EXECUTION VERSION

ASSET PURCHASE AGREEMENT

 

dated as of

December 3, 2025

 

by and between

 

MECHANICS BANK, as Seller

 

and

 

FIFTH THIRD BANK, NATIONAL ASSOCIATION, as Buyer

 

TABLE OF CONTENTS

 

TABLE OF EXHIBITS

TABLE OF SCHEDULES

Seller Disclosure Schedules

ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of December 3, 2025, is entered into by and between Mechanics Bank, a California banking corporation, (“Seller”) and Fifth Third Bank, National Association, a federally chartered financial institution (“Buyer” and together with Seller, the “Parties”).

W  I  T  N  E  S  S  E  T  H :

 

 

 

ARTICLE 1.

Definitions

 

 

“Affiliate” means, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with such Person.

 

“Ancillary Agreement” means the Assignment and Assumption Agreement.

 

“Assignment and Assumption Agreement” means the Assignment and Assumption Agreement to be entered into by the Parties related to the Purchased Assets and the Assumed Liabilities substantially in the form of Exhibit A.

 

“Base Purchase Price” means $101,455,871.66.

 

“Benefit Plan” means any “employee benefit plan” within the meaning of Section 3(3) of ERISA (whether or not subject to ERISA) or any employment, retention, profit-sharing, bonus, stock option, stock purchase, restricted stock and other equity or equity-based, incentive, deferred compensation, severance, termination, health, welfare or other benefit plan, program, policy, agreement or arrangement, whether written or unwritten, sponsored, maintained or contributed to by Seller or any of its Affiliates for the benefit of any Business Employee or entered into between Seller or any of its Affiliates and a Business Employee or under which any Business Employees of Seller are, or may become (assuming any vesting, performance or other benefit requirements are met), entitled to benefits with respect to service as an employee of Seller, other than any plan or program maintained by a Governmental Entity to which Seller or any of its Subsidiaries or Affiliates is required to contribute pursuant to applicable Law.

 

“Business Books and Records” means any books and records exclusively related to the Business (but excluding for clarity the Tax Returns of Seller or its Affiliates); provided that, with respect to any books, records or other materials that are Business Books and Records, Seller shall be permitted to keep (a) a copy of such books, records or other materials to demonstrate compliance with applicable Law, accounting requirements or pursuant to internal compliance procedures, (b) copies of such books, records or other materials to the extent they are relevant to any Excluded Assets, Excluded Liabilities or any of the Retained Seller Businesses and (c) such books, records or other materials in the form of so-called “back-up” electronic tapes in the ordinary course of business.

 

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in the State of California are authorized or required by applicable Law to close.

 

“Business Employees” means each employee of Seller or any of its Affiliates set forth on Section 9.01 of the Seller Disclosure Schedules, as such schedule may be updated from time to time in accordance with Section 9.01.

 

“Business Material Adverse Effect” means any event, change or effect that has a material adverse effect on the business, financial condition or results of operations of the Business taken as a whole; provided that no such event, change or effect resulting or arising from or in connection with any of the following matters shall be deemed, either alone or in combination, to constitute or contribute to, or be taken into account in determining whether there has been, a Business Material Adverse Effect:  (a) the general conditions in banking, financial services or real estate industries; (b) general political, economic, business, monetary, financial or capital, real estate or credit market conditions or trends (including interest rates, tariffs, trade wars, currency exchange rates, tax rates and price levels or trading volumes in the United States or foreign securities markets); (c) changes in global, national or regional political conditions or trends; (d) any act of civil unrest, war or terrorism (including by cyberattack or otherwise), including an outbreak or escalation of hostilities involving the United States or any other country or Governmental Entity or the declaration by the United States or any other country or Governmental Entity or jurisdiction of a national emergency or war, or any worsening of any such conditions; (e) any conditions resulting from natural disasters or weather developments, including earthquakes, hurricanes, tsunamis, typhoons, lightning, hail storms, blizzards, tornadoes, droughts, floods, cyclones, arctic frosts, mudslides and wildfires, manmade disasters or acts of God or any outbreak of any disease or other public health event; (f) the failure of the financial or operating performance of the Business to meet projections, forecasts or budgets for any period (provided that this clause (f) shall not be construed as implying that Seller is making any representation or warranty herein with respect to any projections, forecasts or budgets and no such representations or warranties are being made); (g) any action taken or omitted to be taken by or at the request or with the consent of Buyer or as required or contemplated under by this Agreement; (h) the execution, announcement, pendency, performance or consummation of this Agreement, the Transaction or the other transactions contemplated hereby, or the identity of Buyer (including the impact on or any loss of Business Employees, customers, suppliers, Government Entities or any relationships with any of the foregoing or other business relationships resulting from any of the foregoing); (i) changes in any Law (including any proposed Law) or GAAP or other applicable accounting principles or standards or any interpretations of any of the foregoing; (j) any matter disclosed in the Seller Disclosure Schedules; (k) the failure to obtain any approvals, clearances or consents from any Governmental Entity in connection with the transactions contemplated by this Agreement; or (l) the Retained Seller Businesses; provided that any adverse events, changes or effects resulting from the matters described in clauses (a), (b), (c) and (d) may be taken into account in determining whether there has been a Business Material Adverse Effect to the extent, and only to the extent, that they have a materially disproportionate effect on the Business in the aggregate relative to similarly situated businesses in the industries in which the Business operates (in which case only such incremental materially disproportionate effect may be taken into account in determining whether there has been a Business Material Adverse Effect).

 

“Closing Purchase Price” means an amount equal to (a) the Base Purchase Price, plus (b) the MSR Purchase Price.

 

“Code” means the United States Internal Revenue Code of 1986, as amended.

 

“Contract” means any legally binding written agreement, lease, sublease, license, sublicense, contract, commitment, note, mortgage, indenture, guarantee, or other arrangement, in each case, as amended, supplemented, waived or otherwise modified, other than a Benefit Plan.

 

“Control” means as to any Person, the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise (and the terms “controlled by” and “under common control with” shall have correlative meanings).

 

“DUS License” means the approval by Fannie Mae to originate, sell, and service the Fannie Mae DUS loans held by Seller pursuant to the Fannie Mae MSSA.

 

“Encumbrances” means any mortgage, lien, pledge, security interest, charge, easement, or similar encumbrances, other than restrictions on transfer arising under applicable securities Laws.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“Filings” means any registrations, applications, declarations, reports, submissions, applications or other filings with, or any notices to, any Person (including any third party or Government Entity).

 

“Fannie Mae MSSA” means that certain Multifamily Selling and Servicing Agreement between Fannie Mae, a corporation organized under the Federal National Mortgage Association Charter Act, as amended, 12 U.S.C. §1716 et seq. and HomeStreet Bank, a Washington state chartered commercial bank, dated as of September 30 2020, as amended by that certain First Amendment to Multifamily Selling and Servicing Agreement, dated as of October 11, 2023.

 

“Fraud” means common law fraud, involving an intentional and false representation of a material fact, made by a Person with knowledge that such representation is false, with respect to a representation or warranty expressly set forth in Article 3 or Article 4, as applicable.

 

“GAAP” means generally accepted accounting principles in the United States as of the applicable reference date.

 

“Government Entity” means any federal or state legislative, administrative or regulatory authority, agency, court, body or other governmental or quasi-governmental entity with competent jurisdiction, including any such supranational body, government-sponsored enterprise or any self-regulatory organization.

 

“Illustrative MSR Purchase Price Calculation” means, for illustrative purposes only, the calculation of the fair market value of the MSRs as of September 30, 2025, as set forth on Section 1.01(a) of the Seller Disclosure Schedules.

 

“Knowledge” means (a) when used with respect to Seller, the actual knowledge of the individuals listed on Section 1.01(b) of the Seller Disclosure Schedules and (b) when used with respect to Buyer, the actual knowledge of John Hein.

 

“Law” means any federal, state, local, foreign or supranational law (including common law), statute, constitution, treaty, convention, ordinance, code, rule, regulation, regulatory guidance, order, injunction, judgment, decree, ruling or other similar requirement enacted, adopted, promulgated or applied by a Government Entity, as amended unless expressly specified otherwise.

 

“Liabilities” means all debts, liabilities, guarantees, assurances, commitments and obligations of any kind, whether fixed, contingent or absolute, matured or unmatured, liquidated or unliquidated, accrued or not accrued, known or unknown, due or to become due, whenever or however arising (including whether arising out of any Contract or tort based on negligence or strict liability), including any fines, penalties, losses, costs, interest, charges, expenses, damages, assessments, deficiencies, judgments, awards or settlements.

 

“MSRs” means the contractual right of Seller or its Affiliates to receive servicing fees and other remuneration in exchange for performing loan servicing functions on behalf of Fannie Mae under the Fannie Mae MSSA.

 

“MSR Purchase Price” means the fair market value of the MSRs as of the close of business on the fifth (5th) Business Day prior to the Closing Date, calculated in accordance and on a basis consistent with the practices, procedures, methodologies and policies employed by Seller in preparing the Illustrative MSR Purchase Price Calculation.

 

“Organizational Documents” means (i) with respect to any Person that is a corporation, its articles or certificate of incorporation or memorandum and articles of association, as the case may be, and bylaws, (ii) with respect to any Person that is a partnership, its certificate of partnership, if applicable, and partnership agreement, (iii) with respect to any Person that is a limited liability company, its certificate of formation and limited liability company or operating agreement, (iv) with respect to any Person that is a trust or other entity, its declaration or agreement of trust or other constituent document and (v) with respect to any other Person, its comparable organizational documents, in each case, as has been amended or restated.

 

“Permits” mean all licenses, franchises, permits, certificates, registrations, orders, concessions, declarations, and other authorizations and approvals that are issued by or obtained from any Government Entity.

 

“Permitted Encumbrance” means: (a) statutory Encumbrances of landlords and mechanics’, carriers’, workmen’s, repairmen’s, warehousemen’s, materialmen’s or other like Encumbrances arising or incurred in the ordinary course of business, Encumbrances arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business; (b) Encumbrances for Taxes, assessments or other governmental charges or levies that are not due or payable or that are being contested by appropriate Proceedings or that may thereafter be paid without material penalty; (c) Encumbrances disclosed on or reflected in the unaudited consolidated balance sheet of Mechanics Bancorp as of September 30, 2025 (as filed with the SEC on the Form 10-Q); (d) defects or imperfections of title or other Encumbrances not materially interfering with the ordinary conduct of the Business as a whole; (e) leases, subleases and similar agreements with respect to the real property used or owned by Seller in connection with the Business; (f) Encumbrances listed in the applicable title insurance policies, and any easements, covenants, rights-of-way, restrictions of record and other similar charges not materially interfering with the ordinary conduct of the Business as a whole; (g) Encumbrances that have been placed by any third party on property owned by third parties over which Seller or its Affiliates have easement rights and subordination or similar agreements relating thereto, not materially interfering with the ordinary conduct of the Business as a whole; (h) Encumbrances incurred or deposits made in connection with workers’ compensation, unemployment insurance or other types of social security; (i) Encumbrances created under federal, state or foreign securities Laws; and (j) licenses or other rights granted to intellectual property of Seller.

 

“Person” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a Government Entity.

 

“Post-Closing Tax Period” means any Tax period beginning after the Closing Date, and, with respect to any Straddle Period, the portion of such Tax period beginning after the Closing Date.

 

“Pre-Closing Tax Period” means any Tax period ending on or before the Closing Date, and, with respect to any Straddle Period, the portion of such Tax period ending on the Closing Date.

 

“Proceeding” means any judicial, legal, administrative, arbitral or other action, suit, inquiry, audit, notice of violation, investigation or other proceedings of any nature by or before any Government Entity.

 

“Property Tax” means any real, personal and intangible ad valorem property Tax.

 

“Regulatory Approvals” means all Approvals from Government Entities that are required under applicable Law (including the HSR Clearance (to the extent required) and the approvals set forth on Section 10.01(b)(ii) of the Seller Disclosure Schedules) to permit the consummation of the Transaction and the other transactions contemplated by this Agreement.

 

“Representatives” of a Person means such Person’s Affiliates and any officer, director or employee of such Person or its Affiliates or any investment banker, attorney, accountant or other advisor, agent or representative of such Person or its Affiliates.

 

“Retained Seller Businesses” means all of the activities or businesses, other than the Business, conducted or engaged in by Seller or its Affiliates.

 

“Seller Disclosure Schedules” means the disclosure schedule dated the date hereof regarding this Agreement that has been provided by Seller to Buyer prior to the execution of this Agreement.

 

“Straddle Period” means any taxable period that begins on or before, and ends after, the Closing Date.

 

“Subsidiary” means, with respect to any Person, any entity (a) of which such Person or a Subsidiary of such Person is a general partner or managing member or (b) of which at least a majority of the securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other Persons performing similar functions with respect to such entity are at the time directly or indirectly owned by such Person and/or one or more of its Subsidiaries.

 

“Tax” means any federal, state, local or foreign tax imposed by a Taxing Authority, including any income, gross receipts, capital gains, license, occupancy, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, capital stock, franchise, unincorporated business, profits, withholding, information, social security (or similar), unemployment, disability, workers’ compensation, real property, personal property, ad valorem, sales, use, goods and services, transfer, registration, value added, alternative or add-on minimum, accumulated earnings, personal holding company, estimated, escheat or other tax, and any interest, penalty, assessment, or additions to tax imposed with respect thereto.

 

“Tax Return” means any report, return, information return or statement, declaration, claim for refund, notice, form or other document filed or required to be filed with any Taxing Authority with respect to Taxes, including any amendment thereof.

 

“Taxing Authority” means any Government Entity responsible for the administration, imposition or collection of any Tax.

 

“Transfer Date” means (i) with respect to Offer Employees who are not Leave Recipients as of the Closing Date and who accept Buyer’s offer of employment, the Closing Date and (ii) with respect to Offer Employees who are Leave Recipients as of the Closing Date and who accept Buyer’s offer of employment, the date of active commencement of employment with Buyer or one of its Affiliates, as applicable, within the time period set forth in Section 9.03.

 

“Treasury Regulations” means the U.S. Treasury Regulations promulgated under the Code.

 

“U.S. Bank” means U.S. Bank National Association.

 

“U.S. Bank Reserve Agreement” means that certain Delegated Underwriting and Servicing Reserve Agreement, dated as of September 30, 2020, by and among Fannie Mae, HomeStreet Bank and U.S. Bank.

 

“WARN Act” means the Worker Adjustment Retraining and Notification Act, 29 U.S.C. Section 2101 et seq., or any similar local or state Law, each as amended.

 

ARTICLE 2.

Purchase and Sale; Closing

 

 

 

 

 

 

 

 

The Parties acknowledge and agree that a single asset may fall within more than one of clauses (i) through (v) in this Section 2.01(a); such fact does not imply that (x) such asset shall be transferred more than once or (y) any duplication of such asset is required.

 

 

 

 

 

 

The Parties acknowledge and agree that a single Liability may fall within more than one of clauses (i) through (iv) in this Section 2.01(b); such fact does not imply that (x) such Liability shall be transferred more than once or (y) any duplication of such Liability is required.

 

 

 

 

The Parties acknowledge and agree that neither Buyer nor any of its Subsidiaries will acquire or be permitted to retain any direct or indirect right, title or interest in any Excluded Assets.

 

 

 

 

 

 

 

 

 

 

 

Each of Seller and Buyer shall deliver to the other Party any customary certificates or other instruments necessary and appropriate to consummate the transactions contemplated by this Agreement and any Ancillary Agreement.

 

 

Section 2.04. Allocation of Purchase Price.  Seller and Buyer agree to allocate and, as applicable, cause their relevant Affiliates to allocate, the Closing Purchase Price, the amount of Assumed Liabilities and any other items that are treated as additional consideration for U.S. federal income Tax purposes among the Purchased Assets (and any other assets that, for U.S. federal income Tax purposes, are treated as assets purchased by Buyer (or its relevant Affiliates) pursuant to this Agreement or any Ancillary Agreement) in accordance with this Section 2.04.  No later than ninety (90) days after the determination of the Closing Purchase Price, Buyer shall prepare and deliver to Seller a draft of an allocation statement (“Buyer’s Allocation”) setting forth its proposed allocation of the Closing Purchase Price, the amount of Assumed Liabilities and any other items that are treated as additional consideration for U.S. federal income Tax purposes among the Purchased Assets (and any other assets that, for U.S. federal income Tax purposes, are treated as assets purchased by Buyer (or its relevant Affiliates) pursuant to this Agreement and any Ancillary Agreement), determined in a manner consistent with Section 1060 of the Code and the Treasury Regulations promulgated thereunder.  In the event that Seller disagrees with Buyer’s Allocation, Seller may, within thirty (30) days after receipt of Buyer’s Allocation, deliver a notice (“Seller’s Allocation Notice”) to Buyer to such effect, specifying those items as to which Seller disagrees and setting forth Seller’s proposed allocation.  If Seller’s Allocation Notice is duly delivered, Seller and Buyer shall, during the thirty (30) days immediately following such delivery, use commercially reasonable efforts to reach agreement on the disputed items or amounts in order to determine the allocation of the Closing Purchase Price, the amount of Assumed Liabilities and any other items that are treated as additional consideration for U.S. federal income Tax purposes.  Notwithstanding any other provision in this Agreement to the contrary, if Buyer and Seller are unable to resolve any such dispute within the thirty (30)-day period following the delivery of Seller’s Allocation Notice, then the disputed items shall be submitted for resolution to a mutually agreed upon nationally recognized independent certified public accounting firm for resolution, with the costs of the accounting firm paid fifty percent (50%) by the Seller and fifty percent (50%) by the Buyer; provided that Buyer and Seller shall each be bound by any item on Buyer’s Allocation not in dispute (such undisputed items, “Agreed Items”).  The allocation, as prepared by Buyer if no Seller’s Allocation Notice has been delivered, as adjusted pursuant to any agreement between Seller and Buyer, or as adjusted pursuant to resolution for disputed items as described in the preceding sentence (the “Allocation”) shall be conclusive and binding on the Parties.  For the avoidance of doubt, neither Buyer nor Seller is obligated hereunder to use the Allocation in its financial accounting or financial reporting.  The Allocation shall be adjusted, as necessary, to reflect any subsequent adjustments to the Closing Purchase Price, any liabilities assumed, and any other amounts treated as consideration for U.S. federal income Tax purposes.  Each of Buyer and Seller (1) shall (and shall cause its Affiliates to) prepare and file all relevant Tax Returns in a manner consistent with the Allocation and (2) shall not (and shall cause its Affiliates not to) take any position on any Tax Return or in connection with any Tax proceeding inconsistent with the Allocation, in each case, except to the extent otherwise required by a “determination” within the meaning of Section 1313(a) of the Code (or any analogous provision of applicable state, local or non-U.S. Law).  In the event that the Allocation is disputed by any Taxing Authority, the party hereto receiving notice of such dispute shall promptly notify the other party in writing of such notice and resolution of the dispute.

 

 

 

 

 

 

ARTICLE 3.

Representations and Warranties of Seller

 

Except as set forth in (a) the reports, schedules, forms, statements and other documents filed by Mechanics Bancorp with, or furnished to, the SEC and publicly available at least two (2) Business Days prior to the date of this Agreement or (b) the Seller Disclosure Schedules (it being agreed that disclosure of any item in any section or subsection of the Seller Disclosure Schedules shall be deemed to be disclosed with respect to any other Section or subsection of this Agreement to the extent it is reasonably apparent on the face of the disclosure that such matter is relevant to such other sections or subsections); provided that no such item is required to be set forth as an exception to a representation or warranty as contemplated by Section 7.07 to the extent that disclosing such item would involve the disclosure of confidential supervisory information (including confidential supervisory information as defined in 12 C.F.R. § 261.2(c) and as identified in 12 C.F.R. § 309.5(g)(8)) (“Confidential Supervisory Information”) (provided, further, that to the extent legally permissible, appropriate substitute disclosures shall be made under circumstances in which the foregoing limitations in this proviso apply), Seller represents and warrants to Buyer as follows:

 

Section 3.01. Confidential Supervisory Information.  To Seller’s Knowledge, none of the Confidential Supervisory Information of Seller reflects or evidences the existence of any fact, circumstance, or condition that has resulted in, or would reasonably be expected to result in, a Business Material Adverse Effect.

 

Section 3.02. Organization and Qualification. (a) Seller is duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization; (b) Seller has the requisite corporate power and authority to own the Purchased Assets and to carry on the Business in all material respects as conducted as of the date of this Agreement and (c) Seller is duly qualified to do business in each jurisdiction in which the operation of the Purchased Assets requires such qualification, except in the case of clauses (b) and (c) as would not, individually or in the aggregate, reasonably be expected to have a Business Material Adverse Effect.

 

 

Section 3.04. Binding Effect.  Assuming the due authorization, execution and delivery of this Agreement by Buyer, this Agreement constitutes a valid and legally binding obligation of Seller enforceable against Seller in accordance with its terms, subject to the effect of any applicable Laws relating to bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance or preferential transfers, or similar Laws relating to or affecting creditors’ rights generally and subject, as to enforceability, to the effect of general principles of equity  (the “Enforceability Exceptions”).  Assuming the due authorization, execution and delivery of any Ancillary Agreement by Buyer and its applicable Affiliates, each Ancillary Agreement when executed and delivered will constitute a valid and legally binding obligation of Seller, enforceable against Seller in accordance with the terms of such agreements, subject to the Enforceability Exceptions.

 

 

 

 

 

Section 3.09. Taxes.  Except as would not, individually or in the aggregate, reasonably be expected to have a Business Material Adverse Effect:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Section 3.16.  Broker’s Fees.  No broker, finder or investment banker is entitled to any brokerage, finder’s or other similar fee or commission in connection with this Agreement, any Ancillary Agreement or the Transaction and other transactions contemplated hereunder and thereunder based upon arrangements made by or on behalf of Seller or its Affiliates, for which Buyer or any of its Affiliates would be liable.

 

Section 3.17. Insurance.  There are no material claims related to the Purchased Assets or the Assumed Liabilities pending under any insurance policies or binders maintained by Seller or its Affiliates as to which coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights.  The insurance policies or binders maintained by Seller or its Affiliates relating to the Purchased Assets or the Assumed Liabilities are of the type and in the amounts customarily carried by Persons conducting a business similar to the Business in all material respects.

 

 

ARTICLE 4.

Representations and Warranties of Buyer

 

Buyer represents and warrants to Seller as follows:

 

 

 

 

 

Section 4.05. Non-Contravention. The execution, delivery and performance of this Agreement by Buyer and any Ancillary Agreement by Buyer and its applicable Subsidiaries, and the consummation by Buyer and its applicable Affiliates of the transactions contemplated hereby and thereby, do not and will not (a) conflict with or violate any provision of the Organizational Documents of Buyer or any Affiliate of Buyer that is a party to an Ancillary Agreement or (b) assuming the receipt of all Approvals (i) referred to in Section 4.04 or (ii) required to be received or made by Seller, violate or result in a breach of or constitute a default under any Law or Contract to which Buyer is subject, except, in the case of clause (b), as would not, individually or in the aggregate, reasonably be expected to materially impair or delay the ability of Buyer to perform its obligations under this Agreement and any Ancillary Agreement or to consummate the transactions contemplated hereby and thereby.

 

 

Section 4.07. Compliance with Laws.

 

 

 

 

 

Section 4.10. Confidential Supervisory Information.  To Buyer’s Knowledge, none of the Confidential Supervisory Information of Buyer reflects or evidences the existence of any fact, circumstance or condition that would reasonably be expected to materially impair or delay the ability of Buyer to perform its obligations under this Agreement and any Ancillary Agreement or to consummate the transactions contemplated hereby and thereby.

 

 

 

 

ARTICLE 5.

Covenants of Seller

 

 

 

 

 

 

 

 

 

 

ARTICLE 6.

Covenants of Buyer

 

Section 6.01. Conduct of Business by Buyer.  During the period from the date of this Agreement until the Closing Date, Buyer and its Affiliates shall not, directly or indirectly, acquire or agree to acquire by merger or consolidation, or by purchasing a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that would have a reasonable expectation to, individually or in the aggregate, materially impair or delay the ability of Buyer to perform its obligations under this Agreement and the Ancillary Agreements or to consummate the transactions contemplated hereby and thereby. Notwithstanding the foregoing, nothing in this Agreement shall impair or frustrate the obligations of Buyer to perform under the publicly announced merger agreement between Buyer and Comerica Incorporated as in effect on the date hereof.

 

 

ARTICLE 7.

Covenants of Buyer and Seller

 

 

 

 

 

 

 

 

 

 

Section 7.03. Confidentiality.  The Parties agree to be bound by and comply with the provisions set forth in the Confidentiality Agreement between Buyer and Seller, dated as of October 14, 2025 (the “Confidentiality Agreement”), the provisions of which are hereby incorporated herein by reference and further agree that the Confidentiality Agreement shall terminate upon the Closing.

 

 

Section 7.05. Misallocated Assets and Payments.

 

 

 

 

 

 

Section 7.08. Custodial Accounts Amount Payment.  On the Closing Date, Seller shall provide written notice to Buyer of the aggregate amount of the loan level tax and insurance escrow and replacement reserves in the Custodial Accounts as of the close of business on the Business Day immediately preceding the Closing Date with respect to those loans for which the servicing rights are Purchased Assets (the “Custodial Accounts Amount”).  On the Closing Date, Seller shall deliver to Buyer the Custodial Account Amounts in immediately available funds by wire transfer to the account designated by Buyer, by written notice to Seller, prior to the Closing Date.  At Closing, Buyer shall assume all of Seller’s rights and obligations with respect to maintaining the Custodial Accounts pursuant to the Fannie Mae Multifamily Selling and Servicing Guide and Seller shall resign as custodian with respect thereto.

 

Section 7.10. Further Assurances.  Each Party to this Agreement shall, at the request of the other, at any time and from time to time following the Closing Date, execute and deliver to the requesting Party such further instruments as may be reasonably necessary or appropriate in order more effectively to confirm or carry out the provisions of this Agreement.

 

ARTICLE 8.

Tax Matters

 

Section 8.01. Proration.  For purposes of this Agreement, in the case of any Straddle Period, (i) the amount of Property Taxes and similar Taxes imposed on a periodic basis attributable to the Pre-Closing Tax Period shall be equal to the amount of such Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of calendar days during the Straddle Period that are in the Pre-Closing Tax Period and the denominator of which is the number of calendar days in the entire Straddle Period, and (ii) the amount of Taxes other than those described in the foregoing clause (i) attributable to the Pre-Closing Tax Period shall be computed as if such taxable period ended as of the close of business on the Closing Date.

Section 8.02. Cooperation and Exchanges of Information.  From and after the Closing, the Parties shall (and shall cause their respective Affiliates to) provide each other with such cooperation, documentation, information and assistance as reasonably may be requested by either of them (at the expense of the requesting party to the extent that any out-of-pocket expenses or costs are incurred) in connection with (i) the preparation of any Tax Return, (ii) the determination of any liability in respect of Taxes or the right to any refund, credit or prepayment in respect of Taxes (including pursuant to this Agreement) or (iii) the conduct of any audit or other examination by any Taxing Authority, or any judicial or administrative proceeding with respect to any Taxes, in the case of each of clauses (i) through (iii), with respect to Taxes of or relating to the Business, the Purchased Assets or the Assumed Liabilities.  Notwithstanding anything to the contrary in this Agreement, in no event shall Seller or any of its Affiliates be required to provide any Person with a copy of, or otherwise disclose the contents of, its Tax Returns (other than copies of any Tax Return related exclusively to the Business, the Purchased Assets or the Assumed Liabilities with respect to a Pre-Closing Tax Period).

 

Section 8.03. Tax Treatment of Payments.  Seller and Buyer and their respective Affiliates shall treat any and all payments under Article 12 as an adjustment to the Purchase Price for Tax purposes to the extent permitted under applicable Law, unless otherwise required pursuant to a “determination” (within the meaning of Section 1313(a) of the Code or any similar provision of state, local or non-U.S. Law).

 

Section 8.04. Transfer Taxes.  Buyer shall, in addition to the Purchase Price, pay when due and be responsible for fifty percent (50%) of all sales, use, value-added, goods and services, transfer, documentary, registration, stamp, recording, conveyancing or similar Taxes and related fees and costs that may be imposed as a result of the sale and transfer of the Purchased Assets, the Assumed Liabilities and the Business, together with any and all penalties, interest and additions to tax with respect thereto (but for clarity, excluding any income or gain Taxes or any franchise Taxes imposed in lieu of income Taxes) (“Transfer Taxes”) and the reasonable costs of preparing and filing Tax Returns in respect of any such Transfer Taxes, and Seller shall be responsible for the remaining fifty percent (50%) thereof.  Seller and Buyer shall cooperate in timely preparing and filing any Tax Returns or other filings relating to such Transfer Taxes, including any claim for exemption or exclusion from the application or imposition of any Transfer Taxes.

 

ARTICLE 9.

Employee Matters

 

Section 9.01. List of Business Employees.  Prior to the Closing Date, Seller shall update Section 9.01 of the Seller Disclosure Schedules from time to time on dates that are mutually agreed to by Buyer and Seller solely to reflect (i) resignations from employment of any Business Employee, (ii) terminations of employment on or following the date hereof, (iii) hirings of new Business Employees to replace any individuals who resign from employment, become deceased or are terminated and (iv) any Business Employees that are absent from work on long-term disability leave (each such Business Employee, a “Leave Recipient”).

 

Section 9.02. Offers of Employment.  The Business Employees identified on Section 9.01 of the Seller Disclosure Schedules, as such schedule is adjusted pursuant to Section 9.01, shall be the Business Employees that (a) Seller or its applicable Affiliate shall terminate as of the Closing Date and (b) Buyer or its applicable Affiliate will offer employment to be effective as of the Closing Date (such Business Employees, the “Offer Employees”).  Buyer shall, or shall cause one of its Affiliates to, (i) no later than thirty (30) days following the date hereof, provide an offer confirmation letter to each Offer Employee that provides for compensation and benefits consistent with Section 9.05 and is effective as of the applicable Transfer Date.  Seller shall notify Buyer as soon as reasonably practicable in the event that Seller obtains Knowledge of any Offer Employee receiving offers of employment from a Person other than Buyer, which notice shall include the name of the Offer Employee. Each Offer Employee who accepts Buyer’s offer of employment pursuant to the offer confirmation letter shall be referred to as a “Transferred Employee.”

 

 

Section 9.04. Transfer Time; Transfer Date.  Each Transferred Employee shall become a Transferred Employee at 12:01 a.m., Pacific Time, on the applicable Transfer Date.

 

Section 9.05. Continuation of Compensation and Benefits.  From the Transfer Date of each Transferred Employee through December 31, 2026, Buyer shall provide to each such Transferred Employee (a) a base salary or wage rate that is not less than such Transferred Employee’s base salary or wage rate in effect immediately prior to the Closing, (b) annual or short-term cash incentive compensation target opportunities that are no less favorable than such Transferred Employee’s annual or short-term cash incentive compensation target opportunities in effect immediately prior to the Closing, (c) long-term incentive compensation opportunities that are no less favorable than such Transferred Employee’s long-term incentive compensation opportunities in effect immediately prior to the Closing and (d) health, welfare and retirement benefits that are no less favorable than the health, welfare and retirement benefits provided to similarly situated employees of Buyer.  For a period of one year following the Closing Date, Buyer shall provide, or cause to be provided, to each Transferred Employee who experiences a severance-qualifying termination of employment severance benefits based on the greater of (i) the terms set forth on Section 9.05 of the Seller Disclosure Schedules and (ii) the severance benefits maintained by Buyer with respect to similarly situated employees. For the avoidance of doubt, any payment provided to a Transferred Employee under any change in control agreement set forth in Section 5.02 of the Seller Disclosure Schedules shall not be considered to be equivalent benefits of the Buyer.

 

Section 9.06. Credit for Service; Preexisting Conditions.  With respect to any employee benefit or compensation plan, program, policy, or arrangement (including, for the avoidance of doubt, any vacation or severance program policy or practice) of Buyer or any of its Subsidiaries in which any Transferred Employee becomes a participant, such Transferred Employee shall receive full credit for all purposes for such Transferred Employee’s service with Seller or any of its Affiliates (or predecessor employers) to the same extent that such service was recognized as of the Closing Date under the analogous Benefit Plan in which the Transferred Employee participated prior to the Transfer Date; provided that the foregoing shall not apply to the extent that its application would result in a duplication of benefits for the same period of service.  With respect to any welfare plan maintained by Buyer or any of its Subsidiaries in which any Transferred Employee is eligible to participate after the Transfer Date, Buyer shall, or shall cause its Subsidiaries to (a) waive all limitations as to preexisting conditions and exclusions with respect to participation and coverage requirements applicable to such Transferred Employees, unless such limitations would not have been waived under the analogous Benefit Plan and (b) provide each Transferred Employee with a one-time transfer bonus in the amount equal to one thousand eight hundred dollars ($1,800) for the purpose of compensating such Transferred Employee for any co-payments and deductibles paid and for amounts paid toward any out-of-pocket maximums prior to the Transfer Date in satisfying any analogous Benefit Plan’s deductible or out-of-pocket requirements to the extent applicable under any such plan.

 

Section 9.07. Cash Incentive Compensation.  In connection with the Closing, Seller shall pay to each Transferred Employee who is eligible for an annual cash incentive bonus or a production-based cash incentive under a Benefit Plan during the year in which the Closing occurs (a “Closing Year Bonus”) a pro-rated Closing Year Bonus in respect of the portion of the year in which the Closing occurs that has elapsed prior to the Closing Date.  Buyer and its Affiliates shall be responsible for the payment of any cash or incentive compensation earned in respect of any period from and following the Closing Date.

 

Section 9.08. 401(k) Plans.  Effective as of the Closing, Buyer shall establish participation by the Transferred Employees in Buyer’s (or its designated Affiliate’s) tax-qualified defined contribution plan or plans with a cash or deferred feature (the “Buyer 401(k) Plan”) for the benefit of each Transferred Employee who, as of immediately prior to the Closing, was eligible to participate in a tax-qualified defined contribution plan maintained by Seller or its Affiliates (collectively, the “Seller 401(k) Plan”).  As soon as practicable after the Closing Date, the Seller 401(k) Plans shall, to the extent permitted by Section 401(k) of the Code, make distributions available to Transferred Employees, and the Buyer 401(k) Plan shall accept any such distribution (including loans) as a rollover contribution if so directed by the Transferred Employee.

 

 

 

 

ARTICLE 10.

Conditions to Closing

 

 

 

 

 

 

 

 

 

 

 

 

 

ARTICLE 11.

Termination

 

 

 

 

 

 

 

 

 

ARTICLE 12.

Survival; Indemnification

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ARTICLE 13.

Miscellaneous

 

 

if to Buyer to:

 

Fifth Third Bank, National Association

38 Fountain Square Plaza

Cincinnati, Ohio 45263

Attn: Emily C. Rotella, Esq.

Associate General Counsel

Telephone: [***]

Email: [***]

with a copy (which copy shall not constitute notice) to:

 

Alston & Bird

90 Park Avenue

New York, New York 10016

Attention: James H. Sullivan

E-mail: james.sullivan@alston.com

if to Seller to:

Mechanics Bank

1111 Civic Drive, Suite 290

Walnut Creek, CA 94596

Attention: Glenn Shrader

Email: [***]

with a copy (which copy shall not constitute notice) to:

 

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York  10019

Attention:  Jacob A. Kling; Eric M. Feinstein

Email:  JAKling@WLRK.com; EMFeinstein@WLRK.com

 

or such other address as such Party may hereafter specify for the purpose by notice to the other Party.  All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. (in the case of email, provided that no “error” message or other notification of non-delivery is generated) in the place of receipt and such day is a Business Day in the place of receipt.  Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day in the place of receipt.

 

 

 

 

 

 

 

 

 

 

 

 

 

Section 13.12. Interpretation; Absence of Presumption.  It is understood and agreed that the specification of any dollar amount in the representations and warranties or covenants and agreements contained in this Agreement or the inclusion of any specific item in the Seller Disclosure Schedules is not intended to imply that such amounts or higher or lower amounts, or the items so included or other items, are or are not material, and no Party shall use the fact of the setting of such amounts or the fact of the inclusion of any such item in the Seller Disclosure Schedules in any dispute or controversy between the Parties as to whether any obligation, item or matter not described in this Agreement or included or not included in the Seller Disclosure Schedules is or is not material for purposes of this Agreement.  Nothing herein (including the Seller Disclosure Schedules) shall be deemed an admission by either Party or any of its Affiliates, in any Proceeding or action, that such Party or any such Affiliate, or any third party, is or is not in breach or violation of, or in default in, the performance or observance of any term or provisions of any Contract or any Law.  For the purposes of this Agreement, (a) words in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include the other gender as the context requires; (b) references to the terms Article, Section, paragraph, Exhibit and Schedule are references to the Articles, Sections, paragraphs, Exhibits and Schedules to this Agreement unless otherwise specified; (c) the terms “hereof,” “herein,” “hereby,” “hereto,” and derivative or similar words refer to this entire Agreement, including the Schedules and Exhibits hereto and the words “date hereof” refer to the date of this Agreement; (d) references to “Dollars” or “$” shall mean U.S. dollars; (e) the word “including” and words of similar import when used in this Agreement and any Ancillary Agreement shall mean “including without limitation,” unless otherwise specified; (f) the word “or” shall not be exclusive; (g) references to “written” or “in writing” include in electronic form; (h) provisions shall apply, when appropriate, to successive events and transactions; (i) the headings contained in this Agreement and any Ancillary Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement and any Ancillary Agreement; (j) Seller and Buyer have each participated in the negotiation and drafting of this Agreement and the Ancillary Agreements and if an ambiguity or question of interpretation should arise, this Agreement and the Ancillary Agreements shall be construed as if drafted jointly by the Parties or the parties thereto, as applicable, and no presumption or burden of proof shall arise favoring or burdening any party by virtue of the authorship of any of the provisions in this Agreement or the Ancillary Agreements; (k) a reference to any Person includes such Person’s successors and permitted assigns; (l) any reference to “days” means calendar days unless Business Days are expressly specified; (m) when calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded and if the last day of such period is not a Business Day, the period shall end on the next succeeding Business Day; (n) any Law defined or referred to in this Agreement or in any agreement or instrument that is referred to herein means such Law as from time to time amended, modified or supplemented, including (in the case of statutes) by succession of comparable successor Laws and the related regulations thereunder and published interpretations thereof, and references to any Contract or instrument are to that Contract or instrument as from time to time amended, modified or supplemented; provided that for purposes of any representations and warranties contained in this Agreement that are made as of a specific date or dates, references to any Law shall be deemed to refer to such Law, as amended, and the related regulations thereunder and published interpretations thereof, in each case, as of such date; (o) to the extent that this Agreement or any Ancillary Agreement requires an Affiliate of any Party to take or omit to take any action, such covenant or agreement includes the obligation of such Party to cause such Affiliate to take or omit to take such action; (p) unless otherwise indicated to the contrary herein, amounts used in any calculations for purposes of this Agreement may be either positive or negative, it being understood that the addition of a negative number shall mean the subtraction of the absolute value of such negative number and the subtraction of a negative number shall mean the addition of the absolute value of such negative number; (q) the phrase “to the extent” shall mean the degree to which a subject or other matter extends, and such phrase shall not simply mean “if”; and (r) the phrases “made available,” “have provided,” “disclosed” and phrases of similar import as used in Article 3 shall mean, with respect to any information, document or other material, that such information, document or material was made available by Seller or any of its Representatives, including in the virtual data room hosted by Intralinks and established in connection with the Transaction, at least one (1) day prior to the date of this Agreement.

 

[Signature page follows]

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

---