EXHIBIT 10.3
Execution Copy
PURCHASE AND ASSUMPTION
AGREEMENT
dated as of
February 19, 2009
between
WACHOVIA BANK,
N.A.,
and
PREMIERWEST BANK
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TABLE OF CONTENTS
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Page
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ARTICLE 1
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CERTAIN DEFINITIONS
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1.1
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Certain
Definitions
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1
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1.2
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Accounting
Terms
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9
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1.3
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Interpretation
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9
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ARTICLE 2
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THE P&A TRANSACTION
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2.1
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Purchase and
Sale of Assets
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9
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2.2
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Assumption of
Liabilities
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10
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2.3
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Purchase
Price
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11
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2.4
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Sale and
Transfer of Servicing and Escrows
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11
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2.5
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Assumption of
IRA and Keogh Account Deposits
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12
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ARTICLE 3
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CLOSING PROCEDURES;
ADJUSTMENTS
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3.1
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Closing
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12
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3.2
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Payment at
Closing
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13
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3.3
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Adjustment of
Purchase Price
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13
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3.4
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Proration;
Other Closing Date Adjustments
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14
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3.5
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Seller
Deliveries
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14
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3.6
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Purchaser
Deliveries
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15
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3.7
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Delivery of the
Loan Documents
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15
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3.8
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Collateral
Assignments and Filing
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16
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3.9
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Owned Real
Property Filings
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16
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ARTICLE 4
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TRANSITIONAL MATTERS
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4.1
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Transitional
Arrangements
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16
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4.2
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Customers
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16
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4.3
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Direct
Deposits
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17
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4.4
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Direct
Debits
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18
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4.5
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Escheat
Deposits
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18
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4.6
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Access to
Records
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18
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4.7
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Interest
Reporting and Withholding
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18
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4.8
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Negotiable
Instruments
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19
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4.9
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ATM/Debit
Cards; POS Cards
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19
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4.10
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Data Processing
Conversion for the Branches and Handling of Certain Items
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19
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Page
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4.11
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Information
Regarding Mortgage Loans
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21
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ARTICLE 5
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REPRESENTATIONS AND WARRANTIES OF
SELLER
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5.1
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Corporate
Organization and Authority
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21
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5.2
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No
Conflicts
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21
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5.3
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Approvals and
Consents
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22
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5.4
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Davis Branch
Lease
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22
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5.5
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Litigation
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22
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5.6
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Regulatory
Matters
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22
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5.7
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Compliance with
Laws
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22
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5.8
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Loans
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23
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5.9
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Records
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23
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5.10
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Title to
Assets
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23
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5.11
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Deposits
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24
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5.12
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Environmental
Laws; Hazardous Substances
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24
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5.13
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Brokers’
Fees
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24
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5.14
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Real
Property
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25
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5.13
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Intentionally
Deleted
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25
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5.16
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Employment
Matters; Employee Relations
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25
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5.17
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Absence of
Certain Changes
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26
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5.18
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Insurance
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26
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5.15
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Limitations on
Representations and Warranties
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26
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ARTICLE 6
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REPRESENTATIONS AND WARRANTIES OF
PURCHASER
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6.1
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Corporate
Organization and Authority
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27
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6.2
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No
Conflicts
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27
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6.3
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Approvals and
Consents
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27
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6.4
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Regulatory
Matters
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27
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6.5
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Litigation
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28
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6.6
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Operation of
the Branches
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28
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6.7
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Financing
Available
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28
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6.8
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Brokers’
Fees
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28
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ARTICLE 7
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COVENANTS OF THE PARTIES
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7.1
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Activity in the
Ordinary Course
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28
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7.2
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Access and
Confidentiality
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30
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7.3
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Regulatory
Approvals
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31
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7.4
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Landlord
Consent
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31
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iii
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Page
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7.5
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Efforts to
Consummate; Further Assurances
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31
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7.6
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Solicitation of
Accounts
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32
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7.7
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Insurance
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32
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7.8
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Servicing Prior
to Closing Date
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33
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7.9
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Change of Name,
Etc
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33
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ARTICLE 8
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TAXES AND EMPLOYEE
BENEFITS
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8.1
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Tax
Representations
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33
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8.2
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Proration of
Taxes
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34
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8.3
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Sales and
Transfer Taxes
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34
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8.4
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Information
Returns
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34
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8.5
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Like Kind
Exchange
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34
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8.6
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[Intentionally
Deleted]
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34
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8.7
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Transferred
Employees
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34
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ARTICLE 9
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CONDITIONS TO CLOSING
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9.1
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Conditions to
Obligations of Purchaser
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37
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9.2
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Conditions to
Obligations of Seller
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38
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ARTICLE 10
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TERMINATION
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10.1
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Termination
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38
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10.2
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Effect of
Termination
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39
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ARTICLE 11
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INDEMNIFICATION
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11.1
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Indemnification
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39
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11.2
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Exclusivity
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41
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11.3
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AS-IS, WHERE-IS
Sale; Waiver of Warranties
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42
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ARTICLE 12
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MISCELLANEOUS
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12.1
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Survival
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42
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12.2
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Assignment
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42
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12.3
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Binding
Effect
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43
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12.4
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Public
Notice
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43
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iv
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Page
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12.5
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Notices
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43
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12.6
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Parent
Financial Corporation Obligation
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44
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12.7
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Expenses
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44
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12.8
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Governing
Law
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44
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12.9
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Entire
Agreement; Amendment
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44
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12.10
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Third Party
Beneficiaries
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45
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12.11
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Counterparts
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45
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12.12
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Headings
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45
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12.13
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Severability
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45
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12.14
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Specific
Performance
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45
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v
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List of Schedules
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Schedule
1.1(a)
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Bank Employees
on Leave
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Schedule
1.1(b)
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Branches/Real
Properties
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Schedule
1.1(d)
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Excluded
Deposits and Loans
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Schedule
1.1(e)
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Loans
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Schedule
1.1(f)
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Knowledge of
Seller
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Schedule
2.1(a)(iii)
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Personal
Property; Personal Property Leases
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Schedule
2.1(a)(vii)
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Other
Assets
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Schedule
2.2(a)(vii)
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Accrued
Liabilities
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Schedule
3.5(a)
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Form of
Deed
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Schedule
3.5(b)
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Form of Bill of
Sale
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Schedule
3.5(c)
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Form of
Assignment and Assumption Agreement
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Schedule
3.5(d)
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Form of
Assignment of Lease and Assumption Agreement
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Schedule
3.5(e)
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Form of
Certificate of Officer, Seller
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Schedule
3.6(c)
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Form of
Certificate of Officer, Purchaser
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Schedule
4.10(e)
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Form of Daily
Settlement
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Schedule
5.4-3
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Davis Branch
Lease
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Schedule
5.17
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Absence of
Certain Changes
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Schedule
6.3
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Purchaser
Regulatory Approvals
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Schedule
7.1
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Conduct of
Business
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Confidential
Schedule 10.1
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Termination
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This
PURCHASE AND ASSUMPTION AGREEMENT , dated as of February 19, 2009
(“ Agreement ”), between Wachovia Bank,
N.A. (“ Seller ”) and PremierWest Bank (“
Purchaser
”). PremierWest Bancorp, an Oregon corporation and parent of
Purchaser (“ Parent ”), is
executing this Agreement solely for purposes of Section
12.6(a).
RECITALS
A. Seller . Seller is a
national banking association with its principal office located in
Charlotte, North Carolina.
B. Purchaser . Purchaser is
an Oregon state-chartered banking corporation with its principal
office located in Medford, Oregon.
C. Purchase and Assumption
Transaction .
Purchaser desires to acquire from Seller, and Seller desires to
sell to Purchaser, certain banking operations of Seller, in
accordance with and subject to the terms and conditions of this
Agreement.
D. Continuation of Service
. Purchaser and Seller
each intend to continue providing retail and business banking
services in the geographic regions served by the Branches (as
defined below) to be acquired by Purchaser under this
Agreement.
NOW, THEREFORE , in
consideration of the premises and the mutual promises and
obligations set forth herein, the parties agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
1.1 Certain Definitions
. The terms set forth
below are used in this Agreement with the following
meanings:
“ Accounting Firm
” means Deloitte & Touche.
“ Accrued Interest
” means, as of any
date, (a) with respect to a Deposit, interest which is accrued on
such Deposit to but excluding such date and not yet posted to the
relevant deposit account and (b) with respect to a Loan, interest
which is accrued on such Loan to but excluding such date and not
yet paid.
“ Accrued Liabilities
” has the meaning set forth in Section 2.2(a).
“ ACH Direct Deposit
Cut-Off Date ” has the meaning set forth in Section
4.3.
“ACM” has the meaning
set forth in Section 5.12(d).
“ Adjusted Payment
Amount ” means
(x) the aggregate balance (including Accrued Interest) of the
Deposits and Accrued Liabilities, minus (y) the Purchase Price,
each as set forth on the Final Closing Statement. For avoidance of
doubt, the Adjusted Payment Amount may be a negative
amount.
“
Adjustment Date ” has the meaning set forth in Section
3.3.
“ Affiliate ”
means, with respect to any person, any other person directly or
indirectly controlling, controlled by or under common control with
such person. As used in this definition, the term
“person” shall be broadly interpreted to include any
corporation, company, partnership and individual or group.
“ Agreement ”
means this Purchase and Assumption Agreement, including all
schedules, exhibits and addenda, each as amended from time to time
in accordance with Section 12.9(b).
“ Assets ” has
the meaning set forth in Section 2.1(a).
“ Assignment and
Assumption Agreement ” has the meaning set forth in
Section 3.5(c).
“ Branch Employees
” means the
employees of Seller working at the Branches at the Closing Date
(including those employees who on the Closing Date are on family
and medical leave, military leave or personal, short-term
disability or pregnancy leave and who are eligible to return to
work under Seller’s policies and who are listed on Schedule
1.1(a)).
“ Branch ” or
“ Branches ” means each of the banking offices
of Seller at the locations identified on Schedule 1.1(b)
hereto.
“ Business Day
” means a day on
which banks are generally open for business in California and which
is not a Saturday or Sunday.
“ Cash on Hand
” means, as of any
date, all petty cash, vault cash, teller cash, on-premise ATM cash,
prepaid postage and cash equivalents held at a Branch.
“ Closing ” and
“ Closing Date ” refer to the closing of the
P&A Transaction, which is to be held at such time and date as
provided in Article 3 hereof.
“ Code ” means
the Internal Revenue Code of 1986, as amended, together with any
rules and regulations promulgated thereunder.
“ Davis Branch
” means the Branch located at 333 F Street, Davis,
California.
“ Davis Branch Lease
” means the lease
under which Seller leases the land and building relating to the
Davis Branch.
“ Davis Deposit(s)
” means deposit
liabilities with respect to deposit accounts booked by Seller at
the Davis Branch or allocated by Seller to the Davis Branch as of
the close of business on the Closing Date, which constitute
“deposits” for purposes of the Federal Deposit
Insurance Act, 12 U.S.C. § 1813, including collected and
uncollected deposits and Accrued Interest, but excluding (a)
deposit liabilities with respect to accounts booked by Seller at
the Davis Branch and under or pursuant to any judgment,
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decree or order of any court; (b) deposit
liabilities with respect to accounts registered in the name of a
trust for which Seller serves as trustee (other than deposits held
by an IRA or Keogh Account); (c) deposit liabilities with respect
to accounts booked by Seller at the Davis Branch for which Seller
serves as guardian or custodian (other than deposits held by an IRA
or Keogh Account); (d) Excluded IRA/Keogh Account Deposits and
other deposit liabilities, if any, designated as “Excluded
Deposits”, and (e) deposits in accounts that have been in an
overdrawn status for more than forty-five days at the Closing.
“ Deductible ”
shall have the meaning set forth in Section 11.1(e).
“ Deposit-Related
Loans ” means
all loans secured by a Deposit as of the close of business on the
Closing Date that are linked to an open account and are not sixty
(60) or more calendar days delinquent as of the Closing
Date.
“ Deposit(s)
” means deposit
liabilities with respect to deposit accounts booked by Seller at
the Branches or allocated by Seller to the Branches as of the close
of business on the Closing Date, which constitute
“deposits” for purposes of the Federal Deposit
Insurance Act, 12 U.S.C. § 1813, including collected and
uncollected deposits and Accrued Interest, but excluding (a)
deposit liabilities with respect to accounts booked by Seller at
any Branch and under or pursuant to any judgment, decree or order
of any court; (b) deposit liabilities with respect to accounts
registered in the name of a trust for which Seller serves as
trustee (other than deposits held by an IRA or Keogh Account); (c)
deposit liabilities with respect to accounts booked by Seller at
any Branch for which Seller serves as guardian or custodian (other
than deposits held by an IRA or Keogh Account); (d) Excluded
IRA/Keogh Account Deposits and other deposit liabilities, if any,
designated as “Excluded Deposits”, and (e) deposits in
accounts that have been in an overdrawn status for more than
forty-five days at the Closing.
“ Draft Closing
Statement ”
means a draft closing statement, prepared by Seller, as of the
close of business on the third (3 rd ) Business Day preceding the Closing
Date setting forth an estimated calculation of both the Purchase
Price and the Estimated Payment Amount.
“ Encumbrances
” means all
mortgages, claims, charges, liens, encumbrances, easements,
limitations, restrictions, commitments and security interests,
except for statutory liens securing tax and/or other payments not
yet due, liens incurred in the ordinary course of business,
including liens in favor of mechanics or materialmen, and such
other liens, charges, security interests or encumbrances as do not
materially detract from the value or materially and adversely
affect the current use of the properties or assets subject thereto
or affected thereby or which otherwise do not materially impair the
value of or business operations at such properties and except for
obligations pursuant to applicable escheat and unclaimed property
laws relating to the Escheat Deposits.
“ Environmental Law
” means any
Federal, state, or local law, statute, rule, regulation, code, rule
of common law, order, judgment, decree, injunction or agreement
with any Federal, state, or local governmental authority, (a)
relating to the protection, preservation or restoration of the
environment (including air, water vapor, surface water,
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groundwater, drinking water supply,
surface land, subsurface land, plant and animal life or any other
natural resource) or to human health or safety or (b) the exposure
to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release
or disposal of hazardous substances, in each case as amended and
now in effect. Environmental Laws include the Clean Air Act (42 USC
§7401 et seq .); the Comprehensive Environmental
Response Compensation and Liability Act (42 USC §9601 et
seq .); the Resource Conservation and Recovery Act (42 USC
§6901 et seq .); the Federal Water Pollution Control
Act (33 USC §1251 et seq .); and the
Occupational Safety and Health Act (29 USC §651 et seq
.).
“ Escheat Deposits
” means, as of any
date, Deposits and safe deposit box contents, in each case held on
such date at the Branches which become subject to escheat, in the
calendar year in which the Closing occurs, to any governmental
authority pursuant to applicable escheat and unclaimed property
laws.
“ Estimated Payment
Amount ” means
(x) the aggregate balance (including Accrued Interest) of the
Deposits and Accrued Liabilities, minus (y) the Estimated Purchase
Price, each as set forth on the Draft Closing Statement as
reasonably agreed upon prior to Closing between Seller and
Purchaser. For avoidance of doubt, the Estimated Payment Amount may
be a negative amount.
“ Estimated Purchase
Price ” means
the Purchase Price as set forth on the Draft Closing
Statement.
“ Excluded Deposits
” means, if any,
the Escheat Deposits and Excluded IRA and Keogh Account Deposits
set forth in Schedule 1.1(d), as updated as of the Closing
Date.
“ Excluded IRA and Keogh
Account Deposits ” shall have the meaning set
forth in section 2.5.
“ Excluded Loans
” means with
respect to the Loans, as of the Closing Date, (i) the interest of
any participants in such Loans or loans that have been the subject
of securitizations, (ii) any loans that are ninety (90) days or
more past due as to principal or interest, or (iii) any loans that
are subject to a pending bankruptcy proceeding or a current legal
proceeding related to an obligor’s inability or refusal to
pay such loan, as set forth on Schedule 1.1(d), as updated as of
the Closing Date.
“ FDIC ” means
the Federal Deposit Insurance Corporation.
“ Federal Funds Rate
” on any day means
the per annum rate of interest (rounded upward to the nearest 1/100
of 1%) which is the weighted average of the rates on overnight
federal funds transactions arranged on such day or, if such day is
not a Business Day, the previous Business Day, by federal funds
brokers computed and released by the Federal Reserve Bank of New
York (or any successor) in substantially the same manner as such
Federal Reserve Bank currently computes and releases the weighted
average it refers to as the “Federal Funds Effective
Rate” at the date of this Agreement.
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“
Federal Reserve Board ” means the Board of Governors
of the Federal Reserve System.
“ FedWire Direct Deposit
Cut-off Date ” has the meaning set forth in Section
4.3.
“ Final Closing
Statement ”
means a final closing statement, prepared by Seller, on or before
the thirtieth (30 th ) calendar day following the Closing
Date setting forth both the Purchase Price and the Adjusted Payment
Amount.
“ Grant Deeds ”
has the meaning set forth in Section 3.5(a).
“ Grass Valley Branch
” means the Branch
located at 115 W. McKnight Way, Grass Valley,
California.
“ Grass Valley
Deposit(s) ”
means deposit liabilities with respect to deposit accounts booked
by Seller at the Grass Valley Branch or allocated by Seller to the
Grass Valley Branch as of the close of business on the Closing
Date, which constitute “deposits” for purposes of the
Federal Deposit Insurance Act, 12 U.S.C. § 1813, including
collected and uncollected deposits and Accrued Interest, but
excluding (a) deposit liabilities with respect to accounts booked
by Seller at the Grass Valley Branch and under or pursuant to any
judgment, decree or order of any court; (b) deposit liabilities
with respect to accounts registered in the name of a trust for
which Seller serves as trustee (other than deposits held by an IRA
or Keogh Account); (c) deposit liabilities with respect to accounts
booked by Seller at the Grass Valley Branch for which Seller serves
as guardian or custodian (other than deposits held by an IRA or
Keogh Account); (d) Excluded IRA/Keogh Account Deposits and other
deposit liabilities, if any, designated as “Excluded
Deposits”, and (e) deposits in accounts that have been in an
overdrawn status for more than forty-five days at the
Closing.
“ Hazardous Substance
” means any
substance, whether liquid, solid or gas (a) listed, identified or
designated as hazardous or toxic; (b) which, applying criteria
specified in any Environmental Law, is hazardous or toxic; or (c)
the use or disposal, or any manner or aspect of management or
handling, of which is regulated under Environmental Law.
“ Immediately Transferred
Employees ” has the meaning set forth in Section 8.7.
“ Information ”
has the meaning set forth in Section 7.2(b).
“ IRA ” means a
non-discretionary “individual retirement account” or
similar account created for the exclusive benefit of any individual
or his beneficiaries in accordance with the provisions of Section
408 of the Code.
“ IRS ” means
the Internal Revenue Service.
“ Keogh Account
” means a
non-discretionary account created by a trust for the benefit of
employees (some or all of whom are owner-employees) and that
complies with the provisions of Section 401 of the Code.
-5-
“
Landlord Consent ” has the meaning set forth in
Section 7.4 “ Lease Assignment ” has the meaning
set forth in Section 3.5(d). “ Liabilities ” has
the meaning set forth in Section 2.2.
“ Loans ”
means, collectively, the Deposit-Related Loans, Mortgage Loans,
Overdraft Loans and other loans and lines of credit as set forth in
Schedule 1.1(e), which schedule may be in the form of a magnetic
disk or other media reasonably acceptable to the parties hereto, as
updated as of the Closing Date; provided, however , that
“Loans” shall not include Excluded Loans.
“ Loan Documents
” means all
documents and Records with respect to a Loan including documents in
Seller’s file or imaging system, applications, notes,
security agreements, deeds of trust, mortgages, loan agreements,
including building and loan agreements, guarantees, sureties and
insurance policies (including title insurance policies), flood
hazard certifications, and all modifications, waivers and consents
relating to any of the foregoing.
“ Loan Value
” means, with
respect to a Loan and as of any date, the unpaid principal balance
of any such loan plus Accrued Interest and accrued fees thereon,
net of the interest in such loan of any participant, as of such
date.
“ Loss ” means
the amount of losses, liabilities, damages (including forgiveness
or cancellation of obligations) and reasonable expenses (including
reasonable expenses of investigation and reasonable
attorneys’ fees and expenses in connection with any action,
suit or proceeding ) actually incurred or suffered by the
indemnified party or its Affiliates in connection with the matters
described in Section 11.1, less the amount of the economic benefit
(if any) to the indemnified party or its Affiliates obtained or to
be obtained in connection with any such damage, loss, liability or
expense (including net Tax benefits obtainable under applicable
law, amounts recovered under insurance policies (net of all costs
and expenses incurred in pursuing any such insurance recovery,
including but not limited to those relating to deductibles and
premium adjustments), recovery by setoffs or counterclaims, and
other economic benefits).
“ Material Adverse
Effect ” means
(a) with respect to Seller, a material adverse effect on the
condition (financial or otherwise), business or direct economic
results of operations of the Branches, taken as a whole, or on the
ability of Seller to timely consummate the P&A Transaction as
contemplated by this Agreement, and (b) with respect to Purchaser,
a material adverse effect on the ability of Purchaser to perform
any of its financial or other obligations under this Agreement,
including the ability of Purchaser to timely consummate the P&A
Transaction as contemplated by this Agreement
provided that none
of the following shall be deemed, either alone or in combination,
to constitute, and none of the following shall be taken into
account in determining whether there has been or will be, a
Material Adverse Effect with respect to Seller: any effect, event,
development or change primarily arising out of or resulting from
(i) changes, after the date hereof, in generally accepted
accounting principles or
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regulatory accounting requirements
applicable to banks or savings associations and their holding
companies generally, (ii) changes, after the date hereof, in laws,
rules or regulations of general applicability or interpretations
thereof by courts or governmental agencies or authorities, (iii)
the commencement, occurrence, continuation or intensification of
any war, sabotage, armed hostilities or acts of terrorism not
directly involving the properties or assets of the applicable
person or its subsidiaries, (iv) public disclosure of the
transactions contemplated hereby, including the impact thereof on
customers, suppliers, licensors and employees, or (v) changes,
after the date hereof, in global or national political conditions
or in general U.S. or global economic or market conditions
affecting banks or their holding companies generally unless the
effect on the business of the Branches is disproportionate to that
experienced by similarly situated financial services companies.
“ Mortgage ”
means a mortgage, deed of trust or other security instruments
creating a lien upon real property, together with any assignment,
reinstatement, extension, endorsement or modification thereof,
securing a Mortgage Loan.
“ Mortgagor ”
means the obligor(s) under a Mortgage Loan.
“ Mortgage Loan
” means a loan that
is 100% owned by Seller and secured by a Mortgage on 1-4 family
residential real property.
“ Order ” has
the meaning set forth in Section 9.1(b).
“ Other Assets
” has the meaning set forth in Section 2.1(a).
“ Overdraft Loans
” means unsecured
overdraft loans, including negotiable order of withdrawal line of
credit accounts, relating to the Deposits, as of the close of
business on the Closing Date, plus Accrued Interest and accrued
fees, which do not exceed the applicable credit limit and are
linked to any open Deposit account.
“ Owned Real Property
” means the Real
Property and improvements thereon owned by Seller and used for the
Grass Valley Branch.
“ P&A Transaction
” means the
purchase and sale of Assets and the assumption of Liabilities
described in Sections 2.1 and 2.2.
“ Personal Property
” means all of the
personal property of Seller located in the Branches consisting of
the trade fixtures, shelving, furniture, on-premises ATMs, security
systems, safe deposit boxes (exclusive of contents), vaults, sign
structures (exclusive of signage containing any trade name,
trademark or service mark, if any, of Seller or any of its
Affiliates) and supplies excluding any items consumed or disposed
of, but including new items acquired or obtained, in the ordinary
course of the operation of the Branches through the Closing
Date; provided, however , that Personal Property
shall not include computers (except for ATMs), proprietary or
licensed software, electronic teller station hardware and other
hardware related to teller stations and platforms or any personal
property subject to a Personal Property Lease. The Personal
Property is set forth on Schedule 2.1(a)(iii) and shall be updated
as of the Closing Date.
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“
Personal Property Leases ” means the leases under which
Seller leases certain property in the Branches that would be
“Personal Property” but for the proviso to such defined
term, and which lease agreement relates only to one or more of the
Branches and not to any other facilities of Seller or its
Affiliates, as set forth on Schedule 2.1(a)(iii), as updated as of
the Closing Date.
“ Purchase Price
” has the meaning set forth in Section 2.3.
“ Real Property
” means the parcels
of real property on which the Branches listed on Schedule 1.1(b)
are located, including any improvements thereon, which Schedule
indicates whether or not such real property is Owned Real
Property.
“ Records ”
means all current records and original documents, or where
reasonable and appropriate copies thereof, in Seller’s
possession that pertain to and are used by Seller to administer,
reflect, monitor, evidence or record information respecting the
business or conduct of the Branches and all such records and
original documents, or where reasonable and appropriate copies
thereof, regarding the Assets, or the Deposits, including all such
records maintained to comply with the applicable laws and
governmental regulations to which the Deposits are subject,
including but not limited to applicable unclaimed property and
escheat laws; provided, however , it is understood and
agreed that Seller shall be permitted to retain such books and
records that contain information primarily relating to other assets
and liabilities not constituting Assets and Liabilities;
provided further that in any such case Seller shall provide
to Purchaser such portions or copies of such records as are (i)
reasonably necessary to vest in Purchaser title to any of the
Assets or for the enforcement of Purchaser’s rights, title or
interest in the Assets or the Liabilities or (ii) reasonably
necessary and material to Purchaser’s conduct of the business
of the Branches after the Closing.
“ Regulatory
Approvals ”
means all approvals, authorizations, waivers or consents of, or
notices to, any governmental agencies or authorities required to
consummate the P&A Transaction, including the following: (i)
any required approvals of and/or notices to the OCC, the Federal
Reserve Board, and the FDIC, (ii) any required approvals of and/or
notices to the California Department of Financial Institutions and
the Oregon Department of Consumer and Business Services Division of
Finance and Corporate Securities, and (iii) the expiration of any
waiting period associated with any required Regulatory
Approval.
“ Regulatory
Authority ”
means any federal or state banking, other regulatory,
self-regulatory or enforcement authority or any court,
administrative agency or commission or other governmental authority
or instrumentality.
“ Safe Deposit
Agreements ”
means the agreements relating to safe deposit boxes located in the
Branches.
“ Seller’s
knowledge ” or
other similar phrases means information that is actually known to
any of the persons set forth in Schedule 1.1(f).
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“ Seller Disclosure
Schedule ”
means the disclosure schedule of Seller delivered to Purchaser in
connection with the execution and delivery of this
Agreement.
“ Subsequently
Transferred Employees ” has the meaning set forth in
Section 8.7.
“ Tax Returns
” means any return
or other report required to be filed with respect to any Tax,
including declaration of estimated tax and information
returns.
“ Taxes ” means
any federal, state, local, or foreign taxes, including but not
limited to taxes on or measured by income, estimated income,
franchise, capital stock, employee’s withholding,
non-resident alien withholding, backup withholding, social
security, occupation, unemployment, disability, value added taxes,
taxes on services, real property, personal property, sales, use,
excise, transfer, gross receipts, inventory and merchandise,
business privilege, and other taxes or amounts required to be
withheld and paid over to any government in respect of any tax,
including any interest, penalties, or additions to tax on the
foregoing whether or not disputed.
“ Transaction Account
” means any account
at a Branch in respect of which deposits therein are withdrawable
in practice upon demand or upon which third party drafts may be
drawn by the depositor, including checking accounts, negotiable
order of withdrawal accounts and money market deposit
accounts.
“ Transferred
Employees ”
means Branch Employees who accept offers of employment with
Purchaser or an Affiliate of Purchaser as contemplated in Section
8.7.
1.2 Accounting Terms . All
accounting terms not otherwise defined herein shall have the
respective meanings assigned to them in accordance with
consistently applied generally accepted accounting principles as in
effect from time to time in the United States of America.
1.3 Interpretation . All
references in this Agreement to Articles or Sections are references
to Articles or Sections of this Agreement, unless some other
reference is clearly indicated. Whenever the words
“include,” “includes” or
“including” are used in this Agreement, they shall be
deemed to be followed by the words “without
limitation”. The rule of construction against the draftsman
shall not be applied in interpreting and construing this
Agreement.
ARTICLE 2
THE P&A TRANSACTION
2.1 Purchase and Sale of
Assets . (a) Subject
to the terms and conditions set forth in this Agreement, at the
Closing, Seller shall grant, sell, convey, assign, transfer and
deliver to Purchaser, and Purchaser shall purchase and accept from
Seller, all of Seller’s right, title and interest, as of the
Closing Date, in and to the following (collectively, the
“ Assets ”):
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(i)
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Cash on Hand;
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(ii)
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the Owned Real Property;
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(iii)
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the Personal Property and the Personal Property Leases;
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(iv)
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the Loans, and servicing rights related thereto pursuant to
Section 2.4;
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(v)
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the Branch Leases;
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(vi)
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the Safe Deposit Agreements;
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(vii)
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prepaid expenses, including rents and security deposits as
described in Schedule 2.1(a)(vii) (“ Other Assets ”);
and
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(viii)
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the Records.
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(b) Purchaser understands and
agrees that it is purchasing only the Assets (and assuming only the
Liabilities) specified in this Agreement and, except as expressly
provided in this Agreement, Purchaser will not acquire any interest
in or right to any other business relationship that Seller or its
Affiliates may have with any customer of the Branches, including:
(i) any deposit account or other service of Seller or its
Affiliates at any other office of Seller or its Affiliates that is
linked to the Deposits; (ii) any deposit account that sweeps from
the Branch to a third party that is not an Affiliate of Seller;
(iii) any merchant card banking business; and (iv) any cash
management service (e.g., cash concentrator accounts, controlled
disbursement accounts) that Seller or its Affiliates may provide to
any customer of the Branches. It is expressly understood and agreed
that the Assets shall not include any securities or brokerage
relationships, custodial and trust relationships, insurance
relationships, credit card relationships, internet or online
banking or other relationships between any customer of the Branches
and the Seller or its Affiliates, or any right to the use of any
sign, trade name, trademark or service mark, if any, of Seller or
any of its Affiliates except as agreed to by Seller in connection
with any notices or communications relating to the transactions
contemplated hereby in accordance with the provisions hereof.
2.2 Assumption of
Liabilities . (a)
Subject to the terms and conditions set forth in this Agreement, at
the Closing, Purchaser shall assume, pay, perform and discharge all
duties, responsibilities, obligations or liabilities of Seller
(whether accrued, contingent or otherwise) to be discharged,
performed, satisfied or paid after the Closing Date, with respect
to the following (collectively, the “
Liabilities ”):
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(i)
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the Deposits, including IRA and Keogh Accounts to the extent
contemplated by Section 2.5;
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(ii)
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the Branch Leases;
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(iii)
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the Personal Property and the Personal Property Leases;
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(iv)
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the Safe Deposit Agreements;
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(v)
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the Loans, and the servicing of the Loans pursuant to Section
2.4; and
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(vi) the accrued liabilities, if any,
described in Schedule 2.2(a)(vii) (the “ Accrued
Liabilities ”).
(b) Notwithstanding anything to
the contrary in this Agreement, Purchaser shall not assume or be
bound by any duties, responsibilities, obligations or liabilities
of Seller or of any of its Affiliates, of any kind or nature,
known, unknown, contingent or otherwise, other than the Liabilities
or as otherwise expressly set forth herein.
2.3 Purchase Price . The
purchase price (“ Purchase Price ”) for the
Assets shall be the sum of:
(a) An amount equal to 0.75% of
the average daily balance (including Accrued Interest) of the Davis
Deposits for the period commencing ten (10) calendar days prior to
and inclusive of the day prior to the Closing Date and ending on
the day prior to the Closing Date (for the avoidance of doubt, it
is understood and agreed that for purposes of this calculation,
Davis Deposits shall include all Davis Deposits existing during
such calculation period regardless of whether any such Davis
Deposits exist and are transferred to Purchaser on the Closing
Date)
(b) An amount equal to 0.50% of
the average daily balance (including Accrued Interest) of the Grass
Valley Deposits for the period commencing ten (10) calendar days
prior to and inclusive of the day prior to the Closing Date and
ending on the day prior to the Closing Date (for the avoidance of
doubt, it is understood and agreed that for purposes of this
calculation, Grass Valley Deposits shall include all Grass Valley
Deposits existing during such calculation period regardless of
whether any such Grass Valley Deposits exist and are transferred to
Purchaser on the Closing Date);
(c) The aggregate amount of
Cash on Hand as of the Closing Date;
(d) The aggregate net book
value of all the Assets, other than Cash on Hand, Owned Real
Property and the Loan Value of the Loans, as reflected on the books
of Seller as of the close of business of the month-end day most
recently preceding the Closing Date;
(e) An amount equal to
$850,000 for the Owned Real Property; and
(f) The aggregate Loan Value
of the Loans as of the close of business on the Closing
2.4 Sale and Transfer of Servicing
and Escrows. (a) The Loans shall be sold on a servicing-released
basis. As of the Closing Date, all rights, obligations, liabilities
and responsibilities with respect to the servicing of the Loans
after the Closing Date shall be assumed by Purchaser. Seller and
its Affiliates shall be discharged and indemnified by Purchaser
from all liability with respect to servicing of the Loans after the
Closing Date and Purchaser shall not assume and shall be discharged
and indemnified by Seller and its Affiliates from all liability
with respect to servicing of the Loans on or prior to the Closing
Date.
(b) As of the Closing Date,
Purchaser shall assume, and agrees to undertake and discharge, any
and all obligations of the holder and servicer of Mortgage Loans as
such
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obligations relate to periods after the
Closing Date and as they may relate to the escrow, maintenance of
escrow and payments from escrow of moneys paid by or on account of
the applicable Mortgagor. On or before the fifth (5 th )
Business Day after the Closing Date, Seller shall remit by wire
transfer of immediately available funds to Purchaser all funds held
in escrow that were collected and received pursuant to a Mortgage
Loan for the payment of taxes, assessments, hazard insurance
premiums, primary mortgage insurance policy premiums, if
applicable, or comparable items prior to the Closing Date, plus any
Accrued Interest. Seller makes no warranties or representations of
any kind or nature as to the sufficiency of such sum to discharge
any obligations with respect to Mortgage Loans, or as to the
accuracy of such sum.
2.5 Assumption of IRA and Keogh
Account Deposits . (a) With respect to Deposits in IRAs, Seller
will use reasonable efforts and will cooperate with Purchaser in
taking any action reasonably necessary to accomplish either the
appointment of Purchaser as successor custodian or the delegation
to Purchaser of Seller’s authority and responsibility as
custodian of all such IRA deposits, including sending to the
depositors thereof appropriate notices, cooperating with Purchaser
in soliciting consents from such depositors, and filing any
appropriate applications with applicable regulatory authorities. If
any such delegation is made to Purchaser, Purchaser 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) With respect to Deposits in
Keogh Accounts, Seller will use reasonable efforts and will
cooperate with Purchaser to invite depositors thereof to direct a
transfer of each such depositor’s Keogh Account and the
related Deposits to Purchaser, as trustee thereof, and to adopt
Purchaser’s form of Keogh Master Plan as a successor to that
of Seller. Purchaser will assume no Keogh Accounts unless Purchaser
has received to its satisfaction the documents necessary for such
assumption at or before the Closing.
(c) If, notwithstanding the
foregoing, as of the Closing Date, Purchaser shall be unable to
retain deposit liabilities in respect of an IRA or Keogh Account,
such deposit liabilities shall be excluded from Deposits for
purposes of this Agreement and shall constitute “ Excluded
IRA/Keogh Account Deposits .”
ARTICLE 3
CLOSING PROCEDURES;
ADJUSTMENTS
3.1 Closing . (a) The
Closing will be held at the offices of Seller’s parent
company, Wells Fargo & Company, at 420 Montgomery Street, San
Francisco, California, or such other place as may be agreed to by
the parties.
(b) Subject to the satisfaction
or, where legally permitted, the waiver of the conditions set forth
in Article 9, the Closing Date shall be June 5, 2009, or, if the
Closing cannot occur on such date, on a date and time as soon
thereafter as practicable after receipt of all Regulatory Approvals
and the expiration of all related statutory waiting periods,
subject to the next sentence of this Section 3.1(b). Unless the
parties agree pursuant to Section 4.10(a) that the conversion of
the data processing with respect to the Branches and the Assets and
Liabilities will be performed on a date other than the Closing
Date, the Closing Date shall be a Friday.
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3.2
Payment at Closing . (a) At Closing, (i) if the
Estimated Payment Amount as set forth on the Draft Closing
Statement is a positive amount, Seller shall pay to Purchaser an
amount in dollars equal to such positive amount, or (ii) if the
Estimated Payment Amount as set forth on the Draft Closing
Statement is a negative amount, Purchaser shall pay to Seller an
amount in dollars equal to the absolute value of such negative
amount. In addition, Purchaser shall pay to Seller any sales tax
due.
(b) All payments to be made
hereunder by one party to the other shall be made by wire transfer
of immediately available funds (in all cases to an account
specified in writing by Seller or Purchaser, as the case may be, to
the other not later than the third (3 rd ) Business Day prior to the Closing
Date) on or before 12:00 noon California time on the date of
payment.
(c) If any instrument of transfer
contemplated herein shall be recorded in any public record before
the Closing and thereafter the Closing does not occur, then at the
request of such transferring party the other party will deliver (or
execute and deliver) such instruments and take such other action as
such transferring party shall reasonably request to revoke such
purported transfer.
3.3 Adjustment of Purchase
Price . (a) On or
before 12:00 noon California time on the thirtieth (30
th ) calendar day following the Closing Date (the
“ Adjustment Date ”), Seller shall deliver to
Purchaser the Final Closing Statement and shall make available such
work papers, schedules and other supporting data as may be
reasonably requested by Purchaser to enable it to verify the
amounts set forth in the Final Closing Statement. The Final Closing
Statement shall also set forth the Adjusted Payment Amount.
(b) The determination of the
Adjusted Payment Amount shall be final and binding on the parties
hereto on the thirtieth (30 th ) calendar day after
receipt by Purchaser of the Final Closing Statement, unless
Purchaser shall notify Seller in writing of its disagreement with
any amount included therein or omitted therefrom, in which case, if
the parties are unable to resolve the disputed items within ten
(10) Business Days of the receipt by Seller of written notice of
such disagreement, such items shall be determined by the Accounting
Firm; provided, however, that in the event the fees of the
Accounting Firm, as estimated by such firm, would exceed fifty
percent (50%) of the net amount in dispute, the parties agree that
the Accounting Firm will not be engaged by either party and that
such net amount in dispute will be equally apportioned between
Seller and Purchaser. The Accounting Firm shall be instructed to
resolve the disputed items within ten (10) Business Days of
engagement, to the extent reasonably practicable. The determination
of the Accounting Firm shall be final and binding on the parties
hereto. The fees of the Accounting Firm shall be divided equally
between Seller and Purchaser.
(c) On or before 12:00 noon
California time on the fifth (5 th ) Business Day after
the Adjusted Payment Amount shall have become final and binding or,
in the case of a dispute, the date of the resolution of the dispute
pursuant to subsection 3.3(b) above, if the Adjusted Payment Amount
exceeds the Estimated Payment Amount, Seller shall pay to Purchaser
an amount in dollars equal to such excess, plus interest on such
excess amount from the Closing Date to but excluding the payment
date, at the Federal Funds Rate or, if the Estimated Payment Amount
exceeds the Adjusted Payment Amount, Purchaser shall pay to Seller
an amount in dollars equal
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to such excess, plus interest on such
excess amount from the Closing Date to but excluding the payment
date, at the Federal Funds Rate.
3.4 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
Branches for its own account until 11:59 p.m., California time, on
the Closing Date, and that Purchaser shall operate the Branches,
hold the Assets and assume the Liabilities for its own account
after the Closing Date. Thus, except as otherwise specifically
provided in this Agreement, items of income and expense, as defined
herein, shall be prorated as of 11:59 p.m., California time, on the
Closing Date, 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.
(b) For purposes of this
Agreement, items of proration and other adjustments shall include:
(i) rental payments under the Branch Leases; (ii) personal and real
property taxes and assessments; (iii) FDIC deposit insurance
assessments; (iv) other prepaid expenses and items and accrued but
unpaid liabilities of the Branches, as of the close of business on
the Closing Date; and (v) safe deposit rental payments previously
received by Seller.
3.5 Seller Deliveries . At
the Closing, Seller shall deliver to Purchaser:
(a) A deed in substantially the
form of Schedule 3.5(a) (the “ Grant Deed
”);
(b) A bill of sale in
substantially the form of Schedule 3.5(b) (except as otherwise
required by local state law), pursuant to which the Personal
Property shall be transferred to Purchaser “AS IS”,
“WHERE IS” and with all faults except as provided in
Article 5 hereof;
(c) An assignment and assumption
agreement in substantially the form of Schedule 3.5(c) (except as
otherwise required by local state law), with respect to the
Liabilities (the “ Assignment and Assumption Agreement
”);
(d) A lease assignment and
assumption agreement in substantially the form of Schedule 3.5(d),
with respect to the Davis Branch Lease (the “ Lease
Assignment ”);
(e) An Officer’s
Certificate in substantially the form of Schedule 3.5(e);
(f) The Draft Closing
Statement;
(g) A certification of
non-foreign status meeting the requirements of Treasury Regulation
1.1445-2(b)(2), duly executed and acknowledged, substantially in
the form of the sample certificates set forth in Treasury
Regulation Section 1.1445-2(b)(2)(iv);
(h) Seller’s resignation as
trustee or custodian, as applicable, with respect to each IRA or
Keogh Account included in the Deposits and designation of Purchaser
as successor trustee or custodian with respect thereto, as
contemplated by Section 2.5;
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(i) Such
other documents as the parties determine are reasonably necessary
to consummate the P&A Transaction as contemplated hereby;
and
(j) The Estimated Payment
Amount, if applicable.
3.6 Purchaser
Deliveries . At the Closing, Purchaser shall deliver to
Seller:
(a) The Assignment and
Assumption Agreement;
(b) The Lease
Assignments and such other instruments and documents as any
landlord under a Branch Lease may reasonably require as necessary
or desirable for providing for the assumption by Purchaser of a
Branch Lease, each such instrument and document in form and
substance reasonably satisfactory to the parties and dated as of
the Closing Date;
(c) An Officer’s
Certificate in substantially the form of Schedule 3.6(c);
(d) Purchaser’s
acceptance of its appointment as successor trustee or custodian, as
applicable, of the IRA and Keogh Accounts included in the Deposits
and assumption of the fiduciary obligations of the trustee or
custodian with respect thereto, as contemplated by Section 2.5;
(e) Such other documents as the
parties determine are reasonably necessary to consummate the
P&A Transaction as contemplated hereby; and
(f) The Estimated
Payment Amount, if applicable.
3.7 Delivery of the Loan Documents . (a) As soon as
reasonably practicable after the Closing Date, Seller shall deliver
to Purchaser or its designee the Loan Documents, in whatever form
or medium (including imaged documents) then maintained by Seller.
Seller makes no representations or warranties to Purchaser
regarding the condition of the Loan Documents or any single
document included therein, or Seller’s interest in any
collateral securing any Loan, except as specifically set forth
herein. Seller shall have no responsibility or liability for loss
or destruction of the Loan Documents from and after the time such
files are delivered by Seller to Purchaser or to an independent
third party designated in writing in advance by Purchaser for
shipment to Purchaser, the cost of which shall be the sole
responsibility of Purchaser.
(b) Promptly upon execution of
this Agreement, Purchaser shall provide Seller with the exact name
to which the Loans are to be endorsed, or whether any Loans should
be endorsed in blank. Seller will use its reasonable best efforts
to complete such endorsements and deliver the Loan Documents, along
with appropriate assignments of real property security instruments
in recordable form and assignments of financing statements, at the
Closing in the case of commercial Loans and within thirty (30)
calendar days after Closing in the case of all other Loans;
provided, however, that in the event that Seller requires
additional time to effectively transfer title under any Loan
Document, Purchaser shall not hold Seller liable for any reasonable
delays in the delivery of such Loan Documents. Purchaser further
acknowledges and agrees that Seller may execute or endorse any Loan
Document by way of facsimile signature. Purchaser shall pay or
reimburse Seller for all reasonable third party costs incurred in
connection with the preparation of the assignment
documentation.
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3.8
Collateral Assignments and Filing . Seller shall take all such
reasonable actions as requested by Purchaser to assist Purchaser in
obtaining the valid perfection of a lien or security interest in
the collateral, if any, securing each Loan sold on the Closing Date
in favor of Purchaser or its designated assignee as secured party.
Any such action shall be at the sole expense of Purchaser, and
Purchaser shall pay or reimburse Seller for all reasonable third
party costs incurred in connection therewith.
3.9 Owned Real Property
Filings . On or prior
to the Closing Date, Purchaser shall file or record, or cause to be
filed or recorded, any and all documents necessary in order that
the legal and equitable title to Owned Real Property shall be duly
vested in Purchaser. Any expenses or documentary transfer taxes
with respect to such filings and all escrow closing costs shall be
borne by Purchaser.
ARTICLE 4
TRANSITIONAL MATTERS
4.1 Transitional
Arrangements . Seller
and Purchaser agree to cooperate and to proceed as follows to
effect the transfer of account record responsibility for the
Branches:
(a) As soon as practicable after
the execution of this Agreement by the parties hereto, but in no
event later than thirty (30) calendar days after the date of this
Agreement, Seller will meet with Purchaser to investigate, confirm
and agree upon mutually acceptable transaction settlement
procedures and specifications, files, deliverables, procedures and
schedules, for the transfer of account record responsibility for
the Branches; provided, however, that neither Seller nor its
Affiliates shall be obligated under this Agreement to provide
Purchaser any information regarding the business relationships
described in Section 2.1(b) of this Agreement.
(b) Not later than thirty (30)
calendar days after the date of this Agreement, Seller shall
deliver to Purchaser the specifications and conversion sample
files.
(c) After Purchaser has tested and
confirmed the conversion sample files, Seller shall provide
Purchaser with account information, as of a recent date, including
complete name and address, account masterfile, ATM account number
information, applicable transaction and stop/hold/caution
information, account-to-account relationship information and any
other related information with respect to the Deposits and the
Loans. Seller shall, upon reasonable request, provide to Purchaser
an updated version of such records; provided, however , that
Seller shall not be obligated to provide such updated records more
than twice.
4.2 Customers . (a) Not
later than thirty (30) calendar days nor earlier than sixty (60)
calendar days prior to the Closing Date (except as otherwise
required by applicable law):
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(i)
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Seller will notify the holders of Deposits to be transferred on
the Closing Date that, subject to the terms and conditions of this
Agreement, Purchaser will be assuming liability for such Deposits;
and
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(ii)
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each of Seller and Purchaser shall provide, or join in providing
where appropriate, all notices to customers of the Branches and
other persons that Seller or Purchaser, as the case may be, is
required to give under applicable law or the terms of any other
agreement between Seller and any customer in connection with the
transactions contemplated hereby.
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A party proposing to send or publish any notice or communication
pursuant to this Section 4.2 shall furnish to the other party a
copy of the proposed form of such notice or communication at least
five (5) calendar days in advance of the date of the first mailing,
posting, or other dissemination thereof to customers, and shall not
unreasonably refuse to amend such notice to incorporate any changes
that the other such party proposes as necessary to comply with
applicable law. All costs and expenses of any notice or
communication sent or published by Purchaser or Seller shall be the
responsibility of the party sending such notice or communication
and all costs and expenses of any joint notice or communication
shall be shared equally by Seller and Purchaser. As soon as
reasonably practicable and in any event within thirty (30) calendar
days after the date hereof, Seller shall provide to Purchaser a
report of the names and addresses of the owners of the Deposits,
the borrowers on the Loans and the lessees of the safe deposit
boxes as of the date hereof in connection with the mailing of such
materials. No communications by Purchaser, and no communications by
Seller outside the ordinary course of business, to any such owners,
borrowers or lessees shall be made prior to the Closing Date except
as provided in this Agreement or otherwise agreed to by the
parties.
(b) Following the giving of any
notice described in paragraph (a) above, Purchaser and Seller shall
deliver to each new customer at any of the Branches such notice or
notices as may be reasonably necessary to notify such new customers
of Purchaser’s pending assumption of liability for the
Deposits and to comply with applicable law.
(c) Notwithstanding the provisions
of Section 7.9, neither Purchaser nor Seller shall object to the
use by depositors of the Deposits of payment orders issued to or
ordered by such depositors on or prior to the Closing Date, which
payment orders bear the name, or any logo, trademark, service mark
or proprietary mark, of Seller or any of its Affiliates.
4.3 Direct Deposits .
Seller will use its reasonable best efforts to transfer to
Purchaser on the Closing Date all of those automated clearing house
(“ ACH ”) and FedWire direct deposit
arrangements related (by agreement or other standing arrangement)
to the Deposits. For a period of three (3) months following the
Closing Date, in the case of ACH direct deposits to accounts
containing Deposits (the final Business Day of such period being
the “ ACH Direct Deposit CutOff Date ”), Seller
shall transfer to Purchaser all received ACH Direct Deposits each
Business Day in accordance with Seller’s customary
procedures. Purchaser will send NACHA compliant Notice of Change on
each transfer received. On each Business Day, for a period of
thirty (30) calendar days following the Closing Date (the final
Business Day of such period being the “ FedWire Direct Deposit Cut-Off
Date ”), FedWire direct deposits received by
Seller shall be returned (as soon as is practicable after receipt)
to the originator with an indication of Purchaser’s correct
Wire Room contact information and an instruction that such wire
should be sent to Purchaser. Compensation for ACH direct deposits
or FedWire direct deposits not forwarded to Purchaser on the same
Business Day as that on which Seller has received such deposits
will be handled in accordance with the applicable rules established
by the United States
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Council on International Banking. After
the respective ACH Direct Deposit Cut-Off Date or FedWire Direct
Deposit Cut-Off Date, Seller may discontinue accepting and
forwarding ACH and FedWire entries and funds and return such direct
deposits to the originators marked “Account Sold.”
Seller and its Affiliates shall not be liable for any overdrafts
that may thereby be created. Purchaser and Seller shall agree on a
reasonable period of time prior to the Closing during which Seller
will no longer be obligated to accept new direct deposit
arrangements related to the Branches. At the time of the ACH Direct
Deposit Cut-Off Date, Purchaser will provide ACH originators with
account numbers relating to the Deposits.
4.4 Direct Debits . After
the notice provided in Section 4.2(a), Purchaser shall send
appropriate notice to all customers having accounts constituting
Deposits, the terms of which provide for direct debit of such
accounts by third parties, instructing such customers concerning
the transfer of customer direct debit authorizations from Seller to
Purchaser. Such notice shall be in a form reasonably agreed to by
the parties hereto. For a period of three (3) months following the
Closing, Seller shall transfer to Purchaser all received direct
debits on accounts constituting Deposits each Business Day in
accordance with Seller’s customary procedures. Purchaser will
send NACHA compliant Notice of Change on each direct debit
received. Thereafter, Seller may discontinue forwarding such
entries and return them to the originators marked “Account
Sold.” Purchaser and Seller shall agree on a reasonable
period of time prior to the Closing during which Seller will no
longer be obligated to accept new direct debit arrangements related
to the Branches. On the Closing Date, Purchaser shall provide ACH
originators of such Direct Debits with account numbers relating to
the Deposits.
4.5 Escheat Deposits .
After Closing, Purchaser shall be solely responsible for the proper
reporting and transmission to the appropriate governmental entity
of Escheat Deposits.
4.6 Access to Records
. From and after the
Closing Date, each of the parties shall permit the other reasonable
access to any applicable records in its possession relating to
matters arising on or before the Closing Date and reasonably
necessary in connection with any claim, action, litigation or other
proceeding involving the party requesting access to such records or
in connection with any legal obligation owed by such party to any
present or former depositor or other customer, subject to
confidentiality requirements. All records, whether held by
Purchaser or Seller, shall be maintained for such periods as are
required by law, unless the parties shall agree in writing to a
longer period. Seller may maintain such copies of Records as may be
required by applicable law.
4.7 Interest Reporting and
Withholding . (a)
Unless otherwise agreed to by the parties, Seller will report to
applicable taxing authorities and holders of Deposits, with respect
to the period from January 1 of the year in which the Closing
occurs through the Closing Date, all interest (including dividends
and other distributions with respect to money market accounts)
credited to, withheld from and any early withdrawal penalties
imposed upon the Deposits. Purchaser will report to the applicable
taxing authorities and holders of Deposits, with respect to all
periods from the day after the Closing Date, all such interest
credited to, withheld from and any early withdrawal penalties
imposed upon the Deposits. Any amounts required by any governmental
agencies to be withheld from any of the Deposits through the
Closing Date will be withheld by Seller in accordance with
applicable law or appropriate notice from any governmental agency
and will be remitted by Seller to the appropriate agency on or
prior to the
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applicable due date. Any such withholding
required to be made subsequent to the Closing Date will be withheld
by Purchaser in accordance with applicable law or appropriate
notice from any governmental agency and will be re
