PURCHASE AND ASSUMPTION AGREEMENT by and between BANCO POPULAR NORTH AMERICA AND BANC OF CALIFORNIA, NATIONAL ASSOCIATION APRIL 22, 2014

Section 2.3 Sale and Transfer of Servicing.  The Transferred Loans shall be sold on a servicing-released basis and any related rights shall be transferred to Purchaser and shall be deemed “Transferred Assets” under this Agreement.  As of the Closing Date, all Liabilities with respect to the servicing of the Transferred Loans after the Closing Date will be assumed by Purchaser and shall be deemed “Assumed Liabilities” under this Agreement.

Section 3.1 Closing Statement and Closing Payment.  (a) At least seven (7) Business Days prior to the Closing Date, Seller shall prepare and deliver to Purchaser a statement substantially in the form of Exhibit 3.1(a) (the “Closing Statement”) setting forth the Closing Payment based on Seller’s reasonable, good faith estimates of the value of Transferred Assets and Assumed Liabilities as of the Closing Date and prepared in accordance with GAAP, consistently applied (together with all necessary work papers and documentation used by Seller in preparing the Closing Statement).  A form of Closing Statement prepared by Seller setting forth the Closing Payment based on Seller’s reasonable, good faith estimates of the value of the Transferred Assets and Assumed Liabilities as of March 31, 2014 and prepared in accordance with GAAP, consistently applied, is attached as Exhibit 3.1(b).

Section 3.3 Allocation of Purchase Price.  (a) Within sixty (60) Business Days after the Closing Date, (i) Seller shall prepare and deliver to Purchaser a draft of a statement (the “Allocation Statement”) setting forth its proposed calculation of the aggregate amount of consideration paid by Purchaser in respect of the Transferred Operations and the proposed allocation in accordance with Section 1060 of the Code of such aggregate amount among the Transferred Assets.  If within thirty (30) days after Purchaser’s receipt of the draft Allocation Statement, Purchaser shall not have objected in writing to such draft statement, then such draft statement shall become the Final Allocation, as defined below.  In the event that Purchaser objects in writing within such thirty (30)-day period, Seller and Purchaser shall negotiate in good faith to resolve the dispute.  If Seller and Purchaser are unable to agree upon an allocation within thirty (30) days after timely objection by Purchaser to the draft Allocation Statement, then, such allocation shall be determined, within a reasonable time by a nationally recognized independent accounting firm selected by mutual agreement between Seller and Purchaser.  The fees of any such accounting firm shall be divided equally between Seller and Purchaser.  The allocation consisting of the items agreed between Purchaser and Seller and, if applicable, the items determined by such accounting firm shall become the Allocation Statement.  The allocation of the total consideration, as agreed upon by Purchaser and Seller (as a result of either the Purchaser’s failure to object to the Allocation Statement or of good-faith negotiations between Purchaser and Seller) or determined by a firm of accountants under this Section 3.3(a) (the “Final Allocation”), shall be final and binding upon the parties.

Section 4.1 Closing Time and Place.  The consummation of the transfer of the Transferred Operations, including the Transferred Assets and the Assumed Liabilities, and the payment of the Closing Payment, in each case as contemplated by this Agreement, shall take place at a closing (the “Closing”) to be held at 10:00 a.m., New York time, at the offices of Sullivan & Cromwell LLP, 125 Broad Street, New York, New York 10004, on (i) the first day of a month that is not earlier than the later of (a) October 1, 2014 or (b) three (3) Business Days following the satisfaction or waiver of all conditions set forth in Article X (excluding any such conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions) or (ii) such other date as Purchaser and Seller may agree in writing which the parties agree to discuss in good faith taking into account the anticipated date of the Conversion (the “Closing Date”).  The Closing shall be deemed effective as of 12:01 a.m. Pacific time, on the Closing Date (the “Effective Time”).   If the Closing Date occurs on a day other than a Business Day, any wire transfers that otherwise would have been made on the Closing Date shall be evidenced on the Closing Date through arrangements mutually agreed to by the parties, and such wire transfers shall occur on the first Business Day following the Closing Date.

 

Section 4.2 Closing Documents.  (a) Deliveries of Seller.  At the Closing, Seller shall deliver the following documents to Purchaser, all of which shall be in a form reasonably satisfactory to Purchaser and agreed between the Parties at least two (2) Business Days prior to the Closing Date:

Seller) all of the fixed assets and other tangible personal property capable of physical delivery to the extent not located on or at the Business Premises (including real property files, Cash on Hand, and keys to safe deposit boxes, among others) constituting Transferred Assets hereunder in the possession or control of Seller (or that can be obtained by Seller without unreasonable expense or burden).  Seller shall execute any documentation reasonably required to enable Seller or third parties to transfer to Purchaser the Banking Customer account statements, imaged copies of checks and account histories described in Section 2.1(a)(10) and shall be responsible for the reasonable costs associated with such transfer.

Section 5.1 Organization.  Seller is a New York State chartered bank, duly organized and validly existing under the laws of the State of New York.  Seller has all requisite corporate power and authority to own the Transferred Assets and carry on the Transferred Operations as currently conducted by it and is duly qualified to do business as a foreign corporation or other entity in each jurisdiction where its ownership of the Transferred Assets and the conduct of the Transferred Operations as currently conducted by it requires such qualification, except where the failure to be so qualified would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

Section 5.2 Authority; Capacity.  Seller has the requisite power and authority to enter into and perform this Agreement and any instruments or other documents executed pursuant hereto and to consummate the transactions contemplated hereby and thereby. This Agreement and any other documents or instruments executed pursuant hereto and the execution, delivery and performance hereof and thereof have been duly authorized and approved by all necessary corporate action on the part of Seller and, assuming due authorization, execution and delivery by Purchaser, this Agreement and the instruments and documents executed pursuant hereto constitute, or when fully executed will constitute, the valid and binding obligations of Seller, enforceable against Seller in accordance with their terms, except as enforcement may be limited by receivership, conservatorship and supervisory powers of bank regulatory agencies generally as well as by bankruptcy, insolvency, reorganization, moratorium or other laws of general applicability relating to or affecting creditors’ rights, or the limiting effect of rules of law

Section 5.3 Consents and Approvals.  Seller is not required to obtain any order, permit, consent, approval or authorization of, or required to make any declaration or filing with, any Governmental Entity or third party in connection with the execution and delivery of this Agreement and the transactions contemplated hereby, except (i) as may be required pursuant to the Contracts listed on Schedule 5.3(i), (ii) the approvals or non-objections of the Governmental Entities listed on Schedule 5.3(ii) (the “Seller Regulatory Approvals”) and (iii) other consents or approvals, the failure of which to obtain would not reasonably be expected, individually or in the aggregate, to be material to the Transferred Operations, the Branches, the Transferred Assets or the Assumed Liabilities.

Section 5.4 No Breaches; Defaults.  Assuming receipt of the approvals referenced in Section 5.3, the execution and delivery of this Agreement and the instruments and documents executed pursuant hereto by Seller does not, and the consummation of the transactions contemplated by this Agreement will not, (i) result in a breach, violation of or default under any Applicable Law or governmental permit or license to which Seller is a party or by which it is bound, except such breaches, violations or defaults that would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect,  (ii) constitute a breach or violation of or a default under the charter or bylaws of Seller or (iii) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event that with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any Lien upon any of the assets or properties of Seller under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which Seller is a party, or by which it or any of its properties or assets may be bound or affected, which breach, conflict, loss of benefit, termination, cancellation, acceleration, Lien, violation or default would have or reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 5.5 Compliance with Law.  Seller (i) is in compliance in all material respects with Applicable Law applicable to the Transferred Assets, the Assumed Liabilities and the Transferred Operations; (ii) has conducted, since December 31, 2010, and is conducting the Transferred Operations (including all matters relating to the Business Employees and the Business Premises) in compliance in all material respects with Applicable Law; and (iii) has properly administered in all material respects all accounts within the Transferred Operations for which any of them acts as a fiduciary, including accounts for which any of them serves as a trustee, agent, custodian, personal representative, guardian, conservator or investment advisor, in accordance with the terms of the agreements governing such accounts and Applicable Law. Seller received a rating of satisfactory or higher in its most recent examination with respect to the CRA and has no reason to believe that it will not maintain at least a satisfactory rating following its next CRA examination. Seller has received no written notice of and has no Knowledge of any planned or threatened objection by any community group to the transactions

contemplated hereby that would reasonably be expected to prevent or delay consummation of the transactions contemplated herein.

Section 5.6 Regulatory Matters.  (a) There are no pending or, to Seller’s Knowledge, threatened, disputes or controversies between Seller and any Governmental Entity, or investigation or inquiry by any such Governmental Entity (except for regularly scheduled examinations and audits conducted by Governmental Entities under Applicable Law) specifically affecting to the Transferred Operations, the Transferred Assets, the Branches or the Assumed Liabilities or that would reasonably be expected to prevent or delay consummation of the transactions contemplated herein.

Section 5.7 Litigation and Related Matters.  There are no actions, complaints, petitions, suits, or other proceedings, or any decree, judgment, order or ruling entered, promulgated or pending, whether civil, criminal or administrative, pending or, to Seller’s Knowledge, threatened, affecting or related to the Transferred Operations, the Branches, the Transferred Assets or the Assumed Liabilities, that (i) would have or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect or (ii) would materially impede, delay or prevent Seller from being able to perform its material obligations under this Agreement.

Section 5.8 Operations.  Since December 31, 2013 through the date of this Agreement, and except as otherwise expressly contemplated by this Agreement, Seller has in all material respects conducted the Transferred Operations only in, and has not engaged in any material transaction other than in, the ordinary course of business consistent with past practice.  Since December 31, 2013 there has not been any event, occurrence or circumstance that has had or that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.  Since December 31, 2013 through the date of this Agreement, Seller has not taken, or committed to take, any action, nor has the board of directors of Seller resolved to take

any action, that, if so taken, committed to or resolved on or after the date of this Agreement, would not be permitted under Section 7.1(b)(5), (6), (7), (8), (9), (12), (13), (14), (15) or (16).

Section 5.9 Real Property Leases.  (a)  Seller has provided Purchaser with true and correct copies of all Real Property Leases, including all amendments thereto and any other agreements affecting such Real Property Leases.

Section 5.14 Necessary Permits.  Seller has all material permits, licenses, franchises, certificates of public convenience, orders, ratings and approvals of all Governmental Entities necessary for it to lawfully operate the Transferred Operations and the Business Premises as currently operated (the “Necessary Permits”), and (i) all of the Necessary Permits are valid in good standing and in full force and effect and (ii) to Seller’s Knowledge, no suspension, modification or cancellation of, or proceeding related to, any Necessary Permit has been threatened.

Section 5.15 Title to Assets.  Seller is the lawful owner of, or in the case of leased Transferred Assets, has a valid leasehold interest in, each of the Transferred Assets, free and clear of all Liens (other than Permitted Liens).  Subject to the terms and conditions of this Agreement, on the Closing Date, Purchaser will acquire valid title to, or in the case of leased Transferred Assets, a valid leasehold interest in, all of the Transferred Assets, free and clear of any Liens (other than Permitted Liens).

Section 5.20 Taxes.  (a)  All material Tax Returns required to have been filed with respect to the Transferred Operations, the Transferred Assets and the Assumed Liabilities  have been filed with the appropriate Taxing Authority; each Tax Return is true, complete and correct in all material respects.  All Taxes shown to be due on such Tax Returns have been timely paid to the appropriate Taxing Authority or reflected in an appropriate tax reserve in accordance with GAAP on the financial statements of Seller.  Seller is in compliance with the law and the IRS regulations relative to obtaining from depositors with respect to deposits executed IRS Forms W-8 and W-9 or is back-up withholding on applicable accounts.

Section 5.21 No Brokers or Finders.  Except for RBC Capital Markets, LLC, whose fees will be paid by Seller or an Affiliate of Seller, there is no investment banker, broker, finder or other intermediary that has been retained by or is authorized to act on behalf of Seller or any of its Affiliates that might be entitled to any fee or commission from Seller or its Affiliates in connection with the transactions contemplated hereby.

Section 5.22 Available Funds.  Seller has, and as of the Closing Date will have, sufficient funds to consummate the transactions contemplated by this Agreement, including the making of payments pursuant to Section 3.2 and, if applicable, Section 3.3.

Section 5.23 Insurance Coverage.  The business and operations of the Transferred Operations are insured against such risks and in such amounts and with such coverage deemed appropriate by management of Seller and not in a manner materially inconsistent with industry practice for comparable financial institutions.  Since January 1, 2013, all premiums payable under all insurance policies and fidelity bonds that currently cover the Transferred Assets, the Branches and the assets, business, operations and employees of the

Section 5.24 Limitations on and Disclaimer of Representations and Warranties.  Except for the representations and warranties contained in this Article V, neither Seller nor any other Person makes any other express or implied representation or warranty on behalf of Seller. In addition, except as otherwise expressly set forth in this Agreement:

Operations and is duly qualified to do business in and is in good standing as a foreign corporation or other entity in each jurisdiction where the ownership of the Transferred Assets and the conduct of the Transferred Operations requires such qualification, except where the failure to be so qualified or be in good standing would not reasonably be expected, individually or in the aggregate, to have a material adverse effect on the ability of Purchaser to consummate the transactions contemplated hereby.

Section 6.2 Authority; Capacity.  Purchaser has the power and authority to enter into and perform this Agreement and any instruments or other documents executed pursuant hereto.  This Agreement and any instruments or other documents executed pursuant hereto, and the execution, delivery and performance hereof and thereof have been duly authorized and approved by all necessary corporate action on the part of Purchaser and, assuming due authorization, execution and delivery by Seller, this Agreement and the instruments and documents executed pursuant hereto constitutes, or when executed will constitute, the valid and binding obligations of Purchaser, enforceable against Purchaser in accordance with its terms, except as enforcement may be limited by receivership, conservatorship and supervisory powers of bank regulatory agencies generally as well as bankruptcy, insolvency, reorganization, moratorium or other laws of general applicability relating to or affecting creditors’ rights, or the limiting effect of rules of law governing specific performance, equitable relief and other equitable remedies or the waiver of rights or remedies.

Section 6.4 No Breaches; Defaults.  Assuming the receipt of all regulatory approvals referenced in Section 6.3(a), the execution and delivery of this Agreement and any instruments or other documents executed pursuant hereto by Purchaser do not and the consummation of the transactions contemplated by this Agreement, will not constitute:  (i) a breach or violation of or default under any Applicable Law or any governmental permit or license of Purchaser or to which Purchaser is subject, which breach, violation or default would reasonably be expected to materially impede, delay or prevent Purchaser from being able to perform its obligations under this Agreement in all material respects, or (ii) a breach or violation of or a default under the articles of association  or bylaws of Purchaser.

Section 6.6 Litigation and Related Matters.  There are no actions, complaints, petitions, suits, or other proceedings, or any decree, judgment, order or ruling entered, promulgated or pending, whether civil, criminal or administrative, pending or, to Purchaser’s Knowledge, threatened against or affecting Purchaser or any of its Affiliates that would reasonably be expected to (i) materially impede, delay or prevent Purchaser from being able to perform its obligations under this Agreement or (ii) impair the validity or consummation of this Agreement or the transactions contemplated hereby.

Section 6.7 Financing.  On the Closing Date, assuming receipt of the Acceptable Financing, Purchaser will have sufficient cash, available lines of credit or other sources of immediately available funds to enable it to make the Closing Payment (if any is required to be paid by Purchaser) and to promptly pay any other amounts to be paid by it under this Agreement.

Section 6.8 Reserved.

Section 6.9 No Brokers or Finders.  Except for the Persons set forth on Schedule 6.9, whose fees will be paid by Purchaser or one of its Affiliates, there is no investment banker, broker, finder or other intermediary that has been retained by or is authorized to act on behalf of Purchaser or any of its Affiliates that might be entitled to any fee or commission from Purchaser or any of its Affiliates in connection with the transactions contemplated hereby.

Section 6.10 Limitations on Representations and Warranties.  Except for the representations and warranties specifically set forth in this Article VI, neither Purchaser nor any other Person makes any other express or implied representation or warranty on behalf of Purchaser.

Section 7.1 Conduct of the Transferred Operations Prior to the Closing.  (a) From the date hereof until the earlier of the Closing Date or the termination of this Agreement, except as expressly contemplated by this Agreement or required by Applicable Law, Seller (i) will, with respect to the Transferred Operations, the Branches, the Transferred Assets and the Assumed Liabilities, use its reasonable best efforts to preserve its business relationships with Business Employees, depositors and the obligors of Transferred Loans and other third Persons with whom the Transferred Operations maintains relationships, (ii) will maintain the Branches in their current condition, ordinary wear and tear excepted, and (iii) will use its reasonable best efforts to conduct the Transferred Operations and preserve the Transferred Assets in the ordinary course of business consistent with past practice.

offices, properties, books, and records shall be made to such representatives of Seller as Seller shall designate, who shall be solely responsible for coordinating all such requests and all access permitted hereunder.  In addition, between the date hereof and the Closing Date, Seller agrees to use its reasonable best efforts to obtain any additional or missing documentation or other information from Banking Customers relating to compliance with bank secrecy and anti-money laundering laws and regulations, and to include such documentation or other information in Seller’s customer files (and such files shall be included in the Transferred Books and Records), in each case upon the reasonable request of Purchaser, which documentation or other information Purchaser may identify in the course of its review of such customer accounts.

Section 7.3 Efforts; Regulatory Filings and Other Actions.  (a) Each of the Parties agrees to use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated hereby and to cooperate with the other Parties in connection with the foregoing.  Without limiting the generality of the foregoing, each of the Parties shall use its reasonable best efforts to: (i) obtain all Regulatory Approvals as promptly as practicable, (ii) lift or rescind as promptly as practicable any injunction or restraining order or other order adversely affecting the ability of the Parties to consummate the transactions contemplated hereby, (iii) effect all other necessary registrations and filings, if any, and (iv) fulfill all of the conditions to the obligations of the Parties to consummate the transactions contemplated by this Agreement set forth in Article X.  Notwithstanding anything to the contrary contained herein, nothing in this Section 7.3 shall be deemed to modify the level of efforts Purchaser is required to use to obtain the Acceptable Financing, which is addressed in Section 7.17.

Section 7.4 Further Assurances.  The Parties agree that, from time to time, before, on or after the Closing Date, each of them will execute and deliver such further instruments of conveyance and transfer and take such other action as may be reasonably necessary to carry out the purposes and intents of this Agreement.  To the extent any Transferred Assets are currently held by an Affiliate of Seller, Seller shall enter into such agreements as are necessary in order to transfer the Transferred Assets to Seller on or before the Closing Date, or otherwise

Section 7.5 Confidentiality.  (a)  From the date of this Agreement and continuing thereafter, each Party shall, and shall cause their respective Affiliates, employees and representatives to, keep, treat and hold any and all confidential or proprietary information, knowledge and data of or pertaining to the other Party (including such information, knowledge and data relating to the Seller and its Affiliates) (such information, knowledge and data, the “Confidential Information”) confidential (and not disclose or provide access to any Person) and not use any Confidential Information except as contemplated by Section 7.3 and, in the case of Purchaser, to operate or otherwise in connection with the Transferred Operations, the Transferred Assets, the Assumed Liabilities and the Branches after the Closing; provided, however, that either Party may disclose Confidential Information to another Person (i) with the prior written consent of the other Party, (ii) to the extent required by Applicable Law, (iii) during the course of litigation, so long as the disclosing party uses commercially reasonable efforts to ensure that the party receiving such information treats the information in a confidential manner and in accordance with the terms hereof, (iv) to any taxing authority, (v) to any Governmental Entity in response to a regulatory or legal process or request and (vi) to its legal counsel, accountants, investment advisers, investment bankers, banks, other representatives and their advisors who need to know such information for the purpose of assisting the disclosing party in their capacity as such so long as the disclosing party causes such persons to treat the information in a confidential manner and in accordance with the terms hereof (it being understood that the disclosing party shall be responsible for any breach of the terms of this Section 7.5 by such persons).  Notwithstanding the foregoing, in the event that either Seller or Purchaser or its representatives intend to disclose information pursuant to clause (ii) or (iii) above, such party shall, or shall cause its representative to, to the extent reasonably practicable and permitted by Applicable Law, (x) provide Purchaser or Seller, as the case may be, with reasonable written notice of such requirement sufficiently in advance of disclosing such information so that Purchaser or Seller, as applicable, may seek a protective order or other remedy at its sole expense, (y) in the event that such protective order or other remedy is not obtained, furnish only that portion of such Confidential Information that is legally required to be provided and exercise commercially reasonable efforts to obtain assurances that confidential treatment will be afforded to such Confidential Information and (z) use commercially reasonable efforts to promptly furnish to Purchaser or Seller, as applicable, a copy (in whatever form or medium) of such Confidential Information that it intends to furnish or has furnished.  The foregoing sentences in this Section 7.5(a) shall not apply to any information, knowledge or data that (A) at the time of disclosure is publicly available or becomes publicly available through no breach of this Section 7.5(a), or becomes available on a non-confidential basis from a source other than the party owing a duty of confidentiality pursuant to this Section 7.5(a), so long as such source is not known by such party to be bound by a confidentiality agreement with or other obligations of secrecy to the party whose Confidential Information is disclosed or (B) in the case of Purchaser, was independently developed by Purchaser or on Purchaser’s behalf without the use of Confidential Information or was available to Purchaser or its Affiliates, employees or representatives on a non-confidential basis prior to its disclosure to such Person by Seller.  On and after the Closing Date, the obligations under this Section 7.5(a) shall remain in full force and

Section 7.7 Updated Schedules; Opt Out Loans and Opt Out Deposits.  (a) (i) On or before the tenth (10th) day following the end of each calendar month between the date hereof and the Closing Date and (ii) on the fifth (5th) day prior to the Closing Date anticipated by the Parties, Seller shall deliver to Purchaser updated versions of the following schedules so that they are complete and correct as of the last day of the immediately preceding month:  Schedule 1.1(a) (Assumed Deposits), Schedule 1.1(c) (Excluded Deposits), Schedule 1.1(g) (Transferred Debit Card Rewards Program Accounts), Schedule 1.1(h) (Transferred Overdrafts), Schedule 1.1(f) (Security Deposits), Schedule 2.1(a)(3) (Transferred Personal Property), Schedule 2.1(a)(4) (Personal Property Leases), Schedule 2.1(a)(6) (Transferred Loans) and Schedule 2.1(a)(8) (Assumed Letters of Credit).  Except with respect to deposits and loans associated with any Retained Business, Schedule 1.1(c) (Excluded Deposits) shall exclude deposits to the extent such deposits are associated with a Transferred Loan and such deposits shall be included on Schedule 1.1(a) (Assumed Deposits); and Schedule 1.1(a) (Assumed Deposits) shall exclude deposits to the extent such deposits are associated with an Excluded Loan and such deposits shall be included on Schedule 1.1(c) (Excluded Deposits).

Section 7.9 UCC-1 Assignment, Letters of Credit and Other Documents.  (a)  Seller shall use its reasonable best efforts to deliver to Purchaser at the Closing all signed UCC-1 financing statements and UCC-3 assignments of financing statements, endorsed notes, assignments of mortgages in recordable form, participations and all other documentation necessary to effect the assignment of the Transferred Loans and the Assumed Letters of Credit to Purchaser.  The out-of-pocket costs and expenses of preparing and

filing any such documentation shall be split equally between Seller and Purchaser.  Purchaser agrees to promptly reimburse Seller for any out-of-pocket costs and expenses that are the responsibility of Purchaser under this Section 7.9(a) upon a request therefor accompanied by reasonably supportive documentation.

Section 7.10 Transition Coordinators; Cooperation with Transition.  Subject to Applicable Law, from the date hereof until the earlier of the Closing Date or the termination of this Agreement, Seller will cooperate with Purchaser to provide current information regarding material activities of the Transferred Operations, and Purchaser and Seller shall cooperate with and assist each other in planning and implementing necessary and appropriate policies and procedures in connection with the transition of the ownership of the Transferred Operations from Seller to Purchaser.  In connection therewith, each of Seller and Purchaser shall as promptly as practicable after the execution of this Agreement designate certain of their respective employees as “Transition Coordinators.”

Section 7.14 Escheat Deposits.  No deposits that are Escheat Deposits as of the Closing Date are Assumed Deposits.  Following the Closing, Purchaser shall be solely responsible for properly reporting and transmitting to the applicable Governmental Entity all Escheat Deposits.

Section 7.18 Debit Card Rewards Program.  Upon the written request of Purchaser on or before June 30, 2014, Seller hereby agrees to terminate, on or prior to the Closing Date, the Debit Card Rewards Program in accordance with its terms and conditions and to pay out any amounts owed by Seller thereunder and all costs associated with the Debit Card Rewards Program and the termination thereof.

Section 7.19 ENSI Agreement.  Upon Purchaser’s written request, Seller hereby agrees to take commercially reasonable efforts to instruct Essex National Securities, LLC to transfer, on or prior to the Closing Date, solely with respect to the Transferred Operations and not the Retained Businesses, all customer accounts related to Seller’s investment program under the ENSI Agreement associated with the Branches, in accordance with the terms and conditions of the ENSI Agreement.  Seller agrees to cooperate with Purchaser in connection with Purchaser’s entering into any replacement agreement with Essex National Securities, LLC with respect to the relationships terminated thereby; provided that Purchaser shall bear all costs and expenses associated with entering into any such replacement agreement.

Section 8.1 Transferred Operations Employees.  (a)  Offers of Employment.  Subject to Applicable Law, at least thirty (30) days prior to the Closing Date and effective as of the Closing Date, Purchaser shall make, and shall use reasonable best efforts to cause to be accepted, a Comparable Job Offer to such Business Employees (excluding Retained Employees) as identified by Purchaser in its reasonable discretion; provided, however, that Purchaser will not elect to exclude any protected class of similarly situated Business Employees.  The Business Employees who receive and accept Purchaser’s offer of employment and commence employment with Purchaser as of the Closing Date (or such later date as set forth below) are referred to herein as the “Transferred Operations Employees.”  With respect to the Transferred Operations Employees who hold work visas, Seller and Purchaser shall cooperate to provide for the transfer of the sponsorship of such visas to Purchaser effective as of the Closing Date (or such later date as set forth below).  Purchaser’s employment of the Transferred Operations Employees shall be deemed to commence at the Effective Time, without regard to whether the Transferred Operations Employee is actively at work on the Closing Date, in the case of an employee who on the Closing Date is absent from work due to vacation, jury duty, funeral leave, sick day or personal day leave.  Notwithstanding the foregoing, to the extent that a Business Employee who has received and accepted Purchaser’s offer is not available to perform services on the Closing Date because on the Closing Date such employee is on short- or long-term disability, workers compensation leave, military leave, leave of absence under the Family Medical Leave Act or other leave of absence approved by Seller or one of its Affiliates (other than vacation, jury duty, funeral leave, sick day or personal day leave), he or she shall remain an employee of Seller or one of its Affiliates; provided that Purchaser shall hire such Business Employee if such Business Employee returns to work no later than the date that is the earlier of (x) the scheduled return date (including any approved extensions thereto) and (y) the date that is six (6) months following the Closing Date, unless such employee is entitled to reemployment under the Uniformed Services Employment and Reemployment Act, in which case Purchaser shall be obligated to hire such employee if such employee’s return date is within twelve (12) months following the Closing Date, and, for purposes of this Agreement, each such employee shall become a Transferred Operations Employee as of the date active employment with Purchaser commences.  Those Business Employees who do not receive or do not accept a Comparable Job Offer from Purchaser shall not be considered Transferred Operations Employees for any purpose of this Agreement.

Section 9.1 Tax Indemnification.  (a)  Except to the extent reflected as a Liability in the Final Closing Statement, Seller shall pay or cause to be paid, shall be liable for, and shall indemnify, defend and hold Purchaser and its Affiliates harmless from and against any and all Excluded Taxes.  Purchaser shall pay or cause to be paid, shall be liable for, and shall

indemnify, defend and hold Seller and its Affiliates harmless from and against any and all Taxes relating to the Transferred Operations or any Transferred Asset or Assumed Liability for the Post-Closing Period other than Excluded Taxes that are the responsibility of Seller under the immediately preceding sentence.

Parties reasonable notice and opportunity to take possession of such Tax Returns and other documents at such other Party’s own expense.  Each Party shall make its employees reasonably available on a mutually convenient basis at its cost to provide explanation of any documents or information so provided.

 

Section 9.3 Contest Provisions.  Each of Purchaser and Seller shall promptly notify the other in writing upon receipt of notice of any pending or threatened audits or assessments with respect to Taxes for which such other Party (or such other Party’s Affiliates) may be liable hereunder.  If a third party claim includes or would reasonably be expected to include both a claim for Taxes that are Excluded Taxes and a claim for Taxes that are not Excluded Taxes, and such claim for Taxes that are Excluded Taxes is not separable from such a claim for Taxes that are not Excluded Taxes, Seller (if the claim for Taxes that are Excluded Taxes exceeds or reasonably would be expected to exceed in amount the claim for Taxes that are not Excluded Taxes) or otherwise Purchaser (Seller or Purchaser, as the case may be, the “Controlling Party”) shall be entitled to control the defense of such third party claim (such third party claim, a “Tax Claim”).  In such case, the other party (Seller or Purchaser, as the case may be, the “Non-Controlling Party” shall be entitled to participate fully (at the Non-Controlling Party’s sole expense) in the conduct of such Tax Claim and the Controlling Party shall not settle such Tax Claim without the consent of such Non-Controlling Party (which consent shall not be unreasonably withheld).  The costs and expenses of conducting the defense of such Tax Claim shall be reasonably apportioned based on the relative amounts of the Tax Claim that are Excluded Taxes and that are not Excluded Taxes.

Section 9.4 Transfer Taxes.  (a)  All Transfer Taxes that are payable or that arise as a result of the consummation of the purchase and sale of the Transferred Assets or the assumption of the Assumed Liabilities contemplated by this Agreement (including any such Transfer Taxes from any subsequent increase in consideration) shall be borne equally by Purchaser and Seller.  Purchaser and Seller shall cooperate in the timely completion and filing of any Tax Returns that must be filed in connection with any such Transfer Taxes.  Such Tax Returns shall be prepared consistent with the Allocation Statement pursuant to Section 3.3(a).  Purchaser shall pay to Seller Purchaser’s share of all Transfer Taxes required to be paid by Seller under Applicable Law, if any, at least two (2) Business Days prior to the due date for payment of the relevant Transfer Tax.

Section 9.5 Coordination.  Notwithstanding anything in this Agreement to the contrary, (i) in the event there is a conflict between this Article IX and any provision contained in any other article of this Agreement, this Article IX shall control and (ii) the procedures relating to any claims for Taxes shall be governed by this Article IX and Sections 12.4 and 12.5 shall not apply.

Section 9.7 Limitations and Survival.  Notwithstanding anything in this Agreement to the contrary, the indemnification provisions of Section 9.1 are not subject to the limitations of Article XII and shall survive the Closing until the expiration of the applicable statutes of limitation.

Section 9.8 No Double Recovery.  For the avoidance of doubt, neither Purchaser nor Seller shall be entitled to receive indemnification from the other in respect of all or any portion of any Loss more than once, in each case, whether proceeding under this Article IX or Article XII.

Section 10.2 Conditions to Obligation of Seller to Close.  The obligation of Seller to effect the transactions contemplated by this Agreement is subject to the satisfaction or waiver (in sole discretion of Seller), prior to or at the Closing, of each of the following conditions:

Section 11.2 Termination Fee(a).  (a)  Purchaser shall promptly, and in any event within two (2) Business Days, pay to Seller $2,000,000 (the “Termination Fee”) in cash in the event that this Agreement is terminated by:

Section 11.3 Effect of Termination.  In the event of termination of this Agreement as provided in Section 11.1, this Agreement shall forthwith become void and have no effect, and none of Seller, Purchaser, any of their respective Affiliates or any of the officers, directors or stockholders of any of them shall have any Liability of any nature whatsoever hereunder, or in connection with the transactions contemplated hereby, except (i) the confidentiality provisions of Section 7.5, Section 11.2, this Section 11.3 and Article XII shall survive any termination of this Agreement, and (ii) notwithstanding anything to the contrary contained in this Agreement, neither Purchaser nor Seller shall be relieved or released from any Liabilities or damages arising out of its willful and material breach of this Agreement prior to such termination.

directly or indirectly imposed upon, sustained, incurred or suffered by, any of the Purchaser Indemnified Parties, to the extent relating to or arising out of:

Section 12.3 Indemnification by Purchaser.  (a) Subject to Section 12.1 and notwithstanding anything to the contrary contained in this Agreement, Purchaser hereby agrees that from and after the Closing it shall indemnify, defend and hold harmless Seller, any of its Affiliates, and their respective successors and permitted assigns, and their respective directors, officers, employees, agents, and representatives, each solely in their capacity as such (the “Seller Indemnified Parties” and collectively, with the Purchaser Indemnified Parties, the “Indemnified Parties”) from, against and in respect of any Losses directly or indirectly imposed on, sustained, incurred or suffered by, any of the Seller Indemnified Parties, to the extent relating to or arising out of:

Section 12.4 Third-Party Claim Indemnification Procedures.  (a)  In the event that any written claim or demand for which an indemnifying party (an “Indemnifying Party”) may have Liability to any Indemnified Party hereunder, other than those relating to Taxes (which are the exclusive subject of Article IX), is asserted against or sought to be collected from any Indemnified Party by a third party (a “Third-Party Claim”), such Indemnified Party shall promptly notify the Indemnifying Party in writing of such Third-Party Claim, the amount or the estimated amount of the claimed Loss constituting such Third-Party Claim thereunder to the extent then ascertainable, any other remedy sought thereunder, and, to the extent practicable, any other material details pertaining thereto (a “Claim Notice”); provided, however, that the failure timely to give a Claim Notice shall affect the rights of an Indemnified Party hereunder only to the extent that such failure has a prejudicial effect on the defenses or other rights available to the Indemnifying Party with respect to such Third-Party Claim.  The Indemnifying Party shall have twenty (20) days after receipt of the Claim Notice (the “Notice Period”) to notify the Indemnified Party that it desires to assume the defense of the Indemnified Party against such Third-Party Claim.

Section 12.5 Direct Claims.  If an Indemnified Party wishes to make a claim for indemnification hereunder for a Loss that does not result from a Third-Party Claim (a “Direct Claim”), the Indemnified Party shall notify the Indemnifying Party in writing of such Direct Claim, the nature of the remedy sought and if the remedy consists of damages, the amount or the estimated amount of the claimed Loss constituting such Direct Claim to the extent then ascertainable (which estimate shall not be conclusive of the final amount of such Direct Claim) and, to the extent practicable, any other material details pertaining thereto. The Indemnifying Party shall have a period of twenty (20) days within which to respond to such Direct Claim.  If the Indemnifying Party does not respond within such twenty (20)-day period, the Indemnifying Party will be deemed to have accepted the Direct Claim.  If the Indemnifying Party rejects all or any part of the Direct Claim, the Indemnified Party shall be free to seek enforcement of its rights to indemnification under this Agreement with respect to such Direct Claim.

Section 12.6 Adjustments to Losses.  (a)  In calculating the amount of any Loss, the cash proceeds actually received by the Indemnified Party or any of its Affiliates under any third-party insurance policy or pursuant to any claim, recovery, settlement or payment by or against any other Person (net of any deductibles, costs or expenses incurred in receiving or realizing such proceeds), in each case relating to the Third-Party Claim or Direct Claim, shall be deducted.  In the event that an Indemnified Party has any rights against a third party with respect to any Loss that results in a payment by an Indemnifying Party under this Article XII, such Indemnifying Party shall be subrogated to such rights to the extent of such payment; provided that until the Indemnified Party recovers full payment of the Loss related to any such Direct Claim, any and all claims of the Indemnifying Party against any such third party on account of said indemnity payment is hereby expressly made subordinate and subject in right of payment to the Indemnified Party’s rights against such third party.  Without limiting the generality or effect of any other provision hereof, each Indemnified Party and Indemnifying Party shall duly execute upon request all instruments reasonably necessary to evidence and perfect the subrogation and subordination rights detailed herein, and otherwise reasonably cooperate in the prosecution of such claims.

Section 12.7 Reimbursement.  If an Indemnified Party recovers an amount from a third party in respect of a Loss that is the subject of indemnification hereunder after all or a portion of such Loss has been paid by an Indemnifying Party pursuant to this Article XII, the Indemnified Party shall promptly (and in any event, no later than ten (10) Business Days after receipt of such recovery) remit to the Indemnifying Party the excess (if any)

of (i) the amount paid by the Indemnifying Party in respect of such Loss, plus the amount received from the third party in respect thereof (net of any deductibles, costs or expenses incurred in receiving or realizing such amount from the third party), less (ii) the full amount of Loss.

Section 12.8 Payments.  The Indemnifying Party shall pay all amounts payable pursuant to this Article XII, by wire transfer of immediately available funds, promptly (and in any event within two (2) Business Days) following receipt from an Indemnified Party of a bill, together with all accompanying reasonably detailed back-up documentation, for a Loss that is the subject of indemnification hereunder, unless the Indemnifying Party in good faith disputes any or all of the Loss, in which event it shall promptly so notify the Indemnified Party in writing and shall promptly (and in any event within two (2) Business Days) pay the undisputed portion of such Loss; provided that if the Indemnifying Party does not dispute any or all of the Loss in writing within five (5) Business Days of receipt of such bill and back-up documentation, the Indemnifying Party shall be deemed to not dispute such Loss.  In any event, the Indemnifying Party shall pay to the Indemnified Party, by wire transfer of immediately available funds, the amount of any Loss for which it is liable hereunder no later than two (2) Business Days following any final determination of such Loss and the Indemnifying Party’s Liability therefor.  A “final determination” shall exist when (i) the parties to the dispute have reached an agreement in writing, (ii) a court of competent jurisdiction shall have entered an order or judgment, or (iii) an arbitration or like panel shall have rendered a determination with respect to disputes the parties have agreed to submit thereto.

Section 12.9 Consequential Damages.  In no event shall either Party hereto be entitled to special, consequential or punitive damages or damages for lost profits in any action relating to the subject matter of this Agreement, except to the extent resulting from a settlement or court award in connection with a claim or action brought by a third party.

Section 12.10 Remedies Exclusive.  Except as otherwise specifically provided herein or in the case of fraud, intentional misconduct or willful breach, the remedies provided in this Article XII shall be the exclusive remedies of the Parties from and after the Closing in connection with any breach of a representation or warranty, or non-performance, partial or total, of any covenant or agreement contained herein; provided that for the avoidance of doubt the foregoing shall not prevent a party from obtaining specific performance, injunctive relief or any other available non-monetary equitable remedy.

Section 13.1 Entire Agreement; Amendment.  All Exhibits (attached hereto and as executed) and Schedules hereto shall be deemed to be incorporated into and made part of this Agreement.  This Agreement, together with the Exhibits and Schedules hereto, contain the entire agreement and understanding among the Parties with respect to the subject matter hereof (and supersede any prior agreements, arrangements or understandings among the Parties, oral or written, with respect to the subject matter hereof) and there are no agreements,

Section 13.4 Specific Performance.  The Parties acknowledge and agree that (i) monetary damages could not adequately compensate any Party in the event of a breach of this Agreement by any other Party; (ii) the non-breaching Party would suffer irreparable harm in the event of such a breach; and (iii) the non-breaching Party shall have, in addition to any other rights or remedies it may have at law or in equity, specific performance and injunctive relief as a remedy to prevent breaches of this Agreement and for the enforcement hereof.  The Parties agree not to seek, and agree to waive, any requirement for the securing or posting of a bond or other security in connection with the Party’s seeking or obtaining any relief pursuant to this Section 13.4.   Notwithstanding anything to the contrary contained herein, the Parties acknowledge and agree that Seller shall not be entitled to enforce specifically the obligations of Purchaser to effect the Closing unless all of the conditions set forth in Section 10.1 and Section 10.3 shall have been satisfied or waived, including, for the avoidance of doubt, Section 10.3(e).

Section 13.7 Provisions Separable.  The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.  If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.

Section 13.10 Waivers, Delays or Omissions.  Any provision of this Agreement may be waived if, and only if, such waiver is in writing and signed by the Party against whom the waiver is to be effective.  No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Applicable Law except as otherwise specifically provided in Article XII hereof.  Notwithstanding any provision set forth herein, no Party shall be required to take any action or refrain from taking any action that would cause it to violate any Applicable Law.

Section 13.11 Waiver of Jury Trial.  EACH PARTY HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY CLAIM, ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY OF THEM AGAINST ANOTHER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, OR ANY OTHER AGREEMENTS EXECUTED IN CONNECTION HEREWITH, OR THE ADMINISTRATION THEREOF OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN.  NO PARTY TO THIS AGREEMENT SHALL SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY OTHER LITIGATION PROCEDURE BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY RELATED INSTRUMENTS OR THE RELATIONSHIP BETWEEN THE PARTIES CONTEMPLATED HEREBY.  NO PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.  THE PARTIES MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.  THE PROVISIONS OF THIS SECTION HAVE BEEN FULLY DISCUSSED BY THE PARTIES, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS, EXCEPT AS MAY BE REQUIRED BY LAW.  NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.

Section 13.12 Governing Law; Consent to Jurisdiction.  The execution, interpretation, and performance of this Agreement shall be governed by the laws of the State of New York without giving effect to any conflict of laws provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the law of any other jurisdiction other than the State of New York.  EACH PARTY HERETO, TO THE

EXTENT IT MAY LAWFULLY DO SO, HEREBY SUBMITS TO THE JURISDICTION OF ANY COURT OF THE STATE OF NEW YORK LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AS WELL AS TO THE JURISDICTION OF ALL COURTS FROM WHICH AN APPEAL MAY BE TAKEN OR OTHER REVIEW SOUGHT FROM THE AFORESAID COURTS, FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF SUCH PARTY’S OBLIGATIONS UNDER OR WITH RESPECT TO THIS AGREEMENT OR ANY OF THE AGREEMENTS, INSTRUMENTS OR DOCUMENTS CONTEMPLATED HEREBY (AND EACH AGREES THAT NO SUCH ACTION, SUIT OR PROCEEDING RELATING TO THIS AGREEMENT OR THE RELATED DOCUMENTS SHALL BE BROUGHT BY IT OR ANY OF ITS AFFILIATES EXCEPT IN SUCH COURTS).  EACH PARTY EXPRESSLY WAIVES ANY AND ALL OBJECTIONS IT MAY HAVE AS TO VENUE IN OR PERSONAL JURISDICTION OFANY OF SUCH COURTS OR THAT ANY OF SUCH COURTS ARE AN INCONVENIENT FORUM AND AGREES THAT SERVICE OF PROCESS UPON SUCH PARTY IN ANY SUCH ACTION OR PROCEEDING WILL BE EFFECTIVE IF NOTICE IS GIVEN IN ACCORDANCE WITH SECTION 13.6.