EXHIBIT 2.1
BRANCH PURCHASE AND
ASSUMPTION AGREEMENT
This BRANCH PURCHASE AND ASSUMPTION AGREEMENT
(the “Agreement”), dated as of the 20th day of July,
2005, is made and entered into by and between OLD NATIONAL BANK, a
national banking association having its principal office in
Evansville, Indiana (the “Seller”), and GREENE COUNTY
BANK, a Tennessee state bank having its principal office in
Greeneville, Tennessee (the “Purchaser”).
WITNESSETH
:
WHEREAS, the Seller conducts banking and other
related activities at five branch banking offices in Montgomery
County, Tennessee; and
WHEREAS, the Seller desires to sell certain
loans and other assets and assign certain deposit and other
liabilities and obligations attributed to such branch banking
office to the Purchaser, and the Purchaser desires to purchase such
loans and assets and assume such liabilities and obligations upon
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the
foregoing premises, the representations, warranties and mutual
agreements and covenants contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as
follows:
ARTICLE
I
PURCHASE OF ASSETS;
ASSUMPTION OF LIABILITIES; PAYMENT
1.1
Identification of Branch . The Seller presently owns and
operates five branch banking offices (the "Branches") at the
following locations:
25 Jefferson Street, Clarksville, TN (Main
Office);
1805 Madison Street, Clarksville, TN (Hilldale
Branch);
2786 Wilma Rudolph Blvd., Clarksville, TN (St.
Bethlehem Branch);
111 Cunningham Lane, Clarksville, TN (Cunningham
Branch); and
599 Firestation Road, Clarksville, TN (Sango
Branch).
The Branches are the only branch banking offices
of the Seller which are the subject of this Agreement. The Seller
hereby conveys the Branches to the Purchaser through the sale to
the Purchaser of certain Assets (as hereinafter defined) and the
assumption by the Purchaser of certain Assumed Liabilities (as
hereinafter defined).
1.2 Time and
Place of Closing . The closing of the transactions contemplated
hereby (the “Closing”) shall occur at such time and on
such date as may be mutually agreed to by the parties (the
“Closing Date”), provided that both parties shall use
their reasonable efforts to close such transactions on or before
October 7, 2005. The Closing shall be held at the offices of Bass,
Berry & Sims PLC, 315 Deaderick Street, Suite 2700, Nashville,
Tennessee 37238 or at such other location as may be mutually agreed
to by the parties.
1.3 Purchase
of Assets . Subject to Section 1.4 hereof and the other terms
and conditions of this Agreement, the Seller hereby agrees to sell,
transfer, convey, assign and deliver to the Purchaser, and the
Purchaser agrees to purchase, accept and receive from the Seller,
on the Closing Date the following assets, properties and rights
free and clear of all security interests, liens, mortgages and
encumbrances, except for the security interests, liens, mortgages
and encumbrances that are in favor of the Seller with respect to
the Loans (as hereinafter defined) or that arise under applicable
law and except for the matters disclosed in Section 3.5(a) hereof
with respect to the Real Property (collectively, the
“Assets”):
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(a)
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all loans at
their respective outstanding principal amounts plus all accrued but
unpaid interest and fees thereon and related unamortized
origination costs or fees attributed to the Branches as of the
close of business on the day immediately preceding the Closing
Date, together with all security interests, liens, mortgages,
guaranties and collateral related thereto, but excluding all loan
loss reserves related thereto, all of such loans as of July 18,
2005, being listed on Exhibit 1.3(a) hereto (which Exhibit
shall be updated to reflect new loans made and loans paid off
between the date of this Agreement and the Closing Date), and
delivered to the Purchaser at the Closing (collectively, the
“Loans”), provided, however, that the Loans shall not
include any loans described in Section 1.4 hereof;
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(b)
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(i) all
customer files relating to the Loans and the Deposit Liabilities
(as hereinafter defined), (ii) all promissory notes, loan
agreements, security agreements, mortgages, guaranties and other
loan documents relating to the Loans, (iii) all signature
cards, account agreements and other deposit account documents
relating to the Deposit Liabilities, (iv) all contracts and
rental agreements relating to the Seller’s safe deposit box
business at the Branches, and (v) such other files, records,
documents and instruments as are set forth on Exhibit 1.3(b)
hereto;
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(c)
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all overdrafts
associated with all Deposit Liabilities assumed by the Purchaser
under Section 1.5 hereof;
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(d)
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all fee simple
right, title and interest in and to the real property on which the
Branches’ activities are conducted, the legal description of
which is set forth on Exhibit 1.3(d) hereto, and the
buildings, improvements and fixtures situated thereon together with
all assignable real property rights and appurtenances pertaining
thereto (collectively, the “Real Property”);
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(e)
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all assignable
leases affecting the Branches, including all leases of real
property, all equipment leases for equipment located in the
Branches, and all assignable operating contracts associated with
the Branches (excluding any master contracts which cover other
branches of the Seller), all of which leases, equipment leases, and
operating contracts are listed on Exhibit 1.3(e);
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(f)
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all rights,
title and interest in and to all personal property, furniture,
fixtures, equipment, leasehold improvements, ATM machines, and
other tangible personal property located at the Real Property and
owned by the Seller and used at the Branches, as listed on
Exhibit 1.3(f) hereto (collectively, the “Fixed
Assets”), together with any manufacturer’s warranties
thereon which are in effect on the Closing Date and which are
assignable to the Purchaser;
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(g)
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all petty,
teller, ATM and vault cash maintained at the Branches as of the
close of business on the Closing Date, the exact amounts of which
will be certified by the Seller as of the Closing Date;
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(h)
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all rights to
the extent assignable in, to and under any vendor single interest
insurance or other insurance on collateral transferred to the
Purchaser with the Loans, except with respect to such policies
issued through Central Life Insurance Company;
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(i)
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subject to
Section 1.7 hereof, all safe deposit contracts and rental
agreements for the safe deposit boxes located at the
Branches;
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(j)
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the local
telephone and fax numbers associated specifically with the
Branches;
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(k)
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all securities
brokerage accounts maintained by the Seller or any of its
affiliates or any brokerage company with which Seller or its
affiliates have a relationship for any customer attributed to any
of the Branches;
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(l)
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all rights of
the Seller or any of its affiliates to solicit and service, and all
relationships of the Seller or any of its affiliates with, any and
all customers of the Branches in connection with, annuities,
securities and investment products, including, without limitation,
all rights of the Seller or any of its affiliates to receive
income, premiums, fees or commissions relating to annuities,
securities or investment products or portfolio or investment
management services or activities following the Closing Date by the
Seller or any of its affiliates to customers attributed to the
Branches; and
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(m)
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all merchant
services accounts associated with Deposit Liabilities assumed by
the Purchaser under Section 1.5 hereof.
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The Purchaser
hereby understands and agrees that it is purchasing only the Assets
and assuming only the Assumed Liabilities (as hereinafter defined)
specifically identified in this Agreement and, except as may be
expressly provided for in this Agreement, the Purchaser has no
interest in or right to (y) any customers of any affiliate of the
Seller and (z) any relationship which the Seller may have with any
customer of any other office or branch of the Seller, including,
without limitation, any trust or insurance relationship or any
other service (other than loan, deposit, brokerage, investment or
safe deposit services) of the Seller or any of its affiliates or of
any other office or branch of the Seller which may be related to
the Deposit Liabilities or the Loans. No right to the use of any
sign, trade mark, trade name, service mark or corporate name of
Seller, or any of its affiliates, is being sold
hereunder.
1.4 Excluded
Assets . All assets, properties and rights of the Seller not
expressly included in the Assets are excluded from the transactions
contemplated by this Agreement, including, without limitation, the
following (collectively, the “Excluded
Assets”):
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(a)
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all trade
marks, service marks, trade names, corporate names (including,
without limitation, the names “Old National”,
“Old National Bancorp” and “Old National
Bank”), copyrights, medallion program stamps, signs, logos,
URLs, domain names (and associated e-mail addresses), Internet web
sites, proprietary information, stationery, forms, labels, shipping
materials, brochures, advertising and marketing materials and other
similar property or rights owned by, relating to or referencing the
Seller or any of its affiliates;
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(b)
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the following
loans attributed to the Branches as of the close of business on the
day immediately preceding the Closing Date shall not be sold to the
Purchaser pursuant to this Agreement:
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(i)
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all loans with
respect to which on the close of business on the day immediately
preceding the Closing Date (A) the collateral securing the loan has
been repossessed by the Seller, (B) the security interest in the
collateral securing the loan has not been perfected, or (C)
collection efforts have been instituted or delivery or foreclosure
proceedings have been filed;
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(ii)
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all loans
attributed to the Branches as of the close of business on the day
immediately preceding the Closing Date which are recorded on the
Seller’s books and records as non-accrual or which have
principal or interest that is sixty (60) days or more past due;
and
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(iii)
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all loans
attributed to the Branches as of the close of business on the day
immediately preceding the Closing Date with respect to which the
borrower has filed a petition for relief under the United States
Bankruptcy Code prior to the Closing Date;
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(c)
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all rights of
the Seller or any of its affiliates to solicit and service, and all
relationships of the Seller or any of its affiliates with, any and
all customers of the Seller (whether or not attributed to the
Branches) in connection with, insurance products or policies,
including, without limitation, all rights of the Seller or any of
its affiliates to receive income, premiums, fees or commissions
relating to insurance products or policies prior to or following
the Closing Date by the Seller or any of its affiliates to
customers attributed to the Branches;
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(d)
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all rights of the Seller or any of its
affiliates to solicit and service, and all relationships of the
Seller or any of its affiliates with, any and all customers of the
Seller (whether or not attributed to the Branches) in connection
with, trusts, fiduciary services or activities or related portfolio
or investment management services or activities, including, without
limitation, all rights of the Seller or any of its affiliates to
receive income, premiums, fees or commissions relating to trusts,
fiduciary services or activities prior to or following the Closing
Date from any customers attributable to the Branches;
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(e)
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all routing
numbers of the Seller used in connection with the Deposit
Liabilities or the Branches;
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(f)
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all computer,
networking and data processing equipment, hardware and software
located at or utilized by the Branches, including, without
limitation, servers, workstations, personal computers, CRTs,
printers, routers, modems, network hubs, data storage media,
operating systems, local area networks, custom software and
off-the-shelf software;
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(g)
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all telephone
systems leased by or located at the Branches, as identified on
Exhibit 1.4(h) hereto;
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(h)
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all records of
the Seller, except as expressly provided in Section 1.3(b) of this
Agreement;
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(i)
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all precious
metals maintained in the vaults of any of the Branches;
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(j)
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all other
assets, properties and rights of the Seller or any of its
affiliates relating to, located at, attributed to or used at
branches, facilities or locations of the Seller or any of its
affiliates other than the Branches; and
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(k)
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all stock and
assets used in or useful in the operations of Central Life
Insurance Company, including any insurance policies issued by
Central Life Insurance Company and any right to receive the
premiums associated with those insurance polices.
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1.5
Assumption of Liabilities . The Purchaser hereby agrees,
subject to Section 1.6 hereof and the other terms and conditions of
this Agreement, that on and after the Closing Date it shall assume
and fully and timely perform, discharge and pay, in accordance with
their respective terms, all of the liabilities and obligations of
the Seller relating to:
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(a)
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the deposit
accounts attributed to the Branches as of the close of business on
the day immediately preceding the Closing Date (including, without
limitation, all checking, savings, certificate of deposit,
individual retirement, Keogh, money market, time deposit,
repurchase agreements and sweep accounts; provided ,
however , that it shall not include those certain swap
account listed on Exhibit 1.5(a)(i) hereto) together with
all accrued interest relating to such deposit accounts, such
deposit accounts as of July 18, 2005, being listed on Exhibit
1.5(a)(ii) hereto (which Exhibit shall be updated to reflect
new deposits made and deposits withdrawn or paid between the date
of this Agreement and the Closing Date) and shall be delivered to
the Purchaser at the Closing (collectively, the “Deposit
Liabilities”);
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(c)
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all obligations
relating to all escrow funds and dealer reserves under the Loans
listed on Exhibit 1.5(d);
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(d)
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the leases,
equipment leases and operating contracts listed on
Exhibit 1.3(e);
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(e)
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all safe
deposit boxes and all rental agreements and contracts for the safe
deposit boxes located at the Branches as of the Closing
Date;
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(f)
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the operation
from and after the Closing Date of the Branches in the ordinary
course of business, including, without limitation, the payment or
provision of salary, compensation and employee benefits to the
Employees (as hereinafter defined) arising from and after the
Closing Date;
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(g)
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the obligations
of the Seller to pay the remaining two (2) installments each in the
amount of Ten Thousand Dollars ($10,000.00) to the Economic
Development Corporation of Clarksville, Tennessee; and
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(h)
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all liabilities
or obligations which are expressly identified elsewhere in this
Agreement as being assumed, performed, discharged or paid by the
Purchaser.
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The liabilities and obligations described in
this Section 1.5 that the Purchaser hereby agrees to assume and
fully and timely perform, discharge and pay are referred to
collectively in this Agreement as the “Assumed
Liabilities”. On and after the Closing Date, the Seller shall
have no duties, responsibilities, liabilities or obligations under
or with respect to the Assumed Liabilities.
1.6 Excluded
Liabilities . All liabilities and obligations of the Seller not
expressly included in the Assumed Liabilities are excluded from the
transactions contemplated in this Agreement, including, without
limitation, the following (collectively, the “Excluded
Liabilities”):
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(a)
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all deposit
accounts attributed to the Branches as of the close of business on
the day immediately preceding the Closing Date which are subject to
any order, agreement or encumbrance (other than as reflected in the
deposit agreement or certificate) that in any way restricts the
payment of funds representing such account on the order of the
depositor;
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(b)
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all amounts and
deposits held by the Seller as trustee, agent or similar
relationship relating to trust accounts or to other customer
relationships not being transferred pursuant to this
Agreement;
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(c)
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all liabilities
associated with cashier’s checks or other official bank
checks and traveler’s checks issued by the Seller at the
Branches prior to the Closing Date; and
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(d)
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any and all
other liabilities and obligations of any kind or nature, whether
actual, contingent, disclosed, undisclosed, known or unknown, of
the Seller relating to the Branches that are not expressly included
in the Assumed Liabilities.
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1.7 Safe
Deposit Business .
* The
company is requesting confidential treatment of the text set forth
in brackets below.
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(a)
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On and after
the Closing Date, the Purchaser shall assume and fully and timely
perform and discharge all of the Seller’s obligations with
respect to the Seller’s safe deposit box business at the
Branches in accordance with the terms and conditions of the
contracts or rental agreements related to such safe deposit
boxes.
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(b)
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On the Closing
Date, the Seller shall transfer the records related to such safe
deposit box business to the Purchaser, and the Purchaser shall
maintain and safeguard all such records and be responsible for
granting proper access to and protecting the contents of the safe
deposit boxes at the Branches.
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(c)
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All safe
deposit box rental payments collected by the Seller before the
Closing Date for the respective current rental terms shall be
prorated between the parties as of the Closing Date.
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1.8 Bills of
Sale; Deeds; Assignments; Documentation of Assumption . On the
Closing Date, the Seller shall deliver to the Purchaser such bills
of sale, deeds, assignments and instruments of transfer, reasonably
satisfactory in form and substance to the Seller and the Purchaser,
pursuant to which the Seller will transfer title to the Real
Property by general warranty deed and all of its right, title and
interest in and to the other Assets to the Purchaser. On the
Closing Date, the Purchaser shall deliver to the Seller such
undertakings and agreements, satisfactory in form and substance to
the Seller and the Purchaser, pursuant to which the Purchaser shall
assume and agree to fully and timely perform, discharge and pay, in
accordance with their respective terms, all of the Assumed
Liabilities.
1.9
Assumption Subject to Certain Terms . The liabilities and
obligations being assumed by the Purchaser pursuant to this
Agreement shall be assumed subject to the terms and conditions of
the lease, deposit, loan, security, mortgage and other written
agreements relating thereto and all applicable laws, statutes,
rules, regulations and other legal requirements.
1.10
Payment . In consideration of the assumption by the
Purchaser of the Assumed Liabilities, the Seller shall transfer the
Assets to the Purchaser and shall pay the Purchaser by wire
transfer of immediately available funds on the Closing Date an
amount equal to the Deposit Liabilities determined in accordance
with Section 1.5(a) hereof reduced by the sum of (a) the principal
amount of the Loans, plus the accrued but unpaid interest and fees
thereon and related unamortized origination costs or fees, but net
of unearned income and excluding loan loss and general reserves
related thereto, as shown on the books and records of the Seller as
of the close of business on the day immediately preceding the
Closing Date, (b) the net book value of the Real Property on
Seller’s books and records as of the close of business on the
day immediately proceeding the Closing Date as computed in
accordance with accounting principles generally accepted in the
United States (“GAAP”), (c) the net book value of
the Fixed Assets on Seller’s books and records as of the
close of business on the day immediately proceeding the Closing
Date as computed in accordance with GAAP, (d) the face amount
of the teller, ATM and vault cash maintained at the Branches as of
the Closing Date, determined in accordance with Section 1.3(g)
hereof, (e) [__]*% of the Deposit Liabilities excluding the
repurchase agreement liabilities, (f) One Hundred Fifty Thousand
Dollars ($150,000.00) for the transfer of the securities business
contemplated by Sections 1.3(k), 1.3(l) and 3.26 hereof, and (g)
the net book value of the overdrafts associated with the Deposit
Liabilities on Seller’s books and records as of the close of
business on the day immediately preceding the Closing Date as
computed in accordance with GAAP, plus the accrued but unpaid fees
related to such overdrafts, as shown on the books and records of
the Seller as of the close of business on the day immediately
preceding the Closing Date; and such payment formula shall be
further adjusted in accordance with Section 1.11 hereof. In the
event the preceding formula produces a negative number, the
absolute value of such amount shall be paid by the Purchaser to the
Seller by wire transfer of immediately available funds on the
Closing Date, and the Seller shall have no obligation to make any
payment hereunder to the Purchaser. The payment formula referred to
above is for the sole purpose of determining the amount of cash
transferable at the Closing Date and shall not constitute an
allocation of the purchase price to any particular asset being
transferred or liability being assumed pursuant hereto.
1.11
Pro-Rated Adjustment of Income and Expenses . All utility
payments, real and personal property taxes and similar expenses and
charges relating to the Real Property and the Fixed Assets, all
Federal Deposit Insurance Corporation (“FDIC”) premiums
and assessments and all other prepaid expenses relating to the
operation of the Branches (but excluding any such prepaid expenses
relating to the Excluded Assets or the Excluded Liabilities) shall
be prorated between the parties as of the Closing Date on the basis
of a 365-day year. To the extent any of such items has been prepaid
by the Seller for a period extending beyond the Closing Date, there
shall be a proportionate monetary adjustment in favor of the Seller
and, to the extent due and payable after the Closing Date for a
period prior to the Closing Date, there shall be a proportionate
monetary adjustment in favor of the Purchaser. All taxes, utility
payments and other expenses and charges relating to the Branches to
the extent not prorated, which arise or are incurred, assessed or
imposed on and after the Closing Date for the operation of the
Branches after the Closing Date shall be paid by the
Purchaser.
1.12
Allocation of Purchase Price . The purchase price for the
Assets being purchased and the Assumed Liabilities being assumed by
the Purchaser pursuant to this Agreement shall be allocated on an
allocation schedule to be agreed upon by the Purchaser and the
Seller within thirty (30) days after the Closing Date. This
allocation is intended to comply with the allocation method
required by Section 1060 of the Internal Revenue Code of 1986, as
amended. The Purchaser and the Seller shall cooperate to comply
with all substantive and procedural requirements of Section 1060
and any regulations thereunder, and the allocation shall be
adjusted if and to the extent necessary to comply with the
requirements of Section 1060.
1.13 Transfer
Taxes and Recording Fees . The Purchaser shall pay all transfer
and conveyance taxes and recording fees in connection with the
transfer of the Assets (including the Real Property) to the
Purchaser.
1.14
Adjustments . It is understood by the parties hereto that
the books and records of the Seller may not be complete as of the
Closing Date and that certain assets and liabilities of the type
constituting the Assets and the Assumed Liabilities may not have
been included therein because (a) such Assets and Assumed
Liabilities (i) were not posted on the Closing Date, or (ii) are
carried in the Seller’s suspense account; or (b) for other
reasons, complete information with respect to the Assets and the
Assumed Liabilities was not otherwise available. Within thirty (30)
days after the Closing Date, the Seller and the Purchaser shall
prepare a revised closing statement setting forth the payment
required pursuant to Sections 1.10 and 1.11 of this Agreement
taking into account, among other things, assets and liabilities of
the type constituting the Assets and the Assumed Liabilities and
the transactions occurring through the Closing Date and each shall
afford the other and their accountants and attorneys the
opportunity to review all work papers and documentation used in
preparing the revised closing statement. Within ten (10) days after
completion of the revised closing statement ("Adjustment Date"),
the Purchaser shall pay to the Seller or the Seller shall pay to
the Purchaser, as appropriate, the difference between the amount
paid on the Closing Date and the amount required to be paid
pursuant to the revised closing statement. In the event that a
dispute arises as to the appropriate amounts to be paid to either
party on the Adjustment Date, each party shall pay to the other on
such Adjustment Date all amounts other than those as to which a
dispute exists. Any disputed amounts retained by a party which are
later found to be due to the other party shall be paid to such
other party promptly upon resolution with interest thereon from the
Adjustment Date to the date paid at the applicable Federal Funds
Rate. In the event of such a dispute, either party may submit the
matter to a firm of certified public accountants mutually agreeable
to Seller and Purchaser (the "Mediator"), which shall determine
such dispute in accordance with the terms and conditions of this
Agreement within thirty (30) calendar days after the submission.
The parties shall each pay one-half of the fees and expenses of the
Mediator, except that the Mediator may assess each party for such
amount of its fees and expenses as it determines equitable under
the circumstances. The revised closing statement, as agreed upon by
the parties and determined under this subsection, shall be final
and binding upon the parties.
ARTICLE
II
INDEMNIFICATION
2.1
Seller’s Indemnification of Purchaser . Subject to any
limitations in this Section 2.1 through Section 2.4, Seller shall
indemnify, hold harmless, and defend the Purchaser and each of
Purchaser’s, and its affiliates’, directors, officers,
employees, subsidiaries, affiliates, successors or assigns
(together, the “Purchaser Indemnified Parties”) from
and against any costs or expenses (including reasonable attorneys'
fees and expenses), judgments, fines, claims, losses, damages and
assessments (each, a “Loss”, collectively, "Losses") a
Purchaser Indemnified Party incurs as a result of (a) any breach by
Seller of any of its covenants or agreements contained herein
occurring prior to the Effective Time or any of its covenants
surviving the Closing, (b) any breach by Seller of any of its
representations and warranties contained herein, or in any other
certificate, document, writing or instrument delivered by Seller
pursuant to this Agreement, (c) any Excluded Liabilities, and (d)
Seller's operation of the Branches prior to the Closing.
2.2
Purchaser’s Indemnification of Seller . Purchaser
shall indemnify, hold harmless, and defend Seller and its
affiliates, and the officers, directors, employees, successors and
assigns of any of them (together, the “Seller Indemnified
Parties”) from and against any Losses that a Seller
Indemnified Party incurs as a result of (a) any breach by Purchaser
of any of its covenants or agreements contained herein occurring
prior to the Closing Date or any of its covenants surviving the
Closing Date, (b) any breach by Purchaser of any of its
representations and warranties contained herein or in any
certificate, document, writing or instrument delivered by Purchaser
pursuant to this Agreement, (c) any Assumed Liability; and (d)
Purchaser's operation of the Branches occurring from and after the
Closing Date.
2.3 Claims
for Indemnity .
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A claim for
indemnity shall be made by the claiming party at any time prior to
the one (1) year anniversary of the Closing Date by the giving of
written notice thereof to the other party. Such written notice
shall set forth in reasonable detail the basis upon which such
claim for indemnity is made. In the event that any bona fide claim
is made within such period, the indemnity relating to such claim
shall survive until such claim is resolved.
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If any person
or entity not a party to this Agreement, including any governmental
authority, shall make any demand or claim or file or make or
threaten to file or make any lawsuit or other action or
investigation, which demand, claim, lawsuit, action or
investigation may result in any Loss to a party hereto of the kind
for which such party may seek indemnification pursuant to Section
2.1 or Section 2.2 hereof, such indemnified party shall notify the
indemnifying party of such demand, claim or lawsuit within ten (10)
business days of such demand, claim, filing, making or threat;
provided, however, that any failure by the indemnified party to so
notify the indemnifying party shall not relieve the indemnifying
party from its obligations hereunder, except to the extent that the
indemnified party is actually prejudiced by such failure to give
such notice. Following receipt of notice of a demand, claim,
lawsuit, action or investigation, the indemnifying party (or its
designee) shall have the option, at its cost and expense, to assume
the defense of such matter and to retain counsel (not reasonably
objected to by the indemnified party) to defend any such demand,
claim or lawsuit, and the indemnifying party shall not be liable to
the indemnified party for any fees of other counsel or any other
expenses (except as expressly provided to the contrary herein) with
respect to the defense of such matter, other than reasonable fees
and expenses of counsel employed by the indemnified party for any
period during which the indemnifying party (or its designee) has
not assumed the defense thereof; provided, however, that any
indemnified party shall have the right to participate, at its own
expense, with respect to such claim, demand, action or proceeding.
In effecting the settlement of any such matter, the indemnifying
party (or its designee), or the indemnified party, as the case may
be, shall act in good faith, shall consult with the other party and
shall enter into only such settlement as the other party shall
consent in writing, such consent not to be unreasonably withheld or
delayed. An indemnifying party (or its designee) shall not be
liable for any settlement not made in accordance with the preceding
sentence. Each party shall cooperate fully with the other party in
connection with the defense of any such matter, and shall provide
the other party with access to the properties, books and records
and personnel of the Branches as the other party may deem
appropriate in connection with the defense of such
matter.
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2.4
Limitations on Indemnification . Except as otherwise set
forth herein, Seller shall not be required to indemnify any
Purchaser Indemnified Party, and Purchaser shall not be required to
indemnify any Seller Indemnified Party, unless the aggregate amount
of all Losses incurred by the Purchaser Indemnified Parties, in the
aggregate, or Seller Indemnified Parties, in the aggregate,
pursuant to Sections 2.1 or 2.2 (as the case may be), exceeds
$25,000; provided, however, that no loss shall be deemed to have
been sustained by any party to the extent of (i) any tax savings
realized by such party with respect thereto, or (ii) any proceeds
received or receivable by such party from any insurance policies
with respect thereto. Once such aggregate amount of Losses incurred
by the Purchaser Indemnified Parties, on the one hand, or Seller
Indemnified Parties, on the other hand, exceeds $25,000, a
Purchaser Indemnified Party or Seller Indemnified Party, as the
case may be, shall thereupon be entitled to indemnification only
for amounts in excess of such $25,000. The limitations contained in
this section shall not apply to any claim of common law fraud or
any claims for indemnification for Excluded Liabilities or Assumed
Liabilities.
ARTICLE
III
CERTAIN AGREEMENTS OF
PURCHASER AND SELLER
3.1
Regulatory Approvals .
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(a)
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The Purchaser,
at its sole obligation and expense, shall, as soon as practicable
following the date of this Agreement, but in no event later than
August 8, 2005, prepare all applications, as required by applicable
law, and file such applications with the appropriate federal and
state regulatory authorities for approval to purchase the Assets
and assume the Assumed Liabilities, to establish a branch at the
location of the Branches and to effect in all other respects the
transactions contemplated hereby (the “Governmental
Approvals”). The Purchaser agrees to (i) make draft copies of
such applications (except for any confidential portions thereof)
available to the Seller at least two (2) business days prior to the
filing thereof, (ii) treat and pursue approval of the applications
in a diligent manner and on a priority basis, (iii) request
confidential treatment by the appropriate federal and state
regulatory authorities of all information submitted in the
applications entitled to confidential treatment, (iv) promptly
provide the Seller with a copy of the applications as filed (except
for any confidential portions thereof) and all approvals, denials,
requests, notices, orders, opinions, correspondence and other
documents with respect thereto, and (v) use its reasonable efforts
to obtain all Governmental Approvals.
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(b)
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The Seller
shall, as soon as practicable following the date of this Agreement,
prepare and file with the appropriate federal and state regulatory
authorities notice of its intent to cease operation of the Branches
and to consummate the transactions contemplated hereby and
thereafter shall use its reasonable efforts to obtain any required
permission or approval of such regulatory authorities to cease
operating the Branches.
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3.2
Access . The Seller shall afford to the Purchaser and its
authorized representatives, upon forty-eight (48) hours prior
notice (or upon less prior notice as agreed by the parties),
reasonable access to the employees, properties, books and records
directly related to the Branches in order that the Purchaser, at
Purchaser’s sole expense, may have full opportunity to make a
reasonable review and investigation of the Assets and the Assumed
Liabilities at reasonable times during the Seller’s regular
business hours without materially interfering with the normal
business and operations of the Branches or the affairs of the
Seller. The Seller shall furnish the Purchaser with such
information as to its business, operations and properties relating
to the Branches as the Purchaser may, from time to time, reasonably
request and as shall be available which is required for inclusion
in all governmental applications necessary to effect the
transactions contemplated hereby. Nothing in this Section 2.2 shall
be deemed to require the Seller to breach any obligation of
confidentiality or to reveal any proprietary information, trade
secrets or marketing, business or strategic plans.
3.3
Confidentiality . The Purchaser shall, and shall cause its
directors, officers, employees, agents and representatives to, hold
in strict confidence and not disclose to any other person or entity
without the prior written consent of the Seller (a) the terms of
this Agreement, and (b) all information received by the Purchaser
or its directors, officers, employees, agents or representatives
from or with respect to the Seller, the Branches, the Assets, the
Assumed Liabilities, the customers or the transactions contemplated
hereby, except such information (i) as may be publicly available
other than through a breach of this Agreement or the wrongful
dissemination of such information by the Purchaser or its
directors, officers, employees, agents or representatives, (ii) as
may be required to be disclosed by applicable law or regulation, or
(iii) as required to obtain the Government Approvals provided that
Purchaser may make such information available to its agents,
attorneys and representatives and the agents, attorneys and
representatives of financial institutions providing financing to
Purchaser who agree to keep such information in strict confidence
and to use such information only in connection with providing such
financing to Purchaser. The Seller and the Purchaser agree that
neither shall issue any news or press release nor provide
information to any reporter or the media regarding this Agreement
or the transactions contemplated hereby, except as is required by
applicable law, without obtaining the prior approval of the other
party. In addition to the foregoing, the Seller and the Purchaser
are parties to a separate confidentiality agreement relating to the
Branches and the transactions contemplated hereby which shall
remain binding upon the parties and in full force and effect in
accordance with its terms (the “Confidentiality
Agreement”).
3.4
Conversion of Accounts; Transfer and Delivery of Assets and
Deposit Liabilities .
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(a)
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Prior to the
Closing Date, the Purchaser shall assure Seller that its data
processing systems are capable of receiving the Assets and the
Deposit Liabilities on the Closing Date. Seller and Purchaser shall
cooperate in good faith to assure an orderly transition of
ownership of the Assets and Assumed Liabilities to
Purchaser.
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(b)
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Commencing
promptly following the date hereof, appropriate personnel of Seller
and Purchaser shall meet to discuss and draft a mutually acceptable
transition plan covering operational aspects of the transition
consistent with the terms of this Agreement, including handling and
settlement of the following, as applicable: checks on deposit
accounts and home credit line accounts, loan payments, direct
deposits and direct debits through ACH or otherwise, point of sale
transactions, ATM transactions, error resolution matters pursuant
to Regulations E and Z of the Federal Reserve Board, miscellaneous
account adjustments, daily settlement, and other settlement and
transition items. The parties shall have the transition plan
completed thirty (30) calendar days from the date
hereof.
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(c)
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On the Closing
Date, the Seller shall:
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(i)
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deliver to the
Purchaser such of the Assets as shall be capable of physical
delivery;
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(ii)
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execute,
acknowledge and deliver to the Purchaser all such endorsements,
assignments, bills of sale, deeds (which with respect to the Real
Property shall be general warranty deeds) and other instruments of
conveyance, assignment and transfer as, in the reasonable judgment
of the Purchaser, shall be necessary and appropriate to consummate
the sale and transfer of the Assets to the Purchaser and to vest in
the Purchaser the legal and equitable title to the Assets, free and
clear of all liens and encumbrances, except as otherwise permitted
in this Agreement;
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(iii)
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assign,
transfer and deliver to the Purchaser such of the following records
pertaining to the Deposit Liabilities as exist and are available in
whatever form or medium is maintained by the Seller:
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all orders,
agreements and contracts between the Seller and depositors
attributed to the Branches and records of similar character,
including signature cards; and
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all records of
account maintained for each depositor attributed to the
Branches;
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(iv)
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produce a bank
statement for each of the Loans transferred and Deposit Liabilities
assumed and mail, at its expense, a statement dated as of the day
immediately prior to the Closing Date to the customer with respect
to each of the Deposit Liabilities; and
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(v)
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assign,
transfer and deliver to the Purchaser the promissory notes,
security agreements, mortgages and related agreements and loan
files relating to or evidencing all Loans to the extent the same
exist and in whatever form or medium is maintained by the
Seller.
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3.5
Retention of and Access to Files and Records Following the
Closing Date .
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(a)
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The Purchaser
agrees that it shall maintain, preserve and safely keep, for as
long as may be required by applicable law and in accordance with
customary business practices, all of the files, books of account
and records relating to the Branches (including, without
limitation, the Assets and the Assumed Liabilities) transferred
hereunder by Seller for the joint benefit of itself and the Seller,
and that it shall permit the Seller and its employees and
representatives, at any reasonable time during normal business
hours and upon forty-eight hours prior notice and at the
Seller’s expense, to inspect, make extracts from or copies of
any such files, books of account and records as the Seller shall
deem reasonably necessary.
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(b)
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In the event
that some of the Seller’s records concerning the Deposit
Liabilities cannot reasonably be segregated from the Seller’s
records regarding accounts not transferred pursuant to this
Agreement, the Seller shall not deliver such records to the
Purchaser but shall maintain, preserve and safely keep such records
for as long as may be required by applicable law. For such period
as may be required by applicable law, the Seller shall provide
research and account history services related to any such records
to the Purchaser at the Purchaser's request. Such services shall be
provided on the same service schedule as services then provided by
the Seller to existing customers and the Purchaser shall pay the
same rates for such services as the Seller then charges its
existing customers. Such services do not include information
required to be provided by Seller under Section 3.15.
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(c)
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In the event
that some of the Seller’s records concerning the Excluded
Loans cannot reasonably be segregated from the Purchaser’s
records regarding Loans transferred pursuant to this Agreement, the
Purchaser shall maintain, preserve and safely keep such records for
as long as may be required by applicable law. For such period as
may be required by applicable law, the Purchaser shall provide
research and account history services related to any such records
to the Seller at the Seller's request and Seller shall pay the same
rates for such services as Purchaser shall charge its then existing
customers.
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3.6
Safekeeping . The Seller agrees to transfer and deliver to
the Purchaser on the Closing Date all safe deposit box contents,
including without limitation, cash, securities, papers, valuables
and other items(collectively, “Safekeeping Items”),
held by the Seller in safekeeping for its customers at the
Branches, together with all records relating thereto (in whatever
form or medium is maintained by the Seller). The Purchaser agrees
to assume, honor and discharge, from and after the Closing Date,
the duties and obligations of the Seller with respect to such safe
deposit boxes and the Safekeeping Items and shall be entitled to
any right or benefit arising from such safekeeping business from
and after the Closing Date. The Purchaser agrees to execute as of
the Closing Date a receipt for such Safekeeping Items.
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(a)
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The active
employees of the Seller who are assigned to the Branches as of the
Closing Date (the “Employees”) shall, as of the Closing
Date, be terminated by the Seller and become employees-at-will of
the Purchaser at the base salary at least equivalent to the rate of
base salary paid by the Seller to each of the Employees on the day
immediately preceding the Closing Date. The Seller shall be
responsible for the filing of Forms W-2 with the Internal Revenue
Service and all required filings with state tax authorities with
respect to wages and benefits paid to each such employee for all
periods ending prior to the Closing Date.
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(b)
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Immediately
following the Closing, the Purchaser shall make available to the
Employees substantially the same employee benefits on substantially
the same terms and conditions as the Purchaser offers to its
similarly situated employees. Years of service of each of the
Employees with the Seller, and any predecessors, prior to the
Closing shall be credited for purposes of (i) eligibility under the
Purchaser’s employee welfare benefit plans, and (ii)
eligibility and vesting, but not for purposes of benefit accrual or
contributions, under all other employee benefit plans of the
Purchaser, including, without limitation, all pension, retirement,
profit sharing, 401(k) and employee stock ownership plans. The
Seller shall be responsible for and pay all salary, compensation
and employee benefits (including, without limitation, vacation,
sick, personal and other paid time off), and all payroll taxes in
connection therewith, for the Employees accrued, owned or earned
for all periods prior to the Closing Date. The Purchaser shall be
responsible for and pay all salary, compensation and employee
benefits (including, without limitation, vacation, sick personal
and other paid time off), and all payroll taxes in connection
therewith, for the Employees accrued, owned or earned for all
periods on and after the Closing Date.
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(c)
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In accordance
with the provisions of the Health Insurance Portability and
Accountability Act (“HIPAA”) and the terms of the
Purchaser’s group health, hospitalization, medical, dental
and disability plans (collectively, the “Purchaser’s
Plans”), the Employees who become participants in the
Purchaser’s Plans shall be given “creditable
coverage” credit for their coverage under the Seller’s
group health, hospitalization, medical, dental and disability plans
under the pre-existing condition limitation provisions of the
Purchaser’s Plans. In addition, if a condition was not a
“pre-existing condition” for a participant in the
Seller’s group health, hospitalization, medical, dental and
disability plans, then it shall not be considered to be a
pre-existing condition under the Purchaser’s Plans; provided,
however, that if an Employee’s condition is being excluded as
a pre-existing condition under the relevant Seller’s plan of
the Closing Date, then the Purchaser may treat such condition as a
pre-existing condition under the relevant Purchaser’s Plan
for the period such condition would have been treated as a
pre-existing condition under the Seller’s plan.
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(d)
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With respect to
any Employee on short term disability or temporary leave of
absence, upon conclusion of his or her short term disability or
temporary leave of absence, subject to the terms and conditions of
the applicable plans and policies of the Purchaser and applicable
law, each Employee on such disability or leave shall receive the
salary and vacation benefits effective when he or she went on
disability or leave and, to the extent practicable, shall be
offered by the Purchaser the same or a substantially equivalent
position to his or her position with the Seller.
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(e)
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The Purchaser
shall pay all severance obligations arising out of the termination
of any Employee’s employment after the Closing Date in
accordance with Purchaser’s severance plans, policies and
procedures with the period of years of service with the Seller
credited towards the calculation of severance benefits paid by the
Purchaser; provided, however, that if, before the one year
anniversary of the Closing Date, any Employee experiences a
reduction in base salary, a worksite relocation of more than 30
miles or a termination of employment by Purchaser for any reason
other than cause (as defined generally by Purchaser’s
personnel policies and procedures), such Employee shall be entitled
to severance pay in an amount at least equivalent to the severance
pay the Employee would have received under the Seller’s
severance plans, policies and procedures had such Employee been
eligible for payments thereunder.
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(f)
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Seller will
comply with the Consolidated Omnibus Budget Reconciliation Act of
1985 ("COBRA"), for all of Seller's former employees and other
qualifying beneficiaries for whom COBRA qualifying events occurred
before or coincident with the Closing Date and Purchaser shall have
no responsibility for any such coverage. Seller shall indemnify and
hold Purchaser harmless from all Losses arising as a result of any
alleged violation of the Workers Adjustment and Retraining
Notification Act to which Seller is subject or is alleged to be
subject.
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3.8 Payment
of Items After the Closing Date. Following the Closing Date
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(a)
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The Purchaser
agrees to pay in accordance with applicable law and customary
banking practices all properly drawn and presented checks, drafts
and withdrawal orders presented to the Purchaser by mail, over the
counter or through the check clearing system of the banking
industry by depositors related to the Deposit Liabilities, whether
drawn on the checks, withdrawal or draft forms provided by the
Seller or by the Purchaser, and in all other respects to discharge,
in the usual course of the banking business, the duties and
obligations of the Seller with respect to the balances due and
owing to the depositors with respect to whom the Purchaser has
assumed the Deposit Liabilities. The Purchaser's obligations
hereunder to honor checks, drafts and withdrawal orders on forms
provided by Seller and carrying Seller's imprint (including name
and transit routing number) shall not apply to any such check,
draft or withdrawal order presented to the Purchaser more than
sixty (60) days following the Closing Date.
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(b)
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If any of such
depositors, instead of accepting the obligation of the Purchaser to
pay the Deposit Liabilities, shall demand payment for all or any
part of any such Deposit Liabilities, the Seller shall not be
liable or responsible for making such payment.
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(c)
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After the
Closing, the Seller shall have the rights and obligations of a
“Collecting bank” or “Intermediary bank”
under Article 4 of the Uniform Commercial Code as adopted in
Indiana Code § 26-1-4 et seq .,
with respect to items drawn on the Deposit
Liabilities which are received by Seller for processing. Items
received for processing against the Deposit Liabilities shall be
grouped and delivered to the Purchaser within the time limits
provided by the Indiana Uniform Commercial Code in a special cash
letter separately identified as “Transferred Accounts Cash
Letter.” For purposes of paying the Purchaser’s
obligations to the Seller under this Section 3.8, the Purchaser
will establish a settlement account with the Seller at the Closing
Date in a collected amount equal to One Hundred Thousand Dollars
($100,000), which amount shall be maintained by the Purchaser for a
period of sixty (60) days following the Closing Date, against which
will be (i) debited the checks, ret
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