1
Purchase And Assumption Agreement
Between
Colonial Trust Company
Phoenix, Arizona
And
Dubuque Bank And Trust Company
Dubuque, Iowa
And Joined By
Heartland Financial USA, Inc.
Dubuque, Iowa
Dated as of March 26, 2004
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Purchase and Assumption Agreement
This Purchase and Assumption Agreement (this "Agreement") is dated as of
March 26, 2004, between Colonial Trust Company, an Arizona trust company
("Colonial"), and Dubuque Bank and Trust Company, an Iowa banking association
("DB&T"), and joined in by Heartland Financial USA, Inc., a Delaware corporation
("Heartland").
Recitals
A. Colonial is a nondepository trust company organized under the laws of
the State of Arizona with its principal offices in Phoenix, Arizona.
B. DB&T is a banking association with trust powers organized under the laws
of the state of Iowa with its principal offices in Dubuque, Iowa.
C. Heartland is a registered bank holding company with its principal
offices in Dubuque, Iowa and owns all of the outstanding common stock of DB&T.
D. Colonial's operations include two lines of fiduciary activities, a
corporate trust division, which it has agreed to sell to an unrelated party, and
a personal trust division, also referred to as Colonial's "Wealth Management
Group," which is the subject of this Agreement.
E. Colonial desires to transfer certain assets and certain liabilities
related to the personal trust division to DB&T.
F. DB&T desires to purchase such assets and assume such liabilities from
Colonial on the terms and conditions set forth in this Agreement.
G. Heartland, as the holding company for DB&T, agrees to join in this
Agreement for the purposes of certain representations, warranties and covenants
as to its business as provided herein.
Agreements
In consideration of the foregoing premises, which are incorporated herein
by this reference, and the covenants and agreements of the parties herein
contained, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. In addition to those terms defined throughout this
Agreement, the following terms, when used herein, shall have the following
meanings:
(a) "Accrued Expenses" means the expenses of Colonial related to the
Personal Trust Assets, as reflected on the books of Colonial and accrued and
unpaid as of the Closing Date and included in Schedule 2.3(a), the "Schedule of
Accrued Expenses."
(b) "Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person.
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(c) "Agency Accounts" means those accounts within the Personal Trust
Business that are not Fiduciary Accounts, including accounts for which Colonial
acts as agent, custodian, attorney-in-fact, investment advisor and exercises any
other duties, powers, and appointments regularly administered by, granted to, or
conferred upon banks and companies exercising trust powers established and
maintained under Arizona law.
(d) "A/R Soft Dollar Expense Reimbursement" means the "soft dollars" earned
during the applicable period under Colonial's arrangements with each of CAPIS
and Fifth Third Bank, all as reflected on Colonial's books and records.
(e) "Best Efforts" means the efforts that a prudent Person desirous of
achieving a result would use in accordance with reasonable commercial practice,
without incurring unreasonable expense, in similar circumstances to ensure that
such result is achieved as expeditiously as possible.
(f) "Book Value" means, as to any asset or liability, the value of such
asset or liability as reflected on the books and records maintained by Colonial
in the Ordinary Course of Business in accordance with GAAP.
(g) "Business Day" means a day other than a Saturday, a Sunday or a day
observed as a holiday by Colonial or DB&T.
(h) "Closing" means the time at which Colonial will transfer to DB&T, and
DB&T will purchase, the Personal Trust Business.
(i) "Closing Date" means the date of Closing as specified in Section 10.1.
(j) "Contemplated Transactions" means all of the transactions contemplated
by this Agreement, including: (i) the purchase of the Personal Trust Assets; and
(ii) the assumption of the Personal Trust Liabilities.
(k) "Contract" means any agreement, contract, obligation, promise or
understanding (whether written or oral and whether express or implied) that is
legally binding:
(i) under which a Person has or may acquire any rights;
(ii) under which such Person has or may become subject to any
obligation or liability; or
(iii) by which such Person or any of the assets owned or used by such
Person is or may become bound.
(l) "Equipment and Personal Property" means the equipment and personal
property owned or used in connection with the operations of the Personal Trust
Business, including furniture, equipment, computer hardware, and computer
software as specified in Schedule 4.17, the "Schedule of Equipment and Personal
Property."
(m) "Excluded Assets" means the assets related to the Personal Trust
Business not being purchased by DB&T hereunder, as provided in Section 2.2.
(n) "FDIC" means the Federal Deposit Insurance Corporation, the primary
federal regulator for DB&T.
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(o) "Fiduciary Accounts" means all the accounts within the Personal Trust
Business:
(i) under which Colonial acts or has been named to act as the
administrator, co-administrator, executor, co-executor, trustee or
co-trustee of or in respect to any estate or trust, guardian of any
person or estate that is being administered under applicable Legal
Requirement; or
(ii) arising from Colonial having been named or designated as personal
representative in any last will and testament or other writings
whenever executed, whether probated or not.
(p) "Fiduciary and Agency Agreements" means any instrument, indenture,
declaration, agreement, testamentary will, Contract, resolution or other
agreement under which Colonial acts as an executor, trustee, representative or
agent (including a custodian or escrow).
(q) "Final Purchase Price" means the Purchase Price, adjusted and paid in
accordance with Section 10.5.
(r) "Final Settlement Statement" means the Settlement Statement reflecting
the Final Purchase Price, the form of which is included as Exhibit G.
(s) "GAAP" means, as to the financial statements of the parties, generally
accepted accounting principles in the United States, consistently applied.
(t) "IRS" means the Internal Revenue Service.
(u) "Knowledge" with respect to:
(i) an individual, means that such person will be deemed to have
"Knowledge" of a particular fact or other matter if: (A) such
individual is actually aware of such fact or other matter; or (B) a
prudent individual could be expected to discover or otherwise become
aware of such fact or other matter in the course of conducting a
reasonably comprehensive investigation concerning the existence of such
fact or other matter; and
(ii) a Person (other than an individual), means that such Person will
be deemed to have "Knowledge" of a particular fact or other matter if
any individual who is serving, or who has served in the past
twelve (12) months as a director, outside advisor, officer, manager,
partner, executor or trustee of such Person (or in any similar
capacity) has Knowledge of such fact or other matter.
(v) "Legal Requirement" means any federal, state, local, municipal,
foreign, international, multinational or other Order, constitution, law,
ordinance, regulation, rule, policy statement, directive, statute or treaty.
(w) "Net Accrued WMG Fees Due" is as defined in Section 4.15. The "Schedule
of Fees" is Schedule 4.15.
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(x) "Order" means any award, decision, injunction, judgment, order, ruling,
extraordinary supervisory letter, policy statement, memorandum of understanding,
resolution, agreement, directive, subpoena or verdict entered, issued, made,
rendered or required by any court, administrative or other governmental agency,
including any Regulatory Authority, or by any arbitrator.
(y) "Ordinary Course of Business" means any action taken by a Person only
if such action:
(i) is consistent with the past practices of such Person and is taken
in the ordinary course of the normal day-to-day operations of such
Person;
(ii) is not required to be authorized by the board of directors of such
Person (or by any Person or group of Persons exercising similar
authority), other than loan approvals for customers of a financial
institution; and
(iii) is similar in nature and magnitude to actions customarily taken,
without any authorization by the board of directors (or by any Person
or group of Persons exercising similar authority), other than loan
approvals for customers of a financial institution, in the ordinary
course of the normal day-to-day operations of other Persons that are in
the same line of business as such Person.
(z) "Person" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union or other entity
or Regulatory Authority.
(aa) "Personal Trust Assets" means those assets of Colonial to be purchased
by DB&T as described in Section 2.1 and as listed in Schedule 2.1.
(bb) "Personal Trust Business" means the business of the personal trust
division of Colonial and includes the assets to be purchased, and the
liabilities to be assumed, by DB&T hereunder.
(cc) "Personal Trust Employees" has the meaning set forth in
Section 7.4(b).
(dd) "Personal Trust Liabilities" means those liabilities of Colonial
related to the Personal Trust Business to be assumed by DB&T as described in
Section 2.3 and as listed in Schedule 2.3.
(ee) "Personal Trust Receivables" has the meaning provided in Section 4.18
and the "Schedule of Personal Trust Receivables" is Schedule 4.18.
(ff) "Personal Trust Records" has the meaning provided in Section 6.7.
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(gg) "Prepaid Expenses" means all prepaid expenses, recorded or otherwise
reflected on the books of Colonial as to the Personal Trust Assets that are
existing at, and pertain to periods subsequent to, Closing, including prepaid
rents, real estate taxes, security deposits, maintenance, service and monitoring
Contracts, as shown on the books and records of Colonial prorated on the basis
of the period for which each such expense was prepaid based on a 30-day month or
a 365-day year, as applicable. The "Schedule of Prepaid Expenses" is
Schedule 4.16.
(hh) "Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal, administrative,
investigative or informal) commenced, brought, conducted or heard by or before,
or otherwise involving, any judicial or governmental authority, including a
Regulatory Authority, or arbitrator.
(ii) "Purchase Price" means the amount to be paid by DB&T to Colonial for
the Personal Trust Assets as determined pursuant to Section 2.8.
(jj) "Regulatory Authority" means any federal, state or local governmental
body, agency, court or authority that, under applicable Legal Requirements:
(i) has supervisory, judicial, administrative, police, enforcement,
taxing or other power or authority over Colonial, Heartland, or DB&T;
(ii) is required to approve, or give its consent to the Contemplated
Transactions; or
(iii) with which a filing must be made in connection therewith,
including, in any case, the Arizona Banking Department, the FDIC and
the Iowa Superintendent of Banking.
(kk) "Settlement Date" means the date of post-closing adjustments to the
Purchase Price as provided in Section 10.5.
(ll) "Settlement Statement" means the statement supported by appropriate
exhibits, substantially in the form of Exhibit A, delivered at Closing and
showing the computation of the Purchase Price.
(mm) "Shareholders' Meeting" means the meeting of Colonial shareholders
called for the purpose of voting on this Agreement and the Contemplated
Transactions.
(nn) "Tax" means any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, generation skipping tax or
estate tax), levy, assessment, tariff, duty (including any customs duty),
deficiency or other fee, and any related charge or amount (including any fine,
penalty, interest or addition to tax), imposed, assessed or collected by or
under the authority of any Regulatory Authority or payable pursuant to any
tax-sharing agreement or any other Contract relating to the sharing or payment
of any such tax, levy, assessment, tariff, duty, deficiency or fee.
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(oo) "Tax Return" means any return (including any information return),
report, statement, schedule, notice, form or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Regulatory Authority in connection with the determination, assessment,
collection or payment of any Tax or in connection with the administration,
implementation, or enforcement of or compliance with any Legal Requirement
relating to any Tax.
(pp) "Threatened" means a claim, Proceeding, dispute, action or other
matter for which any demand or statement has been made (orally or in writing) or
any notice has been given (orally or in writing), or if any other event has
occurred or any other circumstances exist, that would lead a prudent Person to
conclude that such a claim, Proceeding, dispute, action or other matter is
likely to be asserted, commenced, taken or otherwise pursued in the future.
Section 1.2 Principles of Construction.
(a) In this Agreement, unless otherwise stated or the context otherwise
requires, the following uses apply:
(i) actions permitted under this Agreement may be taken at any time
and from time to time in the actor's reasonable discretion;
(ii) references to a statute shall refer to the statute and any
successor statute, and to all regulations promulgated under or
implementing the statute or its successor, as in effect at the relevant
time;
(iii) in computing periods from a specified date to a later specified
date, the words "from" and "commencing on" (and the like) mean "from
and including," and the words "to," "until" and "ending on" (and the
like) mean "to, but excluding";
(iv) references to a governmental or quasi-governmental agency,
authority or instrumentality shall also refer to a regulatory body that
succeeds to the functions of the agency, authority or instrumentality;
(v) indications of time of day mean Dubuque, Iowa time;
(vi) "including" means "including, but not limited to";
(vii) all references to sections, schedules and exhibits are to
sections, schedules and exhibits in or to this Agreement unless
otherwise specified;
(viii) all words used in this Agreement will be construed to be of such
gender or number as the circumstances and context require;
(ix) the captions and headings of articles, sections, schedules and
exhibits appearing in or attached to this Agreement have been inserted
solely for convenience of reference and shall not be considered a part
of this Agreement nor shall any of them affect the meaning or
interpretation of this Agreement or any of its provisions; and
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(x) any reference to a document or set of documents in this Agreement,
and the rights and obligations of the parties under any such documents,
shall mean such document or documents as amended from time to time, and
any and all modifications, extensions, renewals, substitutions or
replacements thereof.
(b) The Schedules referred to in this Agreement consist of the agreements
and other documentation described and referred to in this Agreement, which
Schedules were delivered by Colonial to Heartland before the date of this
Agreement. The disclosures in the Schedules, and those in any supplement
thereto, shall relate only to the representations and warranties in the section
of this Agreement to which they reasonably relate and not to any other
representation or warranty in this Agreement. In the event of any inconsistency
between the statements in the body of this Agreement and those in the Schedules
(other than an exception expressly set forth as such in the Schedules with
respect to a specifically identified representation or warranty), the statements
in the body of this Agreement will control.
(c) All accounting terms not specifically defined herein shall be construed
in accordance with GAAP.
(d) With regard to each and every term and condition of this Agreement and
any and all agreements and instruments subject to the terms hereof, the parties
hereto understand and agree that the same have or has been mutually negotiated,
prepared and drafted, and that if at any time the parties hereto desire or are
required to interpret or construe any such term or condition or any agreement or
instrument subject hereto, no consideration shall be given to the issue of which
party hereto actually prepared, drafted or requested any term or condition of
this Agreement or any agreement or instrument subject hereto.
ARTICLE 2
TERMS OF PURCHASE AND ASSUMPTION AND TRANSFER OF TRUST BUSINESS
Section 2.1 Sale of Personal Trust Assets. On the terms and subject to the
conditions contained in this Agreement, at the Closing, DB&T shall purchase from
Colonial and Colonial shall sell, convey, assign, transfer and deliver to DB&T
all of Colonial's rights, title, and interests in and to the Personal Trust
Assets as a going concern, free and clear of all liens, security interests,
pledges, encumbrances, debts, judgments, contingent liabilities, adverse claims
and demands of every kind, character and description whatsoever, including the
following:
(a) all rights under the Fiduciary Accounts and Agency Accounts;
(b) the Fiduciary and Agency Agreements;
(c) any confidential and proprietary information and documents involving
the Personal Trust Business, present, past and potential customer lists, leads,
solicitations, notes explaining the operations of the Personal Trust Business,
and all notes regarding discussions with the customers on trust interpretations
and operations;
(d) all claims of Colonial against others related to the Personal Trust
Assets or the Personal Trust Liabilities, whether asserted or unasserted and
whether now or hereafter existing;
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(e) all of Colonial's transferable right, title and interest in and to the
corporate name "Camelback Trust Company" and all variations thereof;
(f) the Net Accrued WMG Fees Due as of the Closing Date;
(g) the A/R Soft Dollar Expense Reimbursement;
(h) the Equipment and Personal Property, as well as all assignable
manufacturer's and other guarantees, warranties and associated rights, subject
to the liabilities assumed under Section 2.3(d);
(i) all Prepaid Expenses; and
(j) all goodwill and going concern value incident or related to the
Personal Trust Business.
DB&T shall succeed, immediately after the Closing, to all rights, title,
benefits and interests in and to the assets and properties of Colonial to the
extent included among the Personal Trust Assets as of the Closing, and shall be
entitled to receive all benefits therefrom as if DB&T had itself originally
acquired such Personal Trust Assets.
Section 2.2 Identification of Personal Trust Assets. Schedule 2.1 contains
a list of all assets comprising the Personal Trust Assets as of January 20,
2004, organized by category of asset consistent with Section 2.1. All other
assets including cash, investments and such other assets as may be mutually
agreed upon by Colonial and DB&T are Excluded Assets. An updated Schedule 2.1
containing the foregoing information current as of a date no more than five (5)
Business Days prior to the Closing Date shall be delivered to DB&T by Colonial
at the Closing.
Section 2.3 Assumption of Liabilities. Pursuant to the terms of this
Agreement, DB&T shall assume at the close of business on the Closing Date the
Personal Trust Liabilities as follows:
(a) the Accrued Expenses incurred only in the Ordinary Course of Business
during the calendar month in which the Closing occurs and through the close of
business on the date that is five (5) Business Days prior to the Closing Date,
all of which shall be shown on Schedule 2.3(a) delivered at the Closing by
Colonial to DB&T;
(b) all liabilities and obligations with respect to maintenance and
servicing of the Fiduciary and Agency Accounts after the Closing Date; provided,
however, that DB&T specifically does not assume any liabilities or obligations
under the Fiduciary and Agency Accounts, including liabilities or obligations
resulting from any actions or omissions by Colonial, that occurred or existed on
or prior to the Closing;
(c) all personal property and other taxes assessed in connection with the
Personal Trust Assets, provided, such taxes shall be prorated as of the Closing
Date based on a 365-day year and reflected on the Settlement Statement; and
(d) liabilities under the Infovisa software agreement listed on
Schedule 2.3(d), except for liabilities arising as a result of Colonial's breach
of such agreement prior to Closing.
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Section 2.4 Liabilities Not Assumed. DB&T shall not assume or take title to
the Personal Trust Assets subject to, or in any way be liable for, any
liabilities or obligations of Colonial (whether or not referred to in any
Schedule or Exhibit to this Agreement), except as specifically provided in
Section 2.3, it being expressly acknowledged that it is the intention of the
parties hereto that all liabilities and obligations that Colonial has or may
have in the future (whether accrued, absolute, contingent, unliquidated or
otherwise, whether known to Colonial, and whether due or to become due), other
than the Personal Trust Liabilities, shall be and remain the liabilities and
obligations of Colonial.
Section 2.5 Assignment and Fiduciary Substitution. At the Closing, Colonial
shall transfer and assign the Personal Trust Business to DB&T, without any
further action on the part of either DB&T or Colonial (except as provided for
herein) and DB&T shall, to the full extent provided by all applicable Legal
Requirements, be deemed the substitute fiduciary for Colonial on each of the
Fiduciary and Agency Accounts. At such time on such date and thereafter, DB&T
shall, to the full extent provided by all applicable Legal Requirements:
(a) succeed to all of Colonial's right, title, and interest in all property
that Colonial holds as fiduciary with respect to the Personal Trust Business;
(b) be considered the designee fiduciary in all instruments that have
heretofore named Colonial as fiduciary with respect to the Personal Trust
Business, and
(c) perform all the duties and obligations and exercise all the powers and
authority connected with or incidental to that fiduciary capacity in the same
manner as if DB&T had been originally named or designated fiduciary thereunder,
all without the necessity of any instrument of transfer or conveyances.
All costs incurred by Colonial necessary to the substitution of DB&T as
fiduciary on the Fiduciary and Agency Accounts shall be the sole cost and
expense of Colonial.
Section 2.6 Situs of Administration of Fiduciary Accounts. Colonial and
DB&T do each hereby acknowledge and state that the substitution of DB&T for
Colonial with respect to the Fiduciary Accounts pursuant to this Agreement will
not cause a transfer of the situs of the administration of such Fiduciary
Accounts.
Section 2.7 Release of Fiduciary Duties. On and effective as of the Closing
Date, Colonial shall be released from all ongoing fiduciary duties related to
the Personal Trust Business and shall cease to act in all such fiduciary
capacities with respect to the Personal Trust Business.
Section 2.8 Purchase Price of Personal Trust Assets.
(a) The Purchase Price will be an amount equal to the sum of the following
as of the close of business on the Closing Date unless otherwise indicated:
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(i) 1.88 times the amount of the annual recurring fees during the last
twelve (12) months ending on the last day of the month immediately
preceding the month in which the Closing occurs that are attributable
to the Fiduciary and Agency Accounts in existence on January 20, 2004,
for which DB&T is duly appointed and/or succeeds to as of the Closing
Date;
(ii) 1.0 times the amount of the estimated annual recurring fees that
are attributable to the Fiduciary and Agency Accounts that come into
existence after January 20, 2004, for which DB&T is duly appointed
and/or succeeds to as of the Closing Date; and
(iii) the Book Value of the Personal Trust Assets listed in
Sections 2.1(f), (g), (h) and (i).
For purposes of this Section, if there are any Fiduciary and Agency Accounts
described in Section 2.8(a)(i) that have been in existence for less than
twelve (12) months as of the Closing Date, then the amount of the annual
recurring fees during the last twelve (12) months for each such account shall be
equal to the product of (x) the average monthly fees for such account during the
months such account has been in existence, multiplied by (y) twelve (12).
(b) It is understood that the ▇▇▇▇▇▇▇ Family Trust will terminate prior to
Closing, and, therefore, the ▇▇▇▇▇▇▇ Family Trust account is not included in the
Fiduciary Accounts or in the price set forth above in Section 2.8(a). If the
▇▇▇▇▇▇▇ Family Trust is still on hand as of the Closing Date, it is agreed that
such account will be transferred to DB&T and DB&T shall pay a fee to Colonial
equal to one-half (1/2) of the monthly fees received by DB&T on such account
from and after the Closing until the earlier of the date such account is
terminated or Colonial wraps up its affairs and is dissolved. If the ▇▇▇▇▇
▇▇▇▇▇▇▇ Trust or a similar trust created in the process of the termination of
the ▇▇▇▇▇▇▇ Family Trust is placed with Colonial prior to Closing, then the
price to be paid for such shall be governed by Section 2.8(a)(ii).
(c) Furthermore, it is understood and agreed that neither the BFALT
Disbursing Agent account nor any corporate trust account is included in the
Fiduciary Accounts because all such accounts will be or have been transferred to
the purchaser of Colonial's corporate trust division.
Section 2.9 Allocation of Purchase Price. The parties agree to determine
the allocation of the Purchase Price in accordance with the procedures set forth
in Section 7.7; provided, however, that nothing contained in this Agreement
shall require either party or its Affiliates to violate any Legal Requirement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF DB&T
DB&T and, in those sections where specifically joined by Heartland,
Heartland and DB&T, jointly and severally, represent, warrant and agree as
follows:
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Section 3.1 Organization. Heartland is a Delaware corporation, validly
existing in such capacity and in good standing under the laws of the State of
Delaware, and it has the requisite corporate power and authority to execute,
deliver and perform this Agreement, subject to the receipt of all required
regulatory approvals. DB&T is an Iowa banking association with trust powers,
validly existing in such capacity and in good standing under the laws of the
State of Iowa, and it has the requisite corporate power and authority to
execute, deliver and perform this Agreement, subject to the receipt of all
required regulatory approvals.
Section 3.2 Authorization. The execution, delivery and performance of this
Agreement and the consummation of the Contemplated Transactions by each of DB&T
and Heartland has been duly and validly authorized and approved by all requisite
corporate action and such authorization is reflected in the minutes of the
meetings of the board of directors of DB&T and Heartland. DB&T shall
continuously maintain for a reasonable period of time all components of this
Agreement as official records of DB&T and Heartland or any successor thereto.
This Agreement is a valid and binding obligation of each of DB&T and Heartland,
enforceable in accordance with its terms, except that the enforceability hereof
may be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court (or, if applicable, the administrative agency) before which any
Proceedings therefore may be brought.
Section 3.3 No Conflicts. DB&T and Heartland hereby represent that the
execution and delivery of this Agreement by DB&T and Heartland and the
consummation by DB&T and Heartland of the Contemplated Transactions will not:
(a) conflict with any of the provisions of the charter, bylaws or other
governing instruments of DB&T or Heartland; or (b) conflict with, violate or
result in a breach of any Legal Requirement, Order or Contract applicable to
DB&T or Heartland, or to which either of them is a party or pursuant to which
any of their respective properties is bound.
Section 3.4 Litigation and Related Matters. There are no Proceedings
pending, or, to the Knowledge of DB&T or Heartland, Threatened against either of
them that might impair the consummation of the Contemplated Transactions.
Neither DB&T nor Heartland is aware of any facts that would reasonably afford a
basis for any such Proceeding.
Section 3.5 Consents. Other than the approval of the shareholders of
Colonial as described in Sections 8.3 and 9.3, the FDIC, the Iowa Superintendent
of Banking and the Arizona State Banking Department, and subject to the
expiration of any applicable waiting periods, no consent, approval or
authorization of any Regulatory Authority is required for the execution,
delivery and performance by Heartland and DB&T of this Agreement and the
consummation by them of the Contemplated Transactions.
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Section 3.6 Compliance with Legal Requirements and Orders. Neither DB&T nor
Heartland has any notice of any violation of, and each is in compliance with,
all applicable Legal Requirements material to the conduct of its respective
business and every Order to which it is subject, a violation of which would
adversely the ability of either to perform its respective obligations under this
Agreement.
Section 3.7 Information for Regulatory Approvals. The information furnished
or to be furnished by Heartland or DB&T in any regulatory application or
amendment thereto filed by either DB&T or Colonial pursuant to Section 7.1 will
be true and complete in all material respects as of the date so furnished.
Section 3.8 No Broker's or Finder's Fees. No agent, broker, investment
banker, or other Person acting on behalf of or under authority of Heartland or
DB&T or any of their Affiliates is or will be entitled to any broker's or
finder's fee or any other commission or similar fee directly or indirectly in
connection with any of the Contemplated Transactions. DB&T shall be solely
liable for the payment of any such fees and shall indemnify Colonial with
respect to such fees pursuant to Article 13.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF COLONIAL
Colonial represents, warrants and agrees as follows:
Section 4.1 Organization. Colonial is a nondepository trust company, duly
organized, validly existing, and in good standing under the laws of Arizona, and
it has the requisite corporate power and authority to execute, deliver and
perform this Agreement. Colonial is duly authorized to conduct trust operations
in the State of Arizona and in each other state in which it is necessary to
conduct its trust operations.
Section 4.2 Authorization. The execution, delivery and performance of this
Agreement and the consummation by Colonial of the Contemplated Transactions have
been duly and validly authorized and approved by all requisite corporate action
and such authorization is reflected in the minutes of the meetings of Colonial's
board of directors. Colonial shall continuously maintain for a reasonable period
of time all components of this written Agreement as official records of Colonial
or any successor thereto. This Agreement is a valid and binding obligation of
Colonial, enforceable in accordance with its terms, except that the
enforceability hereof may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors rights generally and that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court (or, if applicable, the
administrative agency) before which any Proceedings therefore may be brought.
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Section 4.3 No Conflicts. Except as disclosed on Schedule 4.3, the
execution and delivery of this Agreement by Colonial and the consummation by
Colonial of the Contemplated Transactions will not: (a) conflict with any of the
provisions of the charter, bylaws or other governing instruments of Colonial; or
(b) conflict with, violate or result in a breach of any Legal Requirement, Order
or Contract applicable to Colonial, or to which it is a party or pursuant to
which any of its properties is bound.
Section 4.4 Consents. Other than the approval of the shareholders of
Colonial as described in Sections 8.3 and 9.3, the FDIC, the Iowa Superintendent
of Banking, the Arizona State Banking Department, and subject to the expiration
of any applicable waiting period, no consent, approval or authorization of any
Regulatory Authority or any third party or parties is required for the
execution, delivery and performance by Colonial of this Agreement and the
consummation by it of any of the Contemplated Transactions.
Section 4.5 Compliance with Law. Colonial is in compliance with all Legal
Requirements and Orders applicable to the Fiduciary or Agency Accounts or the
conduct by it of the Personal Trust Business. Colonial has properly administered
all Fiduciary Accounts in accordance with all Legal Requirements. Neither
Colonial nor any of its directors, officers or employees, has committed any
breach of trust with respect to any Fiduciary or Agency Accounts. Colonial is
not charged or, to Colonial's Knowledge, Threatened with, or under investigation
with respect to, any violation of any Legal Requirement or any Order to which
Colonial is subject relating to any aspect of its Personal Trust Business.
Section 4.6 Fiduciary and Agency Agreements. Except as provided in
Schedule 4.6:
(a) Colonial is in compliance with all requirements and obligations
applicable to it under the Fiduciary and Agency Agreements;
(b) Colonial has not taken any action, nor omitted to take any action,
which would, or with the giving of notice or the passage of time or both could,
constitute a default or a violation of any fiduciary duty under any Fiduciary or
Agency Agreement or cause Colonial to be subject to claims for damages,
surcharge, disqualification or removal from any capacity which anyone of them
now occupies with respect to any Trust or Agency Agreement, nor has Colonial
been so subject to claims for damages, surcharged, disqualified or removed from
any such capacity;
(c) each Fiduciary or Agency Agreement and amendments or modification
thereto, was duly executed and delivered (or accepted) by, and constitutes a
legal, valid and binding obligation of, Colonial and, to the Knowledge of
Colonial, each other party thereto, and is enforceable against Colonial and, to
the Knowledge of Colonial, each other party thereto in accordance with its
terms; and
(d) no claim has been made against Colonial and no notice has been received
by Colonial questioning the validity or enforceability of any Fiduciary or
Agency Agreement or asserting any default or violation of any fiduciary duty
thereunder.
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Section 4.7 Personal Trust Records Colonial has maintained all Personal
Trust Records that it is required to maintain pursuant to applicable Legal
Requirement or the applicable Fiduciary or Agency Agreement.
Section 4.8 Trust or Agency Standards.
(a) The Personal Trust Records are retained, protected and duplicated in
accordance with prudent fiduciary practices, reasonable and customary industry
practices and applicable Legal Requirements. The Personal Trust Records are true
and correct in all material respects and reflect all dispositions and
acquisitions of assets and receipt and disbursement of funds, and Colonial
maintains a system of internal accounting controls, policies and procedures
sufficient to make it reasonable to expect that: (i) such transactions are
executed in accordance with management's general or specific authorizations; and
(ii) such transactions are recorded in conformity with any applicable accounting
principles and in such a manner as to permit preparation of financial statements
in accordance with any applicable accounting principles and fiduciary standards
and any other criteria applicable to such statements and to maintain
accountability for assets.
(b) The recorded accountability for assets is compared with existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.
(c) The data and transaction processing services of Colonial are of the
quality generally maintained by trust businesses similarly situated and are
adequate for the performance of the business of Colonial.
Section 4.9 Successor Trustee Documentation. To the extent that any of the
Fiduciary Agreements names a predecessor-in-interest to Colonial as the
fiduciary (whether as trustee, guardian, personal representative, agent or
otherwise), Colonial:
(a) has lawfully succeeded its predecessor-in-interest as the fiduciary
under such Fiduciary Agreements, and
(b) shall provide DB&T with true and correct copies of all documents and
instruments to establish that Colonial is the duly authorized and lawfully
acting successor fiduciary.
Section 4.10 Trust Business Tax Returns. Where and when required, Colonial
has caused to be filed all Tax Returns for any of the Personal Trust Assets.
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Section 4.11 Environmental Liability. To Colonial's Knowledge, with respect
to any real estate held (including fee simple ownership interest, leasehold
interest and easement rights) and administered pursuant to any of the Personal
Trust Assets, whether held in an estate, trust, guardianship, agency
relationship, or other fiduciary capacity (collectively, the "Trust Real
Estate"), there are no actions, suits, investigations, liabilities, inquiries,
Proceedings or Orders involving Colonial or any of the Trust Real Estate that
are pending or, to the Knowledge of Colonial, Threatened, nor is there any
factual basis for any of the foregoing, as a result of any asserted failure of
Colonial, or any predecessor thereof, to comply with any federal, state, county
and municipal law, including any statute, regulation, rule, ordinance, Order,
restriction and requirement, relating to underground storage tanks, petroleum
products, air pollutants, water pollutants or process waste water or otherwise
relating to the environment or toxic or hazardous substances or to the
manufacture, processing, distribution, use, recycling, generation, treatment,
handling, storage, disposal or transport of any hazardous or toxic substances or
petroleum products (including polychlorinated biphenyls, whether contained or
uncontained, and asbestos-containing materials, whether friable or not),
including, the Federal Solid Waste Disposal Act, the Hazardous and Solid Waste
Amendments, the Federal Clean Air Act, the Federal Clean Water Act, the
Occupational Health and Safety Act, the Federal Resource Conservation and
Recovery Act, the Toxic Substances Control Act, the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980 and the Superfund
Amendments and Reauthorization Act of 1986, all as amended, and regulations of
the Environmental Protection Agency, the Nuclear Regulatory Agency and any state
department of natural resources or state environmental protection agency now or
at any time hereafter in effect (collectively, the "Environmental Laws"). To
Colonial's Knowledge, no environmental clearances or other governmental
approvals are required for the conduct of the Personal Trust Business or the
consummation of the Contemplated Transactions, nor have any substances have been
used, stored, deposited, treated, recycled or disposed of on any of the Trust
Real Estate which substances if known to be present on, at or under such
property, would require clean-up, removal or some other remedial action under
any Environmental Law.
Section 4.12 Litigation and Related Matters. Except as set forth on
Schedule 4.12, there are no Proceedings pending or, to the best of Colonial's
Knowledge, Threatened against Colonial that would be reasonably likely to impair
the consummation of any of the Contemplated Transactions or that affect any of
the Personal Trust Assets or Personal Trust Liabilities being transferred to
DB&T pursuant to the terms hereof. Colonial is not aware of any facts that would
reasonably afford a basis for any such Proceeding.
Section 4.13 Assignment of Accounts. As of the Closing Date, DB&T will
immediately succeed Colonial as trustee, executor, administrator or other
fiduciary of Fiduciary or Agency Accounts where the fees resulting therefrom
represent not less than sixty-seven percent (67%) of all of the recurring fees
received by Colonial for such services.
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Section 4.14 Financial Statements
(a) Colonial has furnished to DB&T true and complete copies of: (i) the
audited consolidated balance sheets of Colonial as of March 31, 2003 and 2002,
and the related audited consolidated statements of income, shareholders' equity
and cash flows for such fiscal years; and (ii) the unaudited balance sheet of
Colonial as of December 31, 2003 and the related unaudited consolidated
statement of income for the nine-month period ended December 31, 2003. All such
balance sheets and the related statements of income, shareholders' equity and
cash flows are collectively referred to herein as the "Colonial Financial
Statements."
(b) The Colonial Financial Statements fairly present, in all material
respects, the financial position of Colonial as of the respective dates thereof
and the results of operations and changes in financial position of Colonial for
the periods then ended, in conformity with GAAP applied on a basis consistent
with prior periods (subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments and the fact that all such statements
do not contain all of the footnote disclosures required by GAAP), and except as
otherwise noted therein, the Colonial Financial Statements accurately and fairly
reflect in all material respects the transactions of Colonial. The Colonial
Financial Statements do not require any additional disclosure to reflect
accurately and fairly the financial condition and results of operations of
Colonial as of the respective dates of such Financial Statements other than
those disclosures covered by the representations and warranties contained in
this Article or disclosed to DB&T in or pursuant to schedules to this Agreement.
(c) In addition to the Colonial Financial Statements, Colonial will furnish
to DB&T as soon as they are available, unaudited balance sheets, statements of
income, statements of shareholders' equity, and statements of cash flows of
Colonial for periods after those covered by the applicable Colonial Financial
Statements.
Section 4.15 Net Accrued WMG Fees Due. Attached as Schedule 4.15 is a true
and accurate schedule of the WMG Fees Due and the current commissions payable
with respect thereto resulting in a net amount, if any, of WMG Fees Due to
Colonial, all as shown on the books of Colonial in connection with the Personal
Trust Business ("Net Accrued WMG Fees Due"), as of the date of such
Schedule 4.15. An updated Schedule of Fees and Schedule 4.15 containing
information current as of the close of business no more than five (5) Business
Days prior to the Closing Date shall be delivered to DB&T by Colonial at the
Closing.
Section 4.16 Prepaid Expenses. Attached as Schedule 4.16 is a true and
accurate schedule of all Prepaid Expenses. An updated Schedule of Prepaid
Expenses and Schedule 4.16 containing information current as of the close of
business no more than five (5) Business Days prior to the Closing Date shall be
delivered to DB&T by Colonial at the Closing.
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Section 4.17 Equipment and Personal Property. Attached as Schedule 4.17(a)
is a true and accurate schedule of the Equipment and Personal Property, which
schedule describes any security interests therein or other liens thereon and the
current value of such Equipment and Personal Property on the books of Colonial.
Except as disclosed on Schedule 4.17(b), all Equipment and Personal Property is
in good operating condition, ordinary wear and tear excepted, and conforms with
all material ordinances, regulations, zoning and other laws, whether Federal,
state or local. Except as set forth on Schedule 4.17(b), none of such property
or equipment is in need of maintenance or repairs other than ordinary routine
maintenance and repairs that are not material in nature or cost. An updated
Schedule 4.17(a) and Schedule 4.17(b) containing information current as of the
close of business no more than five (5) Business Days prior to the Closing Date
shall be delivered to DB&T by Colonial at the Closing.
Section 4.18 Personal Trust Receivables. Attached as Schedule 4.18 is a
true and accurate schedule of all Personal Trust Receivables owned by Colonial
in connection with the Personal Trust Business. Each Personal Trust Receivable
set forth on Schedule 4.18 is a valid and binding obligation of the maker
thereof enforceable in accordance with its terms, except that the enforceability
thereof may be subject to bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally and that the remedy of specific performance and injunctive relief or
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any Proceedings therefore may be brought.
Colonial owns each receivable free and clear of all liens, claims and
encumbrances. An updated Schedule of Personal Trust Receivables and
Schedule 4.18 containing information current as of the close of business no more
than five (5) Business Days prior to the Closing Date shall be delivered to DB&T
by Colonial at the Closing.
Section 4.19 Title to Personal Trust Assets. Colonial is the lawful owner
of and has good and indefeasible title to the Personal Trust Assets free and
clear of all liens, claims, encumbrances and rights of others, except as
disclosed on Schedule 4.19. Delivery to DB&T of the instruments of transfer of
ownership contemplated by this Agreement will vest good and indefeasible title
to the Personal Trust Assets in DB&T, free and clear of all liens, claims,
encumbrances and rights of others.
Section 4.20 Taxes. All Taxes relating to the Personal Trust Assets that
are due and payable by Colonial prior to the Closing have been paid in full, or
will be so paid prior to the Closing.
Section 4.22 No Broker's or Finder's Fees. No agent, broker, investment
banker or other Person acting on behalf of or under authority of Colonial or any
of its Affiliates is or will be entitled to any broker's or finder's fee or any
other commission or similar fee directly or indirectly in connection with any of
the Contemplated Transactions. Colonial shall be solely liable for the payment
of any such fees and shall indemnify DB&T with respect to such fees pursuant to
Article 13.
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ARTICLE 5
COVENANTS OF DB&T AND HEARTLAND
DB&T and Heartland, jointly and severally, hereby covenant and agree as
follows, which covenants and agreements will remain in effect subsequent to the
Closing:
Section 5.1 Performance of Liabilities. DB&T and Heartland agree to, from
and after the Closing, pay, honor, discharge and perform all of the Personal
Trust Liabilities, as specifically set forth in Section 2.3.
Section 5.2 Access to Transferred Records. For seven (7) years following
the Closing, DB&T and Heartland shall, to the extent not inconsistent with any
Legal Requirement applicable to DB&T or Heartland, provide such copies of the
records transferred to DB&T by Colonial as Colonial shall reasonably request,
provided that all usual and customary costs incurred in connection with requests
by Colonial for such records shall be borne and paid by Colonial.
Section 5.3 Conditions to Closing. DB&T and Heartland shall use their Best
Efforts to satisfy by the Closing Date all of the conditions to the obligations
of DB&T hereunder within DB&T's direct or indirect control.
Section 5.4 Untrue Representations. DB&T shall promptly notify Colonial in
writing if DB&T or Heartland becomes aware of any fact or condition that makes
untrue, or shows to have been untrue, in any material respect, any
representation or warranty made in this Agreement or that results in the failure
of Heartland or DB&T to comply with any covenant, condition or agreement
contained in this Agreement.
Section 5.5 Litigation and Claims. DB&T shall promptly notify Colonial of
any Proceeding pending or Threatened against DB&T or Heartland that questions
the validity of this Agreement or any actions taken by DB&T or Heartland
pursuant hereto or seeks to enjoin or otherwise restrain any of the Contemplated
Transactions.
Section 5.6 Furnishing Information. DB&T and Heartland shall provide all
information, financial statements and documentation as Colonial shall reasonably
request in connection with any of the Contemplated Transactions.
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ARTICLE 6
COVENANTS OF COLONIAL
During the period from the date hereof to the Closing Date, Colonial hereby
covenants and agrees as follows:
Section 6.1 Preservation of Business. Colonial shall use its Best Efforts
to preserve intact its Personal Trust Business, to keep available the services
of the present officers and employees of its Personal Trust Business and to
preserve the present relationships of Colonial with all personal trust customers
and with all entities identified by DB&T and having business dealings with
Colonial through its Personal Trust Business, and Colonial shall promptly notify
DB&T of any material changes in personnel or customer relations related to its
Personal Trust Business.
Section 6.2 Operations in Ordinary Course.
(a) Except as otherwise provided in this Agreement, without the prior
written consent of DB&T, Colonial shall not engage in any transaction related to
its Personal Trust Business, except in Colonial's Ordinary Course of Business
and consistent with past practices and applicable Legal Requirements, and shall
not take any action that would materially and adversely affect the Personal
Trust Assets or the Personal Trust Liabilities to be acquired and assumed
hereunder.
(b) Colonial further covenants that it shall, except with the prior written
consent of DB&T, from the date hereof through the Closing Date:
(i) maintain its books of accounts and records with respect to the
Personal Trust Assets and Personal Trust Liabilities in the Ordinary
Course of Business and consistent with past practices and applicable
Legal Requirements;
(ii) duly maintain compliance with all Legal Requirements and Contracts
to which it is subject or by which it is bound with respect to the
Personal Trust Assets, the Personal Trust Liabilities and its Personal
Trust Business;
(iii) maintain any insurance related to the conduct of its Personal
Trust Business, in such amounts and of such kinds as are maintained as
of the date of this Agreement; and
(iv) not create or suffer to exist any lien, claim or encumbrance on
any of the Personal Trust Assets except for those otherwise permitted
under this Agreement.
Section 6.3 Contracts. Colonial shall not enter into any material Contract
with respect to its Personal Trust Business, the Personal Trust Assets or the
Personal Trust Liabilities without the prior written consent of DB&T (which
consent will not be unreasonably withheld or delayed), except for Contracts in
the Ordinary Course of Business and consistent with past practice.
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Section 6.4 Shareholders' Meeting. Colonial, acting through its board of
directors, shall, in accordance with applicable Legal Requirements:
(a) duly call, give notice of, convene and hold the Shareholders' Meeting
as soon as reasonably practicable, but in no event later than June 30, 2004, for
the purposes of approving and adopting this Agreement and the Contemplated
Transactions;
(b) require no greater than the minimum vote of the outstanding shares of
Colonial common stock required by applicable Legal Requirements to approve this
Agreement and the Contemplated Transactions;
(c) subject to its fiduciary duties to the shareholders of Colonial,
include in the Proxy Statement (as defined below) the recommendation of its
board of directors that the shareholders of Colonial vote in favor of the
approval and adoption of this Agreement and the Contemplated Transactions; and
(d) cause the Proxy Statement to be mailed to the shareholders of Colonial
as soon as practicable, and use its Best Efforts to obtain the approval and
adoption of this Agreement and the Contemplated Transactions by shareholders of
Colonial at the Shareholders' Meeting.
Section 6.5 Conditions to Closing. Colonial shall use its Best Efforts to
satisfy by the Closing Date all of the conditions to the obligations of Colonial
hereunder within Colonial's direct or indirect control.
Section 6.6 Furnishing Information. Colonial shall promptly furnish to DB&T
all information concerning Colonial required to be included in any application
or filing to be made by DB&T to, or filed by DB&T with, any Regulatory Authority
in connection with Contemplated Transactions, or in connection with any related
transactions during the pendency of this Agreement, and Colonial represents and
warrants that all information so furnished for such statements and applications
shall be true and correct.
Section 6.7 Records. Colonial agrees to deliver all files, records,
documents, computer records and instruments relating to the Personal Trust
Assets (including original trust indentures, deeds of trust and/or mortgages
relating to notes evidencing the Personal Trust Receivables and manuals and
maintenance records for the Equipment and Personal Property) and Personal Trust
Liabilities (including those reasonably necessary to comply with all applicable
Legal Requirements and business practices with respect to the Personal Trust
Receivables) (collectively, the "Personal Trust Records") to DB&T at the
Closing.
Section 6.8 Employment and Non-Competition Agreements. Concurrently with
the execution and delivery of this Agreement, Colonial shall cause to be
delivered to DB&T an employment and non-competition agreement in the form of
Exhibit B, signed by each of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ to be
effective at the Closing.
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Section 6.9 Corporate Name. Colonial agrees to use its Best Efforts to
transfer to DB&T at the Closing all of Colonial's right, title and interest in
the name "Colonial Trust Company" (the "Name Transfer"), provided, however, that
if Colonial determines in good faith and in the exercise of reasonable business
judgment that it will be unable to make the Name Transfer to DB&T, then in the
alternative, Colonial shall be permitted to: (a) make the Name Transfer to DB&T
subsequent to the Closing; (b) make the Name Transfer to the purchaser of
Colonial's corporate trust provision under the express condition that the
"Colonial Trust Company" name not be used in connection with the operation of a
personal trust business or division, or the provision of any personal fiduciary
products or services, within Maricopa County, Arizona, for a period of
twenty (20) years after the Closing; or (c) take such other actions to dispose
of such name or otherwise ensure that it will not be used in connection with the
operation of a personal trust business or division, or the provision of any
personal fiduciary products or services, within Maricopa County, Arizona, for a
period of twenty (20) years after the Closing. Colonial agrees to provide to
DB&T reasonable advance notice of any actions taken by Colonial in connection
with the requirements of this Section.
Section 6.10 Assignment as Successor Fiduciary. Colonial agrees to use its
Best Efforts to cause DB&T as of the Closing Date to immediately succeed
Colonial as trustee, executor, administrator or other fiduciary of all of the
Fiduciary or Agency Accounts for which Colonial serves as trustee, executor,
administrator or other fiduciary as of the date of this Agreement, and for all
other Fiduciary or Agency Accounts created between the date of this Agreement
and the Closing.
Section 6.11 Fairness Opinion. Colonial shall use its Best Efforts to
obtain as soon as reasonably practicable the opinion of The Bank Advisory Group
that the purchase of assets and assumption of liabilities described in this
Agreement are fair to Colonial and its shareholders from a financial point of
view (the "Fairness Opinion").
ARTICLE 7
RECIPROCAL COVENANTS
Section 7.1 Regulatory Approvals. Colonial and DB&T shall cooperate in
preparing, submitting, filing, and publishing (as applicable), and shall file as
expeditiously as possible, all applications, notification and report forms, and
notices as may be required by applicable Legal Requirements, with respect to the
Contemplated Transactions, including those of any Regulatory Authority, and will
use their Best Efforts to obtain such approvals and accomplish such actions as
expeditiously as possible. If any information included or to be included in any
application, notification and report form, or other notice becomes inaccurate,
the party to whom the inaccurate information relates shall be obligated to
provide, as soon as practicable, such additional information as may be necessary
to correct the inaccurate information. Each party shall have the obligation to
notify the other party of any indication it receives from any Regulatory
Authority that it is unlikely that such authority will approve the Contemplated
Transactions. The party that receives or should receive such notice may
terminate this Agreement if it reasonably believes that final approval by such
Regulatory Authority is unlikely.
23
Section 7.2 Conveyances. Each party shall execute and deliver to the other
party all such bills of sale and other documents or instruments of conveyance,
transfer or assignment, and all such instruments of assumption as are necessary
or appropriate to vest in DB&T full and complete title to all the Personal Trust
Assets and to subject DB&T to responsibility for the Personal Trust Liabilities
assumed hereunder as of the Closing. All of such documents and instruments will
be in form and substance reasonably satisfactory to the parties.
Section 7.3 Further Assurances. Each party hereto shall do all things
reasonably necessary or desirable and within its control to effect the
consummation of the Contemplated Transactions, and at any time, and from time to
time, after the Closing shall, upon the request of the other, do or cause to be
done such further acts and execute, acknowledge and deliver all such further
documents, instruments, assignments, transfers, conveyances, powers of attorney
and assurances as may be necessary or reasonably desirable to vest in DB&T the
Personal Trust Assets intended to be sold, transferred and assigned, and to
evidence DB&T's assumption of the Personal Trust Liabilities pursuant to the
provisions of this Agreement.
Section 7.4 Employees.
(a) This Agreement is intended to result solely in the transfer of the
Personal Trust Assets and Personal Trust Liabilities in connection with the
Personal Trust Business to DB&T, all in accordance with the terms of this
Agreement. Except as provided in Section 7.4(b), no transfer of employment of
any employee, representative or agent of Colonial employed in connection with
the Personal Trust Business or otherwise is intended by the parties. Colonial
shall remain solely responsible for its employees, representatives and agents,
and agrees to indemnify DB&T against any and all claims, losses, costs and
damages of any nature whatsoever, including court costs, costs of investigation,
and attorney's fees, arising out of any claims made by such employees,
representatives or agents against DB&T, relating in any way to their employment
by, or service to, Colonial or their termination by Colonial or the accuracy of
the list of employees provided to DB&T. Colonial will file (or cause to be
filed) W-2s for its employees for that part of the tax year up to and including
the Closing. DB&T will file W-2s for employees of Colonial who become employees
of DB&T for that part of the tax year following the Closing.
(b) Attached as Schedule 7.4(b) is a list of those employees associated
with its Personal Trust Business (the "Personal Trust Employees"). Such
employees are leased to Colonial by an employee leasing agency. Each may be
employed by DB&T without the approval of such agency and without the payment of
any fee or penalty.
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(c) DB&T is not hereby, and at no time hereafter will be, adopting,
accepting, or assuming any employee benefit plan of Colonial relating to any of
its employees or any other Contract, trust, plan, fund, or other arrangement of
Colonial that provides for employee benefits or perquisites (collectively,
"Employment Arrangements"), and DB&T shall have no liability or obligation
whatsoever under any Employment Arrangement to Colonial or to any employees of
Colonial, whether or not any of such employees become employees of DB&T, except
for such employment offers made by DB&T and accepted by applicable employees.
DB&T is not obligated to replace any of the Employment Arrangements for any
employees of Colonial who become employees of DB&T. DB&T agrees, however, that
except as expressly provided herein, all former employees of Colonial who
immediately after the Closing become employees of DB&T shall receive credit for
their past service with Colonial for purposes of eligibility and vesting under
DB&T's employee benefit plans.
(d) Prior to the Closing, DB&T and Colonial shall coordinate all
communications of employment offers to the Personal Trust Employees; provided,
however, that this paragraph shall not be construed to require DB&T and Colonial
to act jointly at any time or to allow Colonial any right to make any employment
offers on behalf of DB&T or act as DB&T's agent in any respect. Colonial shall
permit DB&T at reasonable times prior to the Closing to meet with the Personal
Trust Employees, and shall, at DB&T's request, permit DB&T to hold and require
such employees to attend training sessions at reasonable times and places so
that DB&T can prepare the employees to conduct business on behalf of DB&T
immediately after the Closing.
(e) At the Closing, Colonial shall terminate its lease for employment of
each of the full-time and part time Personal Trust Employees engaged by Colonial
immediately prior to the Closing. Except as may be otherwise provided in this
Section, DB&T shall not be obligated to make any contribution to any plan or
program on behalf of any of such employees, or to otherwise provide any
compensation or benefits to any of such employees, with respect to any period
prior to the Closing. It is further provided that in no way shall DB&T be liable
for any claims of any of the Personal Trust Employees which any of them may have
against Colonial, and Colonial agrees to indemnify DB&T and hold DB&T harmless
from and against any such claim. Colonial shall be responsible for payments for
accrued vacation not taken by an employee prior to the Closing Date (which
payments shall be made within ten (10) days after the Closing Date or earlier,
if required by law) and for the timely payment of all wages, salaries, bonuses,
if any, and other compensation with respect to services completed on or prior to
the Closing Date.
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Section 7.5 Confidentiality.
(a) DB&T agrees that all "Confidential Information" (as defined below)
shall be kept confidential by DB&T as required by this Section until the Closing
and if this Agreement is terminated, for a period of three (3) years following
its termination; provided, however, that: (i) any of such Confidential
Information may be disclosed to such directors, officers, employees, potential
investors and authorized representatives of DB&T or its Affiliates
(collectively, for purposes of this Section, "DB&T Representatives") as need to
know such information for the purpose of evaluating the Contemplated
Transactions (it being understood that such DB&T Representatives shall be
informed by DB&T of the confidential nature of such information and shall be
required to treat such information confidentially); (ii) any disclosure of
Confidential Information may be made to the extent to which Colonial consents;
(iii) Confidential Information may be disclosed by DB&T or any DB&T
Representatives to the extent that, in the opinion of counsel to DB&T, DB&T or
such DB&T Representative is legally compelled to do so, provided that, prior to
making such disclosure, DB&T or such DB&T Representative, as the case may be,
consults with Colonial regarding such disclosure and provided further that no
such disclosure shall be made if Colonial seeks to obtain a protective order or
other appropriate remedy to prevent disclosure (in which event no such
disclosure shall be made until such action is disposed of adversely) and
provided further that DB&T or such DB&T Representative, as the case may be,
disclose only that portion of the Confidential Information as is legally
required; and (iv) any of such Confidential Information may be disclosed to any
Regulatory Authority or other Person in connection with any notices,
applications, or requests submitted thereto. DB&T agrees that none of the
Confidential Information will be used for any purpose other than in connection
with the Contemplated Transactions. The term "Confidential Information", as used
herein, means all information obtained by or on behalf of DB&T from Colonial or
its representatives pursuant to this Agreement, other than information which:
(x) was or becomes generally available to the public as a result of the filing
of an application or applications for approval of a Regulatory Authority for the
Contemplated Transactions or by means other than as a result of disclosure by
DB&T or any DB&T Representative or, after the Closing, by Colonial or its
Affiliates; (y) was or becomes available to DB&T on a nonconfidential basis
prior to the disclosure to DB&T by Colonial or its representatives; or (z) was
or becomes available to DB&T from a source other than Colonial and its
representatives, provided that the source is not known by DB&T to be bound by a
confidentiality agreement with Colonial.
(b) If this Agreement is terminated, DB&T shall promptly return all
Confidential Information to Colonial without retaining any copies thereof,
provided that such portion of the Confidential Information as consists of notes,
compilations, analyses, reports, or other documents prepared by DB&T or DB&T's
Representatives shall be destroyed.
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(c) Notwithstanding anything to the contrary in the foregoing provisions of
this Section or elsewhere in this Agreement, any party hereto (and any employee,
representative or other agent of such party) may disclose to any and all
persons, without limitation of any kind, the tax treatment and tax structure of
the Contemplated Transactions and all materials of any kind (including opinions
or other tax analyses) that are provided to any party relating to such tax
treatment and tax structure; provided, however, that any such information and
materials shall be kept confidential to the extent necessary to comply with any
applicable Legal Requirements. For purposes of the preceding sentence, the tax
treatment and tax structure of the Contemplated Transactions shall not be deemed
to include the identity of the parties, or the location of the Personal Trust
Assets. The foregoing authorization of disclosure is retroactively effective
immediately upon commencement of the first discussions among the parties (or
their agents) regarding the Contemplated Transactions, and the parties state and
affirm that this tax disclosure authorization has been given on a date which is
no later than thirty (30) days from the first day that any party (or any
employee, representative, or other agent of such party) first made or provided a
statement as to the potential federal income tax consequences that may result
from the Contemplated Transactions.
(d) Colonial agrees that after the Closing it will have the same obligation
to keep all Confidential Information as to the Personal Trust Business purchased
by DB&T hereunder in trust and confidence and it will abide by the provisions
set forth above in the stead of DB&T. DB&T shall have the reciprocal rights of
Colonial to enforce these provisions following the Closing.
Section 7.6 Publicity. Until consummation of the Closing, Colonial and DB&T
shall coordinate with each other in advance as to the content of any
communication intended for dissemination to the public and to their respective
employees which relates to the Contemplated Transactions. Except for any such
notices as required by law, neither party shall disseminate any such
communication without the prior approval of the other, which approval shall not
be unreasonably withheld or delayed. Notwithstanding the above, each of Colonial
and Heartland is hereby authorized to prepare and file its own Report on
Form 8-K with the Securities and Exchange Commissioner without further consent
of any other party hereto.
Section 7.7 Tax Reporting. The Purchase Price shall be allocated among the
Personal Trust Assets as reasonably determined by the parties and as set forth
on Schedule 7.7 hereto. Colonial and DB&T agree that any reporting of the
Purchase Price or the allocation thereof on IRS Form 8594 under Internal Revenue
Code Section 1060 and on any Tax Return or other filing with any Regulatory
Authority with respect to Taxes filing shall be consistent with the Final
Settlement Statement.
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Section 7.8 Rental of Personal Trust Space. DB&T shall have the right to
continue to occupy the present space used for Colonial's Personal Trust
Business, being approximately 2,500 square feet located at ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, for a period not to extend beyond the date that is one (1)
year after the consummation of the sale by Colonial of its corporate trust
division, pursuant to a lease agreement on commercially reasonable terms and
rental rates acceptable to DB&T and Colonial or its successor in interest and
failing such agreement at the following rates: the first two months at a monthly
rental of $3,125, the next two months at a monthly rental rate of $3,750, the
fifth and six months at a monthly rental rate of $4,375, the seventh and eighth
months at a monthly rental rate of $5,000, the ninth and tenth months at a
monthly rental rate of $5,625, and the eleventh and twelfth months at a monthly
rental rate of $6,250. Included in such right of possession and rental payments
is access to the Personal Trust officiary, access to the telephone system and
lines as is currently being provided, and usual and customary office
accommodations, including air conditioning, heat, electricity, cabling and
restrooms.
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF COLONIAL
The obligations of Colonial hereunder are subject to the satisfaction on or
before the Closing of the following conditions:
Section 8.1 Corporate Approval. The execution, delivery and performance of
this Agreement shall have been duly authorized by all necessary corporate action
of DB&T.
Section 8.2 Absence of Litigation. No Proceeding shall have been instituted
or Threatened on or before the Closing Date pertaining to the Contemplated
Transactions which, in the reasonable opinion of Colonial, would materially and
adversely affect the Contemplated Transactions.
Section 8.3 Shareholder Approvals. At least the minimum number of
outstanding shares of Colonial common stock entitled to vote shall have approved
this Agreement and the transactions described herein in accordance with
applicable Legal Requirements.
Section 8.4 Conditions Performed. All the terms, covenants and conditions
of this Agreement to be complied with and performed by DB&T on or before the
Closing shall have been duly complied with and performed in all material
respects, or Colonial shall have waived such compliance or performance, and all
documents to be delivered or actions to be taken by DB&T pursuant to
Section 10.3 shall have been delivered or performed in all material respects.
Section 8.5 Representations. All of the representations and warranties made
by DB&T herein shall be true and correct in all material respects as of the
Closing with the same force and effect as though such representations and
warranties had been made as of the Closing.
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Section 8.6 Documentation. The form and substance of all instruments of
transfer and other documents required to be delivered pursuant to this Agreement
by DB&T shall be reasonably acceptable in all respects to Colonial.
Section 8.7 Governmental Actions and Approvals. No Regulatory Authority,
including the Department of Justice or the State of Arizona, shall have issued
any Order or taken or Threatened to take any Proceeding which would or could
have the effect of preventing the consummation of the Contemplated Transactions
or asserting any liability as a result of such transactions. To the extent
required by applicable Legal Requirement, any Regulatory Authority whose
approval of the Contemplated Transactions is so required, shall have approved or
authorized all of the Contemplated Transactions and all applicable waiting
periods following such approvals shall have expired. Any such approval required
to be obtained by Colonial or DB&T shall have been granted without the
imposition of conditions that are deemed by the affected party to be materially
burdensome. No Regulatory Authority shall have instituted any Proceeding or
issued any Order to set aside, restrain, enjoin, or prohibit the Contemplated
Transactions or to assert any material liability in connection herewith, and in
the reasonable opinion of Colonial and DB&T, no such Proceeding or Order shall
be imminent.
ARTICLE 9
CONDITIONS TO OBLIGATIONS OF DB&T
The obligations of DB&T hereunder are subject to the satisfaction on or
before the Closing Date of the following conditions:
Section 9.1 Corporate Approval. The execution delivery and performance of
this Agreement shall have been duly authorized and approved by all necessary
corporate action of Colonial.
Section 9.2 Absence of Litigation. No Proceeding shall have been instituted
or Threatened on or before the Closing pertaining to the Contemplated
Transactions which, in the reasonable opinion of DB&T, would materially and
adversely affect the Contemplated Transactions.
Section 9.3 Shareholder Approvals. At least the minimum number of
outstanding shares of Colonial common stock entitled to vote shall have approved
this Agreement and the transactions described herein in accordance with
applicable Legal Requirements.
Section 9.4 Consents of Third Parties. Colonial shall have obtained all
consents of third parties, in form and substance reasonably satisfactory to
DB&T, necessary to transfer to DB&T the Personal Trust Assets and the Personal
Trust Liabilities and Colonial shall have provided to DB&T a copy of all such
consents to DB&T.
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Section 9.5 Conditions Performed. All the terms, covenants and conditions
of this Agreement to be complied with and performed by Colonial on or before the
Closing shall have been duly complied with in all material respects, or DB&T
shall have waived such compliance or performance, and all documents to be
delivered or actions to be taken by Colonial pursuant to Sections 10.2 and 10.4
shall have been delivered or performed in all material respects.
Section 9.6 Representations. All the representations and warranties made by
Colonial herein shall be true and correct in all material respects as of the
Closing with the same force and effect as though such representations and
warranties had been made as of the Closing, except that representations and
warranties made regarding the updated Schedules shall be true and correct in all
material respects as of the Closing Date.
Section 9.7 Documentation. The form and substance of all instruments of
assumption and other documents delivered pursuant to this Agreement by Colonial
shall be reasonably satisfactory in all respects to DB&T. Colonial shall have
delivered to DB&T updated Schedules as required pursuant to this Agreement.
Section 9.8 Governmental Actions and Approvals. No Regulatory Authority,
including the Department of Justice or the State of Arizona, shall have issued
any Order or taken or Threatened to take any Proceeding which would or could
have the effect of preventing the consummation of the Contemplated Transactions
or asserting any liability as a result of such transactions. To the extent
required by applicable Legal Requirements, any Regulatory Authority whose
approval of the Contemplated Transactions is so required, shall have approved or
authorized all of the Contemplated Transactions and all applicable waiting
periods following such approvals shall have expired. Any such approval required
to be obtained by Colonial or DB&T shall have been granted without the
imposition of conditions that are deemed by the affected party to be materially
burdensome. No Regulatory Authority shall have instituted any Proceeding or
issued any Order to set aside, restrain, enjoin, or prohibit the Contemplated
Transactions or to assert any material liability in connection herewith, and in
the reasonable opinion of Colonial and DB&T, no such Proceeding or Order shall
be imminent.
ARTICLE 10
THE CLOSING
Section 10.1 Time and Place of Closing. The Closing shall be on a date
agreed to by the parties hereto, and in the event the parties fail to so agree,
the Closing shall take place on the last Business Day of the calendar month in
which all of the following conditions are satisfied: (a) the receipt of the last
required regulatory approval of the Contemplated Transactions; (b) the
expiration of the last requisite waiting period; and (c) the satisfaction or
waiver in writing of all of the conditions provided for in Articles 8 and 9;
whichever is later, provided, however, in no event will the Closing occur later
than September 30, 2004, unless extended in writing by the parties. (the
"Closing Date").
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Section 10.2 Payment Due at Closing. At the Closing, DB&T shall deliver to
Colonial the Purchase Price, by one or more checks or by one or more deposits
into Colonial's account. Colonial shall prepare and deliver the Settlement
Statement to DB&T two (2) Business Days before the Closing and at the Closing.
Section 10.3 DB&T Closing Actions or Deliveries. At the Closing, DB&T
shall:
(a) deliver to Colonial a certificate of an authorized officer of DB&T,
acceptable to Colonial, dated as of the Closing Date, that the conditions to
Colonial's obligations set forth in Sections 8.1, 8.4 and 8.5 have been met and
certify as to the absence of any Proceedings as contemplated by Section 8.2;
(b) execute and deliver to Colonial an Assumption Agreement in the form
attached as Exhibit C, as assignee, with respect to the Personal Trust
Liabilities; and
(c) deliver or cause to be delivered to Colonial all other documents and
instruments necessary to transfer to DB&T all of Colonial's right, title and
interest in and to the Personal Trust Assets and the responsibility for the
Personal Trust Liabilities.
Section 10.4 Colonial Closing Actions or Deliveries. At the Closing,
Colonial shall:
(a) deliver to DB&T updated schedules as provided for herein;
(b) deliver to DB&T the Settlement Statement and exhibits thereto;
(c) execute and deliver to DB&T a ▇▇▇▇ of Sale and Assignment and
Appointment in the form attached as Exhibit D with respect to the Personal Trust
Assets;
(d) execute and deliver to DB&T the General Assignment in the form attached
as Exhibit E;
(e) deliver to DB&T a certificate of the President of Colonial, dated as of
the Closing Date, that the conditions to DB&T's obligations set forth in
Sections 9.1, 9.3, 9.5, 9.6 and 9.7 have been met and certify as to the absence
of any Proceedings as contemplated under Section 9.2 and evidencing the due
substitution of DB&T for Colonial as fiduciary under all of the Fiduciary
Accounts under applicable Legal Requirements and that no party has objected to
such substitution;
(f) deliver to DB&T an opinion of qualified Arizona counsel in the form of
Exhibit F;
(g) deliver to DB&T possession of the Personal Trust Assets;
(h) deliver or cause to be delivered to DB&T all other documents and
instruments necessary to transfer to DB&T all of Colonial's right, title and
interest in and to the Personal Trust Assets and the responsibility for the
Personal Trust Liabilities;
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(i) deliver or cause to be delivered to DB&T all Personal Trust Records;
and
(j) deliver to DB&T an executed limited power of attorney granting to DB&T
the power and authority to execute any documents or take any actions necessary
to carry on the Personal Trust Business after the Closing.
Section 10.5 Post Closing Adjustments.
(a) As soon as reasonably practicable after the Closing, but no later than
thirty (30) calendar days thereafter, Colonial shall provide DB&T with final
Schedules of Fiduciary and Agency Accounts, Personal Trust Receivables,
Equipment and Personal Property, Accrued Expenses, Prepaid Expenses, and Accrued
Fees (collectively, the "Final Schedules") that shall accurately reflect the
balance of Fiduciary and Agency Accounts, Personal Trust Receivables, Equipment
and Personal Property, Accrued Expenses, Prepaid Expenses, and Accrued Fees,
making up the Personal Trust Assets and Personal Trust Liabilities, as shown on
its financial records as of the close of business on the Closing Date. An
authorized officer acceptable to DB&T shall deliver with the Final Schedules a
certificate stating that the Final Schedules and all other final computations
are true and accurate as of the close of business on the Closing Date.
(b) DB&T shall have the right to review any and all documents (and to
interview any and all of Colonial's personnel) reasonably necessary or desirable
to confirm the accuracy of the Final Schedules.
(c) As soon as reasonably practical after the Closing, but no later than
thirty (30) calendar days thereafter, Colonial shall prepare and deliver to DB&T
a Final Settlement Statement, substantially in the form of Exhibit G which shall
show, based on the Final Schedules delivered pursuant to Section 10.5(a), the
calculation of the Final Purchase Price.
(d) The parties shall make post-closing adjustments on the date that is ten
(10) calendar days following the delivery of the Final Settlement Statement (the
"Settlement Date") or the first Business Day thereafter. If the amount shown on
the Final Settlement Statement as the "Final Purchase Price" (herein so called)
is different from the Closing Payment, then a payment shall be made in the
following manner: (x) if the Closing Payment was greater than the Final Purchase
Price, Colonial shall refund to DB&T the difference between such amounts; and
(y) if the Closing Payment was less than the Final Purchase Price, DB&T shall
pay to Colonial the difference between such amounts. Such refund or payment
shall be made promptly by wire transfer in immediately available funds, together
with interest thereon for the number of days from and including the Closing Date
to such Settlement Date, but excluding such Settlement Date, at the rate per
annum equal to the average during such period of thePhoenix average of the daily
high and low rates for federal funds on each Business Day during such period, as
such rates are published in the Southwest Edition of The Wall Street Journal,
computed on the basis of a 365-day year. Payments sent after 3:00 p.m., Phoenix,
Arizona, time on the Settlement Date shall be deemed to have been paid on the
next Business Day, and the remittance shall bear interest, as calculated
pursuant to this section, for such extra day or days.
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ARTICLE 11
TRANSFER OF OPERATIONS
Section 11.1 Post Closing Mail. If Colonial receives after the Closing a
payment or other mail with respect to the Personal Trust Assets or Liabilities
transferred to DB&T, it shall notify DB&T within one (1) Business Day of receipt
thereof at the address DB&T may from time to time designate, and thereafter it
shall be DB&T's responsibility to retrieve such payment or mail or otherwise
provide at DB&T's expense for delivery of the same to DB&T. Colonial agrees to
use its Best Efforts to cooperate with DB&T to establish efficient arrangements
to accomplish the foregoing. Legal process received in regard to such Personal
Trust Assets shall not be forwarded, although copies of the same shall be
forwarded if not prohibited by law.
Section 11.2 Taxpayer Information. Colonial shall deliver (or cause to be
delivered) to DB&T at the Closing all information in Colonial's possession or
reasonably available to Colonial required by applicable Legal Requirements to be
provided to the IRS and/or account holders with respect to the Personal Trust
Assets and Personal Trust Liabilities transferred. Colonial hereby certifies
that such information, when delivered, shall accurately reflect in all material
respects the information provided by Colonial's customers.
Section 11.3 Receivable Payments. Colonial shall forward to DB&T, within
two (2) Business Days of receipt thereof, receivable payments received by
Colonial with respect to the Personal Trust Receivables assigned to DB&T
pursuant to this Agreement. DB&T shall forward to Colonial, within two (2)
Business Days of receipt thereof, receivable payments received by DB&T with
respect to any Personal Trust Receivables not assigned to DB&T pursuant to this
Agreement.
ARTICLE 12
TERMINATION
Section 12.1 Events of Termination. This Agreement shall be terminable and,
if so terminated, be of no further force or effect between the parties hereto,
except as to any liability for breach of any duty, representation, warranty or
obligation arising prior to the date of termination, upon the occurrence of any
of the following events:
(a) by mutual written consent of Colonial and DB&T;
(b) by Colonial, if any of the conditions set forth in Article 8 has not
been met by September 30, 2004;
(c) by DB&T, if any of the conditions set forth in Article 9 has not been
met by September 30, 2004;
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(d) by either party if: (i) a representation or warranty of the other party
is or becomes false or inaccurate; or (ii) if the other party fails to comply
with a covenant in a timely manner, provided that in the case of either
clause (i) or (ii), such breach is material to the value or condition of the
Personal Trust Business, the Personal Trust Assets or the Personal Trust
Liabilities or such breach has a material impact on the other party's ability to
consummate the Contemplated Transactions, and, in the case of clause (ii), such
failure (provided it can be cured) has not been cured within thirty (30) days of
actual knowledge thereof by the breaching party; provided, however, that
termination pursuant to this Section 12.1(d) shall not relieve the breaching
party of liability for such breach or otherwise; or
(e) by either party, if any Regulatory Authority having jurisdiction over
the Contemplated Transactions notifies DB&T or Colonial in writing that by its
final determination it will refuse to grant an approval or consent to any
material element of the transaction necessary to the consummation thereof or if
such approval or consent contains terms or conditions that either DB&T or
Colonial reasonably determines is unduly burdensome to it.
(f) by Colonial or DB&T if Colonial has not received the Fairness Opinion
by June 30, 2004.
Section 12.2 Manner of Termination. Notwithstanding anything to the
contrary herein contained, neither party hereto shall have the right to
terminate this Agreement on account of its own breach or any immaterial breach
by the other party hereto. If a party hereto desires to terminate this Agreement
pursuant to any right under this Article, such termination shall be ineffective
unless communicated in writing to the other party.
Section 12.3 Effect of Termination. Except as provided in this Article, in
Article 13, and in Sections 7.5, 7.6, and 14.8, if this Agreement is terminated
pursuant to Section 12.1, this Agreement shall forthwith become void, there
shall be no liability under this Agreement on the part of Heartland, DB&T,
Colonial or any of their respective officers, directors, shareholders and
representatives, and all rights and obligations of each party hereto shall
cease; provided, however, that, subject to the provisions of this Article,
nothing herein shall relieve any party from liability for the breach of any of
its covenants or agreements set forth in this Agreement.
Section 12.4 Expenses. Except as provided below, all Expenses (as defined
below) incurred in connection with this Agreement and the Contemplated
Transactions shall be paid by the party incurring such expenses, whether or not
the Contemplated Transactions are consummated. "Expenses" as used in this
Agreement shall consist of all out-of-pocket expenses (including all fees and
expenses of counsel, accountants, experts and consultants to a party hereto and
its Affiliates) incurred by a party or on its behalf in connection with, related
to or in preparation for: (a) the authorization, negotiation, execution and
performance of this Agreement; (b) the operation of the Personal Trust Business;
(c) the solicitation of shareholder approvals; and (d) all other matters related
to the consummation of the Contemplated Transactions.
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Section 12.5 Colonial Termination Payments.
(a) If this Agreement is terminated by:
(i) DB&T because: (A) Colonial committed a breach of its covenants or
agreements under this Agreement (but not a breach of its
representations or warranties); or (B) there is a breach of Colonial's
representations or warranties as of the date of this Agreement, unless,
in either case, such breach is a result of the failure by Heartland or
DB&T to perform and comply in all material respects with any of its
respective material obligations under this Agreement which are to be
performed or complied with by either of them prior to or on the date
required hereunder, or such breach or breaches would not individually
or in the aggregate be reasonably expected to have a material adverse
effect on the benefits of the Contemplated Transactions to DB&T (in
each case described in clauses (A) or (B), a "Colonial Breach
Termination"); or
(ii) DB&T or Colonial because: (A) Colonial did not receive the
Fairness Opinion by no later than June 30, 2004; or (B) Colonial's
shareholders failed to approve the Contemplated Transactions and this
Agreement on or before September 30, 2004 (in each case described in
clauses (A) or (B), a "Colonial Shareholder Termination");
and provided in the case of both clauses (i) and (ii), Heartland and DB&T are in
material compliance with all of their respective material obligations under this
Agreement, then: (x) in the event of a Colonial Breach Termination, Colonial
shall pay to Heartland, upon its written demand, an amount equal to the sum of
Heartland's Expenses, but not in excess of One Hundred Thousand
Dollars ($100,000), plus an amount equal to Two Hundred Thousand
Dollars ($200,000); or (y) in the event of a Colonial Shareholder Termination,
Colonial shall pay to Heartland, upon its written demand, an amount equal to the
sum of Heartland's Expenses, but not in excess of One Hundred Thousand
Dollars ($100,000).
(b) In addition to any payments described in Section 12.5(a), if there is a
Colonial Shareholder Termination, and within eighteen (18) months after such
termination of this Agreement Colonial enters into a Contract with any party
other than Heartland providing for the acquisition of "control of Colonial or
the Personal Trust Business" by such other party, then Colonial shall pay to
Heartland, upon its written demand, the additional sum of Two Hundred Thousand
Dollars ($200,000).
(c) For purposes of this Section, the phrase "control of Colonial or the
Personal Trust Business" means the acquisition by any Person or group of Persons
acting in concert of: (i) legal or beneficial ownership (as defined by
Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of
greater than thirty-five percent (35%) of the then issued and outstanding voting
stock of Colonial through any transaction; or (y) all or any part of the
Personal Trust Business; provided, however, that in no event shall it mean the
sale by Colonial of its corporate trust division.
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(d) The sums payable by Colonial under this Section 12.5 shall constitute
liquidated damages and Heartland's receipt thereof shall be Heartland's sole and
exclusive remedy under this Agreement against Colonial if the Closing does not
occur for all breaches of this Agreement by Colonial or the failure by its
shareholders to approve this Agreement, provided, however, that the provisions
of this Section shall in no way limit Heartland's rights against any third
party.
Section 12.6 Heartland Termination Payments. If this Agreement is
terminated by Colonial because:
(a) Heartland or DB&T committed a breach of its respective covenants or
agreements under this Agreement (but not a breach of its respective
representations or warranties); or
(b) there is a breach of the representations or warranties of Heartland or
DB&T as of the date of this Agreement;
unless, in either case, such breach is a result of the failure by Colonial to
perform and comply in all material respects with any of its material obligations
under this Agreement which are to be performed or complied with by it prior to
or on the date required hereunder, or such breach or breaches would not
individually or in the aggregate be reasonably expected to have a material
adverse effect on the benefits of the Contemplated Transactions to Colonial, and
provided that Colonial is in material compliance with all of its material
obligations under this Agreement, DB&T shall pay to Colonial, upon its written
demand, an amount equal to the sum of Colonial's Expenses, but not in excess of
One Hundred Thousand Dollars ($100,000), plus an amount equal to Two Hundred
Thousand Dollars ($200,000). The sums payable by DB&T under this Section 12.6
shall constitute liquidated damages and Colonial's receipt thereof shall be
Colonial's sole and exclusive remedy under this Agreement if the Closing does
not occur for all breaches of this Agreement by Heartland.
ARTICLE 13
INDEMNIFICATION
Section 13.1 Indemnification by DB&T. DB&T agrees, effective as of the
Closing, to pay, and to indemnify, save, defend and hold harmless Colonial and
its officers, directors, shareholders and representatives and their respective
heirs, successors and assigns (collectively, the "Colonial Insiders"), from and
against, and shall reimburse the Colonial Insiders with respect to, any and all
Losses, imposed on, incurred by or asserted against the Colonial Insiders (or
any of them) in any way relating to or arising from or out of:
(a) a material breach of or in any statement, representation or warranty of
DB&T contained in this Agreement, or any schedule, certificate or other document
delivered pursuant hereto or as part of the Contemplated Transactions the result
of which, either separately or in the aggregate, causes any of the Colonial
Insiders damage in an amount equal to or in excess of $25,000;
(b) any Proceedings of any nature or kind based on actions or omissions of
the DB&T Insiders (as defined below) occurring after the Closing;
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(c) any liability arising out of the operation or administration by the
DB&T Insiders of the Personal Trust Assets or the Personal Trust Business after
the Closing other than: (i) any liabilities of Colonial related to the Personal
Trust Business which are not expressly assumed by DB&T pursuant to this
Agreement; (ii) liabilities arising out of the conduct of the Personal Trust
Business by the Colonial Insiders prior to the Closing; or (iii) any liability
arising out of a breach of duty prior to the Closing by the Colonial Insiders as
the same relates to a Fiduciary Account or Agency Account;
(d) any liability arising out of a breach of duty occurring after the
Closing by the DB&T Insiders as the same relates to a Fiduciary Account or
Agency Account; and
(e) a breach of any covenant of DB&T or the failure of DB&T to perform any
agreement, covenant or obligation of DB&T contained in this Agreement or
document executed pursuant to this Agreement.
Section 13.2 Indemnification by Colonial. Colonial agrees, effective as of
the Closing, to pay, and to indemnify, save, defend and hold harmless DB&T and
its officers, directors, shareholders and representatives and their respective
heirs, successors and assigns (collectively, the "DB&T Insiders"), from and
against, and shall reimburse the DB&T Insiders with respect to, any and all
Losses, imposed on, incurred by or asserted against the DB&T Insiders (or any of
them) in any way relating to or arising from or out of:
(a) a material breach of or in any statement, representation or warranty of
Colonial contained in this Agreement, or any schedule, certificate or other
document delivered pursuant hereto or as part of the Contemplated Transactions
the result of which, either separately or in the aggregate, causes the DB&T
Insiders damage in an amount equal to or in excess of $25,000;
(b) any Proceedings of any nature or kind based on actions or omissions by
the Colonial Insiders occurring, or circumstances existing, at or prior to the
Closing;
(c) any liability related to the Personal Trust Business other than:
(i) the Personal Trust Liabilities expressly assumed by DB&T pursuant to this
Agreement; (ii) liabilities arising out of the conduct of the Personal Trust
Business by the DB&T Insiders after the Closing Date; or (iii) any liability
arising out of a breach of duty prior to the Closing by the DB&T Insiders as the
same relates to a Fiduciary Account or Agency Account;
(d) any liability arising out of the operation or administration by the
Colonial Insiders of the Personal Trust Assets or the Personal Trust Business on
or prior to the Closing;
(e) any liability arising out of a breach of duty occurring on or before
the Closing by the Colonial Insiders as the same relates to a Fiduciary Account
or Agency Account; and
(f) a breach of any covenant of Colonial or the failure of Colonial to
perform any agreement, covenant or obligation of Colonial contained in this
Agreement or in any other agreement or document executed pursuant to this
Agreement.
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Section 13.3 Procedure for Indemnification.
(a) Promptly, or in any event within ten (10) calendar days (in the case of
service of legal process) or within thirty (30) calendar days (in the case of
any other claim), following receipt by any party to be indemnified under the
provisions of this Article (the "Indemnitee") of notice of any Proceeding,
claim, demand or assessment (each, an "Action") against the Indemnitee that
might give rise to a claim pursuant to Sections 13.1 or 13.2, the Indemnitee
shall give written notice thereof to the party obligated to provide such
indemnification under the provisions of this Article (the "Indemnitor")
indicating the nature of such claim, the basis therefore and the estimated
amount thereof. Failure to give any notice provided hereunder shall in no way be
deemed a forfeiture of any Indemnitee's rights to be indemnified hereunder;
provided, however, if the Indemnitor shall have been prejudiced in any material
respect by such failure so to notify the Indemnitor, the Indemnitor shall have
the right to set-off against any amounts payable or that become payable by the
Indemnitor under this Agreement the amount by which the Indemnitor has been
damaged as a result of such failure to notify the Indemnitor. A claim for
indemnity may, at the option of the Indemnitee, be asserted as soon as any claim
has been asserted by a third party in writing, regardless of whether actual harm
has been suffered or out-of-pocket expenses incurred.
(b) At any time after the Indemnitee gives notice to the Indemnitor of a
claim being made against the Indemnitee for which a claim for indemnity is being
asserted, to the extent that such claim is not being defended by any third party
under the terms of any applicable insurance policy or policies, the Indemnitee
shall permit the Indemnitor, at the option and expense of the Indemnitor, to
assume the complete defense of such Action with full authority to conduct such
defense and to settle or otherwise dispose of the same (except as hereinafter
provided), and the Indemnitee will reasonably cooperate in such defense. To
assume such defense, Indemnitor must notify Indemnitee in writing of its
election to do so within ten (10) calendar days following receipt of notice of
the claim from Indemnitee; if Indemnitor does not so notify Indemnitee within
such ten (10) calendar day period, Indemnitor shall be deemed to have elected
not to assume such defense. After notice to the Indemnitee of the Indemnitor's
election to assume the defense of such Action as provided above, the Indemnitor
shall be liable to the Indemnitee for such legal or other expenses subsequently
incurred at the request of the Indemnitor by the Indemnitee in connection with
the defense thereof.
(c) The Indemnitor will not, in defense of any such Action, except with the
consent of the Indemnitee, which consent will not be unreasonably withheld,
consent to the entry of any judgment or enter into any settlement that does not
include, as an unconditional term thereof, the release by claimant or plaintiff
of Indemnitee from all claims and/or liability in respect thereof.
(d) As to those Actions with respect to which the Indemnitor does not elect
to assume control of the defense: (i) the Indemnitee will afford the Indemnitor
an opportunity to participate in such defense, at the Indemnitor's own cost and
expense; (ii) the Indemnitee will not settle or otherwise dispose of any of the
same without the consent of the Indemnitor, which consent will not be
unreasonably withheld; and (iii) the Indemnitor agrees to reasonably cooperate
in such defense.
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(e) The Indemnitor shall make payments to the Indemnitee, pursuant to the
provisions hereof, with respect to Actions of third parties as follows: with
respect to out-of-pocket expenses of the Indemnitee, on demand as incurred, and,
with respect to amounts and fees owed to third parties, to the extent not paid
directly to such third parties by the Indemnitor, on demand at the time of
payment by the Indemnitee to such third party.
(f) The liability of the Indemnitor hereunder shall be subject to the
following limitations:
(i) subject to the provisions of Section 13.3(e) with respect to
out-of-pocket expenses of Indemnitee, the Indemnitor shall pay claims
hereunder when a claim against the Indemnitee or its Insiders has been
established by a final judgment in litigation with a third party in
which the Indemnitor has assumed the defense, or by a settlement with a
third party consented to in writing by the Indemnitee; payment of other
claims as to which the Indemnitee may contest its liability, or claims
not involving third parties, shall be made when the dispute is settled
either by litigation or consent; and
(ii) payments for amounts due the Indemnitee or its Insiders hereunder
shall be paid by either cash or cashier's check.
Section 13.4 Exclusive Right. If the Closing occurs, the indemnification
rights of Colonial, the Colonial Insiders, Heartland, DB&T and the DB&T Insiders
as set forth in this Article shall be the exclusive remedy of such parties for
any Losses relating to, or resulting from or arising out of this Agreement or
the Contemplated Transactions. The parties hereto acknowledge that Colonial
intends to cease operations after the Closing and distribute the proceeds from
the Contemplated Transactions and remaining assets of Colonial to its
shareholders as soon as possible after the Closing Date. The indemnification
rights created by this Article shall not prohibit Colonial from such intended
dissolution.
ARTICLE 14
MISCELLANEOUS
Section 14.1 Survival. Except as otherwise provided in this Section, and
except to the extent an earlier or later expiration date is otherwise expressly
provided for in this Agreement, the representations and warranties of each party
set forth herein shall survive the Closing for a period of one (1) year, and
shall survive any investigation by the other party. The parties hereto will have
no liability after such one (1) year period for any breach of any covenants,
agreements, representations and warranties set forth herein. Notwithstanding the
foregoing provisions of this Section, any claim in respect of which indemnity
may be sought under Article 13 shall survive the time it would otherwise
terminate under this Section if notice of the claim, inaccuracy or breach giving
rise to such right to indemnify shall have been given to the party against whom
such indemnity may be sought prior to such time.
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Section 14.2 Notices. All notices, consents, waivers and other
communications under this Agreement must be in writing (which shall include
telecopier communication) and will be deemed to have been duly given if
delivered by hand or by nationally recognized overnight delivery service
(receipt requested), mailed by registered or certified U.S. mail (return receipt
requested) postage prepaid or telecopied, if confirmed immediately thereafter by
also mailing a copy of any notice, request or other communication by U.S. mail
as provided in this Section:
If to Heartland or DB&T, to:
Dubuque Bank and Trust Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President Trust and Investments
with copies to:
Barack ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
If to Colonial, to:
Colonial Trust Company
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
President
with copies to:
Burdett, Morgan, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq.
or to such other Person or place as Colonial shall furnish to DB&T or DB&T shall
furnish to Colonial in writing. Except as otherwise provided herein, all such
notices, consents, waivers and other communications shall be effective: (a) if
delivered by hand, when delivered; (b) if mailed in the manner provided in this
Section, five (5) Business Days after deposit with the United States Postal
Service; (c) if delivered by overnight express delivery service, on the next
Business Day after deposit with such service; and (d) if by telecopier, on the
next Business Day if also confirmed by mail in the manner provided in this
Section.
40
Section 14.3 Entire Agreement, Modifications, Waivers. This Agreement,
including any exhibits and schedules hereto, constitutes the entire
understanding between the parties hereto pertaining to the subject matter hereof
and supersedes all prior agreements and understandings of the parties, whether
oral or written, in connection therewith. No modification of this Agreement
shall be binding unless executed in writing by the parties hereto. No waiver of
any provision of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
Section 14.4 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective transferees,
successors and assigns, but rights under this Agreement may not be assigned and
duties hereunder may not be delegated by either party without the written
consent of the other, and any such assignment or delegation shall be void and of
no force or effect.
Section 14.5 Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
Section 14.6 Governing Law; Jurisdiction; Venue. All questions concerning
the construction, validity and interpretation of this Agreement and the
performance of the obligations imposed by this Agreement shall be governed by
the internal laws of the State of Iowa applicable to Contracts made and wholly
to be performed in such state without regard to conflicts of laws. Any
Proceeding seeking to enforce, challenge or avoid any provision of, or based on
any right arising out of, this Agreement shall be brought only in the courts of
the State of Iowa, County of Dubuque or, if it has or can acquire jurisdiction,
in the United States District Court serving the County of Dubuque, and each of
the parties consents to the exclusive jurisdiction of such courts (and of the
appropriate appellate courts) in any such Proceeding and waives any objection to
jurisdiction or venue laid therein. Process in any Proceeding referred to in the
preceding sentence may be served on any party anywhere in the world.
Section 14.7 Attorneys' Fees. If any action at law or in equity, including
an action for declaratory relief, is brought to enforce or interpret the
provisions of this Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees from the other party, which fees shall be in addition
to any other relief which may be awarded.
Section 14.8 Severability. If any provision of this Agreement or the
application of any such provision to any Person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such provision shall be severed from this Agreement, and this
Agreement shall continue in full force and effect without said provision;
provided, that no such severance shall be effective if it materially changes the
economic benefit of this Agreement to either party.
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In Witness Whereof, the parties hereto have caused this Agreement to be
executed by their respective officers on the day and year first written above.
Colonial Trust Company Heartland Financial USA, Inc.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇
President Chairman, President and
Chief Executive Officer
Dubuque Bank and Trust Company
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
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Exhibit A
Form of Settlement Statement
This Settlement Statement is provided pursuant to the terms of that certain
Purchase and Assumption Agreement dated as of _________, 2004 (the "Agreement"),
between Colonial Trust Company, an Arizona trust company, and Dubuque Bank and
Trust Company, an Iowa banking association, and joined in by Heartland Financial
USA, Inc., a Delaware corporation. Unless otherwise defined, all capitalized
terms used in this Settlement Statement shall have the meanings attributed to
them in the Agreement.
Calculation of Purchase Price
Annual recurring fees during the last twelve months
ending on the last day of the month immediately
preceding the month in which the Closing occurs,
attributable to Fiduciary and Agency Accounts in
existence on January 20, 2004 $_______
Multiplied by 1.88 x 1.88
Purchase Price for January 20, 2004 Accounts $_______
Plus Estimated annual recurring fees attributable
to Fiduciary and Agency Accounts that have come into
existence after January 20, 2004 $_______
Plus book value of Personal Trust Assets identified
in Sections 2.1(f), (g), (h) and (i) $_______
Total Purchase Price $_______
