Exhibit 10.1
BRANCH PURCHASE AND ASSUMPTION
AGREEMENT
This
Agreement, dated as of November 6, 2006 is made by and between Sun
National Bank, a national banking association organized under the
laws of the United States of America and having its principal place
of business in Vineland, New Jersey (“Seller”), and 1
st Constitution Bank, a commercial bank chartered under
the laws of the State of New Jersey and having its principal place
of business in Cranbury, New Jersey
(“Buyer”).
I.
DEFINITIONS
1.1 Certain Defined
Terms .
Some of
the capitalized terms appearing in this Agreement are defined
below. The definition of a term expressed in the singular also
applies to that term as used in the plural and vice
versa.
“Affiliate” means a Person that
directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, a
specified Person, except in those cases where the controlling
Person exercises control solely in a fiduciary capacity.
“Amount of Premium” has the meaning
set forth in Section 3.1 of this Agreement.
“Assets” has the meaning set forth
in Section 2.1 of this Agreement.
“Assignment” shall mean, with
respect to the Leased Realty, each Landlord’s written consent
to the assignment and assumption of such Lease related to the
Leased Realty or a certificate of estoppel with respect to the
remaining term of the Lease with respect to the Leased Realty for
the benefit of Buyer with respect to the Branch.
“ATM” means automatic teller
machine.
“Benefit Plan” means any pension,
profit-sharing, or other employee benefit, fringe benefit,
severance or welfare plan maintained by or with respect to which
contributions are made by, Seller or any of its Affiliates with
respect to Seller’s employees.
“Branch” means the branch office of
Seller located at 140 Mercer Street, Hightstown, New Jersey
08520.
“Branch Cash” means cash on hand at
the Branch, including vault cash, teller drawer cash, petty cash
and ATM cash.
“Business Day” means any Monday,
Tuesday, Wednesday, Thursday or Friday on which Seller is open for
business.
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“Closing” means the purchase of the
Assets by Buyer and the assumption of the Liabilities by Buyer on
the Closing Date.
“Closing Date” has the meaning set
forth in Section 9.1 of this Agreement.
“Deposit Accounts” means the deposit
accounts at the Branch, the balances of which are included in the
Deposits or would be so included if the Deposit Account had a
positive balance.
“Deposits” or “Deposit
Liabilities” means all deposits (as defined in 12 U.S.C.
Section 1813(l)) which are booked at the Branch on the Closing
Date, including in each case accrued but unpaid interest and both
collected and uncollected funds, but excluding (i) deposits held in
accounts for which Seller acts as fiduciary and are not
transferring from Seller to Buyer (other than deposits held by
Retirement Plans that are transferring from Seller to Buyer in
accordance with this Agreement) and (ii) deposits constituting
official checks, travelers checks, money orders or certified checks
(“Excluded Deposits” shall refer to excluded deposits
referred to at (i) and (ii)). A true and accurate list of the
Deposits as of a date within 5 days prior to the date of this
Agreement is attached hereto as Exhibit A.
“Dispute Resolver” means an
independent accounting firm or other independent third-party
mutually acceptable to Buyer and Seller to act as Dispute
Resolver.
“ERISA” means the Employee
Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” means any entity
that is considered one employer with Seller under Section 4001 of
ERISA or Section 414 of the Internal Revenue Code of 1986, as
amended.
“Equipment Leases” means those
operating and financial leases and conditional sales contracts
covering Fixed Assets which Seller may assign to Buyer without
restriction or with the lessor’s written consent.
“Federal Funds Rate” means, for any
day, the rate per annum (expressed on a basis of calculation of
actual days in a year) equal to the “near closing bid”
federal funds rate published in The Wall Street Journal on
the Business Day following the Closing Date.
“Fixed Assets” means all fixtures
(including signage poles), leasehold improvements, furnishings,
vaults, safe deposit boxes, equipment (including, for example, all
coin counters, security equipment and ATMs, but excluding any other
computer and telecommunications equipment located at the Branch),
supplies (other than forms and other supplies which bear
Seller’s name or logo), and other personal property, that are
owned or (to the extent of Seller’s interest as lessee)
leased by Seller, that are located at the Branch on the Closing
Date, as detailed on Schedule 2.1(a) .
“FDIC” means the Federal Deposit
Insurance Corporation.
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“Governmental Entity” means 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.
“Hazardous Material” means any
substance presently listed, defined, designated or classified as
hazardous, toxic, radioactive or dangerous or otherwise regulated,
under any applicable state or federal law relating to the
protection, preservation or restoration of the environment,
including, but not limited to, the following federal environmental
laws: the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Superfund Amendment and Reauthorization
Act, the Water Pollution Control Act of 1972, the Clean Air Act,
the Clean Water Act, the Resource Conservation and Recovery Act of
1976, the Solid Waste Disposal Act, the Toxic Substances Control
Act and the Insecticide, Fungicide and Rodenticide Act, each as
amended.
“Loans” means (i) those loans
identified on Exhibit B attached hereto pursuant to which Seller
has a security interest in a Deposit transferred hereunder, and
(ii) those lines of credit identified on Exhibit C attached hereto
which are provided as overdraft protection by Seller for a Deposit
transferred hereunder.
“Leased Realty” shall mean
Seller’s rights as lessee in and to any real property leased
by Seller at the Branch as detailed under the List of Leases set
forth at Schedule 1.2 , together with all of Seller’s
rights and interests in the leasehold improvements
therein.
“Liabilities” has the meaning set
forth in Section 2.2 of this Agreement.
“Overdrafts” means those overdrafts
of the book balance of any Deposit Accounts which are not overdrawn
for more than seven days as of the Closing Date and which are not
evidenced by a Loan.
“Person” means an association, a
corporation, an individual, a partnership, a trust or any other
entity or organization, including a Governmental Entity.
“Retirement Plans” means those
non-discretionary individual retirement accounts (IRAs) and Keogh
retirement plan accounts relating to the Deposits for which Seller
acts as custodian or trustee.
“Safe Deposit Contracts” has the
meaning set forth in Section 2.1(e) of this Agreement.
“Welfare Benefit Plans” means those
Benefit Plans which are “welfare benefit plans” as
defined by ERISA.
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II.
PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES
2.1 Purchase of
Assets .
Subject
to the terms and conditions of this Agreement, Seller agrees to
sell, assign and transfer possession of and all right, title and
interest of Seller in and to the following assets to Buyer
(collectively, the “Assets”) and Buyer agrees to
purchase the same from Seller, as of the close of business on the
Closing Date:
(a) the Fixed
Assets;
(b) the Branch
Cash;
(c) the
Overdrafts;
(d) Seller’s
rights with respect to the Leased Realty;
(e) all lease contracts
related to rental of safe deposit boxes at the Branch (“Safe
Deposit Contracts”) and the rented and unrented safe deposit
boxes at the Branch;
(f) With regard to each
Retirement Plan, all of Seller’s right, title and interest in
and to the related plan or trustee or custodial arrangement, and in
and to all assets held by Seller pursuant thereto; and
(g) the
Loans.
2.2 Assumption of
Liabilities .
Buyer
agrees to assume, pay, perform and discharge the following
liabilities of Seller (the “Liabilities”) as of the
close of business on the Closing Date:
(a) the Deposits and all
terms and agreements relating to the Deposit Accounts, excluding
the deposit accounts set forth at Schedule 2.2(a)
;
(b) Seller’s
duties and responsibilities relating to the Deposits arising after
the Closing Date with respect to: (i) the abandoned property laws
of any state, (ii) any legal process which is served on Seller on
or before the Closing Date with respect to claims against or for
the Deposits that is not against Seller or is over and above the
amount of the Deposits; or (iii) any other applicable
law;
(c) Seller’s
duties and responsibilities with respect to any Equipment
Leases;
(d) Seller’s
duties and responsibilities with respect to the Safe Deposit
Contracts;
(e) Seller’s
duties and responsibilities with respect to the Retirement
Plans;
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(f)
Seller’s duties and responsibilities with respect to the
Leased Realty; and
(g) Seller’s
duties and responsibilities with respect to the Loans.
2.3 Transfer of
Records .
(a) At the Closing, Seller also shall transfer
to Buyer possession and all right, title and interest of Seller in
and to all books and records relating to the Assets and the
Liabilities which are maintained at the Branch.
(b) All books and records relating to the Assets
and the Liabilities held by either Seller or Buyer after the
Closing Date shall be maintained in accordance with (and for the
period provided in) that party’s standard recordkeeping
policies and procedures and subject to applicable laws and
regulations governing records retention. Throughout such period,
the party holding such books and records shall comply with the
reasonable request of the other party to provide copies of
specified documents, at the expense of the requesting party. The
requesting party shall give reasonable notice of any such
request.
2.4 Tax Matters
.
Each
party shall be responsible for its sales and use taxes and any
interest and penalties thereon which are payable or arise as a
result of this Agreement or the consummation of any of the
transactions contemplated by this Agreement. Seller shall be
responsible for any taxes as a result of the sale and transfer of
the Leased Realty and the payment of any taxes or levies that may
arise under the New Jersey Bulk Sales Act with respect to the
Branch for all transactions occurring on or prior to the Closing
Date.
2.5 Proration of
Certain Items .
Except
as detailed at Section 2.4 herein, all rental income or expenses
associated with the operation of the Branch (including, but not
limited to rental lease payments related to the Branch, safe
deposit box rental fees actually collected, and any security
deposits or prepaid rents paid related to such Leased Realty), real
estate taxes, personal property taxes (tangible or intangible),
utility, water and sewer charges and assessments, and any and all
other pre-paid charges related to the operation of the Branch shall
be prorated between Buyer and Seller as of the close of business on
the Closing Date. In addition, any quarterly assessments actually
paid by Seller to the Deposit Insurance Fund of the FDIC prior to
the Closing Date for the quarterly assessment period containing the
Closing Date with respect to the Deposits, shall be prorated
between Buyer and Seller as of the close of business on the Closing
Date based upon the daily assessment rate in effect as of such
assessment quarter with respect to Seller, the Deposits subject to
assessment that actually transfer as of the Closing Date and the
number of calendar days remaining until the end of such assessment
quarter, such that Seller shall receive a reimbursement from Buyer
for such number of calendar days remaining until the end of such
assessment quarter.
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2.6 Back Office
Conversion .
Seller
and Buyer shall cooperate with each other and shall use their
reasonable best efforts (consistent with their internal day-to-day
operations) in order to cause the timely transfer of information
concerning the Assets and the Liabilities which is maintained on
Seller’s data processing systems so that Buyer can
incorporate such information into Buyer’s data processing
systems no later than the opening of business on the Business Day
following the Closing Date, including testing of such data
transfers prior to the Closing Date. Buyer shall bear the costs of
any third-party programming requirements related to such data
processing efforts.
2.7 Certain
Transitional Matters Following the Closing Date
(a) Buyer agrees to
honor in accordance with applicable law, up to the collected amount
on deposit (and any other funds available by reason of any
agreement between the depositor and Buyer), all properly drawn and
presented checks, drafts, electronic debits and credits and
withdrawal orders presented to Buyer by mail, over its counters,
throughout the check clearing system, and Automated Clearing House
of the banking industry, by depositors of the accounts assumed,
whether drawn on the checks, withdrawal or draft forms provided by
Seller, or by Buyer, and all other respects to discharge, in the
usual course of the banking business, the duties and obligations of
Seller with respect to the balances due and owing to the depositors
whose accounts are assumed by Buyer. Buyer’s obligation under
this Section to honor checks, withdrawal, draft forms and
electronic debits and credits provided by Seller and carrying its
imprint shall expire at the close of business on the 60
th business day following the Closing Date or a date
mutually agreeable to both parties.
(b) If any of such
depositors, instead of accepting the obligation of Buyer to pay the
Deposit Liabilities assumed, shall demand payment from Seller for
all or any part of any such assumed Deposit Liabilities, Seller
shall not be liable or responsible for making such payment.
Instead, Seller may, at its discretion, assume custody of the check
or other item presented for payment, including electronic items, on
an account which has been transferred with the Branch, batch such
items and send them to Buyer by fax and by mail by the next
business day after receipt thereof by Seller. Seller shall not, at
any time, be liable or responsible for making payment on such items
by reason of its obtaining custody of them for transmittal to
Buyer. Nothing herein shall, however, be construed to relieve the
Seller of any liability which it may have for accepting custody of
any check or item presented for payment on a Deposit which Seller
does not timely batch and send to Buyer in accordance with this
Section 2.7(b), to the extent Buyer’s ability to satisfy such
check or other item has been prejudiced by such delay.
In order
to reduce the continuing charges to Seller through the check
clearing system of the banking industry which will result from
check forms of Seller being used after the Closing Date by the
depositors whose accounts are assumed, Buyer agrees, at its cost
and expense within 30 days prior to the Closing Date, to notify
depositors of Buyer’s assumption of Deposit Liabilities.
Within 10 days of the Closing Date, Buyer shall, at its sole cost
and expense and without cost to depositors, (i) furnish each
depositor of an assumed account with not less than fifty (50)
checks on the forms of Buyer, with instructions to utilize
Buyer’s
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checks and
to destroy unused checks of Seller as of the Closing Date and (ii)
notify holders of ATM cards that all ATM cards held by Branch
customers will be void as of the Closing Date, and that they will
receive new ATM cards on or immediately prior to the Closing Date.
Buyer will send Seller a copy of notification letters forwarded to
depositors by Buyer. Seller hereby agrees that after the 60
th business day following the Closing Date or a date
mutually agreeable to both parties, it shall, with respect to the
Branch, at its sole option, either: (1) return such check or other
item with reference to the maker thereof; or (2) assume custody
thereof and deliver the same in the manner aforesaid.
(c) Buyer agrees, no
later than the start of the second business day after demand by
Seller, to pay Seller an amount equivalent to the amount of any
uncollected item included in a depositor’s balance on the
Closing Date which is returned after the Closing Date as not
collected to the extent that Buyer has not suffered a loss with
respect thereto. Buyer shall be required to make such payment for
an item only up to the amount on deposit with Buyer at the time
Seller makes the demand aforesaid.
(d) Buyer shall timely
forward to Seller any mail, facsimile or other correspondence,
received at the Branch after the Closing Date, that is (i)
addressed to Seller, or (ii) addressed to Buyer but relating to an
obligation of Seller that originated prior to the Closing
Date.
(e) Adjustments after
the Closing Date shall be made daily as may be required. Such
adjustments shall be by wire transfer.
2.8 Information
Returns .
Buyer
shall file all required information returns with the Internal
Revenue Service with respect to interest paid on the Deposits after
the Closing Date, interest received on Overdrafts after the Closing
Date, and any other information returns required with respect to
the Assets and the Liabilities for the periods beginning after the
Closing Date. Seller will file all required information returns
with the Internal Revenue Service and any information returns
required by state or local tax authorities with respect to interest
paid on the Deposits on or before the Closing Date, interest
received on the Overdrafts on or before the Closing Date, and any
other information returns required with respect to the Assets and
the Liabilities for periods ending on or before the Closing
Date.
2.9 Assignment and
Assumption of Branch Lease .
Promptly
following execution of this Agreement, Buyer and Seller, shall use
its commercially reasonable efforts to obtain the Assignment from
the Landlord and any other party related to the Leased Realty
effective as of the Closing Date.
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III.
CONSIDERATION
3.1 Calculation
.
In
consideration of Buyer’s purchase of the Assets and its
assumption of the Liabilities, Seller agrees to pay to Buyer in
immediately available funds not later than 2:00 pm, New Jersey
time, on the Closing Date an amount equal to the Deposits to be
transferred under Section 2.2(a), plus accrued interest on such
Deposits to be transferred, less the sum of the following, in each
case calculated as of the close of business on the Closing Date
(except as otherwise detailed herein):
(a) the sum equal to the
aggregate net book value of the Fixed Assets and Leasehold
Improvements as of the Closing Date as set forth at Schedule 2.1(a)
;
(b) the amount of Branch
Cash;
(c) the principal amount
of the Overdrafts, provided however that Seller shall refund to
Buyer the amount of such Overdrafts to the extent that such amount
shall remain uncollected as of 30 days following the Closing Date,
plus accrued interest from the Closing Date through the date of
collection at the contract rate determined in accordance with the
policies of Seller as detailed at Schedule 3.1(c)
;
(d) the net amount
(which may be a negative amount) of any adjustments under Section
2.5 (i.e., the amount payable by Buyer less the amount payable by
Seller);
(e) an amount equal to
the Amount of Deposit Premium. The “Amount of Deposit
Premium” shall be equal to: (i) four percent (4.00%) of the
average closing daily Deposits attributable to the Branch for the
thirty (30) calendar day period ending as of the calendar day two
days prior to the Closing Date, in the case of Deposits which are
not municipal Deposits or Deposits of a state or local government
or agency, plus (ii) four percent (4.00%) of the average closing
month-end balance for the twelve (12) calendar month periods
completed as of or immediately prior to the Closing Date, in the
case of Deposits attributable to the Branch which are municipal
Deposits or Deposits of a state or local government or agency. For
purposes of this subparagraph, Deposits shall exclude any pledged
deposits or accounts where such pledged deposits or accounts secure
a loan that is not being transferred and any Excluded
Deposits;
(f) an amount in cash
equal to prepaid safe deposit box rental fees actually collected,
prorated for the period from the Closing Date to the end of the
respective Safe Deposit Contract; and
(g) the aggregate
outstanding principal and interest balances with respect to the
Loans.
3.2 Settlement
.
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(a) Not
later than three (3) business days prior to the Closing Date,
Seller shall deliver to Buyer the Closing Statement prepared in
accordance with Seller’s customary practices and procedures
used in preparing financial statements, substantially in the form
of Exhibit B to this Agreement, which shall be completed
based upon information as of the close of business five business
days prior to the Closing Date and shall be the basis of the
payment made to Buyer’s account as of the Closing Date in the
manner detailed at Section 3.1 herein (the “Settlement
Payment”).
(b) The parties shall
cooperate in the preparation of the Adjusted Closing Statement
within 30 days after the Closing Date, which shall be prepared in
accordance with Seller’s customary practices and procedures
used in preparing financial statements, substantially in the form
of Exhibit C to this Agreement, which shall be completed as
of the close of business on the Closing Date. On the Business Day
after Buyer and Seller agree to the Adjusted Closing Statement, or
Buyer and Seller receive notice of any determination of the
Adjusted Closing Statement under subsection (c) (the
“Adjusted Settlement Date”), Seller shall pay to Buyer
(or Buyer shall pay to Seller, as the case may be) an amount (the
“Adjustment Payment”) equal to the amount due stated on
the Adjusted Closing Statement, plus interest from the day after
the Closing Date until the calendar day before the Adjustment
Payment is made at a rate per annum (calculated daily based
on a 360-day year) equal to the daily Federal Funds
Rate.
(c) The Settlement
Payment and the Adjustment Payment shall each be made by wire
transfer of immediately available funds to the account of the party
receiving the payment, which account shall be identified by the
party receiving the funds to the other party not less than two
Business Days prior to such payment.
(d) Any errors
associated with the Deposits or other items or calculations as
detailed on the Closing Statement or the Adjusted Closing Statement
(“Mistakes-in-Fact”) which are determined as of the
date of the Adjusted Closing Statement shall be reconciled as of
such date and appropriate adjustments of payments shall be made to
Seller or Buyer, as appropriate, at such time. Notwithstanding the
foregoing, or anything else herein to the contrary, any
Mistakes-in-Fact which shall be determined by Seller or Buyer
thereafter related to the Transaction consummated under this
Agreement shall nevertheless be reconciled by adjustment or payment
to Seller or Buyer, as appropriate, within 30 days of such
determination; provided that either party shall notify the other of
any such alleged Mistakes-in-Fact within one year after the Closing
Date in order for a claim to be made with respect
thereto.
(e) Seller and Buyer
shall use their best efforts to resolve any disagreement related to
the Adjusted Closing Statement during the thirty (30) day period
following receipt by Seller of notice from Buyer as to any such
disagreement. If the disagreement is not resolved during such
thirty (30) day period, the dispute shall be referred to a Dispute
Resolver, and such Adjusted Closing Statement shall be modified by
any such resolution and thereupon such Adjusted Closing Statement
shall become final and binding on Buyer and Seller provided
, however , that for any claim that does not exceed $5,000,
in the event the fees of such Dispute Resolver as estimated by such
firm would exceed fifty percent (50%) of the net amount in dispute,
the parties agree that such firm will not be engaged by either
party
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and that such net amount in dispute will be
equally apportioned between Seller, on the one hand, and Buyer, on
the other hand. Such Dispute Resolver shall be instructed to
resolve the disputed items within ten (10) Business Days of
engagement, to the extent reasonably practicable. All
determinations under this Agreement made by a Dispute Resolver
shall be binding upon Buyer and Seller. Buyer and Seller shall
share equally in the cost of any Dispute Resolver.
IV.
SELLER’S REPRESENTATIONS AND WARRANTIES
Seller
makes the following representations and warranties to
Buyer.
4.1 Power and
Authority .
(a) The execution and
delivery of this Agreement has been duly authorized by all
necessary corporate action by Seller. Upon execution and delivery
by both parties, this Agreement will constitute a valid and binding
obligation of Seller, enforceable in accordance with its terms,
subject to conservatorship, receivership, and a court’s right
under general principles of equity to refuse to direct specific
performance.
(b) The performance of
this Agreement by Seller will not violate any provision of the
Articles of Association or Bylaws of Seller, or any applicable law,
rule, regulation, or any governmental permit or license or order or
any contract or instrument by which Seller is bound, except for
such violations which alone, or taken in the aggregate, would not
reasonably be expected to have a material adverse effect on the
consummation of the transactions contemplated by this Agreement (a
“Seller Material Adverse Effect”).
(c) The Seller is a
national banking association duly organized and validly existing
under the laws of the United States of America, and has full
corporate power to own the Branch, and to conduct the business of
the Branch and to enter into and perform this Agreement.
4.2 Litigation and
Regulatory Proceedings .
There
are no actions, complaints, petitions, suits or other proceedings,
or any decree, injunction, judgment, order or ruling, entered,
promulgated or pending or (to Seller’s knowledge) threatened
against Seller or any of the Assets or the Liabilities, which
alone, or taken in the aggregate, reasonably would be expected to
have a Seller Material Adverse Effect. No governmental agency has
notified Seller that it would oppose or not approve or consent to
the transactions contemplated by this Agreement and Seller knows of
no reason for any such opposition, disapproval or non-consent,
including, but not limited to Seller’s compliance with the
Community Reinvestment Act, the Bank Secrecy Act and the
Truth-in-Lending Act.
4.3 Consents and
Approvals .
Except
for required regulatory approvals, no consents, approvals, filings
or registrations with any third party or any public body, agency or
authority are required in connection with Seller’s
consummation of the
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transactions contemplated by this Agreement,
other than any required Assignments relating to the Leased Realty
or any required lessor consents to the assignment of any the
Equipment Leases, as detailed at Schedule 4.3 , and as may
be required as a result of any facts or circumstances relating
solely to Buyer.
4.4 Leased
Realty.
Schedule 4.4 sets forth a copy of the Lease applicable to the
Leased Realty. Except for (a) exceptions to title that do not
interfere materially with Seller’s use and enjoyment of the
Leased Realty, (b) liens for current real estate taxes
