Exhibit
2.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, made as of the
12th day of November, 2008, between Vineyard National Bancorp (the
“ Seller ”) and Vineyard Bancshares, Inc.,
a Minnesota corporation (the “ Buyer ”) (this
Stock Purchase Agreement, including all Schedules hereto, is
hereinafter referred to as the “ Agreement
”).
W I T
N E S S E T H:
WHEREAS, Seller is a corporation duly
organized and validly existing under California law;
WHEREAS, Vineyard Bank, National Association
(the “ Bank ”), is a national banking
association organized and existing under the laws of the United
States, with authorized capital consisting of 50,000,000 shares of
common stock, $1.34 par value per share, of which there are
currently outstanding 1,218,700 shares (hereinafter referred to as
the “ Bank Shares ”), all of which are owned by
the Seller and subject to liens in favor of First Tennessee Bank
National Association (the “ Lender ”);
WHEREAS, on May 5, 2008, the Bank was informed
in writing by the Office of the Comptroller of the Currency (the
“ OCC ”) that the Bank has been designated to be
in “troubled condition” for purposes of Section 914 of
the Financial Institutions Reform, Recovery and Enforcement Act of
1989 (“ FIRREA ”), and, on May 20, 2008, the
Seller was informed in writing by the Board of Governors of the
Federal Reserve System (the “ Federal Reserve Board
”) that the Seller has been designated to be in
“troubled condition” for purposes of Section 914 of
FIRREA;
WHEREAS, on July 22, 2008, in cooperation with
and at the request of the OCC, the Bank consented to the issuance
of a consent order (the “ Consent Order ”),
which, among other things, established timeframes for the
completion of remedial measures which have been previously
identified and are in process towards completion as part of the
internally developed and independently implemented risk mitigation
action plan (the “ Action Plan ”) adopted by the
Board of Directors of the Seller;
WHEREAS, on September 23, 2008, the Seller
entered into a written agreement with the Federal Reserve Board,
which formalizes certain of the remedial measures which have been
previously identified as part of the Action Plan;
WHEREAS, as a result of the issuance of the
Consent Order, among other things, the Bank is no longer deemed to
be “well-capitalized” and will be prohibited from
renewing existing brokered deposits or accepting new brokered
deposits without a waiver from the Federal Deposit Insurance
Corporation (the “ FDIC ”), and, as a result of
not being deemed “well capitalized,” the Bank’s
borrowing costs and terms from the Federal Reserve Board, the
Federal Home Loan Bank and other financial institutions, as well as
the Bank’s premiums to the Deposit Insurance Fund and the
Bank’s assessments and application fees paid to the OCC, are
expected to increase;
WHEREAS, Douglas M. Kratz, the President and
Chief Executive Officer of the Buyer, is a Director of the Seller
and the Bank;
WHEREAS, the Buyer will commence a stock
offering to raise at least $125,000,000.00 and intends to inject
approximately $100,000,000.00 of the proceeds raised in the stock
offering into the Bank;
WHEREAS, the Buyer intends to enter into the
transactions contemplated by this Agreement in order to allow the
Seller and the Bank to remedy the issues set forth in the Consent
Order; and
WHEREAS, the Seller desires to sell, assign
and transfer to the Buyer, and the Buyer desires to purchase,
accept and receive from the Seller, the Bank Shares on the terms
and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the
foregoing premises and further in consideration of the mutual
covenants herein contained, the parties hereto hereby agree as
follows:
ARTICLE 1.
PURCHASE AND SALE OF THE BANK SHARES
On the terms and subject to the conditions
herein set forth, the Seller hereby agrees to sell, transfer and
deliver the Bank Shares to the Buyer, and the Buyer hereby agrees
to purchase the Bank Shares from the Seller.
ARTICLE 2.
PURCHASE PRICE AND PAYMENT TERMS
2.1. Purchase
Price . The purchase price to be paid by the Buyer
to the Seller for the Bank Shares shall be up to Eighteen Million
and 00/100ths Dollars ($18,000,000.00), which shall consist of (a)
a payment of Ten Million and 00/100ths Dollars ($10,000,000.00)
(the “ Initial Purchase Price ”) and (b) in the
event that the conditions set forth in Article 10 are satisfied, an
additional payment of Eight Million and 00/100ths Dollars
($8,000,000.00) (the “ Additional Purchase Price
”). The purchase price payable pursuant to the
foregoing sentence, plus any additional amounts added to the
purchase price as a result of the bid procedures described in
Section 12.5 and Schedule 12.5 of this Agreement, shall
hereinafter be referred to as the “ Purchase Price
.”
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On the Closing Date, an amount equal to the
Initial Purchase Price, minus $1,000,000.00 (the “
Carve-Out Funds ”), shall be paid by the Buyer to the
Lender in immediately available funds. On the Closing
Date, an amount equal to the Carve-Out Funds shall be paid by the
Buyer to the Seller in immediately available funds.
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On or before December 15, 2011, an amount
equal to the Additional Purchase Price, if the conditions set forth
in Article 10 are satisfied, shall be paid by the Buyer to the
Lender in immediately available funds.
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2.3. Accounting
Standards . For purposes of this Agreement, the
“ Determination Date ” shall be the last day of
the calendar month prior to the Closing Date. For
purposes of this Agreement, all information on the Bank’s
financial statements shall be prepared in accordance with generally
accepted accounting principles as modified by applicable regulatory
accounting principles and consistent with past practices, which in
the case of unaudited interim financial statements includes their
being subject to normal and recurring year-end adjustments and the
absence of footnotes (“ Accounting Standards
”). The Seller shall cause the Bank’s
regularly-employed accountants to compile and deliver to Seller and
the Buyer a balance sheet, income statement and statement of
changes in stockholder’s equity of the Bank as of and for the
year to date period ending on the Determination Date (hereinafter
the “ 2009 Financial Statements
”) certified by the chief executive officer or the chief
financial officer of the Bank. A copy of the 2009
Financial Statements shall be provided to the Buyer as soon as
available and in no event less than three (3) days prior to the
Closing Date. Any expenses incurred in connection with
the preparation of the 2009 Financial Statements shall be accrued
on the 2009 Financial Statements.
ARTICLE 3.
CLOSING
The closing of the purchase and sale of the
Bank Shares contemplated hereunder shall take place at the offices
of Winthrop & Weinstine, P.A., 225 South Sixth Street, Suite
3500, Minneapolis, Minnesota 55402, at 10:00 a.m. no
later than the fifth (5th) day (or next business day if the
5th day is a Saturday, Sunday or holiday) following receipt by
the Buyer of (a) the Requisite Approval (as defined in Section
9.9), (b) all necessary regulatory approvals and the
expiration of all applicable waiting periods, and (c) the 2009
Financial Statements, said date to be determined by the Buyer in
its discretion, or on such other day or at such other time or place
as may be mutually agreed upon by the Buyer and the Seller (said
day of closing hereinbefore and hereinafter called the “
Closing Date ”).
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as disclosed
in the disclosure schedules delivered by the Seller to the Buyer
not later than fourteen (14) days after the execution of this
Agreement and as updated pursuant to Section 12.4 (the “
Seller Disclosure Schedules ”), the Seller hereby
represents and warrants to the Buyer that, as of the date
hereof (and as of the Closing Date):
4.1. Organization
and Authority . The Seller is a corporation duly
organized, validly existing and in good standing under the laws of
the State of California, is duly qualified to do business and is in
good standing in all jurisdictions where its ownership or leasing
of property or the conduct of its business requires it to be so
qualified, taken as a whole, and has the corporate power and
authority to own its properties and assets and to carry on its
business as it is now being conducted. The Seller is
registered as a bank holding company with the Federal Reserve
Board under the Bank Holding Company Act of 1956, as amended
(the “ Act ”). The Bank is a national
association duly organized, validly existing and in good standing
under the laws of the United States, is duly qualified to do
business and is in good standing in all jurisdictions where its
ownership or leasing of property or the conduct of its business
requires it to be so qualified, taken as a whole, and has the
corporate power and authority to own its properties and assets and
to carry on its business as it is now being conducted.
4.2.
Subsidiaries . Schedule 4.2(a) sets
forth a complete and correct list of all of the Bank’s
“ Subsidiaries ” (as defined in Section
225.2(o) of Regulation Y promulgated by the Federal Reserve
Board; each a “ Bank Subsidiary ” and,
collectively, the “ Bank Subsidiaries ”), and
all outstanding Equity Securities (as defined in
Section 4.3) of each Bank Subsidiary, all of which are
owned directly or indirectly by the Bank except as set forth on
Schedule 4.2(b) . All of the outstanding shares
of Equity Securities of the Bank Subsidiaries owned directly or
indirectly by the Bank are validly issued, fully paid and
nonassessable and are owned free and clear of any lien, claim,
charge, option, encumbrance, agreement, mortgage, pledge, security
interest or restriction (a “ Lien ”) with
respect thereto except as set forth on Schedule 4.2(c)
. Each of the Bank Subsidiaries listed on
Schedule 4.2(a) is a corporation, bank or savings
bank duly incorporated or organized and validly existing and in
good standing under the laws of its jurisdiction of incorporation
or organization, and has corporate power and authority to own or
lease its properties and assets and to carry on its business as it
is now being conducted. Each of the Bank Subsidiaries is
duly qualified to do business in each jurisdiction where its
ownership or leasing of property or the conduct of its business
requires it to be so qualified. Neither the Bank nor any
Bank Subsidiary owns beneficially, directly or indirectly, any
shares of any class of Equity Securities (as defined in
Section 4.3) or similar interests of any corporation,
bank, business trust, association or organization, or any interest
in a partnership or joint venture of any kind, other than those
identified as Bank Subsidiaries in Schedule 4.2(a)
hereof. True and complete copies of the Articles
of Incorporation and Bylaws of each of the Bank Subsidiaries
certified by an officer of the Bank have been delivered to the
Buyer.
4.3. Bank
Capitalization . The authorized capital of the Bank
consists of 50,000,000 shares of common stock with a $1.34 par
value, of which 1,218,700 shares are issued and
outstanding. Except for the Bank Shares, there are no
Equity Securities of the Bank issued and
outstanding. “ Equity Securities ” of
an issuer means capital stock or other equity securities of such
issuer, options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities
or rights convertible into, shares of any capital stock or other
equity securities of such issuer, or contracts, commitments,
understandings or arrangements by which such issuer is or may
become bound to issue additional shares of its capital stock or
other equity securities of such issuer, or options, warrants, scrip
or rights to purchase, acquire, subscribe to, calls on or
commitments for any shares of its capital stock or other equity
securities. The Bank Shares are validly issued, fully
paid and nonassessable and have not been issued in violation of any
preemptive right of any stockholder of the Bank.
4.4. Insured
Status . The Bank is an insured bank under the
provisions of Chapter 16 of Title 12 of United States Code
Annotated, relating to the Federal Deposit Insurance Corporation,
and no act or default on the part of the Bank has occurred which
might adversely affect the status of the Bank as an insured bank
under said Chapter.
4.5. Authority
. The Seller has full corporate power and authority to
enter into, execute and deliver this Agreement and, subject to the
receipt of any required regulatory approvals and obtaining the
Requisite Approval, to consummate the transactions contemplated
hereby and any instruments or agreements required
herein. The execution, delivery and performance of this
Agreement by the Seller and the consummation of the transactions
contemplated hereby in accordance with and subject to the terms of
this Agreement have been duly authorized by all necessary corporate
action, including, without limitation, approval by the Board of
Directors of the Seller, subject to obtaining Requisite Approval,
if applicable.
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Except as provided in Schedule 4.6 ,
neither the execution and delivery by the Seller of this Agreement
nor the consummation of the transactions contemplated hereby nor
compliance by the Seller with any of the provisions hereof
will:
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violate or conflict with any provision of the
Articles of Incorporation or the Bylaws of the Seller, or violate
or conflict with any provision of the Articles of Association or
the Bylaws of the Bank;
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violate or constitute a default under or give
rise to any right of termination, cancellation or acceleration
under any of the terms, conditions or provisions of any agreement
or instrument to which the Seller or the Bank is a party or by
which any of them or any of their properties or assets is bound,
except as has been duly and validly waived, consented to or
approved by the other parties to such agreement or instrument;
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result in the creation or imposition of any
security interest, Lien or other encumbrance upon any assets of the
Seller or the Bank under any agreement or commitment to which the
Seller or the Bank is a party or by which the Seller or the Bank is
bound or to which any of the Seller’s or the Bank’s
assets is subject; or
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violate any statute or law or any judgment,
order, decree, regulation or rule of any court or Governmental
Authority (as defined in Section 6.1(a)) applicable to the Seller
or the Bank or any of their assets;
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in the case of (ii), (iii) and (iv) above,
except to the extent that such violation, default, security
interest, Lien or other encumbrance would not have, either
individually or in the aggregate, a Material Adverse Effect on the
Seller and the Bank, considered as a whole.
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For purposes of this Agreement, “
Material Adverse Effect ” means, with respect to the
Seller or the Bank, as the case may be, a condition, event, change
or occurrence that has a material adverse effect upon (i) the
financial condition, results of operations, loans, securities,
deposit accounts, business or properties of the Seller or the Bank
(other than any condition, event, change or occurrence resulting
from (A) changes in laws or regulations or accounting rules of
general applicability or interpretations thereof; (B) the effect of
the public announcement, pendency or consummation of the
transactions contemplated hereby (including the incurrence of
expenses incurred in connection with this Agreement and the
transactions contemplated hereby); (C) any change resulting from
the compliance by the Seller or the Bank with the terms of, or the
taking of any action by the Seller or the Bank contemplated or
permitted by, this Agreement; (D) changes affecting the financial
services industry generally; (E) changes in general economic,
financial or securities market conditions in the United States or
elsewhere; (F) changes in market interest rates, real estate
markets or other market conditions applicable to California banks
or thrift institutions generally; or (G) any outbreak of major
hostilities in which the United States is involved or any act or
insurrection, sabotage, or terrorism within the United States or
directed against its facilities or citizens wherever located), or
(ii) the ability of the Seller or the Bank to perform its
obligations under, and to consummate the transactions contemplated
by, this Agreement.
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4.7. Financial
Statements .
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The following financial statements of the Bank
have been or will be delivered to the Buyer and are incorporated by
reference herein: the reports of condition and income of
the Bank as of and for the year ended December 31, 2007
and the nine months ended September 30, 2008 and the 2009 Financial
Statements (collectively, the “ Bank Financial
Statements ”).
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Each of the Bank Financial Statements is true
and correct in all material respects, and each of the Bank
Financial Statements has been prepared in accordance with the
Accounting Standards during the periods involved, and presents
fairly in all material respects the financial position
of the Bank at the date thereof and the results of
operations, changes in stockholders’ equity and cash flows,
as applicable, of the Bank for the period stated therein.
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4.8. Loans
. To the Knowledge of Seller, all notes and other
evidences of indebtedness executed and delivered to the Bank in
connection with any of the loans reflected in the records of the
Bank or in the Bank Financial Statements, including, without
limitation, any and all security agreements, guarantees, mortgages
and other collateral documents accompanying the same, (a) are
not subject to any set-off, counterclaim or defense, including but
not limited to the defenses of usury, fraud, or forgery, nor will
the exercise of any right thereunder render such note or other
evidence of indebtedness unenforceable, in whole or in part, or
subject to any right of rescission, set-off, counterclaim or
defense, and no such right of rescission, set-off, counterclaim or
defense has been asserted in any proceeding, (b) are correct
in amount, genuine as to signatures of the makers, endorsers or
signatories thereof or thereto and were given for valid
consideration in the full amount shown on the books and records of
the Seller or the Bank, and (c) represent binding claims
against such makers, endorsers or signatories for the full amount
shown on the books and records of the Seller or the Bank, subject,
in each case, to the enforcement of equitable remedies, bankruptcy,
insolvency, moratorium and other laws affecting the rights of
creditors generally and the judicial limitation of the performance
of the remedy of specific performance and to the allowance for loan
losses contained in the Bank Financial
Statements. Notwithstanding the foregoing
representations or any other representation contained in this
Article 4, the Seller makes no representation as to the
collectability of any of the Bank’s loans due to any
borrower’s financial inability to pay.
4.9. Insider
Loans . Set forth on Schedule 4.9 is a list
of any and all outstanding notes or other evidences of indebtedness
executed and delivered by insiders of the Bank to the
Bank. The Seller shall also provide the Buyer with a
list of insider loans on the Closing Date. For purposes
of this Section 4.9, “insider” shall mean any officer
or director of the Seller or the Bank or any shareholder of the
Seller owning 5% or more of the Seller’s stock or any members
of the immediate families or related interests of such officers,
directors or shareholders, as the terms “immediate
families” and “related interests” are defined in
§§ 215.2(g) and (n) of Regulation O (12
C.F.R. §§ 215.2(g) and (n)).
4.10. Participation
Loans . Schedule 4.10 attached hereto
contains a summary listing, including primary terms, of all
outstanding loans or other evidences of indebtedness in which the
Bank has participated with other parties either as the originating
lender or as a participant.
4.11. Taxes
. With respect to taxes:
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all material federal and state taxes due and
assessable against or measured by the earnings or income of the
Bank for the calendar year ended December 31, 2007, and all prior
calendar years, have been paid in full, except for those taxes
being contested in good faith;
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for calendar year 2008, and for calendar year
2009 up through the Determination Date, the Bank has and will have
maintained adequate monthly accruals and reserves for any and all
projected taxes assessable against or measured by the earnings or
income of the Bank to date;
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the Bank has filed all federal and state
income tax returns and all other returns with respect to any taxes,
either federal, state or local, which are required to be filed and
(i) said returns have been correctly and accurately prepared in all
material respects, (ii) all taxes reflected thereon have been paid,
(iii) no notice of any deficiency, assessments or additions to tax
has been received by the Bank, and the Bank has not waived any
statute of limitations with respect to any taxes reflected on said
returns, and (iv) deferred taxes have been properly reflected on
the Bank Financial Statements.
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To the Knowledge of Seller, there are no other
material taxes of any kind or character for which the Bank is or
may be liable which are now past due, delinquent and/or unpaid.
4.12. Judgments
. Except as set forth in Schedule 4.12 , as of
the date hereof, there are no unsatisfied judgments of record
against the Seller or the Bank.
4.13. Undisclosed
Liabilities . As of the date of the 2009 Financial
Statements, there will be no material liabilities of any kind or
character outstanding for which the Bank is liable which are not
reflected in the 2009 Financial Statements and would be required to
be reflected under the Accounting Standards.
4.14. Regulatory
Reporting . Except as disclosed on Schedule
4.14 , the Seller and the Bank have timely filed all applicable
reports, returns and filing information data required to be filed
with any and all Governmental Authorities and regulatory agencies,
including any and all federal and state banking authorities where
the failure to file such reports, returns and filing information
data would have an adverse effect on the Bank.
4.15. Employment
Contracts . Except as disclosed on Schedule
4.15 , the Bank has no written or oral contracts or commitments
relating to the employment of its officers or
employees. With respect to those certain Two Year Change
Of Control letter agreements (the “ Change Of Control
Agreements ”) entered into by the Bank with some of its
employees as disclosed on Schedule 4.15 , the Bank has given
notice to each employee covered by a Change Of Control Agreement
that the Bank does not wish to extend such Agreement beyond
December 31, 2008.
4.16. Title to the
Bank Shares . The Seller owns the Bank Shares and
will deliver the Bank Shares to the Buyer on the Closing Date, free
and clear of any and all security interests, Liens, encumbrances,
restrictions, claims or other defects in title, and the Bank Shares
constitute 100% of the issued and outstanding Equity Securities of
the Bank.
4.17. No Adverse
Change . Except as set forth on Schedule 4.17
, since September 30, 2008, there has not been:
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Any event or occurrence that would have a
Material Adverse Effect on the Bank;
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Any increase (other than those in the ordinary
course of business) in the wages, salaries, compensation,
pension or other benefits payable or to become payable by
the Bank to any of their respective officers, employees
or agents;
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Any incurrence by the Bank of any obligations
or liabilities, whether absolute, accrued, contingent or otherwise
(including, without limitation, liabilities as guarantor or
otherwise with respect to obligations of others), other than
obligations and liabilities incurred in the ordinary course of
business;
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Any issuance or agreement to issue any Equity
Securities of the Bank;
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Any discharge or satisfaction of any Lien or
encumbrance or payment of any obligation or liability by the Bank
other than current liabilities shown or reflected on the Financial
Statements or current liabilities incurred since that date in the
ordinary course of business;
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The mortgage, pledge or subjection to Lien,
security interest or any other encumbrance of any of the
Bank’s assets, real or personal, tangible or intangible,
other than in the ordinary course of business;
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The sale or transfer of any of the
Bank’s tangible assets, or the cancellation or release of any
debts or claims owing to the Bank, except, in each case,
cancellation or release of debts pursuant to the workout of a
non-performing loan or otherwise in the ordinary course of the
Bank’s business;
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Entry by the Bank into any other transaction
other than in the ordinary course of business;
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The sale, assignment, transfer or encumbrance
by the Bank of any trademarks, trade names or other intangible
assets; or
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Any decrease in the core deposits of the Bank
of five percent (5%) or more.
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4.18. Litigation
. Except as described fully on Schedule 4.18 , as
of the date hereof, and as of the date Schedule 4.18 is
delivered to the Buyer, there are no actions, proceedings,
investigations or inquiries pending or, to the Knowledge of the
Seller, threatened (i) which question the validity of this
Agreement or any action taken or to be taken pursuant hereto or
(ii) which would have, either individually or in the
aggregate, a Material Adverse Effect on the Seller and the Bank,
considered as a whole.
4.19. Title to
Property .
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Except as described in Schedule 4.19 ,
the Bank has good and marketable title to all of its properties
(real and personal, tangible and intangible) and assets
reflected in the Bank Financial Statements or otherwise
represented as being owned by it, free and clear of all mortgages,
pledges, Liens, conditional sales agreements or other encumbrances
of any kind or nature except those reflected as liabilities on the
Bank Financial Statements and except for Permitted Liens.
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For purposes of this Agreement, “
Permitted Liens ” means any of the following (i) Liens
for taxes that (A) are not yet due or delinquent or (B) are being
contested in good faith by appropriate proceedings in accordance
with applicable laws, (ii) statutory Liens of landlords and Liens
of carriers, warehousemen, mechanics, materialmen and other Liens
imposed by law, in each case, for amounts not yet due or amounts
being contested in good faith by appropriate proceedings in
accordance with applicable laws, (iii) Liens incurred or deposits
made in the ordinary course of business in connection with
workers’ compensation, unemployment insurance or other types
of social security, (iv) leases or subleases granted to other
persons that do not materially interfere with the conduct of the
business of the Bank, (v) Liens in favor of a customer of the
business arising in the ordinary course of business, (vi) with
respect to any of the properties underlying the real property
leases, any Lien affecting the interest of the landlord thereunder,
(vii) rights of the third party owners or licensors of software
that is licensed from such third parties for use in the business
and (viii) Liens reflected as liabilities on the Bank Financial
Statements.
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A list of each parcel of real property owned
by the Bank (other than real property acquired in foreclosure or in
lieu of foreclosure in the course of the collection of loans and
being held by the Bank for disposition as required by law) is
set forth in Schedule 4.20(a) under the heading
“Owned Real Property” (such real property being herein
referred to as the “ Owned Real Property
”). A list of each parcel of real property leased
by the Bank is also set forth in Schedule 4.20(a)
under the heading “Leased Real Property” (such
real property being herein referred to as the “ Leased
Real Property ”), which list also identifies each piece
of Leased Real Property whose lease contains change in control
terms which will be triggered by the transaction contemplated by
this Agreement. Collectively, the Owned Real Property
and the Leased Real Property are herein referred to as the
“Real Property.”
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There is no pending action involving the Bank
as to the title of or the right to use any of the Real
Property.
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Schedule 4.20(c) contains a list of all
real property acquired by the Bank in foreclosure or in lieu of
foreclosure and being held for disposition as required by law and
property held by the Bank in its capacity as trustee.
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None of the buildings, structures or
improvements located on the Real Property is the subject of any
official complaint or notice by any Governmental Authority of
violation of any applicable zoning ordinance or building code, and
there is no zoning ordinance, building code, use or occupancy
restriction or, to Knowledge of Seller, condemnation action or
proceeding pending or, threatened, with respect to any such
building, structure or improvement which will or reasonably could
materially interfere with the use of any of the Real
Property. The Real Property is in generally good
condition for its intended purpose, ordinary wear and tear
excepted, and has been maintained in accordance with reasonable and
prudent business practices applicable to like facilities.
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To the Knowledge of the Seller, the Bank has
not caused the use, generation, treatment, storage, disposal or
release at any Real Property of any Toxic Substance, except in
accordance in all material respects with all applicable federal,
state and local laws and regulations. “ Toxic
Substance ” means any hazardous, toxic or dangerous
substance, pollutant, waste, gas or material, including, without
limitation, petroleum and petroleum products, metals, liquids,
semi-solids or solids, that are regulated under any federal, state
or local statute, ordinance, rule, regulation or other law
pertaining to environmental protection, contamination, quality,
waste management or cleanup. There are no underground
storage tanks located on, in or under any Owned Real Property or,
to the Knowledge of the Seller, the Leased Real Property.
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4.21. Leases
. The Schedule of Leases attached hereto in Schedule
4.21 sets forth a complete and correct listing of all leases of
real property to which the Bank is a party (collectively, the
“ Bank Building Leases ”). The Seller
has delivered to the Buyer complete and correct copies of all lease
agreements described in said Schedule together with any and all
amendments thereto, each such lease agreement is valid, binding and
legally enforceable by the parties thereto and subsisting and no
event has occurred or condition exists which constitutes, or after
notice or lapse of time or both would constitute, a default
thereunder.
4.22. Condition of
Assets . Except as set forth on Schedule 4.22
, there is no material asset used by the Bank in the conduct of its
business which is not either owned by the Bank or leased to the
Bank under appropriate licenses or leases; and all such assets
owned or used by the Bank are, and on the Closing Date will be,
reasonably fit and suitable for the uses and purposes for which
they were intended and, to the Knowledge of the Seller, in good
operating condition subject to normal wear and tear and maintenance
requirements, except where such failure to be in good operating
condition would not materially impair the operation of the Bank as
presently conducted.
4.23. Loans,
Commitments and Contracts .
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Except for the contracts and leases required
to be listed on Schedule 4.21 and the loans required to be
listed on Schedule 4.9 , and except as otherwise listed on
Schedule 4.23(a) , the Bank is not a party to or bound
by any:
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agreement, contract, arrangement,
understanding or commitment with any labor union;
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material franchise or license agreement,
excluding software license agreements entered into in the ordinary
course of business;
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written employment, severance, termination
pay, agency, consulting or similar agreement or commitment in
respect of personal services;
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agreement, indenture or other instrument not
disclosed in the Bank Financial Statements relating to the
borrowing of money by the Bank or the guarantee by the Bank of any
such obligation;
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contract containing covenants which limit the
ability of the Bank to compete in any line of business or with any
Person (as defined below) or which involves any
restrictions on the geographical area in which, or method by which,
the Bank may carry on its respective business (other than as may be
required by law or any applicable regulatory authority);
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data processing, item processing or ATM
contracts or agreements;
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loans or other obligations payable or owing to
any officer, director or employee of the Bank except
(A) salaries, wages and directors’ fees or other
compensation incurred and accrued in the ordinary course of
business and (B) obligations due in respect of any depository
accounts maintained by any of the foregoing with the Bank in the
ordinary course of business; or
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other agreement, contract, arrangement,
understanding or commitment involving an obligation by the Bank of
more than $50,000 extending beyond six months from the date hereof
that cannot be canceled without cost or penalty upon notice of 30
days or less, other than contracts entered into in respect of
deposits, loan agreements and commitments, notes, security
agreements, repurchase and reverse repurchase agreements, Treasury,
tax and loan notes, bankers’ acceptances, outstanding letters
of credit and commitments to issue letters of credit, participation
agreements and other documents relating to transactions entered
into by the Bank in the ordinary course of business and not
involving extensions of credit with respect to any one entity or
related group of entities. For purposes of this
Agreement, “ Person ” shall be broadly
interpreted and includes an individual, body corporate,
partnership, joint venture, trust, association, unincorporated
organization, any Governmental Authority, the executors,
administrators or other legal representatives of an individual or
any other entity recognized by law and pronouns having a similarly
extended meaning.
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The Bank carries property, liability, director
and officer, errors and omissions and other insurance coverage as
set forth in Schedule 4.23(b) under the heading
“Insurance.”
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True, correct, and complete copies of the
agreements, contracts and other documents referred to in
Section 4.23(a) have been included with
Schedule 4.23(a) hereto or otherwise delivered to
the Buyer. True, correct and complete copies of the
agreements, contracts, insurance policies and other documents
referred to in Schedules 4.23(a) and 4.23(b)
have been or shall be furnished or made available to the Buyer.
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Each of the agreements, contracts, insurance
policies and other documents referred to in
Schedules 4.23(a) and 4.23(b) is a valid,
binding and enforceable obligation of the parties sought to be
bound thereby, except as the enforceability thereof against the
parties thereto (other than the Bank) may be limited by
bankruptcy, insolvency, reorganization, moratorium and other laws
now or hereafter in effect relating to the enforcement of
creditors’ rights generally, and except that equitable
principles may limit the right to obtain specific performance or
other equitable remedies.
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Schedule 4.23(e) contains a true,
correct and complete listing by account as of October 31, 2008, of
all loans of the Bank that have been internally classified
as
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“watch,” “special
mention,” “substandard,” “doubtful”
or “loss” and any other Bank loan that is over ninety
(90) days past due as of October 31, 2008.
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4.24. Employee
Benefit Plans .
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Schedule 4.24(a) lists all
pension, retirement, supplemental retirement, stock option, stock
purchase, stock ownership, savings, stock appreciation right,
profit sharing, deferred compensation, consulting, bonus, medical,
disability, workers’ compensation, vacation, group insurance,
severance and other employee benefit, incentive and welfare
policies, contracts, plans and arrangements, and all trust
agreements related thereto, maintained by or contributed to by the
Seller or the Bank as of the date hereof in respect of any of the
present or former directors, officers, or other employees of and/or
consultants to the Seller or the Bank and which would be required
to be continued by the Bank after Closing (collectively “
Bank Employee Plans ”). The Seller has
furnished the Buyer with the following documents with respect to
each Bank Employee Plan: (i) a true and complete
copy of all written documents comprising such Bank Employee Plan
(including amendments and individual agreements relating
thereto) or, if there is no such written document, an accurate
and complete description of the Bank Employee Plan; (ii) the
most recently filed Form 5500 or Form 5500-C/R (including all
schedules thereto), if applicable; (iii) the most recent
financial statements and actuarial reports, if any; (iv) the
summary plan description currently in effect and all material
modifications thereof, if any; and (v) the most recent
determination letter from the Internal Revenue Service (“
IRS ”), if any.
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All Bank Employee Plans have been
maintained and operated in all material respects in accordance with
their terms and the requirements of all applicable statutes,
orders, rules and final regulations, including, without limitation,
to the extent applicable, the Employee Retirement Income Security
Act of 1974, as amended (“ ERISA ”), and
the Internal Revenue Code of 1986, as amended (the “
Code ”)
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