PURCHASE AND ASSUMPTION AGREEMENT
This is a Purchase and Assumption Agreement (this "Agreement") dated as of July
18, 1997, between The Paducah Bank & Trust Company, a Kentucky banking
corporation ("Purchaser"), and Republic Bank & Trust Company, a Kentucky banking
corporation ("Seller").
WHEREAS, Seller conducts business (the "Business") at two branches in Paducah,
Kentucky ("Seller Offices"); and
WHEREAS, Purchaser desires to acquire and assume and Seller desires to sell and
assign certain assets and certain deposit liabilities associated with the Seller
Offices.
NOW, THEREFORE, in consideration of the mutual promises hereinafter contained,
and other good and valuable consideration, the parties agree as follows:
ARTICLE I
PURCHASE AND ASSUMPTION
1.01 PURCHASE AND SALE OF ASSETS. At the Closing (defined below), Purchaser
shall purchase and Seller shall sell certain assets relating to the Seller
Offices pursuant to the terms and conditions set forth herein. The assets of the
Seller Offices, as more fully described in Section 1.02 below, are hereinafter
referred to as the "Seller Assets". At the Closing, Purchaser shall assume the
"Seller Deposit Liabilities" (as hereinafter defined) relating to the Seller
Offices. The acquisition by Purchaser from Seller of the Seller Assets and the
assumption of Seller Deposit Liabilities pursuant to the terms and conditions
set forth herein is sometimes referred to herein as the "Acquisition".
1.02 TRANSFER OF ASSETS. Subject to the terms and conditions of this Agreement,
on and as of the close of business on the Closing Date (defined below), Seller
shall assign, transfer, convey and deliver to Purchaser, the Seller Assets, as
described in subparagraphs (a) through (i), inclusive of this Section 1.02:
(A) REAL ESTATE. The real estate on which the Seller Office on Lone Oak
Road (the "Lone Oak Office") is situated together with all improvements
thereon and all easements associated therewith (the "Real Estate") by
general warranty deed, substantially in the form attached hereto as
Annex 1.02(a). Seller shall provide to Purchaser as soon as reasonably
possible after the execution of this Agreement the legal descriptions
for such real estate, and all title information, surveys and
environmental assessments or investigations in the possession of, or
available to, Seller.
(B) PERSONAL PROPERTY. All of the furniture, fixtures and equipment and
other tangible personal property located at the Lone Oak Office (the "Fixed
Assets"). The Fixed Assets shall include, without limitation, the assets to
which the Purchase Price is allocated as set forth on Annex 1.02(b). The Fixed
Assets shall not include the assets specifically listed on Annex 1.02(b) as
being retained by Seller.
(C) RECORDS OF THE SELLER OFFICES. All records and original documents
(if available) related to Seller Assets transferred or liabilities
assumed by Purchaser hereunder including, but not limited to Seller
Deposit Liabilities.
(D) SAFE DEPOSIT BUSINESS. The safe deposit business conducted at the
Seller Offices (the "Safe Deposit Business"), including safe deposit
vaults containing safe deposit boxes at the Lone Oak Office and all
prepaid rent for any time period following the Closing Date. A true and
complete list of safe deposit boxes (including but not limited to the
location, lessee, lease term, and lease rate) is attached hereto as
Annex 1.02(d) and shall be updated as of the Closing Date.
(E) CONTRACTS OR AGREEMENTS. All of Seller's right, title and interest
in and to the maintenance and service agreements attributable to the
Lone Oak Office, as listed on Annex 1.02(e) (the "Assumed Contracts").
(F) CASH ON HAND. All cash on hand at the Seller Offices as of the
close of business on the Closing Date.
(G) PREPAID EXPENSES. Those prepaid expenses attributable to the Lone
Oak Office as of the close of business on the Closing Date, which
prepaid expenses shall be identified on a list mutually acceptable to
both parties hereto within 30 days from the date of the execution of
this Agreement.
(H) LOANS SECURED BY DEPOSIT ACCOUNTS. All loans attributable to the
Seller Offices (including all interest earned but not collected) that
are either (i) at least 100% collateralized by Seller Deposit
Liabilities and are not more than twenty (20) days past due on the
Closing Date or otherwise involved in any type of litigation or (ii)
particular loans outstanding pursuant to overdraft lines that are
specifically identified in writing by Purchaser prior to the Closing as
being acquired by the Purchaser. The foregoing loans are collectively
referred to as the "Loans". The Loans as of the date of this Agreement
are set forth on Annex 1.02(h).
(I) RESIDUAL ASSETS. All of the remaining intangible assets, including,
without limitation, goodwill (Purchaser understands that Seller does
not have any goodwill reflected on its books with respect to the Seller
Offices), associated with the Seller Assets, Seller Offices and Seller
Deposit Liabilities and any claims of Seller against third parties with
respect to such Seller Assets, Seller Offices and Seller Deposit
Liabilities, to be transferred to the Purchaser hereunder; provided,
that Seller shall not hereby transfer to Purchaser any intangible
assets that relate solely to the real estate at which the Seller Office
on Broadway (the "Broadway Office") is situated.
1.03 ACCEPTANCE AND ASSUMPTION. Subject to the terms and conditions of
this Agreement on and as of the close of business on the Closing Date, Purchaser
shall:
(A) SELLER ASSETS. Receive and accept all of the Seller Assets
assigned, transferred, conveyed and delivered to Purchaser by Seller
pursuant to this Agreement.
(B) SELLER DEPOSIT LIABILITIES. Assume and thereafter discharge the
"Seller Deposit Liabilities" (as hereinafter defined). The term "Seller
Deposit Liabilities" means all of Seller's obligations, duties and
liabilities under each deposit account which is attributable to the
Seller Offices as of the close of business on the Closing Date (the
"Deposit Accounts"), as reflected on the books of Seller. The Seller
Deposit Liabilities include accrued, but unpaid interest on the Deposit
Accounts calculated through the close of business on the Closing Date
in accordance with the Seller's books and records. The Seller Deposit
Liabilities do not include (i) escheatable accounts or accounts subject
to or involved in any form of litigation, (ii) accounts that are
overdrawn on the Closing Date, and (iii) affiliate accounts. The
Deposit Accounts referred to in the immediately preceding sentence
include, without limitation, passbook accounts, statement savings
accounts, super NOW accounts, money market accounts, checking accounts
and NOW accounts, Individual Retirement Accounts ("IRAs") of the type
Purchaser is eligible to administer, and certificates of deposit. Annex
1.03(b) is a listing of the Deposit Accounts and their respective
balances as of the date listed therein. The aggregate balance of the
Seller Deposit Liabilities at the Seller Offices as of May 31, 1997,
was approximately $65 million. The "obligations, duties and
liabilities" referred to in this Section 1.03(b) include, without
limitation, the obligation to pay and otherwise process all Seller
Deposit Liabilities in accordance with applicable law and their
respective contractual terms as reflected in the Seller's books and
records, and the duty to supply all applicable reporting forms for
post-closing periods, including, without limitation, Form 1099s,
relating to the Deposit Liabilities. Notwithstanding anything in this
Agreement to the contrary, Seller Deposit Liabilities and Deposit
Accounts do not include accounts (other than those transaction accounts
that may be designated in writing by Seller at or prior to the Closing)
for which the mailing address on the official records of the Seller
reflects a zip code (excluding any four digit suffix) (the "Account's
Zip Code") other than one of those listed on Annex 1.03(b)(1).
(C) OTHER LIABILITIES. Fully and timely perform and discharge,
as the same may be or become due, the Assumed Contracts and any other
liabilities specifically assumed by Purchaser under the terms of this
Agreement.
(D) NO ASSUMPTION OF LIABILITIES. Except for the Assumed Contracts,
Seller Deposit Liabilities, and any other obligations or liabilities
specifically assumed by Purchaser under this Agreement, it is expressly
understood and agreed that Purchaser shall not assume or be liable for
any of the debts, obligations or liabilities of Seller of any kind or
nature whatsoever including, but not limited to, any debt (except to
the extent the same has been credited to Purchaser by proration at
Closing) or tax including any bank shares, franchise or related tax,
any liability for unfair labor practices, any liability or obligation
of Seller arising out of any threatened or pending litigation, any
liability with respect to personal injury or property damage claims,
any liability related to Seller's safe deposit business, any liability
arising out of claims of employees employed at the Seller Offices for
bonuses, salaries, sick leave, vacation, wages or other payments or
benefits in respect of services performed at the Seller Offices prior
to the Closing, any liability under or in connection with any "employee
benefit plan" as defined in Section 3(3) of ERISA which is maintained
by Seller and covers any employees at the Seller Offices, any liability
Seller may have incurred or will incur in connection with the
transactions contemplated by this Agreement, any liability arising out
of any action or inaction occurring on or prior to the Closing Date and
relating to one or more Seller Deposit Accounts, including but not
limited to the lack of a taxpayer identification number for an account
holder or the lack of compliance with any federal or state law or
regulation with respect to one or more Seller Deposit Accounts, or any
other liability Seller may have incurred prior to the Closing in
connection with the operation of the Seller Offices and which has not
been credited to Purchaser through proration or specifically assumed by
Purchaser under this Agreement.
1.04 PAYMENT OF FUNDS. Subject to the terms and conditions hereof, at the
Closing:
(A) NET PAYMENT. Seller shall make available and transfer to Purchaser
in the manner specified in Sections 4.04 and 4.05 hereof, funds equal
to the difference between the aggregate balance of Seller Deposit
Liabilities (including interest posted or accrued to such accounts but
excluding accrued interest paid directly to depositors by check or
otherwise transferred to an account which is not being assumed
hereunder; for all purposes under this Section 1.04, the amount of the
Seller Deposit Liabilities with respect to certificates of deposit and
time deposits shall be determined as if the average effective interest
rate over the term of the deposit accrues throughout the term of the
deposit regardless of whether, under the terms of the deposit, the
interest rate increases or decreases at different times; for example,
if a $100,000 certificate of deposit has an average effective interest
rate of 6%, but, has only paid interest at a 5% rate, the Seller
Deposit Liabilities would include the $100,000 principal plus interest
calculated at 6% through the Closing Date minus any amount of interest
already paid out on that certificate of deposit ), less the following:
(1) the "Deposit Premium" which shall equal to seven percent
(7%) of the Total Seller Deposit Liabilities for accounts
whose Account's Zip Code is one of those listed as part of the
primary area in Annex 1.03(b)(1) plus five percent (5%) of the
Total Seller Deposit Liabilities for accounts whose Account's
Zip Code is one of those listed as part of the extended area
in Annex 1.03(b)(1). "Total Seller Deposit Liabilities" shall
equal the daily average of the balances of the applicable
Seller Deposit Liabilities for the five business day period
ending on the business day prior to Closing;
(2) the amount (net of depreciation) that the Real Estate and
the Fixed Assets are reflected on Seller's financial
statements (determined in accordance with generally accepted
accounting practices, consistently applied, as of the last
calendar month-end to occur on or before the Closing Date)
minus any prepaid rent received by Seller in connection with
the Safe Deposit Business;
(3) the amount of cash on hand at the Seller Offices as of the
close of business on the Closing Date;
(4) the amount of prepaid expenses agreed upon as provided in
Paragraph 1.02(g) recorded or otherwise reflected on the books
of Seller as being attributable to the Seller Assets as of the
close of business on the Closing Date; and
(5) the value of the Loans. For purposes of this subparagraph
5, the term "value" shall mean the aggregate of the
outstanding principal balances of the Loans together with
accrued but unpaid interest to the date of Closing and accrued
unpaid loan fees for periods prior to the Closing Date
calculated in accordance with generally accepted accounting
principles, consistently applied.
The aggregate payment by Purchaser of the purchase price of the Assets
as referenced in this Section 1.04(a)(1) though (5), inclusive, is
sometimes hereinafter referred to as the "Acquisition Consideration".
(B) ACQUISITION CONSIDERATION. The Acquisition Consideration shall be
computed as set forth in this Agreement. The allocation of the
Acquisition Consideration is set forth in Annex 1.02(b), and except as
otherwise set forth herein, is subject to adjustment by written
agreement between Purchaser and Seller. Such agreement shall not,
however, result in a recalculation or adjustment to the total
Acquisition Consideration which shall be computed in accordance
herewith.
(C) REIMBURSEMENT AND PRORATION OF CERTAIN EXPENSES. All other expenses
due and payable at the time of Closing relating to (1) the Seller
Deposit Liabilities assumed by Purchaser (excepting any entrance and/or
exit fees imposed by the FDIC but including regular premiums paid to
the FDIC for insurance on the Seller Deposit Liabilities which regular
premiums will be prorated according to a formula agreed to by the
Seller and Purchaser based on the standard formula promulgated by the
FDIC, the amount of the Seller Deposit Liabilities assumed by Purchaser
and the number of days during any period for which Seller has prepaid
premiums to the FDIC that Purchaser has held the Seller Deposit
Liabilities), (2) the Seller Assets transferred to Purchaser hereunder,
including all rents, real estate taxes, assessments (but not bank
deposit taxes), utility payment, payments due on leases assigned,
payments due on assigned service and maintenance contracts and similar
expenses, shall be prorated between Purchaser and Seller as of the
close of business on the Closing Date. Any reimbursement payment due
from Purchaser to Seller or from Seller to Purchaser pursuant to the
terms of this Section 1.04(c) shall be made in the manner specified in
Section 4.04 herein.
(D) EXIT/ENTRANCE FEES. Any exit and entrance fees imposed by the FDIC
or any other authorized government or regulatory entity upon Purchaser
or Seller as a result of the transaction contemplated herein, whether
assessed before or after the Closing, shall be paid directly by
Purchaser. Purchaser shall be solely responsible for paying such fees
directly (or reimbursing Seller for such fees if levied against
Seller), as it may be required by applicable law and regulation, and
Purchaser shall have no claim or recourse against Seller resulting from
the imposition or collection of such fees. Any one time assessment
relating to savings association insurance fund insured deposits, levied
against Seller or Purchaser and relating to the Seller Deposit
Liabilities shall be paid by the party against whom it is levied.
1.05 LEASE OF BROADWAY OFFICE. Subject to the terms and conditions of this
Agreement, on and as of the close of business on the Closing Date (defined
below), Seller shall enter into a lease (the "Lease") with Purchaser
substantially in the form of Annex 1.05 with respect to the real estate on which
the Broadway Office is situated together with all improvements thereon and all
easements associated therewith and all of the furniture, fixtures and equipment
and other tangible personal property located at the Broadway Office
(collectively, the "Leased Assets"). The Leased Assets shall include, without
limitation, those listed on Annex 1.05(b). The Leased Assets shall not include
the assets specifically listed on Annex 1.05(b) as being excluded. Seller shall
provide to Purchaser as soon as reasonably possible after the execution of this
Agreement the legal descriptions for such real estate, and all title
information, surveys and environmental assessments or investigations in the
possession of, or available to, Seller.
ARTICLE II
COVENANTS OF THE PARTIES
2.01 REGULATORY APPROVALS. As promptly as practicable (but in any case within 30
days) after execution of this Agreement, Purchaser and Seller shall prepare and
submit for filing any and all applications, filings, and registrations with and
notifications to, all state and federal authorities required on the part of
Purchaser and Seller for the transaction contemplated by this Agreement to be
consummated at the Closing. Thereafter, Purchaser and Seller shall pursue all
such applications, filings, registrations, and notifications diligently and in
good faith and shall file such supplements, amendments, and additional
information in connection therewith as may be reasonably necessary for said
transaction to be consummated at such Closing. Prior to filing any such
application, filing, registration or notification, or amendment or supplement
thereto, the filing party shall provide the other party with reasonable
opportunity to review and comment thereon. The filing party shall provide the
other party with final copies of such documents, as filed, and, promptly after
receipt, copies of written communications from the agency or authority with
which such filing was made, or telephonic notice of material non-written
communications. Notwithstanding the foregoing, neither party shall be required
to provide the other party with any such information which constitutes
confidential business information which is subject to confidentiality pursuant
to the Freedom of Information Act or corresponding state law.
2.02 OPERATION OF OFFICES. Seller shall continue to operate Seller Offices in a
manner equivalent to that manner and system of operation employed immediately
prior to the date of this Agreement. Seller will use commercially reasonable
efforts to prevent harm or damage to the reputation of the Seller Offices or
material reduction of the existing Seller Deposit Liabilities. Except with the
prior written consent of the Purchaser, (which consent shall not be unreasonably
withheld or delayed) or as expressly contemplated or permitted by this
Agreement, during the period from the date of this Agreement and continuing
until the Closing, Seller shall not:
(a) conduct business at the Seller Offices other than in the usual,
regular and ordinary course or fail to use its best efforts to preserve
the Seller Offices intact or to preserve the good will of the customers
at and others having business with the Seller Offices;
(b) sell, lease, encumber, or otherwise dispose of, or agree to sell,
lease, encumber or otherwise dispose of, any of the Seller Assets or
any of the collateral securing the Loans;
(c) cause the Seller Offices to transfer any Deposits, including,
without limitation, to Seller's or any affiliates' other operations or
branches, except upon the unsolicited request of a depositor in the
ordinary course of business;
(d) agree to increase the salary, remuneration or compensation
(including insurance, pension or other benefit plan) payable or to
become payable to persons employed at the Seller Offices other than in
accordance with Seller's customary policies and/or bank-wide changes,
or pay or agree to pay any uncommitted bonus to any such employees
other than regular bonuses granted based on historical practice;
(e) hire any new employees at the Seller Offices without making a good
faith effort to give Purchaser prior notice;
(f) violate any law, statute, rule, governmental regulation, order or
undertaking which violation would have a material adverse effect on the
Seller Assets;
(g) invest in any Fixed Assets on behalf of the Seller Offices, except
for commitments made on or before the date of the Agreement and for
replacements of furniture, furnishings and equipment and normal
maintenance and refurbishing purchased or made in the ordinary course
of business;
(h) offer any special deposit rate promotion with respect to the
Deposit Accounts or potential accounts except those offered by Seller
at all or substantially all of its branch offices;
(i) take any action to artificially inflate the amount of the Seller
Deposit Liabilities.
2.03 INSURANCE. During the period from the date of this Agreement and continuing
until the Closing, Seller shall maintain in effect all current insurance
policies insuring the Seller Assets.
2.04 INFORMATION CONCERNING AND ACCESS TO SELLER OFFICES. Seller shall permit
officers and authorized representatives of Purchaser access upon reasonable
notice to Seller to inspect the Seller Offices during normal business hours or
at such other time mutually agreed upon by both parties, and to permit Purchaser
to make or cause to be made such reasonable investigation of information and
materials relating to the financial condition, assets and liabilities of the
Seller Offices including general and subsidiary ledgers, deposit records, audit
reports and any other information concerning the business, property, personnel
and legal questions concerning the Seller Offices (or related to the physical
condition of the Seller Offices) as Purchaser reasonably deems necessary;
provided, however, that such access and investigation shall be reasonably
related to the transactions contemplated hereby and shall not interfere with the
normal operations of the Seller Offices; and provided further, that nothing in
this Section 2.04 shall be deemed to require Seller to breach any obligation of
confidentiality not to reveal any proprietary information, trade secrets,
marketing plans, strategic plans or information not related to the transaction
contemplated by this Agreement.
2.05 INFORMATION CONCERNING TITLE TO REAL ESTATE. As soon as reasonably
practicable after the date of this Agreement, Purchaser shall obtain preliminary
title reports and surveys with respect to the Real Estate. Purchaser shall
notify Seller in writing of any disapproved liens, encumbrances, easements,
restrictions, conditions, covenants, rights, rights of way, or other matters
affecting title to the Real Estate (collectively the "Liens"). Seller shall have
thirty (30) days following receipt of such written notice of objection to any
such Liens to cause a removal of any such Liens. Unless the Purchaser objects to
any such Liens they shall be considered accepted and Purchaser shall be deemed
to have accepted such Liens and shall have no further recourse with respect
thereto (thereafter such Liens shall be "Permitted Liens"), provided that, the
following shall be Permitted Liens and shall not be disapproved: (a) mechanics',
carriers', workers and other similar liens arising in the ordinary course of
business (but only to the extent that Seller shall have paid off the entire
liability giving rise to such liens prior to the Closing), (b) minor
imperfections of title, none of which shall individually or in the aggregate
materially detract from the value of or impair the use of the real property
subject thereto, or impair the operation of the Business; (c) zoning laws that
do not impair the present use of the property subject thereto; and (d) liens for
current taxes not yet due and payable.
2.06 COOPERATION OF PARTIES. Purchaser hereby covenants to Seller and Seller
hereby covenants to Purchaser that, from the date hereof until the Closing, such
party shall cooperate fully with the other party in obtaining any consents,
approvals, permits or authorizations which are required to be obtained pursuant
to any federal or state law, or any federal or state regulation thereunder, for
or in connection with the transactions described and contemplated in this
Agreement. The parties further agree to consult and cooperate with each other
and to get the prior approval of the other regarding press releases and other
media releases in connection with the transaction contemplated by this Agreement
and to otherwise cooperate to effect the smooth transition of the Seller Assets
and Seller Deposit Liabilities to Purchaser. In addition, within thirty (30)
days of the date hereof, Seller shall provide to Purchaser (1) a detailed
explanation of Seller's file layouts used in connection with the servicing of
the Deposit Accounts, and (ii) a computer tape listing the current balances and
account numbers for the Deposit Accounts.
2.07 DISCLOSURES. From the date hereof until and through the Closing Date,
neither party shall, except for the making of filings with the Securities and
Exchange Commission, issue or publicly disclose, or permit any of its affiliates
to issue or publicly disclose, any press release or other information concerning
the transactions contemplated hereby, without first providing a copy of such
press release or other information to, and obtaining a written approval of, the
other party, which approval shall not be unreasonably withheld.
2.08 CONVERSION. From the date hereof through the Closing Date, Seller shall
cooperate and work with Purchaser to complete the tasks required to facilitate
the conversion. Such tasks include, but are not limited to, providing Purchaser
with updated cartridges, files and other items as are reasonably necessary to
complete the conversion process and related testing procedures. Within thirty
(30) days from the date hereof, Seller shall provide Purchaser with initial
computer cartridge reports and related documentation on the Deposit Accounts in
a format currently used by Seller and Seller will reasonably cooperate with
Purchaser in Purchaser's conversion of such format to one which is reasonably
acceptable to Purchaser. Seller shall provide to Purchaser on the day following
the Closing, conversion tapes as of the Closing Date. Seller agrees to
reasonably cooperate in resolving any conversion-related issues arising from the
conversion of the Deposit Accounts for a period of ninety (90) days following
the date that the conversion is completed. If Purchaser requests, Seller shall
reformat or data scrub the conversion tapes and Purchaser shall reimburse Seller
for any costs and expenses incurred by Seller in such reformatting or data
scrubbing. Promptly following the Closing, Seller will provide to its customers
final statements, including interest payments/credits of accrued interest, for
all Deposit Accounts, other than IRA accounts, as of the Closing. Seller shall
also provide magnetic records of the final customer statements to Purchaser.
2.09 SAFE DEPOSIT BUSINESS. From and after the Closing Date, Purchaser shall
perform and discharge all of Seller's obligations to the customers of the Safe
Deposit Business in accordance with the provisions of the applicable leases or
other agreements relating to such customers.
2.10 CONDUCT OF BUSINESS. Between the date hereof and the Closing Date,
Purchaser and its affiliates shall not undertake any marketing or advertising
efforts specifically directed to Seller's customers or take any other action
intended to reduce the amount of the Deposits as of the Closing Date. Purchaser
shall not, between the date of this Agreement and the Closing Date, conduct its
business and operations in such a manner as to intentionally impair its ability
to consummate the transactions contemplated hereunder nor will it intentionally
engage in any transaction, take any action or omit to take any action, which
could be expected to impair its ability to consummate the transactions
contemplated hereunder.
2.11 FIDUCIARY RELATIONSHIPS. Purchaser shall perform all of the fiduciary
relationships of Seller arising out of any retirement accounts included within
the Deposits, and with respect to such accounts, Purchaser shall assume all of
the obligations and duties of Seller as fiduciary and succeed to all such
fiduciary relationships of Seller as fully and to the same extent as if
Purchaser had originally acquired, incurred or entered into such fiduciary
relationship; provided that Purchaser is not hereby assuming any liability for
any breach of fiduciary duty that occurs prior to the Closing.
2.12 NOTICES OF DEFAULT. Seller and Purchaser shall each promptly give written
notice to the other upon becoming aware of the impending or threatened
occurrence of any event which could reasonably be expected to cause or
constitute a material breach of any of their respective representations,
warranties, covenants or agreements contained in this Agreement.
2.13 REGULATORY MATTERS. Neither Purchaser nor Seller, nor any of their
respective affiliates, has received any indication from any federal, state or
other governmental agency, or has any other reason to believe, that such agency
would oppose or refuse to grant or issue its consent or approval, if required,
or impose any materially adverse condition, with respect to the transaction
contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and
warrants to Seller as follows:
(A) GOOD STANDING AND POWER OF PURCHASER. Purchaser is a state banking
corporation, duly organized, and validly existing, and in good standing
under the laws of the Commonwealth of Kentucky, with corporate power to
own its properties and to carry on its business as presently conducted
and to consummate the transactions contemplated hereby. The deposits of
Purchaser are insured by the Bank Insurance Fund.
(B) AUTHORIZATION OF AGREEMENT. The execution and delivery of this
Agreement, and the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on the part of Purchaser,
and this Agreement is a valid and binding obligation of Purchaser,
enforceable against the Purchaser in accordance with its terms.
(C) EFFECTIVE AGREEMENT. Subject to the receipt of any and all
necessary regulatory approvals and required consents, the execution,
delivery, and performance of this Agreement by Purchaser and a
consummation of the transactions contemplated hereby, will not conflict
with, result in the breach of, constitute a violation or default,
result in the acceleration of payment or other obligations, or create a
lien, charge or encumbrance, under any of the provisions of the
Articles of Incorporation or By-laws of Purchaser, under any judgment,
decree or order, under any law, rule or regulation of any government or
agency thereof, or under any contract, agreement or instrument to which
Purchaser is subject, except for any such conflict, breach, violation,
default, acceleration or lien which would not have a material adverse
effect on the Purchaser's ability to perform its obligations hereunder.
(D) NO BROKER. No broker or finder, or other party or agent performing
similar functions, has been retained by Purchaser or is entitled to be
paid based upon any agreements, arrangements or understandings made by
Purchaser in connection with the transaction contemplated hereby. Any
payment to which such a broker or finder is entitled shall be the sole
responsibility of Purchaser.
3.02 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and
warrants to Purchaser as follows:
(A) GOOD STANDING AND POWER OF SELLER. Seller is a state banking
corporation, duly organized, and validly existing, and in good standing
under the laws of the Commonwealth of Kentucky, with corporate power to
own its properties and to carry on its business as presently conducted
and to consummate the transactions contemplated hereby. The deposits of
Seller are insured by the Bank Insurance Fund and the Savings
Association Insurance Fund ("SAIF") in accordance with FDIC
regulations.
(B) AUTHORIZATION OF AGREEMENT. The execution and delivery of this
Agreement, and the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on the part of Seller, and
this Agreement is a valid and binding obligation of Seller, enforceable
against the Seller in accordance with its terms.
(C) EFFECTIVE AGREEMENT. Subject to the receipt of any and all
necessary regulatory approvals and required consents, the execution,
delivery, and performance of this Agreement by Seller and a
consummation of the transactions contemplated hereby, will not conflict
with, result in the breach of, constitute a violation or default,
result in the acceleration of payment or other obligations, or create a
lien, charge or encumbrance, under any of the provisions of the
Charter, Articles of Incorporation or By-laws of Seller, under any
judgment, decree or order, under any law, rule or regulation of any
government or agency thereof, or under any contract, agreement or
instrument to which Seller is subject, except for any such conflict,
breach, violation, default, acceleration or lien which would not have a
material adverse effect on the Seller Assets or Seller's ability to
perform it obligations hereunder.
(D) TITLE TO SELLER ASSETS. Seller is the sole owner of each of the
Seller Assets and the Leased Assets free and clear of any mortgage,
lien or encumbrance. The Real Estate and the real estate portion of the
Leased Assets (the "Broadway Real Estate") constitutes all of the real
property used in the operation of the Seller Offices, including without
limitation, for parking and ingress and egress. Seller is the sole
owner of a fee simple interest in, and has good and marketable title
to, the Real Estate and the Broadway Real Estate, free and clear of any
mortgage, lien or encumbrance other than the Permitted Liens, and shall
convey the Real Estate to Purchaser by delivery at Closing of a general
warranty deed conveying title subject to said Permitted Exceptions.
(E) ZONING MATTERS. There are no uncorrected violations of zoning
and/or building codes relating to the Seller Offices.
(F) ENVIRONMENTAL MATTERS. There is no material environmental defect in
or associated with the Seller Offices or the Real Estate resulting from
actions or omissions to act of Seller, and to Seller's best knowledge,
there is no condition existing thereon which would give rise to
liability of Purchaser under federal, state or local environmental laws
and regulations. Seller has not received written notification from any
person that any hazardous substance, as defined under Section 104(14)
of the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, has been disposed of, buried beneath,
percolated beneath or otherwise exists on the aforementioned real
estate, or that it is a "potentially responsible party" as defined
under said statute. Seller agrees to permit Purchaser, or its designees
to enter upon the Real Estate to conduct environmental site
assessments, and Seller agrees to cooperate with Purchaser or its
designees in this regard.
(G) TAXES. Seller shall pay, credit Purchaser for paying, or make
appropriate provision to pay in accordance with ordinary business
practices all federal, state and local income, excise, payroll,
withholding, property, franchise, shares, sales, use and transfer
taxes, if any, which have accrued (whether or not they are due and
payable) through the date of Closing,. Any claims for refunds of taxes
which have been paid by Seller shall remain the property of Seller.
(H) THIRD-PARTY CLAIMS. There are no actions, suits or proceedings,
pending or, to the best of Seller's knowledge, threatened against or
affecting Seller or any interest or right of Seller, as such might
relate to the Seller Offices or against or affecting the Seller Assets,
the Seller Deposit Liabilities, or the banking business of the Seller
Offices.
(I) NO BROKER. No broker or finder, or other party or agent performing
similar functions, has been retained by Seller or is entitled to be
paid based upon any agreements, arrangements or understandings made by
Seller in connection with the transaction contemplated hereby. Any
payment to which such a broker or finder is entitled shall be the sole
responsibility of Seller.
(J) ASSETS. Seller has not received notice nor has knowledge that any
governmental authority considers the Seller Offices to violate or to
have violated, fire, zoning, heath, safety, building, hazardous waste
or environmental code or other ordinance, law or regulation or order of
any government or agency, body or subdivision thereof, or any private
covenants, restrictions or easements. The Fixed Assets are used in the
operation of the Seller Offices and are in satisfactory condition
taking into account their age and reasonable wear and tear.
(K) COMPLIANCE WITH LAWS. Seller is in material compliance with all
statutes and regulations applicable to the Seller Assets, the Seller
Deposit Liabilities and the conduct of the Seller Offices. Seller has
not received notice from any agency or department of federal, state or
local government asserting a violation of any law, regulation,
ordinance, rule or order (whether executive, judicial, legislative or
administrative) that would have a material adverse effect on the
financial condition, results of operations or business of the Seller
Offices or the Seller Assets. Seller holds all permits, licenses,
exemptions, orders and approvals of all governmental entities which are
necessary to the operation of the Seller Offices and to the best of
Seller's knowledge, is in compliance with the terms thereof. Seller has
filed all Currency Transaction Reports with respect to all transactions
required to be reported under the Bank Secrecy Act and regulations
adopted pursuant thereto. With respect to the Deposit Accounts, Seller
has complied with specified information reporting requirements pursuant
to Section 6723 of the Code and any applicable regulations thereunder,
or established "reasonable cause" pursuant to Section 6724 of the Code
for information returns required to be filed on or after December 31,
1995.
(L) DEPOSITS. The deposit records of Seller accurately reflect the
Deposit Accounts and are and shall be sufficient to enable Purchaser to
conduct a banking business with respect to the Seller Offices. Seller
has not transferred any deposit accounts held by Seller at the Seller
Offices to any of Seller's other branches, or to any branch of any
Seller affiliate, except at the express unsolicited request of the
depositor in the ordinary course of business. Seller has not
transferred any deposit accounts from any of Seller's other branches or
from any branches of an affiliate of Seller to the Seller Offices,
except as set forth in schedule 3.02(i) or at the express unsolicited
request of the depositor in the ordinary course of business. There are
no material uncured violations or violations with respect to which
material refunds or restitution may be required with respect to the
Seller Deposit Liabilities and the terms and conditions and other
documentation with respect to the Seller Deposit Liabilities complies
in all material respects with all applicable laws and regulations and
has been provided to Purchaser. The Seller Deposit Liabilities are
insured by the Federal Deposit Insurance Corporation to the full extent
provided by federal law and regulations. Seller is in material
compliance with all terms and conditions and other documentation
applicable to the Seller Deposit Liabilities. Seller shall deliver to
Purchaser as of the Closing Date (i) TINs (or record of appropriate
exemption) for all holders of Seller Deposit Liabilities; and (ii) all
other information in Seller's possession or reasonably available to
Seller required by applicable law to be provided to the IRS with
respect to the Seller Assets or Seller Deposit Liabilities and the
holders thereof. Seller hereby certifies that such information, when
delivered, shall accurately reflect the information provided by
Seller's customers. To the best of Seller's knowledge, there are not
any "kiting" schemes associated with any of the Seller Deposit
Liabilities.
(M) LOANS. All of the Loans have been made for good, valuable and
adequate consideration in the ordinary course of business of Seller,
are evidenced by notes or other evidences of indebtedness that are
true, genuine, and enforceable in accordance with their terms. Each of
the Loans is secured by a first priority security interest in a Deposit
Account with a balance greater than that of the Loan. Each such
security interest is evidenced by a security agreement that is true,
genuine, and enforceable in accordance with its terms. No Loan has been
adversely classified in any regulatory examination or by Seller's
internal classification system and no Loan is 90 days or more past due,
has been restructured or is classified as nonaccrual. There are no
material uncured violations or violations with respect to which
material refunds or restitution may be required with respect to the
Loans that have been cited in any compliance report to Seller as a
result of examination by any regulatory authority and the loan
documentation with respect to the Loans complies in all material
respects with all applicable laws and regulations.
(N) ASSUMED CONTRACTS. Seller has delivered to the Purchaser true and
correct copies of the Assumed Contracts. Each of the Assumed Contracts
is valid and in full force and effect in accordance with its terms and
the Seller knows of no defaults under any Assumed Contract. No event or
condition has occurred or exists, or , to the best knowledge of the
Seller, is alleged by any of the other parties thereto to have occurred
or existed, which constitutes, or with lapse of time or giving of
notice or both might constitute, a default or breach under any of the
Assumed Contracts. There are no contracts or agreements that relate to
the Seller Offices that have not been disclosed to the Purchaser.
Seller has delivered to Purchaser all safe deposit box lease agreements
in effect with respect to the Seller Offices. Seller shall provide
Purchaser with the proper trust documents for any retirement accounts
assumed by Purchaser under this Agreement.
3.03 EMPLOYEE MATTERS.
(a) Purchaser shall consider for employment each person (each an
"Affected Employee") who is employed at the Seller Offices on the date
of this Agreement after the Closing Date on an at will basis as a new
employee of Purchaser and in accordance with this Section 3.03. Each
Affected Employee who is employed by Purchaser as of the Closing Date
shall be (i) employed upon terms and conditions, including, without
limitation, salary and eligibility for benefits, including welfare,
pension, severance and vacation benefits, substantially equivalent to
other newly hired employees of Purchaser with similar responsibilities
and (ii) given credit for their length of service with Seller for
purposes of eligibility and vesting (but not benefit accrual) under
Purchaser's employee benefit plans (including, without limitation, any
vacation, sick leave, and severance policies); provided that there may
be an interim period of time between the Closing and the effectiveness
of eligibility under the plans.
(b) Purchaser shall not assume any accrued vacation or sick days,
severance benefits or other benefits owed to any Affected Employee by
Seller as of (and including) the Closing Date.
ARTICLE IV
CLOSING
4.01 CLOSING AND CLOSING DATE. Unless otherwise agreed to in writing, the
transaction contemplated by this Agreement shall be consummated and closed (the
"Closing") at the offices of Brown, Todd & Heyburn PLLC at 12:00 noon on the
twelfth business day after all required regulatory approvals have been obtained
and all applicable waiting periods have expired, or such other time and date
which is mutually agreed upon by Purchaser and Seller (the "Closing Date").
Notwithstanding anything contained in this Section 4.01 to the contrary, if the
Closing does not occur on or before November 30, 1997, either party may
terminate this Agreement, upon written notification to the other party. Such
deadline shall be automatically extended to January 31, 1998 if the Closing does
not occur by the November 30, 1997 deadline due to the failure (which is beyond
the control of Purchaser) of state or federal regulatory authorities to approve
the transaction by a date which would allow the Closing to occur by November 30,
1997 (the "Termination Date"). The parties may, however, prior to either
deadline, agree to an extension of that deadline.
4.02 PURCHASER'S ACTION AT CLOSING. At the Closing, Purchaser shall:
(a) execute, acknowledge, and deliver to Seller to evidence the
assumption of the liabilities and obligations of Seller in connection
with the Seller Deposit Liabilities and Assumed Contracts, an
instrument or instruments of assumption in forms reasonably
satisfactory to Purchaser;
(b) receive, accept and acknowledge delivery of all Seller Assets, and
all records and documentation relating thereto, sold, assigned,
transferred, conveyed or delivered to Purchaser by Seller hereunder;
(c) execute and deliver to Seller such written receipts for the Seller
Assets assigned, transferred, conveyed or delivered to Purchaser
hereunder as Seller may reasonably have requested at or before the
Closing;
(d) execute and deliver to Seller the Lease.
4.03 SELLER'S ACTIONS AT CLOSING. At Closing, Seller shall:
(a) deliver to Purchaser a duly executed and recordable general
warranty deed conveying title to the Real Estate free and clear of all
claims, liens and encumbrances (other than the Permitted Liens);
(b) assign to Purchaser, Seller's rights in and to the Assumed
Contracts, which are assignable and which constitute a part of the
Seller Assets;
(c) deliver to Purchaser the Seller Assets purchased hereunder which
are capable of physical delivery and such appropriate bills of sale and
other instruments of title as Purchaser may reasonably request to vest
in Purchaser good and marketable title thereto, free and clear of all
encumbrances (other than the Permitted Liens);
(d) assign, transfer, and deliver to Purchaser the records and original
documents (if available) pertaining to the Seller Deposit Liabilities
(in whatever form or medium then maintained by Seller);
(e) execute and deliver to Purchaser an instrument which shall assign
and transfer Individual Retirement Accounts attributable to the Seller
Offices to Purchaser and which shall additionally appoint Purchaser as
a successor trustee for such accounts;
(f) assign, transfer and deliver and endorse over to Purchaser all
promissory notes and other credit agreements, together with
corresponding collateral (including, without limitation, mortgages and
personal property liens) related to the Loans and all files and records
and original documents, if available (in whatever form or medium then
maintained by Seller), pertaining to the Loans;
(g) deliver all other records and original documents (if available)
related to the Seller Assets transferred to, and the Seller Deposit
Liabilities assumed by, Purchaser; and,
(h) make available and transfer to Purchaser all funds required to be
paid to Purchaser pursuant to the terms of this Agreement;
(i) execute and deliver to Purchaser the Lease.
4.04 CLOSING STATEMENT/METHOD OF PAYMENT. The parties shall prepare and execute
at Closing a Closing Statement (the "Preliminary Settlement Statement")
supported by appropriate exhibits, substantially in the form of Annex 4.04,
showing the computation of the funds, if any, due to Purchaser (the "Cash
Payment"). The Cash Payment, as set forth pursuant to the terms of Section 1.04
hereof but determined as if the Closing occurred on the business immediately
prior to the Closing Date, shall be made on the Closing Date in immediately
available federal funds. At least two business days prior to Closing, Purchaser
and Seller shall provide written notice to one another indicating the account
and bank to which such funds shall be wire transferred.
4.05 POST CLOSING ADJUSTMENTS.
(a) As soon as reasonably practicable after the Closing Date, but no
later than twelve (12) business days thereafter, Seller shall provide
Purchaser with: (1) final Annexes 1.02(h) and 1.03(b) that shall
accurately reflect the related balances as shown on the financial
records of Seller as of the close of business on the Closing Date
calculated in accordance with generally accepted accounting principles
consistently applied, and (ii) a final schedule that shall accurately
reflect the amount of Cash on Hand as of the close of business on the
Closing date, which schedule shall be prepared by Seller based upon a
cash count to be mutually conducted by Seller and Purchaser at the
close of business on the day of the Closing Date.
(b) Purchaser and its accountants and attorneys shall have the right to
review any and all documents (and to interview any and all Seller
personnel) reasonably necessary or desirable to confirm the accuracy of
final Annexes 1.02(h) and 1.03(b) and the final cash schedule.
(c) As soon as reasonably practicable after the Closing Date, but no
later than twelve (12) business days thereafter, Seller shall prepare
and deliver to Purchaser a final settlement statement (the "Final
Settlement Statement"), in the form of Annex 4.05(c) hereto, which
shall show the calculation of the final Acquisition Consideration based
on the final Annexes and Schedules delivered pursuant to Section
4.05(a) hereof. Upon delivery of the Final Settlement Statement,
Purchaser or Seller, as the case maybe, shall promptly make such
payments in the amount and manner as are specified in Section 4.05(d)
hereof.
(d) If the Cash Payment shown on the Final Settlement Statement (the
"Final Payment Amount") is different from the Cash Payment made on the
Closing Date, then a payment or refund shall be promptly made by Seller
or Purchaser necessary to reflect the Final Payment Amount. Such refund
or payment shall be made by wire transfer in immediately available
funds, together with interest thereon for the number of days from and
including the Closing Date to such settlement date, but excluding such
settlement date, at the rate per annum equal to the average during such
period of the average of the daily high and low rates for federal funds
on each business day during such period, as such rates are published in
the Midwestern Edition of the Wall Street Journal, computed on the
basis of a 365-day year.
4.06 CONDITIONS TO OBLIGATION OF SELLER. The obligations of Seller to consummate
the transactions contemplated hereby are subject to the satisfaction of the
following conditions precedent on or before the Closing, any of which may be
waived by Seller:
(a) the representations and warranties of Purchaser set forth in
Section 3.01 of this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the
Closing as if made on the Closing;
(b) Purchaser, in all material respects, shall have performed and
observed its obligations and covenants as set forth in this Agreement
prior to or on the Closing;
(c) receipt of all permits, consents, approvals and authorizations from
federal and state governmental authorities and regulatory agencies
necessary to effect the transactions contemplated herein (including the
expiration of all applicable waiting periods);
(d) there shall not be threatened, instituted or pending any action or
proceeding before any domestic or foreign court or governmental agency
or other regulatory or administrative agency or commission, or by any
other person (1) challenging the transactions contemplated by this
Agreement or the terms thereof; or (2) seeking to prohibit the
transactions contemplated by this Agreement, which, in the reasonable
opinion of Seller's counsel, has a reasonable probability of success.
4.07 CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of Purchaser to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions precedent on or before the Closing, any
of which may be waived by Purchaser:
(a) the representations and warranties of Seller set forth in Section
3.02 of this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing as if
made on the Closing;
(b) Seller, in all material respects, shall have performed and observed
its obligations and covenants as set forth in this Agreement prior to
or at the Closing;
(c) Receipt of all permits, consents, approvals and authorizations from
federal and state governmental authorities and regulatory agencies
necessary to effect the transactions contemplated hereby and the
operation of the Seller Offices by Purchaser (including the expiration
of all applicable waiting periods), on terms and conditions
satisfactory to Purchaser (other than standard terms and conditions);
(d) there shall not be threatened, instituted or pending any action or
proceeding before any domestic or foreign court or governmental agency
or other regulatory or administrative agency or commission, or by any
other person (1) challenging the transactions contemplated by this
Agreement or the terms thereof or (2) seeking to prohibit the
transactions contemplated by this Agreement, which, in the opinion of
Purchaser's counsel, has a reasonable probability of success; and
(e) there shall have been no material adverse change in the business,
financial condition, or operations of the Seller Offices (other than
changes resulting from or attributable to (i) changes in laws and
regulations, or (ii) economic conditions (including without limitation
interest rates), in either case that affect banking institutions
generally or the ability to conduct banking operations at the Seller
Offices, or in the physical condition of the Seller Assets from the
physical condition that exists as of the date of this Agreement, or in
the quality of the Loans (taken as a whole) from the quality that
exists as of the date of this Agreement.
ARTICLE V
GENERAL COVENANTS AND INDEMNIFICATION
5.01 CONFIDENTIALITY OBLIGATIONS OF SELLER. From and after the date hereof,
Seller shall, and shall cause its subsidiaries and affiliates to, treat all
information received from Purchaser concerning the business, assets, operations,
and financial condition of Purchaser as confidential, unless and to the extent
that Seller can demonstrate that such information was already known to Seller or
such subsidiary or affiliates or in the public domain or was subsequently
independently developed by Seller; and Seller shall, and shall cause its
subsidiaries and affiliates to, not use any such information (so required to be
treated as confidential) for any purposes except in furtherance of the
transactions contemplated hereby. From and after the date of Closing, Seller
shall, and shall cause its subsidiaries and affiliates to, treat all information
regarding the Seller Offices as confidential, and Seller shall, and shall cause
its subsidiaries and affiliates to, not use any such information so required to
be treated as confidential for any purpose. Upon the termination of this
Agreement, Seller shall, and shall cause its affiliates to, promptly return all
documents and work papers containing, and all copies of, any such information
(so required to be treated as confidential) received from or on behalf of
Purchaser in connection with the transactions contemplated hereby. The covenants
of Seller contained in this Section 5.01 shall survive any termination of this
Agreement; provided, however, that neither Seller nor any of its affiliates
shall be deemed to have violated the covenants set forth in this Section 5.01 if
Seller or any of such affiliates shall in good faith disclose any of such
confidential information in compliance with any legal process, order or decree
issued by any court or agency of government of competent jurisdiction, provided
that prior to such disclosure, Seller shall give Purchaser reasonable prior
notice thereof.
5.02 CONFIDENTIALITY OBLIGATIONS OF PURCHASER. From and after the date hereof,
Purchaser shall, and shall cause its subsidiaries and affiliates to, treat all
information received from Seller concerning the business, assets, operations,
and financial condition of Seller, as confidential, unless and to the extent
that Purchaser can demonstrate that such information was already known to
Purchaser or such subsidiary or affiliates or in the public domain or was
subsequently independently developed by Purchaser; and Purchaser shall, and
shall cause its subsidiaries and affiliates to, not use any such information (so
required to be treated as confidential) for any purposes except in furtherance
of the transactions contemplated hereby. Upon the termination of this Agreement,
Purchaser shall, and shall cause its affiliates to, promptly return all
documents and work papers containing, and all copies of, any such information
(so required to be treated as confidential) received from or on behalf of Seller
in connection with the transactions contemplated hereby. The covenants of
Purchaser contained in this Section 5.02 are of the essence and shall survive
any termination of this Agreement; provided, however, that neither Purchaser nor
any of its affiliates shall be deemed to have violated the covenants set forth
in this Section 5.02 if Purchaser or any of such affiliates shall in good faith
disclose any of such confidential information in compliance with any legal
process, order or decree issued by any court or agency of government of
competent jurisdiction, provided that, prior to such disclosure, Purchaser shall
give Seller reasonable prior notice thereof.
5.03 INDEMNIFICATION BY BOTH PARTIES. Purchaser, on the one hand, and Seller, on
the other hand. mutually agree to indemnity and hold each other harmless from,
and to reimburse each other promptly for, any and all losses, liabilities,
damages, expenses and other costs (including court costs, costs of investigation
and reasonable attorneys' fees) ("Losses") that one party may suffer as the
result of the material breach by the other party of any covenant, representation
or warranty of that other party set forth in this Agreement.
5.04 INDEMNIFICATION BY SELLER. Seller shall indemnify, hold harmless and defend
Purchaser from and against any and all Losses arising out of any actions, suits,
or other proceedings, claims or demands commenced by any third party prior to or
after the Closing, which arise out of, or are in any way related to, (i) the
operations of the Seller Offices (including but not limited to claims for
personal injuries arising from incidents occurring prior to the Closing) or the
administration of any of the Deposit Accounts or Loans by Seller prior to the
Closing, (ii) the Fixed Assets, Assumed Contracts, Records, or Safe Deposit
Business, insofar as the basis for such action, suit, or other proceedings,
claim or demand arose prior to the Closing, or (iii) the fiduciary duties of
Seller arising prior to the Closing with respect to the individual retirement
accounts assumed by Purchaser or included within the Seller Deposit Liabilities.
5.05 INDEMNIFICATION BY PURCHASER. Purchaser shall indemnity, hold harmless and
defend Seller from and against all Losses arising out of any actions, suits or
other proceedings, claims or demands, which arise out of, or are in any way
related to, (i) the operations of the Seller Offices or the administration of
any of the Seller Deposit Liabilities or Loans by Purchaser subsequent to the
Closing, (ii) Fixed Assets, Assumed Contracts, Records or Safe Deposit Business,
insofar as the basis for such action, suit or other proceeding, claim or demand
arises subsequent to the Closing, or (iii) the fiduciary duties of Purchaser
arising subsequent to Closing with respect to the individual retirement accounts
assumed by Purchaser or included within the Seller Deposit Liabilities.
5.06 CLAIMS.
(A) DEFENSE OF CLAIMS. Should any claim be made, or suit or proceeding
be instituted against a Buyer or Seller (the "Indemnified Party"),
which, if valid or prosecuted successfully, would be a matter for which
such Indemnified Party is entitled to indemnification under this
Agreement (a "Claim") from the other party (the "Indemnifying Party"),
the Indemnified Party shall notify the Indemnifying Party in writing
concerning the same promptly after the assertion or commencement
thereof. The Indemnified Party shall in the first instance file in a
timely manner any answer or pleading with respect to a suit or
proceeding if such action is necessary to avoid default or other
material adverse results. The party having the greater risk of
financial loss with respect to such Claim (the "Lead Party") shall
control the defense thereof and shall use reasonable efforts to defeat
or minimize any loss resulting from such Claim. The Lead Party shall
provide the other party (the "Non-Lead Party") with such information
and opportunity for consultation (including estimations regarding costs
and fees) as may reasonably be requested and the Non-Lead Party shall
be entitled, at its own expense, to participate in the defense of a
claim and to engage counsel for such purpose. All costs and expenses
incurred by the Lead Party in connection with the defense of a Claim
shall in the first instance be paid by the Lead Party. Any reasonable
costs and expenses so paid by the Indemnified Party shall be subject to
the Indemnified Party's rights to indemnification under this Agreement.
(b) SETTLEMENT OF CLAIMS. No settlement of a Claim involving liability
of an Indemnified Party subject to indemnification under this Agreement
shall be made without prior written consent by or on behalf of the
Indemnifying Party, which consent shall not be unreasonably withheld or
delayed. For these purposes, consent shall be presumed in the case of
settlements of $5,000 or less wherein the Indemnifying Party has not
responded within ten (10) business days of written notice of a proposed
settlement. In the event of any dispute regarding the reasonableness of
a proposed settlement, the party which will bear the larger financial
loss resulting from such settlement and the application of the
indemnification provisions set forth in this Agreement will make the
final determination in respect thereto, which determination will be
final and binding on all involved parties.
5.07 REQUEST FOR INDEMNIFICATION. If at any time or from time to time any party
shall determine that it is entitled to indemnification under this Agreement,
such party shall give written notice to the other party specifying the basis on
which indemnification is sought, the amount of the asserted loss, damage or
expense, as the case may be, and requesting indemnification. If indemnification
is required under this Agreement with respect to a Claim, the parties
contemplate that payment shall be made to the Indemnified Party at or about the
time the Indemnified Party shall be required to make payment with respect to the
Claim, unless there shall be a dispute as to the Indemnified Party's entitlement
to indemnification, in which case adjustment will be made upon resolution of
said dispute. Upon receipt of any request for indemnification, the Indemnifying
Party may object thereto by delivering written notice of such objection to the
Indemnified Party specifying in reasonable detail the basis on which such
objection is made. In the case of objection to a request for indemnification as
to a Claim, such objection shall be made within thirty (30) business days of
notice from the Indemnified Party's requesting payment, unless the Indemnifying
Party shall have earlier agreed to such liability. Failure on the part of the
Indemnifying Party so to object shall constitute acceptance by such party of the
request to indemnify as to such matter.
5.08 REDUCTION FOR INSURANCE. The amount which an Indemnifying Party is required
to indemnify the Indemnified Party pursuant to this Agreement shall be reduced
(including, without limitation, retroactively) by any insurance proceeds
actually recovered by or on behalf of such Indemnified Party in reduction of the
related indemnifiable loss (the "Indemnifiable Loss"). Amounts required to be
paid, as so reduced, are hereafter called an "Indemnity Payment." If an
Indemnified Party shall have received or shall have had paid on its behalf an
Indemnity Payment in respect of an Indemnifiable Loss and shall subsequently
receive, directly or indirectly, insurance proceeds in respect of such
Indemnifiable Loss, then such Indemnified Party shall pay to such Indemnifying
Party a sum equal to the amount of such insurance proceeds up to an amount equal
to the Indemnity Payment.
5.09 FURTHER ASSURANCES. From and after the date hereof, each party agrees to
execute and deliver such instruments and to take such other actions as the other
party hereto may reasonably request in order to carry out and implement this
Agreement. The covenants of each of the parties hereto pursuant to this Section
5.06 shall survive the Closing.
ARTICLE VI
TERMINATION
6.01 TERMINATION BY MUTUAL AGREEMENT. This Agreement may be terminated
and the transactions contemplated hereby may be abandoned by mutual consent and
agreement of the parties hereto.
6.02 TERMINATION BY PURCHASER. This Agreement may be terminated and the
transaction contemplated hereby abandoned by Purchaser:
(a) Upon written notice to Seller, if at the time of such termination
any of the conditions set forth in section 4.07 hereof are not
satisfied and cannot reasonably be expected to be satisfied before the
Termination Date.
(b) If any regulatory approval required for consummation of this
transaction is denied by the applicable regulatory authority or is
granted upon satisfaction of conditions unacceptable in the reasonable
judgment of Purchaser or Seller, or in the event that at any time prior
to the Closing Date it shall become reasonably certain to Purchaser,
with the advice of counsel, that a regulatory approval required for
consummation of the transaction will not be obtained. For purposes
hereof, a condition may be deemed "unacceptable" if in the reasonable,
good faith judgment of Purchaser, it is reasonably probable that it
would have a material adverse effect on the business, operations,
assets or financial condition of Purchaser upon completion of the
acquisition contemplated hereby or otherwise materially impair the
value of Seller's business to be acquired hereunder, provided that in
each case no such term or condition imposed by any regulatory authority
shall be deemed to have such an effect unless it materially differs
from terms and conditions customarily imposed by such an authority in
connection with approvals of similar such transactions.
(c) In accordance with Section 4.01.
6.03 TERMINATION BY SELLER. This Agreement may be terminated and the
transaction contemplated hereby abandoned by Seller:
(a) Upon written notice to Purchaser, if at the time of such
termination any of the conditions set forth in Section 4.06 hereof are
not satisfied and cannot reasonably be expected to be satisfied before
the Termination Date.
(b) If any regulatory approval required for consummation of this
transaction is denied by the applicable regulatory authority or is
granted upon satisfaction of conditions unacceptable in the reasonable
judgment of Seller, or in the event that at any time prior to the
Closing Date it shall become reasonably certain to Seller, with the
advice of counsel, that a regulatory approval required for consummation
of the transaction will not be obtained. For purposes hereof, a
condition may be deemed "unacceptable" if in the reasonable, good faith
judgment of Seller, it is reasonably probable that it would have a
material adverse effect on the business, operations, assets or
financial condition of Seller, provided that in each case no such term
or condition imposed by any regulatory authority shall be deemed to
have such an effect unless it materially differs from terms and
conditions customarily imposed by such an authority in connection with
approvals of similar such transactions.
(c) In accordance with Section 4.01.
6.04 TERMINATION BY EITHER PARTY. Upon written notice by either Seller (a
"Party") or Purchaser (also a "Party"), at any time prior to the day of the
Closing if and only if such Party is not in material breach of this Agreement
and if the other Party has breached in any material respect any covenant or
undertaking contained herein and such breach is not cured within thirty days of
the date the nonbreaching Party gives notice of such breach to the breaching
Party (provided no cure period shall be available for any breach which, due to
the nature of the breach, cannot be cured, or for any breach which is the same
or substantially similar to a prior breach for which a cure period has been
given).
6.05 NOTICE OF TERMINATION. To exercise the right to terminate as provided in
this section, the exercising party must advise the other party in writing, which
notice shall be effective immediately upon its being delivered as referenced in
Section 7.09 hereof.
6.06 EFFECT OF TERMINATION. The termination of this Agreement pursuant to
Sections 6.02 or 6.03 of this Agreement shall not release any party hereto from
any liability or obligation to the other party hereto arising from a breach of
any provision of this Agreement occurring prior to the termination hereof. No
termination of this Agreement shall affect or diminish the parties' obligations
under Sections 5.01 and 5.02 of this Agreement, which shall survive the
termination.
ARTICLE VII
MISCELLANEOUS PROVISIONS
7.01 NO SOLICITATION BY SELLER. For a period of three (3) years after the
Closing Date, Seller shall not specifically target and solicit customers of the
Seller Offices for the provision of services offered by or competitive with
services offered by Purchaser in McCracken County, Kentucky; provided, however,
these restrictions shall not restrict (i) general mass mailings or other similar
communications provided such communications do not utilize or incorporate any
customer or mailing list compiled from customers of the Seller Offices or which
consists primarily of customers of the Seller Offices or which are targeted only
to the McCracken County area or (ii) communications with Seller's then loan
customers for the purpose of renewing, extending or modifying their loans. In
addition, Seller will not, for a period of three (3) years after the Closing
Date, establish a banking or thrift office in McCracken County, Kentucky;
provided however that nothing herein shall prevent Seller from acquiring and
operating a branch in McCracken County, Kentucky through the purchase of a
financial institution whose main office is not located in McCracken County,
Kentucky.
7.02 NOTICES TO DEPOSITORS. Seller shall use its best efforts to provide
Purchaser an intermediate customer list (on paper and on a computer diskette)
and mailing labels of the Deposits to be assumed as of forty-five days prior to
the Closing. On the Closing Date, Seller shall provide a final customer list of
the Seller Deposit Liabilities. At least fourteen (14) days before the Closing
(or on such earlier or later date as may be required by law), Purchaser shall
mail notice (the "Notification") to the holders of the Deposit Accounts to be
assumed that, subject to the closing requirements, Purchaser will be assuming
the liability of the Seller Deposit Liabilities. The Notification will be based
on the list and labels referred to above and a log maintained at the Seller
Offices of the new accounts opened since the date of said list. Seller shall
provide Purchaser with a copy of said log up to the date of Seller's mailing. In
the Deposit Account Notification, Purchaser shall set out the details of its
administration of the assumed accounts and may, with Seller's prior written
consent (which shall not be unreasonably withheld), communicate and mail
information, brochures, bulletins, press releases and other communications to
depositors of the Seller Offices concerning the business and operations of
Purchaser. Each party shall obtain the other party's prior approval of its
notification letter(s) and any other communications to depositors of the Seller
Offices regarding the transactions contemplated hereby (which approval shall not
be unreasonably withheld). The Notification may be made jointly if (a) it is
permitted by applicable statutes and regulations and (b) Seller and Purchaser
can agree to the content thereof.
7.03 POST CLOSING RECONCILIATION.
(A) INCLEARING ITEMS. As of the opening of business on the Closing
Date, Seller shall expedite the clearing and sorting of all checks,
drafts, instruments and other commercial paper relative to the Deposit
Accounts (hereinafter collectively referred to as the "Paper Items").
For a period of sixty (60) days following the Closing Date (the
"Inclearing Period"), Seller shall continue to process checks or drafts
drawn on Deposits which are not intercepted by the FRB. On each banking
day during the Inclearing Period, Seller shall send to Purchaser by
overnight mail all inclearing items received for payment that day. Upon
expiration of the Inclearing Period, Seller shall cease honoring
inclearing items presented against the Deposit Accounts and such items
shall be returned marked "Refer to Maker". Seller and Purchaser shall
settle amounts due under this Section 7.03 by wire transfer.
(B) ACH TRANSACTIONS. At least thirty (30) days prior to the Closing
Date, Seller shall deliver to Purchaser (i) copies of all ACH
origination forms for social security payments, and (ii) all other
records and information necessary for Purchaser to administer the ACH
transactions. For a period of one hundred twenty (120) days following
the Closing Date, Seller agrees to continue to accept and immediately
forward to Purchaser in paper format all automated clearinghouse
entries ("ACH") and corresponding funds. Seller also agrees to include
the originator identification number, and Purchaser agrees to
immediately notify and instruct the originator of the ACH to reroute
the entries directly to Purchaser. Upon expiration of such one hundred
twenty (120) day period, Seller shall discontinue accepting and
forwarding ACH transactions to the Purchaser. Transactions will be
returned to the originators marked "Branch Sold to Another DFI," with
code R12 included as the reason for the return. Purchaser agrees to
complete and obtain Federal Reserve acceptance of the ACH Federal
Reserve Agreement prior to the Closing Date. All returns received by
Seller after the Closing Date for ACH transactions processed on or
before the Closing Date for any of the Deposit Accounts will be
provided to Purchaser as received for appropriate posting to the
Deposit Accounts. Simultaneously, Seller shall credit or debit the Due
to Account (defined in Section 7.16, below) as appropriate. Purchaser
shall notify Seller of any ACH returns which it initiates after the
Closing Date with respect to ACH transactions processed on or before
the Closing Date for any of the Deposit Accounts and Seller shall make
any appropriate entries to the Due to Account.
(C) OVER-THE-COUNTER RETURNED ITEMS. For a period of ninety (90) days
following the Closing Date, Seller shall, by facsimile, provide
Purchaser with-a list of any over-the-counter returned items on the day
they are received by Seller. Over-the-counter returned items are those
items that are included within the Seller Deposit Liabilities
transferred to Purchaser but that are returned unpaid to Seller after
the Closing Date. Seller shall send such items by overnight mail to
Purchaser for "next banking day" delivery. On the same day, Purchaser
shall transmit to Seller in immediately available funds by wire
transfer, the sum of over-the-counter returned items for which
sufficient available funds were in the applicable accounts to cover the
over-the-counter returned items, and Seller shall refund to Purchaser
any Deposit Premium paid with respect to such amounts. Purchaser agrees
to prohibit withdrawals from, or debits to, any Deposit Accounts which
do not have a sufficient available funds balance to cover any
over-the-counter returned items until such over-the-counter returned
items are paid to Seller. Notwithstanding the foregoing, Seller shall
bear all liability for items deposited or negotiated at the Seller
Offices prior to or on the Closing Date and subsequently returned as
uncollectible to the extent that an overdraft is created immediately
after (i) the exercise of Purchaser's lawful rights of offset and (ii)
the application of any availability under any overdraft line of credit
relating to the affected account or accounts, provided that Purchaser
shall handle returned items expeditiously under the permanent rules
established by the FRB in Regulation J and Regulation CC.
(D) WITHHOLDING. Seller shall deliver to Purchaser (i) on or before the
Closing Date, a list of all "B" (TINs do not match) and "C" (under
reporting/IRS imposed withholding) notices from the IRS imposing
withholding restrictions and (ii) for a period of one hundred twenty
(120) calendar days after the Closing Date, all notices received by the
Seller from the IRS imposing or releasing withholding restrictions on
the Seller Deposit Liabilities. Any amounts withheld by Seller up to
and including the Closing Date shall be remitted by Seller to the
appropriate governmental agency on or prior to the time they are due.
Any withholding obligations required to be remitted to the appropriate
governmental agency up to and including the Closing Date will be
withheld and remitted by Seller. Any withholding obligations required
to be remitted to the appropriate governmental agency after the Closing
Date with respect to withholding obligations after the Closing Date and
not withheld by Seller as set forth above will be remitted by
Purchaser. Any penalties described on a "B" notice from the IRS or any
similar penalties that relate to the Seller Deposit Liabilities opened
by Seller prior to the Closing Date will be paid by Seller promptly
upon receipt of the notice (subject to Seller's rights to contest such
penalties).
(E) REPORTING OBLIGATIONS. Seller shall comply with all federal and
state income tax reporting requirements with respect to the Seller
Deposit Liabilities and interest paid thereon through the Closing.
Purchaser shall comply with all federal and state income tax reporting
requirements with respect to the Seller Deposit Liabilities and
interest paid thereon after the Closing. Seller shall provide TINs and
any other information that may be required by Purchaser in this regard.
(F) LOAN PAYMENTS. For a period of ninety (90) days after the Closing
Date, Seller will forward to Purchaser loan payments received by Seller
with respect to the Loans.
7.04 EFFECT OF TRANSITIONAL ACTION. Except as and to the extent expressly set
forth in this Article VII, nothing contained in this Article VII shall be
construed to be an abridgement or nullification of the rights, customs, and
established practices under applicable banking laws and regulations as they
affect any of the matters addressed in this Article VII.
7.05 EXPENSES. Except as and to the extent specifically allocated otherwise
herein, each of the parties hereto shall bear its own expense, whether or not
the transactions contemplated hereby are consummated.
7.06 SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES. Respective
covenants, representations and warranties of Purchaser and Seller contained or
referred to in this Agreement shall survive the Closing for a period of five
years and shall not be deemed to merge therewith or terminate thereby.
7.07 SUCCESSORS AND ASSIGNS. All of the obligations of the parties hereunder,
including, without limitation, the indemnification obligations in section 5.03
and 5.04, shall be binding upon the successors and assigns of the parties.
7.08 WAIVERS. Each party hereto, by written instrument signed by duly authorized
officers of such party, may extend the time for the performance of any of the
obligations or other acts of the other party hereto and may waive, but only as
affects the party signing such instruments:
(a) Any inaccuracies in the representations or warranties of the other
party contained or referred to in this Agreement or in any document
delivered pursuant hereto.
(b) Compliance with any of the covenants or agreements of the
other party contained in this Agreement.
(c) The performance (including performance to the satisfaction of
a party or its counsel) by the other party of such of its obligations
set out herein.
(d) Satisfaction of any condition to the obligations of the
waiving party pursuant to this Agreement.
7.09 NOTICES. Any notice or other communication required or permitted pursuant
to this Agreement shall be effective only if it is in writing and delivered
personally, by facsimile transmission, or by registered or certified
return-receipt mail, postage prepaid addressed as follows:
IF TO SELLER: REPUBLIC BANK &TRUST COMPANY
601 West Market Street
Louisville, Kentucky 40202-2700
Attention: Bill Petter, Chief Financial Officer
WITH COPIES TO: REPUBLIC BANK &TRUST COMPANY
601 West Market Street
Louisville, Kentucky 40202-2700
Attention: Steve Trager, Vice Chairman
IF TO PURCHASER: THE PADUCAH BANK & TRUST COMPANY
555 Jefferson Street
P.O. Box 2600
Paducah, Kentucky 42001-2600
Attention: Joseph H. Framptom, Chairman
WITH COPIES TO: Brown, Todd & Heyburn, PLLC
3200 Providian Center
Louisville, Kentucky 40202-3363
Attention: R. James Straus
or to such other person or address as any such party may designate by notice to
the other parties and shall be deemed to have been given as of the date
received.
7.10 COOPERATION ON OPEN ITEMS AND OTHER MATTERS. After Closing the parties
agree to cooperate with each other with respect to the processing of outstanding
checks, ATM transactions and other open items which originated prior to Closing.
7.11 PARTIES IN INTEREST; ASSIGNMENT; AMENDMENT. This Agreement is binding upon
and is for the benefit of the parties hereto and their respective successors,
legal representatives, and assigns, and no person who is not a party hereto (or
a successor or assignee of such party) shall have any rights or benefits under
this Agreement, either as a third party beneficiary or otherwise. This Agreement
cannot be assigned (except by operation of law due to a merger of Purchaser or
Seller with a third party), and this Agreement cannot be amended or modified,
except by a written agreement executed by the parties hereto or their respective
successor and assigns.
7.12 ENTIRE AGREEMENT. This Agreement supersedes any and all oral or written
agreements and understandings heretofore made relating to the subject matter
hereof and contains the entire agreement of the parties relating to the subject
matter hereof. Annexes and Appendices to this Agreement are incorporated into
this Agreement by reference and made a part hereof.
7.13 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Kentucky, except to the
extent precluded by federal law of mandatory application.
7.14 COUNTERPARTS. This Agreement may be executed in several counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
7.15 RISK OF LOSS. The risk of any loss or damage to any of the Seller Assets by
fire or any other casualty or cause shall be borne by Seller at all times
through the Closing Date, and by Purchaser thereafter.
7.16 TRANSACTION ACCOUNT. Purchaser shall establish a transaction account with
Seller (the "Due to Account") for purposes of accepting credits to, and
absorbing debits against, the cash balances to be transferred as a result of
adjustments made pursuant to this Agreement after the Closing Date. Seller shall
be authorized to make the deposits and withdrawals from and to the Due to
Account without the signature of Purchaser but only to the extent of the
adjustments specifically provided for in this Agreement. Seller shall provide to
Purchaser a full record of all transactions in the Due to Account by 8:00 a.m.
eastern time of the business day following any such transactions. Any negative
(collected) balances in the Due to Account shall represent an advance to
Purchaser bearing interest, which shall be debited against the Due to Account at
the end of each month at the applicable Federal Funds Rate on the last business
day of such month.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by the respective officers thereunto duly authorized, all as of the
date first above written.
THE PADUCAH BANK & TRUST COMPANY REPUBLIC BANK & TRUST COMPANY
By: /s/ By: /S/
----------------------------- -----------------------------
Its: Its:
----------------------------- -----------------------------
ATTEST: ATTEST:
By: /s/ By: /s/
----------------------------- -----------------------------
Its: Its:
----------------------------- -----------------------------
The exhibits to the Agreement have been omitted from this filing in reliance on
Rule 601(b)(2) of Regulation S-K. Republic Bancorp, Inc. will furnish
supplemental a copy of any omitted exhibit to the Securities and Exchange
Commission upon request.