ASSET PURCHASE AGREEMENT

Exhibit 10.1

ASSET PURCHASE AGREEMENT

BETWEEN

COLONIAL BANK,

GLOBAL CONSUMER ACQUISITION CORP.

AND

THE COLONIAL BANCGROUP, INC.

DATED: July 13, 2009

TABLE OF CONTENTS

 

 

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ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (the “ Agreement ”) is entered into as of July 13, 2009, by and between Colonial Bank, an Alabama banking corporation having its principal offices in Montgomery, Alabama (“ Seller ”), Global Consumer Acquisition Corp., a Delaware corporation having its principal offices in New York, New York (together with a to-be-acquired Nevada state chartered bank as assignee pursuant to Section 12.1(b), the “ Purchaser ”) and, for purposes of Section 8.6 hereof, The Colonial BancGroup, Inc., a Delaware corporation having its principal offices in Montgomery, Alabama (“ BancGroup ”).

Recitals

A. Seller wishes to divest itself of certain specified assets, deposits, and other specified liabilities in connection with Seller’s retail and corporate branch banking business referred to as the Nevada Franchise.

B. Purchaser wishes to form or acquire a bank to purchase such specified assets and assume such specified liabilities upon the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and mutual agreements hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, Seller and Purchaser agree as follows:

Article I.

DEFINITIONS AND RULES OF CONSTRUCTION

Section 1.1 DEFINITIONS.

The terms set forth below are used in this Agreement with the following meanings:

“ ACH ” shall have the meaning set forth in Section 4.3.

“ Acquisition Value ” shall have the meaning set forth in Section 2.2(c).

“ Adjustment Payment Date ” shall have the meaning set forth in Section 3.3(c).

“ Affiliate ” shall mean, with respect to any Person, any other Person directly or indirectly controlled by, controlling or under common control with such Person. For purposes of the definition of Affiliate, the term “control” (including the terms “controlled by,” “controlling” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.

“ Assigned Loans ” shall have the meaning set forth in Section 2.1(a)(6).

“ Assignment and Assumption Agreement ” shall have the meaning set forth in Section 3.2(b)(3).

 

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“ Assignment and Assumption of Leases ” shall have the meaning set forth in Section 3.2(b)(4).

“ Assumed Contracts ” shall have the meaning set forth in Section 2.10.

“ ATM ” shall refer to an automatic teller machine.

“ BancGroup ” shall have the meaning as set forth in the introductory paragraph of this Agreement.

“ Banking Operations ” shall mean the business and operations of the Nevada Franchise.

“ Benefit Plans ” shall have the meaning set forth in Section 6.8(d).

“ Branch Leases ” shall have the meaning set forth in Section 2.1(a)(2).

“ Branches ” shall have the meaning set forth in Section 2.1(a)(2).

“ Business Day ” shall mean any day other than a Saturday, a Sunday or a day on which banks in Alabama, Nevada, or New York are authorized or required to close for regular banking business.

“ Closing ” shall have the meaning set forth in Section 3.1(a).

“ Closing Date ” shall have the meaning set forth in Section 3.1(b).

“ Closing Date Payment Amount ” shall have the meaning set forth in Section 2.2(a).

“ Closing Statement ” shall have the meaning set forth in Section 3.2(b)(8).

“ COBRA ” shall mean the continuation coverage requirements of §§601 et seq. of ERISA and §4980B of the Code.

“ Code ” shall mean the Internal Revenue Code of 1986, as amended.

“ Coins and Currency ” shall mean all petty cash, foreign currency, vault cash, teller cash, ATM cash, prepaid postage and cash equivalents located at the Owned Real Property and Leased Premises (exclusive of the contents of any safe deposit boxes) as of the Effective Time.

“ Colonial Plaza ” shall mean the parcel of real property with an address of 4670 S. Fort Apache Road, Suite 250, and 4730 S. Fort Apache Road, Suite 200, Las Vegas, Nevada 89147 leased by Seller pursuant to the Office Lease, dated March 2001, between Fort Apache Office Partners, LLC and Seller, as successor by conversion to Colonial Bank, N.A., as amended, on which the Colonial Plaza bank branch is currently located.

“ Comparable Job Offer ” shall have the meaning set forth in Section 2.5(a).

“ Confidentiality Agreement ” shall mean the Confidentiality Agreement between Seller and Purchaser dated as of April 24, 2009.

 

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“ Covered Employee ” shall have the meaning set forth in Section 2.5(a).

“ CRA ” shall mean the Community Reinvestment Act of 1977 and the regulations promulgated thereunder.

“ Credit Card Accounts ” shall have the meaning set forth in Section 2.1(c)(10).

“ Credit Card Limit Guaranty ” shall have the meaning set forth in Section 2.1(c)(10).

“ D’Andrea Ground Leased Property ” shall mean the parcel of real property with an address of 2818 Vista Boulevard, Sparks, Nevada 89434 leased by Seller pursuant to the Excess Lease, dated April 6, 2007, by and between McDonald’s USA, LLC and Seller, as successor by conversion to Colonial Bank, N.A., as amended, on which the D’Andrea bank branch is currently located.

“ Deductible Amount ” shall have the meaning set forth in Section 5.4(a).

“ Defect Reduction Amount ” shall have the meaning set forth in Section 2.13.

“ Deposits ” shall have the meaning set forth in Section 2.3(a).

“ Deposit Liabilities ” shall have the meaning set forth in Section 2.3(a).

“ DGCL ” means the General Corporation Law of the State of Delaware.

“ Easement Area ” shall have the meaning set forth Section 9.11.

“ Effective Time ” shall have the meaning set forth in Section 3.1(b).

“ Employees ” shall have the meaning set forth in Section 6.8(c).

“ Employee on Leave ” shall have the meaning set forth in Section 2.5(a).

“ Environmental Law ” shall mean any federal, state, local or common law, statute, rule, regulation, ordinance, code, order or judgment (including any judicial or administrative interpretations, guidance, directives, policy statement or opinions) relating to the injury to, or the pollution or protection of the environment (including, without limitation, any indoor area, surface or medium) or human health and safety.

“ Environmental Liabilities ” shall mean any and all claims, judgments, suits, obligations (including, investigation, remediation, reporting, monitoring, corrective action, decommissioning and closure activities), proceedings, damages (including punitive and consequential damages), losses, fines, penalties liabilities, encumbrances, liens, violations, costs and expenses (including, attorneys and consultants fees), (a) which are incurred in connection with or as a result of (i) the existence or alleged existence of Hazardous Substances in, on, under, at or emanating from any Owned Real Property, Leased Premises or Nevada Franchise, (ii) the actual or alleged offsite transportation, treatment, storage or disposal of Hazardous Substances generated by the Seller or its Nevada Franchise or (iii) the violation or alleged violation of any Environmental Laws or (b) which arise under the Environmental Laws.

 

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“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended.

“ ERISA Affiliate ” means any entity required to be aggregated in a controlled group or affiliated service group with Seller for purposes of ERISA or the Code (including under Section 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA), at any relevant time.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ Excluded Assets ” shall have the meaning set forth in Section 2.1(b).

“ Excluded Employee ” shall mean any employee of Seller or its Affiliates listed on Schedule 2.5(a)(iii).

“ Excluded Liabilities ” shall have the meaning set forth in Section 2.1(d).

“ Excluded IRA Account Deposits ” shall have the meaning set forth in Section 2.11(b).

“ Fallon ATM Location ” shall mean the parcel of real property with an address of 925 West Williams Avenue, Fallon, Nevada 89406 leased by Seller pursuant to the Tenant Lease, dated February 1, 2005, by and between Depotland, LLC and Seller, as successor by conversion to Colonial Bank, N.A., on which the Fallon ATM is currently located.

“ FDIC ” means the Federal Deposit Insurance Corporation.

“ Federal Funds Rate ” shall mean the average of the high and low rates quoted for Federal Funds in the Money Rates column of The Wall Street Journal from the Effective Time adjusted as such average may increase or decrease during the period between the Effective Time and the date of the applicable payment.

“ Federal Reserve Board ” shall have the meaning set forth in Section 8.2(b).

“ Financial Statements ” means (i) the audited “carve out” income statement, balance sheet and statement of cash flows of the Nevada Franchise for each of the years ended December 31, 2008 and 2007 prepared in a manner consistent with the SEC Staff Accounting Bulletin Topic 1.B. and with a presentation that complies with Article Nine of Regulation S-X, promulgated by the Exchange Act, as amended from time to time (“ Regulation S-X ”), (ii) the unaudited “carve out” income statement, balance sheet and statement of cash flows for the Nevada Franchise for each of the three months ended March 31, 2009 and 2008 or the interim period required by Rule 3-12 of Regulation S-X, (iii) Management’s Discussion and Analysis of Financial Condition and Results of Operations as required by Item 303 of Regulation S-K promulgated by the Exchange Act, as amended from time to time (“ Regulation S-K ”) for each of the years ended December 31, 2008 and 2007 and the three months ended March 31, 2009 and 2008, and (iv) the supplemental data regarding the Nevada Franchise as set forth in Securities Act Industry Guide No. 3 promulgated by the SEC.

 

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“ GAAP ” means generally accepted accounting principles in the United States.

“ Governmental Authority ” shall mean any government or any agency, bureau, board, commission, court, department, official, political subdivision, tribunal or other instrumentality of any government having authority in the United States, whether federal, state or local.

“ Ground Leased Property ” shall have the meaning set forth in Section 2.8(a).

“ Guaranty Release ” shall have the meaning set forth in Section 10.7.

“ Hazardous Substance ” shall mean any substance, chemical, material, waste, pollutant or contaminant which is regulated under applicable Environmental Law.

“ HSR Act ” shall have the meaning set forth in Section 8.2(e).

“ Improvements ” shall have the meaning set forth in Section 9.11.

“ IPO ” shall have the meaning set forth in Section 6.22.

“ IRA ” means an “individual retirement account” or similar account created by a trust for the benefit of any individual or his beneficiaries in accordance with the provisions of §408 of the Code.

“ IRS ” means the U.S. Internal Revenue Service.

“ Key Employee ” shall have the meaning set forth in Section 6.22.

“ Knowledge ” shall mean, with respect to Seller, the actual knowledge of the Persons set forth on Annex A and, with respect to Purchaser, the actual knowledge of the Persons set forth on Annex B, in all cases after reasonable investigation.

“ Leased Branches ” shall have the meaning set forth in Section 2.1(a)(2).

“ Leased Premises ” shall have the meaning set forth in Section 2.1(a)(2).

“ Liens ” shall have the meaning set forth in Section 6.5.

“ Loan Policy ” means the loan policy of Seller set forth on Schedule 2.1(b)(7).

“ Loans ” shall have the meaning set forth in Section 2.4(a).

“ Losses ” shall mean losses, liabilities, damages, costs and expenses (including reasonable attorneys fees) incurred or suffered by the indemnified party or its Affiliates, net of any amounts actually recovered by the indemnified party under insurance policies (other than any self-insurance) with respect to such Loss, and (i) increased to take account of any net tax cost (other than a reduction in tax basis) incurred by the indemnified party arising from the receipt of indemnity payments hereunder, and (ii) reduced to take account of any net tax benefit actually recognized for tax purposes by the indemnified party arising from the incurrence or payment of any such Loss, in each case when and as such tax cost or tax benefit is actually recognized for tax purposes through an increase or reduction of taxes otherwise due.

 

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“ Net Book Value ” shall mean, as of the Closing Date, (i) with respect to the Owned Real Property, the Leased Premises and the Other Liabilities, the value of those assets and/or liabilities as carried on Seller’s books and records based on Seller’s internal accounting procedures in accordance with GAAP, consistently applied, (ii) with respect to the Assigned Loans, the aggregate outstanding principal amount thereof, plus accrued and unpaid interest, late charges and any other charges thereon, net of reserves equal to 1.5% of the aggregate outstanding principal amount thereof and charge-offs and (iii) with respect to Overdrafts, the aggregate outstanding principal amount thereof (and not including any interest, late charges or other charges thereon), provided that the Net Book Value for any Overdraft that has been outstanding for 55 days or more as of the Closing Date shall be $0.

“ Nevada FID ” means the Division of Financial Institutions of the Nevada Department of Business and Industry.

“ Nevada Franchise ” shall mean Seller’s retail and corporate branch banking business operated at the Owned Real Property and the Leased Premises.

“ Non-Accrual Loans ” shall mean loans and other extensions of credit classified on the books and records of Seller as in “non-accrual status” in accordance with the Loan Policy, consistently applied.

“ Non-Performing Loans ” shall mean loans and other extensions of credit classified on the books and records of Seller as “non-performing” in accordance with the Loan Policy, consistently applied.

“ Non-Time Deposits ” shall mean Deposits excluding Time Deposits.

“ Non-Time Deposit Premium ” shall mean $28,000,000, adjusted by either (a) adding 9  ¹ / 3 % of the amount by which the deposit balances of Non-Time Deposits included in Transferred Assets exceeds $310,000,000 or (b) subtracting 9  ¹ / 3 % of the amount by which the deposit balances of Non-Time Deposits included in Transferred Assets is less than $290,000,000. For purposes of clarification, if the deposit balances of Non-Time Deposits included in Transferred Assets is between $290,000,000 and $310,000,000 (inclusive), the Non-Time Deposit Premium shall be $28,000,000.

“ Non-Transferred Records ” shall have the meaning set forth in Section 2.12(a).

“ Occupancy Agreements ” shall have the meaning set forth in Section 6.6(c).

“ Order ” shall have the meaning set forth in Section 9.4.

“ ORE Property ” shall mean real property owned by Seller that was acquired by reason of a defaulted loan (or under similar circumstances) and is not currently used in the Banking Operations.

 

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“ Other Facilities ” shall have the meaning set forth in Section 2.1(a)(2).

“ Other Facility Leases ” shall have the meaning set forth in Section 2.1(a)(2).

“ Other Filings ” shall have the meaning set forth in Section 8.16(a).

“ Other Liabilities ” shall mean the liabilities of Seller relating to the Transferred Assets set forth on Schedule 1.2 hereto.

“ Overdrafts ” shall mean overdrafts of the book balance of any accounts constituting Deposit Liabilities.

“ Owned Branch ” shall have the meaning set forth in Section 2.1(a)(1).

“ Owned Real Property ” shall have the meaning set forth in Section 2.1(a)(1).

“ Participation Agreement (Pari Passu) ” shall have the meaning set forth in Section 3.2(b)(14).

“ Participation Agreement (LIFO) ” shall have the meaning set forth in Section 3.2(b)(15).

“ Permitted Encumbrances ” shall have the meaning set forth in Section 2.8(a).

“ Person ” shall mean any individual, association, corporation, limited liability company, partnership, limited liability partnership, trust or any other entity or organization, including any Governmental Authority.

“ Personal Property ” shall mean all furniture, fixtures, equipment, ATMs, security systems, safe deposit boxes (exclusive of contents), vaults and other tangible personal property that are owned, used or held for use by Seller in the conduct of the Nevada Franchise, in each case as of the Effective Time, and any of such items on order at the Effective Time, including, without limitation, all remote branch capture equipment and all personal computers and laptops.

“ Personal Property Leases ” shall mean all leases of Personal Property.

“ Pipe-Line Loans ” shall have the meaning set forth in Section 2.4(b).

“ Post-Closing Balance Sheet ” shall have the meaning set forth in Section 3.3(a).

“ Post-Closing Balance Sheet Delivery Date ” shall have the meaning set forth in Section 3.3(a).

“ Post-Closing Services ” shall have the meaning set forth in Section 8.23.

“ Pre-Closing Balance Sheet ” shall have the meaning set forth in Section 2.2(b).

“ Press Release ” shall have the meaning set forth in Section 2.2(b).

 

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“ Progress Threshold ” shall have the meaning set forth on Schedule 8.15.

“ Property Price ” shall mean the Net Book Value attributable to each parcel of the Owned Real Property or Ground Leased Property.

“ Proxy Statement ” shall have the meaning set forth in Section 2.2(b).

“ Purchase Price ” shall mean the total of the items included in Section 2.2(a).

“ Purchaser ” shall have the meaning as set forth in the introductory paragraph of this Agreement.

“ Purchaser Common Stock ” means the common stock, par value $0.0001 per share, issued by the Purchaser.

“ Purchaser Indemnified Parties ” shall have the meaning set forth in Section 5.1.

“ Purchaser Material Adverse Effect ” shall mean an event, occurrence or circumstance, individually or in the aggregate, that has had or is reasonably likely to have a material adverse effect on Purchaser’s ability to timely perform its obligations under this Agreement or consummate the transactions contemplated by this Agreement; provided , that a Purchaser Material Adverse Effect shall not include (a) events or conditions resulting from general economic conditions (including changes in interest rates and stock market valuations, and other economic events or economic conditions generally affecting the financial services industry either in Nevada or nationwide (including as may result from any terrorist attacks, any war, any armed hostilities or any other national or international response related thereto)), or (b) changes in accounting practices or changes to statutes, regulations or regulatory policies generally applicable to banks or financial service companies.

“ Purchaser Stockholder Approval ” shall mean the approval by the holders of Purchaser Common Stock of, among other things, this Agreement, the consummation of the transactions contemplated hereby, and such other business as may properly come before the meeting or any adjournment or postponement thereof, as set forth in the Proxy Statement.

“ Purchaser Stockholders’ Meeting ” shall have the meaning set forth in Section 8.16.

“ Purchaser’s 401(k) Plan ” shall mean any qualified cash or deferred arrangement (within the meaning of §401(k) of the Code) maintained by Purchaser, if any.

“ Real Property Contract Rights ” shall mean (i) all transferable guaranties and warranties from any contractor, manufacturer, materialman, or other supplier of goods, equipment, services, appliances, improvements or work delivered to Seller or installed for Seller at any Owned Real Property or Leased Premises, (ii) any transferable governmental licenses, permits, approvals and certificates relating to the ownership, use or operation of any Owned Real Property or Leased Premises, and any renewals thereof, substitutions therefor or additions thereto, (iii) any deposits made by Seller (or Seller’s predecessors-in-interest) with utility companies relating to any Owned Real Property or Leased Premises, to the extent apportionment is made therefor under Section 2.7 below, and (iv) all right, title and interest of Seller in and to all plans, drawings, specifications site plans and surveys relating to any Owned Real Property or Leased Premises.

 

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“ Real Property Leases ” shall have the meaning set forth in Section 2.1(a)(2).

“ Regulatory Actions ” shall have the meaning set forth in Section 8.2(d).

“ Regulatory Approvals ” shall mean all regulatory approvals that are required in order to consummate the transactions contemplated by this Agreement, including all regulatory approvals that are required to consummate the Purchaser’s acquisition of a bank charter sufficient to consummate the transactions contemplated in this Agreement, including the expiration of all waiting periods thereunder (including any extensions thereof).

“ Related Document ” means each of the Grant, Bargain and Sale Deeds delivered pursuant to Section 3.2(b)(1), the Bill of Sale and Assignment of Contract Rights delivered pursuant to Section 3.2(b)(2), the Assignment and Assumption Agreement, the Assignment and Assumption of Leases, the certificates delivered pursuant to Sections 3.2(b)(7) and (12) and the Transition Services Agreement.

“ Restricted Territory ” shall have the meaning set forth in Section 8.5.

“ Safe Deposit Contracts ” shall mean all safe deposit contracts and leases for the safe deposit boxes located at the Owned Real Property and Leased Premises as of the Effective Time, a complete and accurate list of which is set forth on Schedule 2.1(a)(5).

“ SEC ” shall mean the Securities and Exchange Commission.

“ Securities Act ” means the Securities Act of 1933, as amended.

“ Seller ” shall have the meaning set forth in the introductory paragraph of this Agreement.

“ Seller’s 401(k) Plan ” shall mean Seller’s qualified cash or deferred arrangement(s) (within the meaning of §401(k) of the Code) known as the Colonial BancGroup 401(k) Plan.

“ Seller Indemnified Parties ” shall have the meaning set forth in Section 2.2(b)5.2.

“ Seller Material Adverse Effect ” shall mean an event, occurrence or circumstance, individually or in the aggregate, that has had or is reasonably likely to have a material adverse effect on (i) the business, operations, assets, liabilities, properties, financial condition or prospects of the Nevada Franchise, taken as a whole, (ii) Seller’s ability to timely perform its obligations under this Agreement or consummate the transactions contemplated by this Agreement; provided , that a Seller Material Adverse Effect shall not include (a) events or conditions resulting from general economic conditions (including changes in interest rates and stock market valuations, and other economic events or economic conditions generally affecting the financial services industry in Nevada or nationwide (including as may result from any terrorist attacks, any war, any armed hostilities or any other national or international response related thereto)) provided that such events or conditions do not have a disproportionate or unique effect on the Nevada Franchise, the Transferred Assets, the Transferred Liabilities or the Seller, or (b) changes in accounting practices or changes to statutes, regulations or regulatory policies generally applicable to banks or financial service companies.

 

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“ Seller’s Pension Plan ” shall mean Seller’s defined benefit pension plan known as the Colonial Retirement Plan, and any other “employee benefit pension plan” as defined in Section 3(2) of ERISA subject to Section 412 of the Code, Section 302 of ERISA or Title IV of ERISA, that is or was sponsored or maintained by Seller or any of its ERISA Affiliates, or to which Seller or any of its ERISA Affiliates contributes, has contributed, or is obligated to contribute, as to which Seller or any of its ERISA Affiliate could have any liability (including contingent liability).

“ Software Licenses ” shall have the meaning set forth in Section 2.1(a)(3).

“ Surveys ” shall have the meaning set forth in Section 2.8(a).

“ Time Deposits ” shall mean Deposits that have a specified maturity date, such as certificates of deposit.

“ Title Commitments ” shall have the meaning set forth in Section 2.8(a).

“ Title Defects ” shall have the meaning set forth in Section 2.8(a)

“ Title Defect Notice ” shall have the meaning set forth in Section 2.8(a).

“ Transaction Account ” shall mean accounts at Branches in respect of which deposits there are withdrawable upon demand or upon which third party drafts may be drawn by the depositor, including checking accounts, negotiable orders of withdrawal (NOW) accounts and money market deposit accounts.

“ Transaction Form 8-K ” shall have the meaning set forth in Section 2.8(a)8.18.

“ Transfer Date ” shall have the meaning set forth in Section 2.5(a).

“ Transferred Assets ” shall have the meaning set forth in Section 2.1(a).

“ Transferred Employee ” shall have the meaning set forth in Section 2.5(a).

“ Transferred Liabilities ” shall have the meaning set forth in Section 2.1(c).

“ Transition Services Agreement ” shall have the meaning set forth on Section 8.23.

“ Trust Account ” shall have the meaning set forth in Section 8.19.

“ WARN ” shall have the meaning set forth in Section 2.5(e).

Section 1.2 RULES OF CONSTRUCTION.

(a) The words “include” and “including” as used herein shall be deemed to be followed by the phrase “without limitation.” References to an Article, Section, Exhibit or

 

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Schedule shall be deemed to be references to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term.

(b) Any fact or item disclosed on any Schedule to this Agreement shall be deemed disclosed on all other Schedules to this Agreement to which such fact or item applies, but only to the extent that it is readily apparent on the face of such disclosure that such disclosure is relevant to such other Schedules. Any fact or item disclosed on any Schedule hereto shall not by reason only of such inclusion be deemed to be material and shall not be employed as a point of reference in determining any standard of materiality under this Agreement.

Article II.

TRANSFER OF ASSETS AND LIABILITIES

Section 2.1 TRANSFERRED ASSETS AND TRANSFERRED LIABILITIES.

(a) As of the Effective Time, and subject to the terms and conditions set forth herein, Seller will sell, assign, transfer, convey, and deliver to Purchaser, and Purchaser will purchase from Seller, all right, title and interest in and to the following, to the extent constituting, related to, used or held for use in or dedicated to the Nevada Franchise, except as otherwise excluded from sale pursuant to the provisions of Section 2.1(b) below (collectively, the “ Transferred Assets ”), free and clear of all Liens and, to the extent applicable, Title Defects:

(1) subject to Section 2.8, Seller’s fee simple right, title and interest in and to the real estate and the related improvements and fixtures located at Seller’s owned Nevada banking offices (each such owned branch, an “ Owned Branch ” and, collectively, the “ Owned Branches ” and, together with the Owned Branches and all real property rights and appurtenances pertaining thereto, the “ Owned Real Property ”), all as described on Schedule 2.1(a)(1), together with all related Real Property Contract Rights and all right, title and interest of Seller in, to and under any related Occupancy Agreements;

(2) subject to Section 8.8, including the receipt of the applicable consents referred to therein, all leases or licenses of real property relating to (A) Seller’s leased banking offices at the locations identified on Schedule 2.1(a)(2)(A) (collectively, the “ Leased Branches ” and, together with the Owned Branches, the “ Branches ”; and such leases or licenses relating to the Leased Branches, collectively, the “ Branch Leases ”), and (B) the other facilities identified on Schedule 2.1(a)(2)(B) (collectively, the “ Other Facilities, ” and such leases relating to the Other Facilities, collectively, the “ Other Facility Leases, ”

 

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and, together with the Branch Leases and the Other Facility Leases, the “ Real Property Leases ” and the premises leased under the Real Property Leases, collectively, the “ Leased Premises ”), together with all related Real Property Contract Rights and all right, title and interest of Seller in, to and under any related Occupancy Agreements;

(3) all software licenses relating to and used exclusively by the Nevada Franchise, including such software licenses listed on Schedule 2.1(a)(3) (the “ Software Licenses ”);

(4) all Personal Property and all Personal Property Leases, a complete and accurate list of which leases are listed on Schedule 2.1(a)(4);

(5) all Safe Deposit Contracts;

(6) subject to Sections 2.1(b)(7), 2.1(b)(8) and 2.4(g), Loans set forth on Schedule 2.1(a)(6) (which Schedule includes a complete and accurate list of the debtor, loan amount and collateral with respect to each such Loan, as of the dates set forth on Schedule 2.1(a)(6)), and such other Loans and Pipe-Line Loans as the parties shall agree to in writing, in their sole and absolute discretion (all such Loans and Pipe-Line Loans to be assigned to Purchaser, the “ Assigned Loans ”), including with respect to all of the foregoing, the collateral therefor and (except to the extent set forth in Section 2.1(b)) the servicing rights under the Assigned Loans for which the Seller has retained servicing rights;

(7) the business operations conducted at the Branches and other assets (including customer data) relating to the Nevada operations of Seller with respect to Assigned Loans and Deposit Liabilities;

(8) all Overdrafts;

(9) all Assumed Contracts;

(10) all claims, counter-claims and causes of action against third parties with respect to the Transferred Assets and Transferred Liabilities;

(11) all Coins and Currency;

(12) all poles and other parts of signage located at the Owned Real Property or Leased Premises, but excluding any part that includes any logos, abbreviations, trademarks or trade names of Seller or any of its Affiliates;

(13) Seller’s rights in and to the name “Interwest Mortgage” and any related logos, abbreviations, trademarks, tradenames, signs, paper stock forms and other supplies containing any such logos, abbreviations, trademarks or tradenames; and

 

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(14) all Permits primarily used in the conduct of the Nevada Franchise that are assignable by Seller.

(b) The following items shall be excluded from the Transferred Assets (collectively, the “ Excluded Assets ”):

(1) All proprietary merchandising equipment, marketing aides and other assets listed on Schedule 2.1(b);

(2) Seller’s rights in and to the names “Colonial BancGroup” and “Colonial Bank”, and, except as set forth in Section 2.1(a)(13), any other Seller Affiliates’ or predecessor banks’ names and any of Seller’s or Seller’s Affiliates, predecessors’ corporate logos, abbreviations, trademarks, trade names, signs, paper stock forms, and other supplies containing any such logos, abbreviations, trademarks, or trade names;

(3) any bank regulatory licenses and other Permits that are not assignable by Seller;

(4) any deposit account or other service of Seller at any office of Seller (other than the Branches) or its Affiliates that may be linked to the Deposits;

(5) all tax refunds, tax credits or deferred tax assets, to the extent not related to any amounts for which Purchaser will be liable;

(6) all assets related to any of the Benefit Plans;

(7) all Non-Accrual Loans, all Non-Performing Loans, any other Loans and Pipe-Line Loans not acquired by Seller hereunder and ORE Property;

(8) any Loan that is amended, terminated or extended or any Pipe-Line Loan that is approved without Purchaser’s prior written consent, provided that Purchaser may, at its option, elect (by written notice delivered to Seller prior to the Closing) to include any such amended or extended Loan or Pipe-Line Loan approved without Purchaser’s prior written consent;

(9) all other assets, properties and rights of Seller not expressly included within the definition of the Transferred Assets.

(c) Purchaser shall assume as of the Effective Time and pay, perform and discharge as of or after the Effective Time, as the case may be, the following (and only the following) duties, obligations, and liabilities of Seller, but only to the extent arising out of or related to the ownership and use of the Transferred Assets and the operation and conduct of the Banking Operations by the Purchaser from and after the Effective Time (the “ Transferred Liabilities ”):

(1)(i) Deposit Liabilities with deposit balances in a sufficient aggregate amount so that the Closing Date Payment Amount paid by Purchaser or Seller, as applicable, does not exceed $1,000,000; provided , however , that if any Deposits need to be excluded from the definition of Transferred Liabilities in order to comply with the limitation on the Closing Date Payment Amount, then Deposits shall be excluded in the following priority (x) first, Time Deposits and (y) second, if no Time Deposits are left to exclude, then Non-Time Deposits ; and (ii) all terms and agreements relating to such Deposit Liabilities (including all of Seller’s responsibilities regarding such Deposit Liabilities with respect to (w) official checks issued prior to the Effective Time, (x) the escheat and/or abandoned property laws of any state, (y) any legal process that is served on Seller on or before the Closing Date with respect to claims against or for the Deposit Liabilities that do not exceed the amount of the applicable Deposit(s), except to the extent such legal process is attributable to any act or omission taken or omitted to be taken by Seller prior to the Effective Time, and (z) any other applicable laws (except to the extent attributable to any act or omission taken or omitted to be taken by Seller prior to the Effective Time in violation of any such laws or arising from circumstances, events or conditions occurring or existing prior to the Effective Time));

 

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(2) [intentionally omitted];

(3) the Real Property Leases and the Personal Property Leases; provided, however, that Purchaser shall not assume any liabilities, duties or obligations arising under any Real Property Lease or any Personal Property Lease that is not assigned to Purchaser at the Closing due to the failure to receive a necessary consent or otherwise;

(4) the Software Licenses;

(5) the Safe Deposit Contracts (including all of Seller’s duties, obligations and responsibilities with respect to (x) any legal process that is served on Seller on or before the Closing Date with respect to claims against or for the contents thereof, except to the extent such legal process is attributable to any act or omission taken or omitted to be taken by Seller prior to the Effective Time in violation of the applicable Safe Deposit Contract or applicable law or arising from circumstances, events or conditions prior to the Effective Time, and (y) any other applicable laws (except to the extent attributable to any act or omission taken or omitted to be taken by Seller prior to the Effective Time in violation of any such laws or arising from circumstances, events or conditions occurring or existing prior to the Effective Time));

(6) the Assigned Loans and the servicing thereof (except to the extent that such Loan, Pipe-Line Loan or servicing constitutes an Excluded Asset);

(7) [intentionally omitted];

 

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(8) the Assumed Contracts; provided, however, that Purchaser shall not assume any liabilities, duties or obligations (i) arising under any Assumed Contract that is not assigned to Purchaser at the Closing due to the failure to receive a necessary consent or otherwise or (ii) arising out of or related to any breach by Seller thereunder;

(9) all liabilities, duties and obligations expressly assumed by Purchaser pursuant to Section 2.5 (excluding liabilities and obligations (i) relating to acts or omissions of Seller prior to the Effective Time or arising from circumstances, events or conditions occurring or existing prior to the Effective Time) and (ii) expressly retained by Seller pursuant to Section 2.5(f)); and

(10) Seller’s guarantee of the credit card limits of the customers of the Nevada Franchise set forth on Schedule 2.1(c)(10) (the “ Credit Card Accounts ”) pursuant to the guaranty in favor of First National Bank of Omaha, dated as of August 17, 2004 (the “Credit Card Limit Guaranty” ).

(d) Notwithstanding anything to the contrary contained herein, except for the Transferred Liabilities expressly assumed in Section 2.1(c), Purchaser shall not assume any duties, obligations or liabilities of Seller or any of its Affiliates of any kind, whether known, unknown, contingent or otherwise (the “ Excluded Liabilities ”). For the avoidance of doubt, Excluded Liabilities include, without limitation, all duties, obligations or liabilities (i) not relating to the Transferred Assets or the Transferred Liabilities, (ii) attributable to any acts or omissions to act taken or omitted to be taken by Seller (or any of its Affiliates) prior to the Effective Time in violation of any applicable laws (including Environmental Laws), contracts or fiduciary duties, (iii) attributable to any actions, causes of action, claims, suits or proceedings or violations of law or regulation attributable to any acts or omissions to act taken or omitted to be taken by Seller (or any of its Affiliates) prior to the Effective Time, (iv) arising out of or related to any Excluded Assets, (v) resulting or arising from, or in connection with, any conditions existing at or affecting the Owned Real Property, Leased Premises or Nevada Franchise, or any acts or omissions occurring, prior to the Closing Date, any of which gives rise to any Environmental Liabilities (whether known or unknown, disclosed or undisclosed, asserted or unasserted prior to the Closing Date), (vi) arising out of or related to any Permitted Encumbrances to the extent arising out of or related to any circumstances, events or conditions occurring or existing prior to the Effective Time but without duplication of any adjustments to Purchase Price made in accordance with the definition of “Permitted Encumbrances” hereunder, (vii) relating to tax accruals of Seller (or any of its Affiliates), (viii) arising from circumstances, events or conditions occurring or existing prior to the Effective Time and not expressly assumed hereunder, (ix) all claims and liabilities arising prior to the Effective Time (or, with respect to Employees on Leave, the Transfer Date) with respect to any employee or former employee of the Seller or its Affiliates, or (x) all liabilities and obligations (including any underfunding of defined benefit plans and obligations under COBRA) in respect of benefits accrued under all benefit plans or arrangements maintained, administered or contributed to by Seller or any of its ERISA Affiliates, or with respect to which the Seller or any of its ERISA Affiliates has any liability, including the Benefit Plans. Without limiting the generality of the foregoing, it is the intention that the assumption by Purchaser of the Transferred Liabilities shall not in any way enlarge the rights of any third parties relating thereto. Nothing contained in this Agreement shall

 

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prevent any party hereto from contesting matters relating to the Transferred Liabilities with any third party obligee. Except as otherwise provided in Article V, from and after the Effective Time, (i) Purchaser shall have complete control over the payment, settlement or other disposition of the Transferred Liabilities and the right to commence, control and conduct all negotiations and proceedings with respect thereto and (ii) Seller shall have complete control over the payment, settlement or other disposition of the Excluded Liabilities and the right to commence, control and conduct all negotiations and proceedings with respect thereto. Except as otherwise provided in Article IV or any transition plan entered into thereunder, (i) Seller shall promptly notify Purchaser of any claim made against it with respect to the Transferred Liabilities or the Transferred Assets and shall not voluntarily make any payment of, settle or offer to settle, or consent or compromise or admit liability with respect to, any Transferred Liabilities or Transferred Assets and (ii) Purchaser shall promptly notify Seller of any claim made against it with respect to the Excluded Liabilities or the Excluded Assets and shall not voluntarily make any payment of, settle or offer to settle, or consent or compromise or admit liability with respect to, any Excluded Liabilities or Excluded Assets.

(e) All excise, sales, use and transfer taxes that are payable or that arise as a result of the consummation of the transactions contemplated hereby shall be borne equally by the Seller and the Purchaser; provided, however , that any transfer taxes that are payable or arise as a result of any transfer or assignment to Seller in order to clarify chain of title shall by borne solely by Seller.

Section 2.2 PURCHASE PRICE; CLOSING DATE PAYMENT AMOUNT.

(a) As consideration for the purchase of the Transferred Assets and the assumption of the Transferred Liabilities, Purchaser shall pay Seller, or Seller shall pay Purchaser, as applicable, an amount (the “ Closing Date Payment Amount ”) equal to the sum of the following:

(1) the Non-Time Deposit Premium; plus

(2) a premium in the amount equal to 0.1% times the amounts that the deposit balance of the Time Deposits exceeds Two Hundred Million Dollars; plus

(3) the Acquisition Value, as set forth on the Pre-Closing Balance Sheet; plus

(4) the face amount of the Coins and Currency, as set forth on the Pre-Closing Balance Sheet; plus

(5) the net amount of the prorations and other closing date adjustments owed by Purchaser to Seller pursuant to Section 2.7, if any; minus

(6) the amount of Deposit Liabilities assumed by Purchaser pursuant to Section 2.1(c) (including, without limitation, all of Seller’s responsibilities regarding such Deposit Liabilities assumed by Purchaser with

 

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respect to (w) official checks issued prior to the Effective Time, (x) the escheat and/or abandoned property laws of any state, (y) any legal process that is served on Seller on or before the Closing Date with respect to claims against or for the Deposit Liabilities that do not exceed the amount of the applicable Deposit(s), except to the extent such legal process is attributable to any act or omission taken or omitted to be taken by Seller prior to the Effective Time, and (z) any other applicable laws (except to the extent attributable to any act or omission taken or omitted to be taken by Seller prior to the Effective Time in violation of any such laws or arising from circumstances, events or conditions occurring or existing prior to the Effective Time), as set forth on the Pre-Closing Balance Sheet, expressed as a positive number; minus

(7) the amount of all other Transferred Liabilities and the Other Liabilities, as set forth on the Pre-Closing Balance Sheet, expressed as a positive number; minus

(8) the net amount of the prorations and other closing date adjustments owed by Seller to Purchaser pursuant to Section 2.7, if any.

(b) Seller and Purchaser shall jointly prepare a balance sheet (the “ Pre-Closing Balance Sheet ”) as of a date not earlier than five Business Days and not later than two Business Days, prior to the Effective Time anticipated by the parties reflecting the Transferred Assets and the Transferred Liabilities. If the Closing Date Payment Amount as determined in accordance with Section 2.2(a) and using the amounts reflected on the Pre-Closing Balance Sheet is positive, Purchaser will pay such amount to Seller at the Closing, in immediately available funds. If the Closing Date Payment Amount as determined in accordance with Section 2.2(a) and using the amounts reflected on the Pre-Closing Balance Sheet is negative, Seller will pay such amount to Purchaser at the Closing, in immediately available funds. All amounts paid at the Closing shall be subject to subsequent adjustment based on the Post-Closing Balance Sheet (as defined in Section 3.3).

(c) The “ Acquisition Value ” of the Transferred Assets shall be the sum of the following:

(1) the Net Book Value of the Assigned Loans and Overdrafts as of the Effective Time less the related loan loss reserves based upon the risk rating assigned by the Seller and the related Seller calculations; plus

(2) the Net Book Value of the Personal Property, the Owned Real Property, the Leased Premises and the other Transferred Assets (other than the Assigned Loans, the Overdrafts, and the Coins and Currency) as of the Effective Time.

(d) Seller and Purchaser will cooperate in good faith to determine a reasonable allocation of the Purchase Price and the Transferred Liabilities, as finally determined pursuant to Sections 2.2 and 3.3, in accordance with §1060 of the Code. Seller and Purchaser shall cooperate in good faith to mutually agree to such allocation and shall reduce such

 

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agreement to writing, including jointly completing and properly filing the IRS Asset Acquisition Statement (Form 8594), and any other forms or statements required by the Code, Treasury Regulations or the IRS, together with any and all attachments required to be filed therewith. If Seller and Purchaser are unable to agree on an allocation within 30 days of the Purchase Price being finally determined in accordance with Section 3.3, then either party shall have the right to require that such allocation be submitted to a nationally recognized certified public accounting firm that has no material relationship with either party to determine such allocation. Seller and Purchaser shall file timely any such forms and statements with the IRS. To the extent consistent with applicable law, Seller and Purchaser shall not file any tax return or other documents or otherwise take any position with respect to taxes which is inconsistent with such allocation of the final Purchase Price and the Transferred Liabilities, provided , however , that neither Seller nor Purchaser shall be obligated to litigate any challenge to such allocation of the final Purchase Price and the Transferred Liabilities by any Governmental Authority. Seller and Purchaser shall promptly inform one another of any challenge by any Governmental Authority to any allocation made pursuant to this paragraph and agree to consult with and keep one another informed with respect to the state of, and any discussion, proposal or submission with respect to, such challenge.

(e) An example calculation of the Pre-Closing Balance Sheet and a calculation of the Closing Date Payment Amount is attached hereto as Schedule 2.2(e).

Section 2.3 DEPOSIT LIABILITIES.

(a) “ Deposit Liabilities ” shall mean all rights, duties, obligations and liabilities relating to the deposits (“ Deposits ”) that are booked at each of the Branches or otherwise opened and maintained as part of the Nevada Franchise, including accrued but unpaid or uncredited interest thereon and uncollected funds related thereto, as of the Effective Time and that constitute “deposits” for purposes of the Federal Deposit Insurance Act, 12 U.S.C. §1813, but excluding (i) deposit liabilities with respect to Excluded IRA Account Deposits, (ii) deposit liabilities with respect to accounts associated with or securing lines of credit or loans where the line of credit or loan is excluded in accordance with Section 2.1(b), (iii) deposit liabilities with respect to accounts that Seller is not permitted to transfer or otherwise dispose of pursuant to applicable law or contract, (iv) deposit liabilities with respect to deposits of public and governmental funds as to which there is required security posted by the Seller, (v) any Time Deposit which, upon the occurrence of any event or circumstance, could result in the acceleration of such Time Deposit, and (vi) Excluded Liabilities.

(b) Seller does not represent or warrant that any deposit customers whose accounts are assumed by Purchaser will become or continue to be customers of Purchaser after the Effective Time.

Section 2.4 LOANS AND PIPE-LINE LOANS.

(a) “ Loans ” shall mean, collectively, all rights, duties, obligations and liabilities relating to loans and other extensions of credit including accrued interest, as recorded on the balance sheet of the Nevada Franchise. For the avoidance of doubt, the Transferred Assets shall include only those Loans to be transferred to the Purchaser as Assigned Loans pursuant to Section 2.1(a)(6).

 

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(b) “ Pipe-Line Loans ” shall mean, collectively, all of Seller’s rights, duties, obligations and liabilities relating to loans or other extensions of credit in connection with the operation of the Nevada Franchise that (i) would constitute Loans if arising prior to the Effective Time, (ii) arise from the ordinary course lending activities of Seller (or its applicable Affiliates) consistent with past practice and not in breach of this Agreement and (iii) are approved by Seller prior to the Effective Time but has not yet been closed as of the Effective Time; provided that the Pipe-Line Loans shall not include any loans or other extensions of credit described in Section 2.4(c) or any servicing rights or obligations constituting Excluded Assets. For the avoidance of doubt, the Transferred Assets shall include only those Pipe-Line Loans to be transferred to the Purchaser as Assigned Loans pursuant to Section 2.1(a)(6).

(c) Notwithstanding the provisions of Section 2.4(a) and 2.4(b), the Transferred Assets shall not include any Loans or Pipe-Line Loans excluded from the Transferred Assets under Section 2.1(b).

(d) Schedule 2.4(d) identifies the insurance companies who are the current underwriters of credit life insurance and credit disability insurance sold in connection with Assigned Loans. Prior to the Effective Time, Seller will notify such insurance companies in writing of the sale of such Assigned Loans to Purchaser. Purchaser will work directly with such insurance companies in the handling and processing of premium rebates and insurance claims. After the Effective Time, Seller will promptly deliver to Purchaser (i) the proceeds of any credit life insurance and/or credit disability insurance received by it in connection with any of the Assigned Loans sold to Purchaser; and (ii) any written notices or other correspondence or written inquiries made by any of the relevant insurance companies and relating to any such proceeds.

(e) All Assigned Loans will be transferred without recourse and without any warranty or representation as to their collectibility or the creditworthiness of any of the obligors of such Assigned Loans. Notwithstanding the foregoing, nothing contained in this Subsection shall alter or otherwise limit the representations and warranties contained in Section 6.10 and the remedies available to the Purchaser Indemnified Parties pursuant to Article V for a breach thereof.

(f) If the balance due on any Assigned Loan purchased hereunder has been reduced by Seller as a result of a payment by check received prior to the Effective Time, which item is returned after the Effective Time, the asset value represented by the Assigned Loan transferred shall be correspondingly increased and an amount in cash equal to such increase shall be paid by Purchaser to Seller promptly.

(g) If any of the Assigned Loans are excluded pursuant to Section 2.1(b)(7) because they are classified as Non-Performing Loans, then Seller and Purchaser shall cooperate in good faith to identify other Loans of equivalent value that Purchaser is willing, in its sole and absolute discretion, to purchase, and any such Loans approved by Purchaser in writing shall be Assigned Loans hereunder.

 

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Section 2.5 EMPLOYEE MATTERS.

(a) Purchaser will make Comparable Job Offers (as defined below) on or about the Closing Date (to be effective as of the Effective Time) to all Employees (i) whose names appear on Schedule 6.8(c) as of the date of this Agreement (or, with the consent of Purchaser, as of the Closing Date), (ii) who are employed by Seller immediately prior to the Closing Date, and (iii) who are not Excluded Employees (each, a “ Covered Employee ”). Purchaser will communicate offers of at-will employment in a form determined by Purchaser and which form is not reasonably objected to by Seller. All Covered Employees shall be offered at-will employment with Purchaser (i) in a comparable position as such Covered Employee’s position with Seller on the date hereof, (ii) with annual base salary, or weekly or hourly rate of pay which is no less than such Covered Employee’s pay with Seller indicated on Schedule 6.8(c) ( provided that incentive pay, where applicable, shall be determined based on incentive compensation programs determined by Purchaser in its sole and absolute discretion), (iii) at a work location that does not require such Employee to travel more than an additional 50 miles (one way) to work than such Employee traveled prior to the Closing Date, and (iv) with a work status (full or part-time, including number of hours-per-week worked) that is not changed from that indicated on Schedule 6.8(c) (a “ Comparable Job Offer ”). Each Covered Employee who timely accepts Purchaser’s offer of employment and commences employment with Purchaser shall be referred to as a “ Transferred Employee ” for purposes of this Agreement. With respect to any Covered Employee who accepts an offer of employment from Purchaser who on the Closing Date is on military leave, sick leave, maternity leave, short-term disability or other leave of absence approved by Seller in accordance with past practice, except as required by applicable law and is named on Schedule 2.5(a)(ii) (each, an “ Employee on Leave ”), Purchaser need only employ such Covered Employee on an at-will basis beginning after such absence if such Covered Employee returns to employment in accordance with the terms of such Covered Employee’s leave, provided that such Covered Employee commences active employment with Purchaser no later than six months after the commencement of the leave. Any Employee on Leave who commences active employment with Purchaser in accordance with the preceding sentence will cease employment with Seller at the end of such leave of absence and the date of commencement of active employment with Purchaser in accordance with the previous sentence shall be referred to herein as the “ Transfer Date .” Seller shall cooperate in facilitating the performance of Purchaser’s obligations to make offers and shall in good faith encourage Employees who receive offers from Purchaser to accept such offers.

(b) Purchaser will give all Transferred Employees service credit for all periods of employment with Seller and its Affiliates (or its predecessor entities) prior to the Closing Date for purposes of determining entitlement to severance benefits, vacation and service awards and for , purposes of eligibility, participation and vesting (but not benefit accruals) under any employee benefit or compensation plan, program and arrangement adopted or maintained by Purchaser or any of its Affiliates in which Transferred Employees are eligible to participate, solely to the extent recognized by the Purchaser under the applicable plan, program, or arrangement and solely to the extent such time period is recognized under the terms of the Purchaser’s plan, program or arrangement; provided such crediting does not result in any duplication of benefits. To the extent that any Transferred Employee has satisfied in whole or in part any annual deductible under a welfare benefit plan, or has paid any out-of-pocket expenses pursuant to any welfare benefit plan co-insurance provision, in each case, with respect to the

 

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calendar year in which the Closing Date (or commencement of participation in such new plan) occurs, such amount shall be counted toward the satisfaction of any applicable deductible or out-of-pocket expense maximum, respectively, under the comparable benefit plans and programs provided to Transferred Employees by Purchaser and its Affiliates. In any event, the welfare benefit plans and programs of Purchaser and its Affiliates shall be applied without regard to any limitations relating to preexisting conditions, waiting periods or required physical examinations.

(c) Purchaser shall offer and pay severance benefits as described in this Subsection (c) to all Covered Employees to whom Comparable Job Offers are not made. In addition, Purchaser shall offer and pay severance benefits as described in this Subsection to any Transferred Employee terminated by Purchaser without cause within six months of the Closing Date. From and after the Closing Date, Purchaser shall determine in its sole discretion whether a Transferred Employee who has a termination of employment without cause following the Closing Date meets the requirements of severance payments and shall provide, and be solely liable for, severance benefits to each Transferred Employee whose employment is terminated by the Purchaser without cause during the period that commences on the Closing Date and ends on the date that is six months thereafter and to each Covered Employee to whom Purchaser does not make a Comparable Job Offer; provided, however, that Purchaser shall not be responsible for the payment of severance or transition benefits to any individual, or for the payment of any amount to any Covered Employee who is offered, but does not accept, a Comparable Job Offer. Severance benefits payable under this Subsection shall be equal to the amount of severance payments that would be payable under the applicable plan of Seller and its Affiliates effective as of the date hereof as set forth on Schedule 2.5(c) or by Purchaser under its severance plans, whichever offers the greater benefits to the affected Employees; provided, however, that such benefits shall be in lieu of notice pay under WARN, to the extent applicable. In no event shall Seller be liable for any severance or transition benefits to any Transferred Employee or to any Covered Employee to whom Purchaser does not make a Comparable Job Offer. Notwithstanding the foregoing, nothing contained herein shall be deemed to entitle any Transferred Employee to any severance or separation pay by reason of his or her ceasing to be an employee of Seller and becoming an employee of Purchaser or any of its Affiliates pursuant to this Agreement.

(d) Each Transferred Employee who participated or who was eligible to participate in Seller’s 401(k) Plan immediately prior to the Closing shall be eligible to participate in Purchaser’s 401(k) Plan applicable to the Transferred Employees. Seller shall cause Seller’s 401(k) Plan to provide the Transferred Employees with the option to voluntarily rollover their eligible account balances from Seller’s 401(k) Plan into the Purchaser’s 401(k) Plan (or into an IRA of the Transferred Employee’s choosing), and, subject to applicable law, Purchaser shall cause Purchaser’s 401(k) Plan to accept such eligible rollovers from the Transferred Employees. Seller shall fully vest each Transferred Employee under each Benefit Plan that provides for retirement benefits as of the Closing Date. Seller shall make all required (in accordance with historical practices, including any discretionary matching or profit sharing contributions under any Benefit Plan) payments, premiums, contributions, reimbursement or accruals for all periods (or partial periods) of employment service for Transferred Employees ending prior to or as of the Closing Date.

(e) Seller shall have the sole responsibility for providing health care continuation coverage to any employee of the Seller that is not a Transferred Employee

 

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(including the Excluded Employees) and all other M&A Qualified Beneficiaries (as defined in Treas. Reg. § 54.4980 B-9) pursuant to COBRA and any similar state or local statute. Purchaser shall be responsible for the administration of and shall assume any and all obligations, if any, arising after the Closing Date under COBRA with respect to the Transferred Employees and their beneficiaries. Seller shall be responsible for providing any notice required pursuant to the United States Federal Worker Adjustment and Retraining Notification Act of 1988, any successor United States law, and any other applicable plant closing notification law (collectively, “ WARN ”) with respect to a layoff or plant closing relating to the Nevada Franchise that occurs prior to or on the Closing Date and Purchaser shall be responsible for providing any notice required pursuant to WARN with respect to a layoff or plant closing relating to the Nevada Franchise that occurs after the Closing Date. On or before the Closing Date, Seller shall provide a list of names and site of employment of any and all employees whose employment relates to the Nevada Franchise who have experienced, or will experience, an employment loss or layoff (as defined in WARN, or any similar state or local statute). Seller shall update this list up to and including the Closing Date.

(f) Seller shall be responsible for the filing of Forms W-2 with the IRS and any required filing with state tax authorities, with respect to wages and benefits paid to each Transferred Employee for periods ending on or prior to the Closing Date or the Transfer Date, as applicable.

(g) Prior to the Closing Date, Seller and Purchaser shall cooperate in order to permit Purchaser to train Employees who choose to accept employment with Purchaser, and Seller shall, as scheduled by Purchaser for reasonable periods of time and subject to Seller’s reasonable approval excuse such employees from their duties at the Branches for the purpose of training and orientation by Purchaser.

(h) No provision of this Agreement, including this Section 2.5, shall (i) create any third party beneficiary or other rights in any employee or former employee (including any beneficiary or dependent thereof) of Seller or any of its Affiliates in respect of continued employment (or resumed employment) with Purchaser or any of its Affiliates or Seller or any of its Affiliates, (ii) create any such rights in any such individuals in respect of any benefits that may be provided, directly or indirectly, under any Benefit Plan or any plan or arrangement which may be established by Purchaser or any of its Affiliates or (iii) constitute a limitation on rights to amend, modify or terminate after the Closing Date any such plans or arrangements of Purchaser or any of its Affiliates.

Section 2.6 SECURITY.

As of the Effective Time, Seller shall not have any responsibility for the security of and insurance on all Persons and property located in or about the Owned Real Property or Leased Premises.

Section 2.7 PRORATION; OTHER CLOSING DATE ADJUSTMENTS.

(a) Except as otherwise specifically provided in this Agreement, it is the intention of the parties that Seller will operate the Nevada Franchise, hold the Transferred Assets

 

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and retain the Transferred Liabilities for its own account until the Effective Time, and that Purchaser shall operate the Nevada Franchise, hold the Transferred Assets and assume the Transferred Liabilities for its own account as of such time. Thus, except as otherwise expressly provided in this Agreement, items of income (as and when collected) and expense, as defined herein, shall be prorated as of the Effective Time, and settled between Seller and Purchaser on the Closing Date, whether or not such adjustment would normally be made as of such time. Items of proration will be handled at Closing as an adjustment to the Purchase Price unless otherwise agreed by the parties hereto. In furtherance of the foregoing, Purchaser shall promptly forward to Seller complete and accurate copies of all invoices, billing statements and similar documents received by Purchaser after the Effective Time and relating to the Banking Operations conducted prior to the Effective Time, and Seller shall promptly forward to Purchaser complete and accurate copies of all invoices and billing statements received by Seller relating to the Banking Operations conducted after the Effective Time. To the extent the exact amounts of any real property taxes or other items to be prorated are not known on the Closing Date, the parties shall make reasonable estimates of such taxes or other items for purposes of making prorations at Closing and shall thereafter adjust the prorations as promptly as practicable after such exact amounts are finally ascertained. Purchaser shall be solely responsible for payments to vendors pursuant to Assumed Contracts with respect to items of personal property that have been ordered by Seller in the ordinary course of business consistent with past practice but not delivered as of the Effective Time.

(b) For purposes of this Agreement, items of proration and other adjustments shall include, without limitation: (i) rental payments under the Real Property Leases and the Personal Property Leases; (ii) personal and real property taxes and assessments arising from (x) Owned Real Property, (y) without duplication of any amounts set forth in clause (i) above, payable by Seller pursuant to its Real Property Leases, or (z) otherwise from the Banking Operations (in each case, determined by assuming that the taxable year or period ended at the Effective Time); (iii) FDIC deposit insurance assessments; (iv) trustee or custodian fees on IRA accounts that are transferred to Purchaser as part of the Transferred Assets; (v) prepaid expenses and items and accrued but unpaid liabilities pursuant to Assumed Contracts, Real Property Leases, the Personal Property Leases and the Occupancy Agreements, a portion of which is attributable to periods after the Effective Time (it being understood that Purchaser shall have no liability for any accrued but unpaid liabilities attributable to Excluded Assets or Excluded Liabilities); (vi) safe deposit rental payments previously received by Seller, and (vii) rents and other income collected under the Occupancy Leases, a portion of which is attributable to periods after the Effective Time. For the avoidance of doubt, (i) items of income shall not be apportioned unless and until actually collected, and (ii) Purchaser shall have no liability to Seller for any failure to collect any item of income after the Closing Date.

(c) Notwithstanding anything contained herein to the contrary, items of proration and other adjustments pursuant to this Section 2.7 shall not include any items included in the calculation of Closing Date Payment Amount or in any adjustment thereto pursuant to Section 3.3, including, without limitation, any accrued and unpaid interest, late charges and any other charges with respect to the Assigned Loans included in the calculation of Acquisition Value.

 

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Section 2.8 TITLE INSURANCE AND SURVEY FOR REAL PROPERTY.

(a) Seller shall obtain and deliver to Purchaser as soon as practicable after the date of this Agreement an ALTA title insurance commitment (as the case may be, the “ Title Commitments ”) for each parcel of the Owned Real Property and each Leased Premises constituting a parcel of land and the improvements thereon set forth on Schedule 2.8(a) (“ Ground Leased Property ”), issued by a national title insurance company by and through its agent, Chicago Title Insurance Company which shall indicate the state of title for each parcel of the Owned Real Property and each parcel of the Ground Leased Property. Seller shall also deliver to Purchaser within 15 days after the date of this Agreement, without any representation or warranty of any kind, a copy of any survey in its possession for the Owned Real Property and each parcel of the Ground Leased Property. Seller, at its sole expense, shall, as promptly as practicable, cause a survey (collectively the “ Surveys ”) of each or any parcel of the Owned Real Property and/or the Ground Leased Property to be performed by a Nevada registered and licensed land surveyor of Purchaser’s choice, and shall provide Purchaser a copy of each such survey within ten days after its completion. Purchaser will notify Seller in writing (a “ Title Defect Notice ”) no later than 15 days after the later of (x) Purchaser’s receipt of the Title Commitment or (y) the date hereof (or, with respect to any objection revealed by the Surveys, within 15 days after the later of (x) the date of receipt of the applicable Survey or (y) the date hereof) with respect to a parcel of the Owned Real Property or a parcel of the Ground Leased Property of any mortgages, pledges, liens, encumbrances, reservations, encroachments, overlaps or other title defects related to such Owned Real Property or such Ground Leased Property which are disclosed by the Title Commitments or Surveys received by Purchaser and as to which Purchaser objects (the “ Title Defects ”), provided that a Title Defect Notice shall not include or refer to any Permitted Encumbrances. If Purchaser does not notify Seller of Title Defects within such time period, Purchaser shall be deemed to have waived its rights to provide a Title Defect Notice with respect to the Title Defects disclosed by such Title Commitments or Surveys, and any Title Defect Notice with respect to the Title Defects disclosed by such Title Commitments or Surveys sent after such time shall not be valid. Title Defects shall not include: (i) real property ad valorem taxes for the year of Closing or any assessments, charges or taxes not yet due and payable; (ii) mechanics or materialmens liens incurred in the ordinary course and which relate to sums not yet due and payable, to the extent the amount of the underlying claim is credited against the Purchase Price; (iii) zoning, building code and other use restrictions imposed by a Governmental Authority, a subdivision plat, or customary covenants, conditions, easements or restrictions for a community or mixed use development, in each case that do not (1) materially interfere with the use of the applicable Owned Branch or Leased Branch as a bank branch (or, if applicable, the use of the applicable Other Facility) operated in the manner it is currently operated or (2) materially increase the cost of such operation; or (iv) such encumbrances and other title, survey or other matters (including liens, reservations, encroachments, easements, overlaps, covenants, conditions and restrictions, and title defects or deficiencies), provided that such encumbrances and other title, survey or other matters: (A) are customary or typical for similar properties in the State of Nevada, (B) do not materially interfere with the use of the applicable Owned Branch or Leased Branch as a bank branch (or, if applicable, the use of the applicable Other Facility) operated in the manner it is currently operated, and (C) either (1) do not impose any non-recurring obligations that would cost in excess of $10,000 to perform in connection with the applicable Owned Branch, Leased Branch or Other Facility (or in excess of

 

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$50,000 after aggregating the costs of performance of such non-recurring obligations applicable to all Owned Branches, Leased Branches and Other Facilities) and do not otherwise materially increase the cost of operation of the applicable Owned Branch or Leased Branch as a bank branch (or, if applicable, the use of the applicable Other Facility) operated in the manner it is currently operated, or (2) would cost less than $10,000 to cure or eliminate in the case of any Owned Branch, Leased Branch or Other Facility (and less than $50,000 aggregating the costs associated with curing all such Title Defects applicable to all Owned Branches, Leased Branches and Other Facilities) (all such matters described in clauses (i), (ii), (iii) or (iv), collectively, the “ Permitted Encumbrances ”); and any Permitted Encumbrances included in any Title Defect Notice shall be disregarded and shall not constitute Title Defects for any purpose hereunder. If Seller shall timely receive any Title Defect Notice with respect to any parcel of the Owned Real Property or any parcel of the Ground Leased Property, Seller shall, at its option and in its sole discretion, elect to take one of the following actions with respect to each Title Defect referenced in such Title Defect Notice: (i) cure or eliminate such Title Defect prior to the Closing, in which event the Closing shall proceed with respect to the parcel of the Owned Real Property or Ground Leased Property, without any reduction in the applicable Property Price; or (ii) accept a reduction in the Property Price applicable to the parcel of the Owned Real Property or any parcel of the Ground Leased Property subject to such Title Defect equal to any applicable Defect Reduction Amount to reflect the greater of the diminution in value (if any) resulting from such Title Defect or the cost of curing such Title Defect, if applicable, as determined pursuant to Section 2.13.

(b) Purchaser shall have the right, at its sole cost and expense, to obtain an updated Title Commitment or Survey prior to the Closing Date to determine whether any title changes may have arisen between the effective date of the applicable Title Commitment or Survey and such update. If such update indicates that any Title Defects have been placed of record in respect of any parcel of the Owned Real Property or any parcel of the Ground Leased Property since the effective date of the applicable Title Commitment or Survey, then Purchaser shall have the right to provide Seller a Title Defect Notice in respect thereof within 10 days of the receipt of the updated commitment or Survey, but no later than the Closing Date, and thereafter Seller shall have the right to address such Title Defect Notice in the same manner as is set forth in Section 2.8(a) with respect to Title Defect Notices received by Seller within the time provided in Section 2.8(a) (by electing to cure the Title Defect in question or accept a reduction in the applicable Property Price, as more particularly set forth in Section 2.8(a)). Failure by Purchaser to provide any Title Defect Notice pursuant to the immediately preceding sentence within 10 days of the receipt of the updated commitment or Survey, but no later than the Closing Date shall constitute waiver of any further right to do so, and any Title Defect Notice received after such time shall not be valid.

(c) Notwithstanding anything contained herein to the contrary, Seller shall be obligated to discharge (i) discharge any mortgage, deed of trust, security interest or similar Lien against any parcel of the Owned Real Property or parcel of the Ground Leased Property which it willfully placed of record prior to the date hereof, and (ii) any Lien against any parcel of the Owned Real Property or parcel of the Ground Leased Property which it willfully places of record on or after the date hereof.

 

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Section 2.9 ENVIRONMENTAL MATTERS.

(a) Seller has provided to Purchaser complete and accurate copies of all environmental studies, reports and audits in Seller’s and its Affiliates possession related to the Owned Real Property and Leased Premises. Except as set forth in Article VI, (i) Seller does not make any representation or warranty regarding any aspect of any study, report or audit delivered to Purchaser, including without limitation, the accuracy or completeness of such study, report or audit, its preparation, or any information upon which it is based, and (ii) any reliance on the report or any information contained in the report shall be at Purchaser’s risk.

(b) Subject to compliance with Section 8.1(a) during the period prior to the Effective Time, Purchaser shall have the right, but not the obligation, at its sole cost and expense, to cause such investigations and tests of the Owned Real Property and the Leased Premises as is reasonably acceptable to Purchaser. Seller shall reasonably cooperate with Purchaser and/or its agents or contractors in their environmental assessment, evaluation, investigation and testing of the Owned Real Property and the Leased Premises, including by providing Purchaser and/or its agents or contractors reasonable access to pertinent records and documents in Seller’s possession. Any environmental assessment, evaluation, investigation or test performed by Purchaser or its agents or contractors prior to the Effective Time shall be conducted in a manner so as not to damage in any material respect the Owned Real Property and so as not to interfere in any material respect with the business or operations conducted thereat. If any material damage is caused to the Owned Real Property or Leased Premises prior to the Effective Time, Purchaser shall as promptly as commercially reasonable repair and restore the Owned Real Property or Leased Premises, as applicable, to substantially its former condition. During the period prior to the Effective Time, (i) without the prior written consent of Seller (which consent will not unreasonably be withheld or delayed) and execution of a property access agreement, Purchaser shall not conduct subsurface or intrusive testing or any ground water monitoring or install any test well or undertake any other investigation which requires a permit or license from any environmental regulatory authority, and (ii) Purchaser shall give Seller reasonable prior notice of its intention to conduct any investigation or test hereunder, and Seller reserves the right to be present and to have a representative present while any such investigations are conducted. Purchaser shall not submit a copy of any such report or disclose the contents thereof to any Governmental Authority unless specifically required by applicable law, and if so required, Purchaser shall provide Seller two days’ prior written notice of any submission. Purchaser and Purchaser’s agents, representatives, contractors and designees will not reveal to any third party not approved in writing by Seller (other than Purchaser’s attorneys, accountants and other professional advisors who agree to keep such information confidential) the results of its inspections or tests, unless required by law.

Section 2.10 ASSUMED CONTRACTS.

Attached as Schedule 2.10 is a list of all service or similar contracts in effect as of the date hereof (which Schedule Seller shall modify on or prior to the tenth day prior to the Closing Date to include any such contracts that have been terminated or modified or have been entered into in the ordinary course of business since the date hereof, in each case with Purchaser’s prior written consent) that relate to the Owned Real Property, the Leased Premises or the Banking Operations subject to this Agreement (and not to Seller’s operations generally) including,

 

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without limitation, the Personal Property Leases, Safe Deposit Contracts and Software Licenses (“ Assumed Contracts ”). Subject to obtaining any required third party consents, Purchaser shall assume all such Assumed Contracts at the Closing.

Section 2.11 ASSUMPTION OF IRA ACCOUNT DEPOSITS.

(a) With respect to Deposits in IRAs, prior to the Closing Date, Seller will effect either the appointment of Purchaser as successor custodian or the delegation to Purchaser (or to an Affiliate of Purchaser) of Seller’s authority and responsibility as custodian of all such IRA deposits (except self-directed IRA deposits), each to be effective as of the Effective Time, including, but not limited to, sending to the depositors thereof appropriate notices, cooperating with Purchaser (or such Affiliate) in soliciting consents from such depositors, and filing any appropriate applications with applicable regulatory authorities. If any such delegation is made to Purchaser (or such Affiliate), Purchaser (or such Affiliate) will perform all of the duties so delegated and comply with the terms of Seller’s agreement with the depositor of the IRA deposits affected thereby.

(b) If, notwithstanding the foregoing, as of the Closing Date, Purchaser shall be unable to retain deposit liabilities in respect of an IRA, such deposit liabilities shall be excluded from Deposits for purposes of this Agreement and shall constitute “ Excluded IRA Account Deposits .”

Section 2.12 BOOKS AND RECORDS.

(a) As of the Effective Time, Seller shall deliver to Purchaser all files, documents and records at the Branches or Other Facilities that pertain to and are utilized by Seller to administer, monitor, evidence or record information respecting the business or conduct of the Nevada Franchise. Seller shall also make available to Purchaser all files, documents and records (including digitally-imaged files essential for Purchaser’s operation of the Branches), or copies thereof, maintained on electronic or magnetic media in the electronic data base system of Seller about customers of the Branches and Branch operations. Notwithstanding the foregoing, all files, documents and records (i) that contain information regarding customers and/or accounts not being transferred to Purchaser hereunder where such information is not reasonably separable from the files, documents or records otherwise to be delivered to Purchaser hereunder or (ii) that are contained in nonessential digitally-imaged files, and, in either case, where access by or disclosure to Purchaser would violate the rights of customers not being transferred tot Purchaser hereunder, including any privacy law, or contravene any law, rule, regulation, order, judgment, decree, fiduciary duty or binding agreement entered into prior to the date of this Agreement (“ Non-Transferred Records ”), shall remain in the possession of Seller. The Seller shall make appropriate substitute disclosure arrangements under circumstances in which the restrictions of the preceding sentence apply. Purchaser agrees, at Seller’s expense, to return to Seller all files, documents and records contained in any Branch or Other Facility that Purchaser believes do not relate to the business or conduct of the Nevada Franchise.

(b) As of the Effective Time, Purchaser shall become responsible for maintaining the files, documents and records transferred to it pursuant to this Agreement. Purchaser will preserve and hold such files, documents and records in safekeeping as required by applicable law and in accordance with Purchaser’s customary practices.

 

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(c) After the Effective Time, Purchaser will (i) promptly research and provide copies to Seller and its representatives of files, documents, or records to the extent reasonably required in connection with any third party claim, action, litigation or other proceeding involving Seller or its Affiliates or in connection with any legal obligation owed by Seller or its Affiliates to any present or former depositor or other customer or any Governmental Authority or in connection with any other reasonable request related to the Transferred Assets or Transferred Liabilities, including for purposes of preparing regulatory and tax reports and returns and (ii) permit Seller and its representatives, at reasonable times and upon reasonable written notice, without material disruption to Purchaser’s operations and subject to a confidentiality agreement in a form satisfactory to Purchaser, to examine, inspect, copy and reproduce any such files, documents or records, and to meet and discuss with Seller’s former employees, to the extent reasonably required in connection with any third party claim, action, litigation or other proceeding involving Seller or its Affiliates or in connection with any legal obligation owed by Seller or its Affiliates to any present or former depositor or other customer or any Governmental Authority or in connection with any other reasonable request related to the Transferred Assets or Transferred Liabilities, including for purposes of preparing regulatory and tax reports and returns. After the Effective Time, Seller will (i) promptly research and provide copies to Purchaser and its representatives of files, documents or records retained by Seller regarding the Transferred Assets and Transferred Liabilities (including Non-Transferred Records) to the extent reasonably required in connection with any third party claim, action, litigation or other proceeding involving Purchaser or its Affiliates or in connection with any legal obligation owed by Purchaser or its Affiliates to any present or former depositor or other customer or any Governmental Authority or in connection with any other reasonable request related to the Transferred Assets or Transferred Liabilities, including for purposes of preparing regulatory and tax reports and returns and (ii) permit Purchaser and its representatives, at reasonable times and upon reasonable notice, without material disruption to Seller’s operations and subject to a confidentiality agreement in form satisfactory to Seller, to examine, inspect, copy and reproduce files, documents or records retained by Seller regarding the Transferred Assets and Transferred Liabilities (including Non-Transferred Records) to the extent reasonably required in connection with any third party claim, action, litigation or other proceeding involving Purchaser or its Affiliates or in connection with any legal obligation owed by Purchaser or its Affiliates to any present or former depositor or other customer or any Governmental Authority or in connection with any other reasonable request related to the Transferred Assets or Transferred Liabilities, including for purposes of preparing regulatory and tax reports and returns. Nothing in this Section shall require either party to provide access to or disclose information where such access or disclosure would violate the rights of customers, including any privacy law, result in the loss of any attorney-client privilege or contravene any law, rule, regulation, order, judgment, decree, fiduciary duty or binding agreement entered into prior to the date of this Agreement. The parties hereto shall make appropriate substitute disclosure arrangements under circumstances in which the restrictions of the preceding sentence apply.

(d) It is understood that certain of Seller’s and Purchaser’s records may be available only in electronic or magnetic form, or in the form of photocopies, film copies or other non-original and non-paper media, or held by third-parties.

 

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(e) Except for data expressly required to be provided by Seller or Purchaser hereunder, all data and information and any copies or extracts thereof or other data or analyses derived therefrom, and all internal reports and data relating to, containing or derived from the operating results of Seller or Purchaser, as the case may be, and its Affiliates or any subsidiary or division or line of business thereof, whether contained in books, records or other paper format, accessed through the computer and data processing systems of such Person, or otherwise in the possession of such Person, shall remain solely the property of such Person, and nothing contained in this Agreement shall be construed as transferring to or vesting in the other party or such other party’s Affiliates any right or interest in or to such data and information or to grant to such other party or its Affiliates any ongoing rights to the use of the data derived therefrom. Each party acknowledges that the other party shall be entitled to take all such steps prior to or following the Closing as shall be necessary in the other party’s sole discretion to effect the foregoing, including taking such actions as are necessary to ensure that all access to such information at the offices of the other party shall be terminated as of or promptly following the Closing. Each party shall promptly provide to the other party any such information or data described herein of the other party, which remains at any facilities of such party following the Closing.

Section 2.13 DETERMINATION OF DEFECT REDUCTION AMOUNTS.

If Seller shall receive a Title Defect Notice in respect of any parcel of the Owned Real Property or parcel of the Ground Leased Property, either party shall have the right to require the determination of any related Defect Reduction Amount (if any) which Purchaser might elect to accept pursuant to Section 2.8 and this Section, by providing written notice to the other party that such party requires such determination. Upon the recipient’s receipt of any such notice, Seller and Purchaser shall cooperate in good faith in an attempt to reach agreement as to the applicable Defect Reduction Amount, if any. If the parties are unable to reach such agreement within ten days after the date of such notice, then the Defect Reduction Amount shall be determined by an appraisal prepared in accordance with customary practices and procedures (except as provided herein) by an M.A.I. appraiser selected by agreement between Seller and Purchaser; provided that in the event the parties cannot agree on the selection of an appraiser within five days, then such appraiser shall be selected as follows: Seller and Purchaser shall each select an appraiser within five days and the two selected appraisers shall then select a third appraiser, who shall be the appraiser who shall determine the Defect Reduction Amount, if any. If either party does not select an appraiser within five days, then the appraiser chosen by the other party shall be solely responsible for determining the Defect Reduction Amount, and if the two initial appraisers shall fail to agree on the third appraiser within five days then the parties shall submit the matter to the American Arbitration Association to select an impartial appraiser. For all purposes under this Agreement, the “ Defect Reduction Amount ” attributable to any Title Defect shall be (and any appraisal thereof shall determine) the amount of the costs of remedying such Title Defect. If any appraiser selected hereunder shall be unable to determine any Defect Reduction Amount pursuant to the foregoing provisions, then the parties shall cooperate and work reasonably with the appraiser in order to ascertain the Defect Reduction Amount in a reasonable and mutually satisfactory manner. Any appraiser selected hereunder shall be an M.A.I. appraiser of good professional standing who has experience appraising properties similar to the Owned Real Property or Ground Leased Property in question. Any appraisal costs incurred pursuant to this Section shall be shared equally by Seller and Purchaser. Any determination of a Defect

 

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Reduction Amount pursuant to this Section shall be final. After any Defect Reduction Amount is determined pursuant to this Section, such Defect Reduction Amount shall be included in the calculations used to adjust the Purchase Price pursuant to Section 3.3.

Section 2.14 NO DUTY TO CURE.

Except as set forth in Sections 2.8, 2.13 and 3.3 and Article V, Seller shall not have any obligation or duty to cure any Title Defect either before or after the Closing. Purchaser’s only rights in connection with any Title Defect shall be the rights set forth in Sections 2.8, 2.13 and 3.3 and Article V.

Section 2.15 COOPERATION AND EXPEDITED CLOSING.

Seller and Purchaser shall cooperate in good faith and shall use their commercially reasonable best efforts to consummate the transactions contemplated by this Agreement expeditiously. Without restricting or limiting the foregoing, Purchaser will assist Seller in complying with the applicable requirements of third Persons relating to the consummation of the transactions contemplated by this Agreement, including the expedited satisfaction of all Regulatory Approvals.

Article III.

CLOSING AND EFFECTIVE TIME

Section 3.1 EFFECTIVE TIME.

(a) The purchase of assets and assumption of liabilities provided for in this Agreement, and the conversion referred to in Section 4.7 (unless otherwise mutually agreed to by the parties hereto), shall occur at a closing (the “ Closing ”) to be held at the offices of Brownstein Hyatt Farber Schreck LLP, 100 City Parkway, Suite 1600, Las Vegas, Nevada 89106-4614 at 10:00 a.m., local time, or at such other time, place, and manner as the parties shall mutually agree, on a date to be mutually agreed upon between the parties, which date shall occur not earlier than three days nor later than ten days following the satisfaction or, where legally permitted, waiver of all conditions set forth in Articles IX and X (other than those conditions that by their nature are to be satisfied at the Closing).

(b) The effective time (the “ Effective Time ”) shall be 11:59 p.m., local time in Las Vegas, Nevada, on the day on which the Closing occurs (the “ Closing Date ”). Each of Purchaser and Seller shall use its commercially reasonable best efforts to effect the Closing as promptly as reasonably practicable, subject to the satisfaction or waiver, if permitted by law, of the conditions to Closing set forth in Articles IX and X.

Section 3.2 CLOSING.

(a) All actions taken and documents delivered at the Closing shall be deemed to have been taken and executed simultaneously, and no action shall be deemed taken nor any document delivered until all have been taken and delivered.

 

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(b) At the Closing, subject to all the terms and conditions of this Agreement, Seller shall execute and/or deliver, as applicable, to Purchaser the following:

(1) Grant, Bargain and Sale Deeds executed by Seller transferring all right, title and interest in and to each parcel of Owned Real Property to Purchaser, subject to Permitted Encumbrances, in substantially the form attached hereto as Exhibit 3.2(b)(1) and a State of Nevada Declaration of Value with respect to each such parcel;

(2) a Bill of Sale and Assignment of Contract Rights, in substantially the form attached hereto as Exhibit 3.2(b)(2), transferring to Purchaser all the Personal Property, the Coins and Currency and Real Property Contract Rights;

(3) an Assignment and Assumption Agreement in substantially the form attached hereto as Exhibit 3.2(b)(3), with respect to the Transferred Liabilities (“ Assignment and Assumption Agreement ”);

(4) an Assignment and Assumption of Leases executed by Seller, in substantially the form attached hereto as Exhibit 3.2(b)(4), pursuant to which Seller shall assign and Purchaser shall assume the Real Property Leases (“ Assignment and Assumption of Leases ”);

(5) such consents of landlords of the Real Property Leases listed on Schedule 6.9 to the assignment of the Leased Premises to Purchaser;

(6) estoppel certificates executed by the lessor of each Leased Premise in form and substance reasonably acceptable