice unless an extension is
consented to by the party having the right to terminate. If this Agreement is
terminated as provided herein;
(a) Each party will return all documents, work papers and
other materials of the other party, including photocopies or other
duplications thereof, relating to this transaction, whether obtained
before or after the execution hereof, to the party furnishing the same;
and
(b) All information received by either party thereto with
respect to the business of the other party (other than information that
is a matter of public knowledge or that has heretofore been published
in any publication for public distribution or filed as public
information with any governmental authority or as required by law)
shall not at any time be used for any business purpose by such party or
disclosed by such party to third persons.
ARTICLE IX
Survival; Indemnification
-------------------------
9.1 No Survival. The covenants, agreements, representations and
warranties of the parties hereto made, contained in or to be performed pursuant
to this Agreement shall not survive after the Closing.
9.2 Seller's Indemnity. Subject to the provisions of Section 9.4
hereof, Seller hereby indemnifies Purchaser against and agrees to hold it
harmless from any and all damage, loss, settlement, obligation, deficiency,
liability and expense (including, without limitation, reasonable expenses of
investigation and attorney's fees and expenses in connection with any action,
suit or proceeding brought against Purchaser) demanded, claimed or threatened in
writing against Purchaser or incurred or suffered by Purchaser arising out of
any liabilities and assets of Seller not expressly assumed or purchased
hereunder by Purchaser including, but not limited to (i) the ownership or
operation of the Assets, Liabilities and Branches prior to the Closing, (ii)
Employee claims for matters occurring before the Closing or (iii) the breach of
a representation or warranty, covenant or agreement made or to be performed by
Seller (all such claims, damages, losses, settlements, obligations,
deficiencies, liabilities and expenses being hereinafter referred to as "Seller
Indemnifiable Claims"). Any direct claim by Purchaser against Seller, as
distinguished from a claim against Purchaser by a third party, shall be settled
by arbitration pursuant to Article X. Seller shall not be liable under this
Section 9.2 for any settlement effected without its consent (which consent shall
not be unreasonably withheld) of any claim, litigation or proceeding in respect
of which indemnity may be sought hereunder. Purchaser agrees to give prompt
notice to Seller of the assertion of any claim, or the commencement of any suit,
action or proceeding in respect of that indemnity may be sought hereunder.
Seller may, and at the request
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of Purchaser shall, (unless Seller disclaims any liability or obligation under
this Section 9.2 with respect to such suit, action or proceeding) participate in
and control the defense of any such suit, action or proceeding at its own
expense.
9.3 Purchaser's Indemnity. Subject to the provisions of Section
9.4 hereof, Purchaser hereby indemnifies Seller against and agrees to hold it
harmless from any and all damage, loss, settlement, obligation, deficiency,
liability and expense (including, without limitation, reasonable expenses of
investigation and attorney's fees and expenses in connection with any action,
suit or proceeding brought against Seller) demanded, claimed or threatened in
writing against Seller or incurred or suffered by Seller arising out of (i)
ownership or operation of the Branches or their respective business and
properties after Closing (except as to such damage, liability, loss or expense
resulting from actions taken by Purchaser at the written direction of Seller);
(ii) ownership of the Assets acquired or Liabilities assumed in the Transaction
after Closing, (iii) the termination by Purchaser of any Employee employed by
Seller on or after the Closing Date or (iv) the breach of any representation or
warranty, or covenant or agreement made or to be performed by Purchaser (all
such claims, damages, losses, settlements, obligations, deficiencies,
liabilities and expenses under clauses (i), (ii), and (iii) being hereinafter
collectively referred to as "Purchaser Indemnifiable Claims". Any direct claim
by Seller against Purchaser, as distinguished from a claim against Seller by a
third party, shall be settled by arbitration pursuant to Article X. Purchaser
shall not be liable under this Section 9.3 for any Purchaser Indemnifiable Claim
which arises or results from any misrepresentation or breach of any covenant,
representation or warranty made by Seller pursuant to this Agreement or any
settlement effected by Seller without its consent (which consent shall not be
unreasonably withheld) of any claim, litigation or proceeding in respect of
which indemnity may be sought hereunder. Seller agrees to give prompt notice to
Purchaser of the assertion of any claim, or the commencement of any suit, action
or proceeding in respect to which indemnity may be sought hereunder. Purchaser
may, and at the request of Seller shall, (unless Purchaser disclaims any
liability or obligation under this Section 9.3 with respect to such suit, action
or proceeding) participate in and control the defense of any such suit, action
or proceeding at its own expense.
9.4 Notice and Defense of Claims. The obligations and liabilities
of each indemnified party hereunder with respect to claims resulting from the
assertion of liability by any indemnified party or third parties shall be
subject to the following terms and conditions:
(a) The indemnified party shall give prompt written
notice to the indemnifying party of the assertion of any claim or
commencement of any action or proceeding in respect of which
indemnification may be sought hereunder, stating the nature and basis
of said claims or events and the amounts thereof, to the extent known,
and in the case of any claim, action, suit or proceeding brought by any
third party, a copy of any claim, process or legal pleadings with
respect thereto promptly after such documents are received by the
indemnified party. Such notice shall be given in accordance with
Section 12.8 hereof.
(b) The indemnifying party shall, at its own expense, be
entitled to participate in and, to the extent that it shall wish,
jointly and with any other indemnifying party, to assume the defense,
with independent counsel reasonably satisfactory to the indemnified
party, provided that in assuming the defense of any such third party
claim, action, suit or
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proceeding, the indemnifying party acknowledges in writing to the
indemnified party that the indemnifying party shall thereafter be
liable for any Seller or Purchaser Indemnifiable Claims with respect to
such claim, action, suit or proceeding.
(c) If the indemnifying party elects to assume control of
such defense or settlement, it shall conduct such defense or settlement
in a manner reasonably satisfactory and effective to protect the
indemnified party fully; the indemnifying parties and their counsel
will keep the indemnified party fully advised as to their conduct of
such defense or settlement, and no compromise or settlement (other than
any compromise or settlement solely requiring the payment of money by
the indemnifying party for full and final resolution thereof) shall be
agreed or made without the indemnified party's written consent. In any
case, the indemnified party shall have the right to employ its own
counsel and such counsel may participate in such action, but the
reasonable fees and expenses of such counsel shall be at the expense of
the indemnified party, when and as incurred, unless (a) the employment
of counsel by the indemnified party has been authorized in writing by
the indemnifying party; (b) the indemnified party shall have reasonably
concluded that there may be a conflict of interest between the
indemnifying party and the indemnified party in the conduct of the
defense of such action; (c) the indemnifying party shall not in fact
have employed independent counsel reasonably satisfactory to the
indemnified party to assume the defense of such action and shall have
been so notified by the indemnified party; (d) the indemnified party
shall have reasonably concluded and specifically notified the
indemnifying party either that there may be specific defenses available
to it which are different from or additional to those available to the
indemnifying party or that such claim, action, suit, or proceeding
involves or could have a material adverse effect upon it beyond the
financial resources of the indemnifying party or the scope of this
Agreement; or (e) the indemnifying party fails to conduct such defense
or settlement in a manner reasonably satisfactory to protect the
indemnified party fully. If clause (b), (c) (d) or (e) of the preceding
sentence shall be applicable, then counsel for the indemnified party
shall have the right to direct the defense of such claim, action, suit
or proceeding on behalf of the indemnified party and the reasonable
fees and disbursements of such counsel shall constitute Seller or
Purchaser Indemnifiable Claims hereunder.
(d) If the indemnifying parties do not elect to assume
the defense or settlement in a manner reasonably satisfactory to
protect the indemnified party fully, the indemnified party may engage
independent counsel selected by the indemnified party to assume the
defense and may contest, pay, settle or compromise any such claim on
such terms and conditions as the indemnified party may determine. The
fees and disbursements of such counsel shall constitute Indemnifiable
Claims hereunder.
(e) The indemnified party shall be kept fully informed of
such claim, action, suit or proceeding at all stages thereof whether or
not such party is represented by its own counsel.
9.5 Limit on Indemnities.
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(a) NOTWITHSTANDING ANY OTHER PROVISION HEREOF, THE
PARTIES SHALL HAVE NO OBLIGATIONS UNDER THIS AGREEMENT FOR ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL LIABILITY, DAMAGE OR LOSS OF THE
INDEMNIFIED PARTY THAT THE INDEMNIFIED PARTY MAY SUFFER, PROVIDED,
HOWEVER, THAT THIS LIMITATION ON INDEMNIFICATION SHALL NOT PROHIBIT
INDEMNIFICATION FOR SUCH DAMAGES TO THE EXTENT THAT SUCH CLAIM IS
ORIGINALLY ASSERTED BY A THIRD PARTY.
ARTICLE X
Arbitration
-----------
The parties shall submit to binding arbitration by a board of three
arbitrators any disputed question or controversy arising under this Agreement or
arising out of or relating to the transactions contemplated by the Agreement.
Any such arbitration shall be conducted at Boston, Massachusetts. Either party
may initiate the arbitration, by notice in writing to the other party, setting
forth the nature of the dispute, the amount involved, if any, and the remedy
sought. Any party desiring to initiate arbitration shall serve a written notice
of intention to arbitrate to the other party and to the American Arbitration
Association office in or closest to Boston, Massachusetts within 180 days after
dispute has arisen. A dispute is deemed to have arisen upon receipt of written
demand or service of judicial process. Failure to serve a notice of intention to
arbitrate within the time specified above shall be deemed a waiver of the
notifying party's right to compel arbitration of such claim. Such notice of
intention to arbitrate may be informal and need not comply with Rule 6 of the
American Arbitration Association. The issue of waiver pursuant to this paragraph
is an arbitrable issue.
The board of three arbitrators shall be appointed promptly upon written
application of the initiating party, and shall be selected in accordance with
the Commercial Arbitration Rules of the American Arbitration Association. All of
the arbitrators shall be members of the American Arbitration Association, and,
if commercially reasonable, at least two of the arbitrators shall be experienced
in the banking industry. Depositions may be taken and other discovery obtained
in any arbitration under this Agreement. The board of arbitrators appointed
hereunder shall conduct the arbitration pursuant to the Commercial Arbitration
Rules of the American Arbitration Association then in effect, except as such
rules may be modified for the purpose of the arbitration proceeding by action of
a majority vote of the arbitrators or by mutual written agreement of the parties
to this Agreement.
In the arbitration proceeding subject to these provisions, the
arbitrators, or a majority of them, are specifically empowered to decide (by
documents only, or with a hearing, at the arbitrators sole discretion)
pre-hearing motions which are substantially similar to prehearing motions to
dismiss and motions for summary adjudication.
The award of the arbitrators shall be final and binding upon the
parties and judgment thereon may be entered in any court having jurisdiction.
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All statutes of limitations which would otherwise be applicable shall
apply to any arbitration proceeding hereunder.
The provisions of this Article X shall survive any termination,
amendment, or expiration of the Agreement in which this section is contained,
unless all the Parties otherwise expressly agree in writing.
The parties acknowledge that this Agreement evidences a transaction
involving interstate commerce in that the funds which may be advanced or
committed under this Agreement are derived from interstate financial markets.
The Federal Arbitration Act shall govern the interpretation, enforcement, and
proceedings pursuant to the arbitration clause in this Agreement.
The arbitrators, or a majority of them, shall award attorneys' fees and
costs to the prevailing party pursuant to the terms of this Agreement.
Venue of any arbitration proceeding hereunder will be in Boston,
Massachusetts.
Except as set forth above concerning awards to the prevailing party,
each party shall bear its own expenses in connection with preparation for the
presentation of its case at the arbitration proceedings and the fees and
expenses of the arbitrators and all other expenses of the arbitration (except
those referred to in the preceding sentence) shall be borne equally by the
parties to such arbitration.
ARTICLE XI
Employee Matters
----------------
11.1 Employee Considerations.
(a) Schedule 11.1 to this Agreement, as updated at the
Closing Date, sets forth for each Branch a list of Employees and a
corresponding annual salary ("Annual Salary") for each employee. It is
Purchaser's current intent, subject to discussions with and the
evaluation of each Employee, to offer employment at the Closing to all
of the Employees. All Employees offered employment shall be offered the
same approximate Annual Salary as set forth in Schedule 11.1 together
with any increases pursuant to Section 4.1(k).
(b) Seller shall retain responsibility for any and all
liabilities and responsibilities with respect to any Plan maintained by
the Seller and Purchaser shall not assume nor be responsible for the
continuation of, or any liabilities under or in connection with, any
such Plans. Seller shall be solely responsible for and shall pay in
full to all of Seller's employees all compensation, bonuses and other
payments, and all sick pay, vacation pay, and any other benefits
otherwise payable under the Plans, accrued through and including the
Closing Date for which Seller is obligated thereunder, and Seller shall
satisfy all such obligations to such employees.
(c) Seller will retain responsibility for, and continue
to pay, all hospital, medical, life insurance, disability, supplemental
unemployment and all other welfare plan expenses and benefits for each
Seller employee hired by Purchaser (and covered
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dependents) with respect to claims incurred by such employee or their
covered dependents prior to the Closing. Seller will retain
responsibility for, and continue to pay, any life, health or other
welfare benefits payable to each former employee of Seller who
terminated employment with Seller (and their dependents) prior to the
Closing in respect of claims incurred on their behalf prior to the
Closing. For purposes of this paragraph, a claim is deemed incurred
when the event that first gave rise to the claim occurred,
notwithstanding the fact that such benefits may be paid at a subsequent
date.
(d) Seller is responsible for any liabilities that may
arise with respect to application of Section 4980B of the Code or
Sections 601-609 of Title I of ERISA ("COBRA") with respect to any of
its employees or covered dependents as a result of the transactions
contemplated by this Agreement, as well as for any COBRA violations
which occurred prior to the Closing of this Agreement. Purchaser is not
a successor employer for COBRA purposes, but Purchaser will be
responsible for liabilities with respect to COBRA for employees
terminated by Purchaser after the Closing.
(e) Notwithstanding any statement or indication in this
Agreement or otherwise to the contrary, there are no Plans as to which
Purchaser will be required to make any contributions or with respect to
which Purchaser shall have any obligation or liability whatsoever after
the Closing, whether on behalf of any of the current employees of
Seller or on behalf of any other person.
(f) Purchaser is not, and shall not be deemed to be, a
successor employer to Seller with respect to any Plan, and no Plan
adopted or maintained by Purchaser after the Closing is or shall be
deemed to be a "successor plan," as such term is defined in ERISA or
the Code, of any such Plan.
(g) Neither Purchaser nor Seller intend this Agreement to
create any rights or interests, except as between Purchaser and Seller,
and no present, former or future employee of Purchaser or Seller shall
be treated as a third party beneficiary in or under this Agreement.
(h) Notwithstanding the foregoing, with regard to
employees of Seller who will be employed by Purchaser ("Former Seller
Employees"): (i) all Former Seller Employees who accept employment with
Purchaser as of the Closing Date shall be eligible to participate in
the employee benefit plans and other fringe benefits of Purchaser on
the same basis as such plans and benefits are offered to employees of
Purchaser with comparable positions with Purchaser, and (ii) Purchaser
shall credit such Former Seller Employees for their length of service
with Seller (including any predecessor of Seller) for all purposes
under each employee benefit plan and fringe benefit to be provided by
Purchaser to such Former Seller Employees, other than under the
Purchaser's Retirement Plan, any other defined benefit plan, and the
Purchaser's ESOP Plan if allowable under ERISA and the terms of such
Plans. For purposes of this Section, "employee benefit plan and other
fringe benefits" includes pension and profit-sharing plans, retirement
and post-retirement welfare benefits, health insurance benefits,
disability, life and accident insurance, sickness benefits, vacation,
employee loans and banking privileges.
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(i) Seller shall retain the responsibility for payment of
all short term disability benefits, sick pay or salary continuation for
all Employees prior to the Closing Date, and Purchaser shall not assume
responsibility for such benefits. On and after the Closing Date,
Purchaser will be responsible for payment of any short term disability
benefits, sick pay or salary continuation for all Employees in
Purchaser's employ per its policies, including any Employee who as of
the Closing Date is absent from work due to sickness or short-term
disability.
ARTICLE XII
Miscellaneous
-------------
12.1 Entire Agreement. This Agreement embodies the entire agreement
of the parties with respect to the subject matter and supersedes all prior
understandings or agreements, oral or written, between the parties hereto.
12.2 Headings. The Articles and Sections contained in this
Agreement, except the terms identified for definition in Article I and elsewhere
in this Agreement, are inserted for convenience only and shall not affect the
meaning or interpretation of this Agreement or any provision hereof.
12.3 Disclosure in Schedules. Disclosure in any particular schedule
required by this Agreement may be made by reference to another schedule,
provided that such reference shall specify such other schedule (unless the
number and title of the referenced schedule is provided in the disclosure, then
the disclosure will not be considered made by cross reference).
12.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
Agreement.
12.5 GOVERNING LAW. THIS AGREEMENT AND ALL MATTERS IN CONNECTION
HEREWITH SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS, EXCEPT INSOFAR AS FEDERAL LAW SHALL BE APPLICABLE
TO THE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY.
12.6 Successors. All terms and conditions of this Agreement shall
be binding on the successors and assigns of the parties.
12.7 Modification; Assignment. No amendment or other modification,
rescission, release, annulment or assignment of any part of this Agreement shall
be effective except pursuant to a written agreement subscribed by the duly
authorized representatives of the parties hereto.
12.8 Notice. Any notice, request, demand, consent, approval or
other communication to any party hereto shall be effective when received and
shall be given in writing, and delivered in person against receipt therefor, or
sent by certified mail, postage prepaid, courier service, telex
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or facsimile transmission at its address set forth below or at such other
address as it shall hereafter furnish in writing to the others.
If to Seller: Xx. Xxxxx X. X'Xxxxxxxx, Xx.,
Chairman of the Board and President
Encore Bank
0000 Xxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Facsimile:(000) 000-0000
with a copy to: Xx. Xxxxxxx X. Xxxxxx XX
Xxxxxxxxx & Xxxxxxxxx, L.L.P.
South Tower, Pennzoil Place
000 Xxxxxxxxx Xx., Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile:(000) 000-0000
If to Purchaser: Xx. Xxxxx X. Xxxxxxx
Chairman and Chief Executive Officer
Boston Federal Savings Bank
17 New England Executive Park
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
with a copy to: Laurence M. F. Spaccasi, Esq.
Xxxxxxx Xxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000
Facsimile: (000) 000-0000
All such notices and other communications shall be deemed given on the
date received by the addressee.
12.9 Costs, Fees and Expenses. Except as otherwise set forth
herein, each party hereto agrees to pay all costs, fees and expenses that it has
incurred in connection with or incidental to the matters contained in this
Agreement, including without limitation, any fees and disbursements to its
accountants and counsel.
12.10 Severability. If any provision of this Agreement is invalid or
unenforceable, then, to the extent possible, all of the remaining provisions of
this Agreement shall remain in full force and effect and shall be binding upon
the parties hereto.
12.11 Further Assurances. From time to time as and when requested by
Purchaser, Seller or the officers and directors of Seller, shall execute and
deliver such further agreements, documents, deeds, certificates and other
instruments and shall take or cause to be taken such other actions, including
those as shall be necessary to vest or perfect in or to confirm of record or
otherwise the Seller's title to and possession of, all of its property,
interest, assets, rights,
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privileges immunities, powers, franchises and authority, as shall be reasonably
necessary or advisable to carry out the purposes of and effect the transactions
contemplated by this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives on the date first above
written.
ATTEST: BOSTON FEDERAL SAVINGS BANK
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxx
------------------------------- --------------------------------------
Xxxxx X. Xxxxxxx
Chairman and Chief Executive Officer
ATTEST: ENCORE BANK
/s/ X. Xxxxxxxx Xxxxx By: /s/ Xxxxx X. X'Xxxxxxxx, Xx.
------------------------------- ---------------------------------------
Xxxxx X. X'Xxxxxxxx, Xx.
Chairman of the Board and President
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