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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
DATE OF REPORT: September 29, 1998
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VIB Corp
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(Exact name of registrant as specified in its charter)
California
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(State or other jurisdiction of incorporation)
33-43021 33-0780371
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(Commission File Number) (IRS Employer I.D. Number)
1498 Main Street, El Centro, California 92243
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(Address of principal executive offices) (Zip Code)
(760) 337-3200
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report)
Exhibit Index at Page: 3
Total No. of Pages: 101
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Item 5. Other Events.
Acquisition of Bank of Stockdale, Bakersfield, CA
On September 15, 1998, VIB Corp and Bank of Stockdale, F.S.B.,
Bakersfield, California, entered into an Agreement and Plan of Reorganization
pursuant to which Bank of Stockdale will become a wholly-owned subsidiary of VIB
Corp and will continue to operate under its federal stock savings bank charter.
Upon consummation of the merger, each issued and outstanding share of Bank of
Stockdale stock will be converted into the right to receive that number of newly
issued shares of VIB Corp stock equal to the result from dividing the Bank of
Stockdale Per Share Value by the VIB Corp Market Value Per Share.
The Bank of Stockdale Per Share Value shall be equal to: (a) the
product of Bank of Stockdale's total stockholders' equity (calculated in
accordance with generally accepted accounting principles) as of the last day of
the calendar month next preceding the month of the closing minus One Hundred
Eighty Thousand Dollars ($180,000), multiplied by 2.83, (b) less all expenses of
Bank of Stockdale related to the Agreement, including finders' fees, (c) divided
by the number of Bank of Stockdale shares outstanding at the closing.
The VIB Corp Market Value Per Share shall be determined by taking the
average of the closing prices of VIB Corp stock on the Nasdaq National Market
(trading symbol: "VIBC") for the twenty (20) trading days preceding the fifth
(5th) business day prior to the closing; provided, however, that if the result
of that calculation is less than Nine Dollars and Fifty Cents ($9.50), the VIB
Corp Market Value Per Share shall be Nine Dollars and Fifty Cents ($9.50), if
the result of that calculation is greater than Fifteen Dollars and Fifty Cents
($15.50) but not greater than Nineteen Dollars and Fifty Cents ($19.50), the VIB
Corp Market Value Per Share shall be equal to Fifteen Dollars and Fifty Cents
($15.50) plus twenty-five percent (25%) of the amount by which the amount
exceeds Fifteen Dollars and Fifty Cents ($15.50), and if the result of that
calculation exceeds Nineteen Dollars and Fifty Cents ($19.50), the VIB Corp
Market Value Per Share shall be Sixteen Dollars and Fifty Cents ($16.50).
Fractional shares will not be issued in the merger. In lieu thereof,
each holder of Bank of Stockdale stock who would otherwise be entitled to
receive fractional shares of VIB Corp stock shall receive an amount in cash
equal to the VIB Corp Market Value Per Share multiplied by the fraction of the
share of VIB Corp stock to which such holder would otherwise be entitled.
The completion of the merger is subject to receipt of regulatory
approval including approvals of the Office of Thrift Supervision and the Board
of Governors of the Federal Reserve System. The transaction must also be
approved by holders of at least two-thirds (2/3) of the issued and outstanding
shares of Bank of Stockdale stock and a majority of the issued and outstanding
shares of VIB Corp stock. The parties anticipate that the transaction will be
completed during the first quarter of 1999.
Acquisition of Freemont Investment & Loan Branch Office in Hemet, CA
On or about September 22, 1998, the wholly-owned subsidiary of VIB
Corp, Valley Independent Bank, El Centro, California ("VIB") entered into a
branch acquisition agreement with Freemont Investment & Loan, a California
industrial loan company ("Freemont") headquartered in Anaheim, California, to
acquire certain of the assets and to assume certain of the liabilities of
Freemont's branch office located at 2091 West Florida Avenue, Suite 100, Hemet,
California 92545, including substantially all of the deposits of the branch. As
of June 30, 1998,
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the total deposits of the branch were approximately One Hundred Million Dollars
($100,000,000). VIB will pay an amount equal to one percent (1%) of the branch
deposits it assumes. VIB will also assume the branch lease and will acquire
certain of the leasehold improvements and certain of the loans assigned to the
branch.
The branch purchase is subject to regulatory approval including the
approval of California Commissioner of Financial Institutions and the Board of
Governors of the Federal Reserve System. It is anticipated that the branch
purchase will be completed prior to December 31, 1998.
In connection with the branch purchase it is anticipated that VIB
will be required to increase its capital by Eight Million Five Hundred Thousand
Dollars ($8,500,000). Although final decisions have not yet been made, VIB Corp
is exploring the possibility of issuing up to Fifteen Million Dollars
($15,000,000) in trust preferred securities to generate sufficient resources to
increase VIB's capital and to provide for other corporate purposes.
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Item 7. Financial Statements and Exhibits.
A. Financial Statements of Business Acquired.
Not applicable.
B. Pro Forma Financial Information.
Not applicable.
C. Exhibits.
2.1 Agreement and Plan of Reorganization by and between
VIB Corp and Bank of Stockdale, F.S.B. dated
September 15, 1998..............................................5
2.2 Agreement to Assume Liabilities and to Acquire Assets of
Branch Office between Freemont Investment & Loan and
Valley Independent Bank dated September 22, 1998...............69
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VIB CORP
Date: September 29, 1998 /s/ Harry G. Gooding, III
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Harry G. Gooding, III
Executive Vice President
and Chief Financial Officer
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AGREEMENT AND
PLAN OF REORGANIZATION
BY AND BETWEEN
VIB CORP
AND
BANK OF STOCKDALE, F.S.B.
DATED SEPTEMBER 15, 1998
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TABLE OF CONTENTS
AGREEMENT AND PLAN OF REORGANIZATION
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ARTICLE I - THE MERGER AND RELATED TRANSACTIONS....................................................... 2
1.1 Creation of BOS Interim Bank........................................................ 2
1.2 Merger.............................................................................. 2
(a) Merger of BOS Interim Bank and BOS......................................... 2
(b) Effect on BOS Interim Bank Shares.......................................... 2
(c) Effect on BOS Shares....................................................... 2
(d) Effect on VIBC Shares...................................................... 3
(e) Alternative Method......................................................... 3
1.3 Dissenting Shares of BOS Stock...................................................... 3
1.4 Dissenting Shares of VIBC Stock..................................................... 3
1.5 Fractional Shares................................................................... 4
1.6 Delivery of Certificates and Cash................................................... 4
(a) Transfer Agent............................................................. 4
(b) Exchange Procedures........................................................ 4
(c) Transfers.................................................................. 4
(d) Termination of Exchange Fund............................................... 4
(e) Lost, Stolen or Destroyed Certificates..................................... 5
1.7 Exchange of BOS Stock Options....................................................... 5
1.8 Effect of the Merger................................................................ 5
1.9 Name of Merged Bank................................................................. 5
1.10 Charter and Bylaws of Merged Bank................................................... 5
1.11 Directors and Officers of Merged Bank............................................... 6
1.12 Articles of Incorporation, Bylaws and Directors of VIBC............................. 6
1.13 Director's Agreement................................................................ 6
1.14 Affiliate's Letter.................................................................. 6
1.15 Shareholder's Agreement............................................................. 6
1.16 Cooperation; Best Efforts........................................................... 6
ARTICLE II - THE CLOSING.............................................................................. 6
2.1 Closing Date........................................................................ 6
2.2 Execution of Merger Agreement....................................................... 7
2.3 Documents to be Delivered........................................................... 7
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF BOS................................................... 7
3.1 Organization, Standing and Power.................................................... 7
3.2 Capitalization...................................................................... 8
3.3 Subsidiaries........................................................................ 8
3.4 Authority........................................................................... 8
3.5 Branches............................................................................ 9
3.6 Financial Statements................................................................ 9
3.7 Undisclosed Liabilities............................................................. 9
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3.8 Title to Assets.................................................................... 10
3.9 Real Estate........................................................................ 10
3.10 Environmental Liabilities.......................................................... 10
(a) Compliance................................................................ 10
(b) No Investigations......................................................... 11
(c) Hazardous Substances...................................................... 11
3.11 Loans and Investments.............................................................. 12
3.12 Extensions of Credit............................................................... 12
3.13 Deposits........................................................................... 13
3.14 Litigation and Governmental Proceedings............................................ 13
3.15 Contracts and Agreements........................................................... 13
3.16 Performance of Obligations......................................................... 14
3.17 Insurance.......................................................................... 14
3.18 Taxes.............................................................................. 15
3.19 Absence of Certain Changes......................................................... 15
3.20 Brokers' and Finders' Fees......................................................... 16
3.21 Employees.......................................................................... 16
3.22 Regulatory Reports................................................................. 16
3.23 BOS Employee Benefit Plans and Employment and Labor Contracts...................... 17
3.24 Stock Option Plans................................................................. 19
3.25 Absence of Certain Practices....................................................... 19
3.26 No Violation of Law................................................................ 19
3.27 Certain Interests.................................................................. 19
3.28 Minute Books....................................................................... 20
3.29 Accounting Records; Data Processing................................................ 20
3.30 Operating Losses................................................................... 20
3.31 CRA Standing....................................................................... 20
3.32 Year 2000 Matters.................................................................. 20
3.33 Accuracy and Currentness of Information Furnished.................................. 21
3.34 Effective Date of Representations, Warranties, Covenants and
Agreements......................................................................... 21
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF VIBC.................................................. 21
4.1 Organization, Standing and Power................................................... 21
4.2 Capitalization..................................................................... 21
4.3 Subsidiaries....................................................................... 21
4.4 Authority.......................................................................... 22
4.5 Financial Statements............................................................... 22
4.6 Undisclosed Liabilities............................................................ 23
4.7 Title to Assets.................................................................... 23
4.8 Real Estate........................................................................ 23
4.9 Environmental Liabilities.......................................................... 24
(a) Compliance................................................................ 24
(b) No Investigations......................................................... 24
(c) Hazardous Substances...................................................... 24
4.10 Loans and Investments.............................................................. 24
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4.11 Deposits........................................................................... 25
4.12 Litigation and Governmental Proceedings............................................ 25
4.13 Contracts and Agreements........................................................... 25
4.14 Performance of Obligations......................................................... 26
4.15 Insurance.......................................................................... 27
4.16 Taxes.............................................................................. 27
4.17 Absence of Certain Changes......................................................... 27
4.18 Brokers' and Finders' Fees......................................................... 28
4.19 Employees.......................................................................... 28
4.20 Regulatory Reports................................................................. 28
4.21 VIBC Employee Benefit Plans and Employment and Labor Contracts..................... 29
4.22 Stock Option Plan.................................................................. 31
4.23 Absence of Certain Practices....................................................... 31
4.24 No Violation of Law................................................................ 31
4.25 Certain Interests.................................................................. 32
4.26 Minute Books....................................................................... 32
4.27 Accounting Records; Data Processing................................................ 32
4.28 Operating Losses................................................................... 32
4.29 CRA Standing....................................................................... 32
4.30 Year 2000 Matters.................................................................. 33
4.31 Accuracy and Currentness of Information Furnished.................................. 33
4.32 Effective Date of Representations, Warranties, Covenants and
Agreements......................................................................... 33
ARTICLE V - COVENANTS OF BOS PRIOR TO CLOSING........................................................ 33
5.1 Business Records and Information................................................... 33
5.2 Limitations Upon BOS Prior to Closing.............................................. 34
5.3 Affirmative Conduct of BOS Prior to Closing........................................ 36
5.4 Indemnification.................................................................... 38
5.5 Execute Agreement to Merge......................................................... 38
5.6 Discussion With Third Parties...................................................... 38
(a) Strategic Transactions.................................................... 38
(b) Qualifying Proposal....................................................... 39
(c) Disclosure and Trading.................................................... 39
5.7 Stock Option Plans................................................................. 40
5.8 Change in Control and Salary Continuation Agreements............................... 40
5.9 Proxy Statement.................................................................... 40
ARTICLE VI - COVENANTS OF VIBC PRIOR TO CLOSING...................................................... 41
6.1 Business Records and Information................................................... 41
6.2 Limitations Upon VIBC Prior to Closing............................................. 41
6.3 Affirmative Conduct of VIBC Prior to Closing....................................... 43
6.4 Indemnification.................................................................... 44
6.5 Discussion With Third Parties...................................................... 44
(a) Strategic Transactions.................................................... 44
(b) Qualifying Proposal....................................................... 44
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(c) VIBC Acquisition Transaction.............................................. 45
(d) Disclosure and Trading.................................................... 45
6.6 Stock Option Plan.................................................................. 46
6.7 Preparation of S-4 and the Proxy Statement......................................... 46
6.8 Proxy Statement.................................................................... 46
ARTICLE VII - MEETINGS OF SHAREHOLDERS AND FEDERAL SECURITIES LAWS................................... 46
7.1 Shareholders' Meetings............................................................. 46
7.2 Federal Securities Laws............................................................ 47
ARTICLE VIII - CONDITIONS PRECEDENT TO OBLIGATIONS OF BOS............................................ 47
8.1 Continued Accuracy of Representations and Warranties............................... 48
8.2 Performance of Obligations......................................................... 48
8.3 Absence of Material Changes........................................................ 48
8.4 Officers' Certificate.............................................................. 48
8.5 Receipt of Legal Opinion........................................................... 48
8.6 Fairness Opinion................................................................... 48
8.7 Appointment of VIBC Director....................................................... 48
8.8 Closing Documents.................................................................. 48
ARTICLE IX - CONDITIONS PRECEDENT TO OBLIGATIONS OF VIBC............................................. 49
9.1 Continued Accuracy of Representations and Warranties............................... 49
9.2 Performance of Obligations......................................................... 49
9.3 Absence of Material Changes........................................................ 49
9.4 Affiliate's Letters................................................................ 49
9.5 Resignation and Appointment of Directors........................................... 49
9.6 Officers' Certificate.............................................................. 49
9.7 Receipt of Legal Opinion........................................................... 49
9.8 Fairness Opinion................................................................... 50
9.9 Closing Documents.................................................................. 50
ARTICLE X - CONDITIONS PRECEDENT TO THE MERGER....................................................... 50
10.1 Permits and Approvals.............................................................. 50
10.2 Tax Ruling or Opinion.............................................................. 50
10.3 Absence of Litigation.............................................................. 51
10.4 Shareholder Approvals.............................................................. 51
(a) Approval of Merger........................................................ 51
(b) Other Actions............................................................. 52
10.5 Continuity of Interest............................................................. 52
ARTICLE XI - TERMINATION............................................................................. 52
11.1 Termination of This Agreement...................................................... 52
11.2 Immaterial Breach.................................................................. 53
11.3 Effect of Termination.............................................................. 53
11.4 Termination Fee and Liquidated Damages............................................. 54
(a) Termination Fee........................................................... 54
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(b) Liquidated Damages........................................................ 54
(c) Exclusive Remedy.......................................................... 54
ARTICLE XII - GENERAL PROVISIONS..................................................................... 54
12.1 Expenses........................................................................... 54
12.2 Notices............................................................................ 54
12.3 Successors and Assigns............................................................. 55
12.4 Third Party Beneficiaries.......................................................... 55
12.5 Counterparts....................................................................... 55
12.6 Governing Law...................................................................... 56
12.7 Captions........................................................................... 56
12.8 Exhibits and Schedules............................................................. 56
12.9 Representations and Warranties..................................................... 56
12.10 Waiver and Modification............................................................ 56
12.11 Attorneys' Fees.................................................................... 56
12.12 Knowledge.......................................................................... 56
12.13 Entire Agreement................................................................... 57
12.14 Consents........................................................................... 57
12.15 Severability....................................................................... 57
12.16 Press Release...................................................................... 57
12.17 Arbitration........................................................................ 57
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LIST OF EXHIBITS AND SCHEDULES
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EXHIBITS
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Merger Agreement................................................................ Exhibit A
Director's Agreement (BOS)...................................................... Exhibit B-1
Director's Agreement (VIBC)..................................................... Exhibit B-2
Affiliate's Letter.............................................................. Exhibit C
Shareholder's Agreement......................................................... Exhibit D
SCHEDULES
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Bank of Stockdale, F.S.B.:
Articles of Association and Bylaws.............................................. Schedule 3.1
Subsidiaries.................................................................... Schedule 3.3
Agreements, Instruments, Obligations............................................ Schedule 3.4
Financial Statements ........................................................... Schedule 3.6
Liabilities..................................................................... Schedule 3.7
Assets.......................................................................... Schedule 3.8
Real Estate .................................................................... Schedule 3.9
Environmental Liabilities....................................................... Schedule 3.10
Loans and Investments........................................................... Schedule 3.11
Classified Loans................................................................ Schedule 3.12
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Deposits ....................................................................... Schedule 3.13
Litigation ..................................................................... Schedule 3.14
Understandings ................................................................. Schedule 3.15
Obligations..................................................................... Schedule 3.16
Insurance ...................................................................... Schedule 3.17
Taxes........................................................................... Schedule 3.18
Certain Changes................................................................. Schedule 3.19
Brokers' and Finders' Fees...................................................... Schedule 3.20
Regulatory Reports.............................................................. Schedule 3.22
Employee Benefit Plans.......................................................... Schedule 3.23
Stock Option Plan............................................................... Schedule 3.24
Certain Practices............................................................... Schedule 3.25
Certain Interests............................................................... Schedule 3.27
Data Processing ................................................................ Schedule 3.29
Operating Losses................................................................ Schedule 3.30
VIB Corp:
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Articles of Incorporation and Bylaws ........................................... Schedule 4.1
Agreements, Instruments and Obligations ........................................ Schedule 4.4
Financial Statements............................................................ Schedule 4.5
Liabilities..................................................................... Schedule 4.6
Assets.......................................................................... Schedule 4.7
Real Estate .................................................................... Schedule 4.8
Environmental Liabilities....................................................... Schedule 4.9
Loans and Investments........................................................... Schedule 4.10
Deposits........................................................................ Schedule 4.11
Litigation...................................................................... Schedule 4.12
Understandings.................................................................. Schedule 4.13
Obligations..................................................................... Schedule 4.14
Insurance....................................................................... Schedule 4.15
Taxes........................................................................... Schedule 4.16
Certain Changes................................................................. Schedule 4.17
Brokers' and Finders' Fees...................................................... Schedule 4.18
Regulatory Reports.............................................................. Schedule 4.20
Employee Benefit Plans.......................................................... Schedule 4.21
Stock Option Plan............................................................... Schedule 4.22
Certain Practices............................................................... Schedule 4.23
Data Processing................................................................. Schedule 4.27
Operating Losses ............................................................... Schedule 4.28
Closing:
Closing Schedule................................................................ Schedule 2.3
Legal Opinion to BOS............................................................ Schedule 8.5
Legal Opinion to VIBC........................................................... Schedule 9.7
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made and
entered into as of September 15, 1998, by and among VIB Corp, a California
corporation ("VIBC"), 1498 Main Street, El Centro, California 92243, and Bank of
Stockdale, F.S.B., a federal stock savings bank ("BOS"), 5151 Stockdale Highway,
Bakersfield, California 93309, pursuant to which BOS will become a separate,
wholly-owned subsidiary of VIBC, with reference to the following:
R E C I T A L S
WHEREAS, BOS is a federal stock savings bank with its principal
office in the City of Bakersfield, County of Kern, State of
California, and VIBC is a California corporation with its principal
office in the City of El Centro, County of Imperial, State of
California;
WHEREAS, Valley Independent Bank ("VIB") is a California banking
corporation with its principal office in the City of El Centro, County
of Imperial, State of California, and is a wholly-owned subsidiary of
VIBC;
WHEREAS, BOS and VIBC desire to enter into this Agreement which
contemplates the acquisition of BOS by VIBC, pursuant to which BOS
will become a separate, wholly-owned subsidiary of VIBC;
WHEREAS, this Agreement provides for the completion of the
acquisition of BOS by VIBC through the merger (the "Merger") of BOS
with an interim federal stock savings bank which shall be a
wholly-owned subsidiary of VIBC ("BOS Interim Bank") under the
applicable laws of the United States and in accordance with the
articles of combination (the "Merger Agreement") to be entered into by
and between BOS Interim Bank and BOS substantially in the form of
Exhibit "A" hereto;
WHEREAS, to consummate the Merger the parties hereto will have to
take various steps and actions in furtherance of the transaction
contemplated by this Agreement (collectively, with the Merger, the
"Transactions"); and
WHEREAS, the Boards of Directors of VIBC and BOS have determined
that this Agreement and the Transactions are in the best interests of
their respective shareholders and have approved this Agreement and
authorized its execution;
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties contained herein, and
intending to be legally bound, the parties hereto agree as follows:
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A G R E E M E N T
ARTICLE I
THE MERGER AND RELATED TRANSACTIONS
1.1 CREATION OF BOS INTERIM BANK. As soon as practicable VIBC shall
organize BOS Interim Bank pursuant to 12 CFR Section 552.2-2 as a new, interim
federal stock savings bank wholly-owned by VIBC.
1.2 MERGER. The Merger shall become effective (the "Effective Time of
the Merger") on the date and time specified on the endorsement of the articles
of combination by the Office of Thrift Supervision (the "OTS"). At the Effective
Time of the Merger and pursuant to the terms of this Agreement and the Merger
Agreement, the following transactions will be deemed to have occurred
simultaneously:
(a) MERGER OF BOS INTERIM BANK AND BOS. BOS Interim Bank and
BOS will merge, and the separate corporate existence of BOS Interim
Bank shall cease. BOS as the savings bank surviving the Merger is
sometimes referred to herein as the "Merged Bank."
(b) EFFECT ON BOS INTERIM BANK SHARES. Each share of the
common stock of BOS Interim Bank (the "BOS Interim Bank Stock") issued
and outstanding immediately prior to the Effective Time of the Merger,
on and after the Effective Time of the Merger, pursuant to the Merger
Agreement and without any further action on the part of VIBC or BOS
Interim Bank, shall be converted into one share of common stock of the
Merged Bank (the "Merged Bank Stock"). Each outstanding stock
certificate which prior to the Effective Time of the Merger represented
shares of BOS Interim Bank Stock automatically and for all purposes
shall be deemed to represent the number of shares of Merged Bank Stock
into which the shares of BOS Interim Bank Stock represented by such
certificate have been converted as provided in this Section 1.2(b);
provided, however, at the request of VIBC, the Merged Bank shall
exchange VIBC's certificate or certificates formerly representing
shares of BOS Interim Bank Stock for a certificate or certificates of
Merged Bank Stock.
(c) EFFECT ON BOS SHARES. Each share of the common stock,
$4.00 par value, of BOS (the "BOS Stock") issued and outstanding
immediately prior to the Effective Time of the Merger, on and after the
Effective Time of the Merger, pursuant to the Merger Agreement and
without any further action on the part of BOS or the holders of BOS
Stock, automatically shall be canceled and cease to be an issued and
outstanding share of BOS Stock and shall be converted into the right to
receive that number of newly issued shares of common stock, no par
value, of VIBC (the "VIBC Stock") equal to the whole and fractional
number resulting from dividing the BOS Per Share Value by the VIBC
Market Value Per Share (the "Exchange Ratio"); provided, however, cash
shall be paid in lieu of fractional interests pursuant to Section 1.5
hereof. For purposes of this Agreement, the BOS Per Share Value shall
be determined by: (i) first, subtracting the amount of $180,000 from
the BOS shareholders' equity as of the last day of the calendar month
next preceding the month of the Closing; (ii) second, multiplying the
result times 2.83; (iii) third, subtracting from the resultant
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multiple all expenses related to this Agreement, including finders'
fees; and (iv) fourth, dividing the result by the total number of
shares of BOS Stock outstanding at the Closing. The BOS shareholders'
equity shall be determined in accordance with generally accepted
accounting principles, consistently applied, and shall be determined
consistent with the requirements of Section 3.6 hereof. For purposes of
this Agreement the VIBC Market Value Per Share shall be determined by
taking the average of the closing prices of the VIBC Stock on the
Nasdaq National Market for the 20 trading days preceding the fifth
business day prior to the Closing (the "Nasdaq Average"). In the event
the Nasdaq Average is between $9.50 and $15.50, the VIBC Market Value
Per Share shall be the Nasdaq Average. In the event the Nasdaq Average
is less than $9.50, the VIBC Market Value Per Share shall be $9.50. In
the event the Nasdaq Average is greater than $15.50, but not greater
than $19.50, then the VIBC Market Value Per Share shall be $15.50 plus
twenty-five percent (25%) of the amount by which the Nasdaq Average
exceeds $15.50. In the event the Nasdaq Average exceeds $19.50, the
VIBC Market Value per Share shall be $16.50. Certificates formerly
evidencing shares of BOS Stock shall be surrendered for exchange to the
Transfer Agent (as defined in Section 1.6 hereof) in accordance with
Section 1.6.
(d) EFFECT ON VIBC SHARES. Each share of VIBC Stock issued and
outstanding immediately prior to the Effective Time of the Merger
shall, on and after the Effective Time of the Merger, remain issued and
outstanding and shall automatically and for all purposes be deemed to
represent one share of common stock of VIBC.
(e) ALTERNATIVE METHOD. Anything herein to the contrary
notwithstanding, upon written notice to BOS, VIBC may at any time prior
to the Effective Time of the Merger change the method of effecting the
acquisition of BOS (including, without limitation, the provisions of
this Article I) if and to the extent it deems such change to be
necessary, appropriate or desirable; provided, however, that no such
change shall (i) alter or change the amount or kind of consideration to
be issued to holders of BOS Stock as provided for in this Agreement,
(ii) cause the transaction to be treated as anything other than a
tax-free reorganization to the holders of BOS Stock, or (iii)
materially impede or delay the receipt of any approvals referred to in
Section 10.1 or the consummation of the Transactions contemplated by
this Agreement.
1.3 DISSENTING SHARES OF BOS STOCK. Each outstanding shares of BOS
Stock whose holder has lawfully dissented from the Merger in accordance with 12
C.F.R. Section 552.14 and has timely filed with BOS a written demand for
appraisal of his or her shares accompanied by surrender of his or her stock
certificates pursuant to Section 552.14 is herein called a "Dissenting BOS
Share." Dissenting BOS Shares whose holders have not effectively withdrawn or
lost their dissenters' rights under Section 552.14 shall not be converted
pursuant to Section 1.2(c), but the holders thereof shall be entitled only to
such rights as are granted them by Section 552.14. Each dissenting shareholder
who is entitled to payment pursuant to Section 552.14 shall receive such payment
in an amount as determined pursuant to Section 552.14.
1.4 DISSENTING SHARES OF VIBC STOCK. Any shareholder of VIBC who shall
have lawfully dissented from the Transactions in accordance with the applicable
statutes of the State of California, and who shall have timely demanded payment
of the value of such shareholder's VIBC Stock and submitted such shares for
endorsement as provided in Section 1300(b) of the California
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General Corporation Law ("Dissenting VIBC Shares"), shall thereafter have only
such rights as are provided a dissenting shareholder in accordance with said
statutes and shall have no other rights under this Agreement or as shareholders
of VIBC.
1.5 FRACTIONAL SHARES. No fractional shares of VIBC Stock shall be
issued in the Merger. In lieu thereof, each holder of BOS Stock who would
otherwise be entitled to receive fractional shares of VIBC Stock shall receive
an amount in cash equal to the VIBC Fair Market Value Per Share (as determined
in Section 1.2(c) hereof), multiplied by the fraction of a share of VIBC Stock
to which such holder would otherwise be entitled.
1.6 DELIVERY OF CERTIFICATES AND CASH.
(a) TRANSFER AGENT. Prior to the Effective Time of the Merger
VIBC shall deliver or cause to be delivered to U.S. Stock Transfer
Corporation, its transfer agent (the "Transfer Agent"), an amount of
cash equal to the anticipated aggregate amount of fractional interests
to be paid pursuant to Section 1.5 hereof, and sufficient certificates
of the VIBC Stock for issuance to BOS's shareholders. Delivery to the
holders of BOS Stock of the certificates for VIBC Stock and cash to
which they are entitled will subsequently be made by the Transfer Agent
against delivery of share certificates formerly evidencing BOS Stock
(duly executed and in proper form for transfer) to the Transfer Agent
in accordance with this Section 1.6 and the terms and conditions of an
agreement to be entered into by and between VIBC and the Transfer Agent
(the "Transfer Agent Agreement"). A copy of the Transfer Agent
Agreement will be provided to BOS and its counsel for approval prior to
consummation of the Merger, which approval shall not be unreasonably
withheld.
(b) EXCHANGE PROCEDURES. As soon as practicable after the
Effective Time of the Merger, the Transfer Agent will send a notice and
transmittal form to each holder of a certificate previously
representing shares of BOS Stock advising such holders of the
applicable terms of the conversion effected by the Merger and the
procedure for surrendering to the Transfer Agent such certificate for
conversion. Each holder of such certificates, upon surrender of the
same to the Transfer Agent in accordance with such transmittal form,
shall be entitled to receive the consideration provided for in Section
1.2(c) hereof. If the consideration for shares of BOS Stock provided
for in Section 1.2(c) is to be delivered to any person other than the
registered holder of said shares surrendered for exchange, the amount
of any stock transfer tax or similar taxes (whether imposed on the
registered holder or such person) payable on account of the transfer to
such person shall be paid to the Transfer Agent by such person, or the
Transfer Agent may refuse to make such exchange unless satisfactory
evidence of the payment of such taxes or exemption therefrom is
submitted. The certificates so surrendered shall forthwith be canceled.
No interest will be paid or accrued on any amount payable upon due
surrender of the certificates.
(c) TRANSFERS. After the Effective Time of the Merger, there
shall be no transfers on the stock transfer books of BOS of the BOS
Stock that was outstanding immediately prior to the Effective Time of
the Merger.
(d) TERMINATION OF EXCHANGE FUND. Any portion of the cash
delivered to the Transfer Agent (including the proceeds of any
investments thereof) that remains unclaimed
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by the holders of BOS Stock for six months after the Effective Time of
the Merger shall be returned to VIBC. Any holders of BOS Stock who have
not theretofore complied with this Section 1.6 shall thereafter look
only to VIBC for exchange of their BOS Stock upon due surrender of
their certificates (or affidavits of loss in lieu thereof), without any
interest thereon. Notwithstanding the foregoing, none of VIBC, BOS, the
Transfer Agent or any other person shall be liable to any former holder
of BOS Stock for any amount properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(e) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
certificate shall have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming such certificate to
be lost, stolen or destroyed and, if required by VIBC, the posting by
such person of a bond in customary amount as indemnity against any
claim that may be made against it with respect to such certificate, the
Transfer Agent shall exchange such lost, stolen or destroyed
certificate, upon due surrender thereof, in accordance with the
provisions of this Section 1.6.
1.7 EXCHANGE OF BOS STOCK OPTIONS. VIBC shall issue substitute stock
options, effective at the Effective Time of the Merger, to each optionee holding
an outstanding stock option pursuant to BOS's 1985 and 1995 Stock Option Plans.
The substitute stock options, to be issued pursuant to VIBC's 1997 Stock Option
Plan, shall be issued for the same remaining terms and the same vesting
schedules as the BOS stock options being exchanged therefor; and shall be issued
for the same numbers of shares of VIBC Stock and the same exercise prices,
adjusted for the Exchange Ratio. Such adjustment in the numbers and exercise
prices shall be made without change in the total exercise price applicable to
the unexercised portion of the BOS stock option. Any fractional share interests
shall be disregarded.
1.8 EFFECT OF THE MERGER. By virtue of the Merger and at the Effective
Time of the Merger, all of the rights, privileges, powers and franchises and all
property and assets of every kind and description of BOS Interim Bank and BOS
shall be vested in and be held and enjoyed by the Merged Bank, without further
act or deed, and all the estates and interests of every kind of BOS Interim Bank
and BOS, including all debts due to either of them, shall be as effectively the
property of the Merged Bank as they were the property of BOS Interim Bank and
BOS, and the title to any real estate vested by deed or otherwise in either BOS
Interim Bank or BOS shall not revert or be in any way impaired by reason of the
Merger; and all rights of creditors and liens upon any property of BOS Interim
Bank and BOS shall be preserved unimpaired, and all debts, liabilities and
duties of BOS Interim Bank and BOS shall be debts, liabilities and duties of the
Merged Bank and may be enforced against it to the same extent as if such debts,
liabilities and duties had been incurred or contracted by it, and none of such
debts, liabilities or duties shall be expanded, increased, broadened or enlarged
by reason of the Merger.
1.9 NAME OF MERGED BANK. The name of the Merged Bank shall be "Bank of
Stockdale, F.S.B."
1.10 CHARTER AND BYLAWS OF MERGED BANK. The Charter and Bylaws of BOS
as in effect immediately prior to the Effective Time of the Merger shall be the
Charter and Bylaws of the Merged Bank.
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<PAGE> 13
1.11 DIRECTORS AND OFFICERS OF MERGED BANK. The directors of BOS at the
Effective Time of the Merger shall be the directors of the Merged Bank until
their successors have been chosen and qualified in accordance with the Charter
and the Bylaws of the Merged Bank; provided, however, that at the Effective Time
of the Merger Messrs. Irving R. Beimler and Jeffery W. Warlick shall resign from
the BOS Board of Directors and Messrs. Richard D. Foss and Dennis L. Kern shall
be appointed for three-year terms to the Board of Directors of BOS. The officers
of BOS at the Effective Time of the Merger shall be the officers of the Merged
Bank until they resign or are replaced or terminated by the Board of Directors
of the Merged Bank or otherwise in accordance with the Merged Bank's Charter or
Bylaws.
1.12 ARTICLES OF INCORPORATION, BYLAWS AND DIRECTORS OF VIBC. At the
Closing, VIBC's Articles of Incorporation and Bylaws as in effect immediately
prior to the Closing shall remain the Articles of Incorporation and Bylaws of
VIBC. At the Effective Time of the Merger, Mr. Ed L. Hickman, or if he shall be
unable to serve, another individual designated by VIBC, in its sole and absolute
discretion, shall be appointed for a one-year term to the Board of Directors of
VIBC.
1.13 DIRECTOR'S AGREEMENT. Concurrently with the execution of this
Agreement BOS and VIBC shall cause each of their directors to enter into an
agreement in the form of Exhibit "B-1" or Exhibit "B-2" hereto, respectively,
pursuant to which each director shall agree to vote or cause to be voted all
shares of his or her BOS Stock or VIBC Stock with respect to which such director
has voting power on the date hereof or hereafter acquired to approve the
Transactions contemplated hereby and all requisite matters related thereto.
1.14 AFFILIATE'S LETTER. Concurrently with the execution of this
Agreement BOS shall use its best efforts to cause each of its "affiliates" for
purposes of Rule 145 under the Securities Act of 1933, as amended, to sign an
Affiliates' Letter substantially in the form of Exhibit "C" hereto. At the
Closing, BOS shall use its best efforts to cause any affiliates who had not
previously signed an Affiliates' Letter to do so. Each share of VIBC Stock
issued in respect of BOS Stock pursuant to the Merger to such affiliates shall
bear the restrictive legend specified in Exhibit "C".
1.15 SHAREHOLDER'S AGREEMENT. Concurrently with the execution of this
Agreement BOS shall cause Financial Institutions Partners, Ltd. and Mr. Eric D.
Hovde to enter into a Shareholder's Agreement substantially in the form of
Exhibit "D" hereto.
1.16 COOPERATION; BEST EFFORTS. Each of the parties, consistent with
the fiduciary duties of the directors of each party, will use its best efforts
to consummate the Transactions contemplated by this Agreement and cooperate in
any action necessary or advisable to facilitate such consummation including,
without limitation, making all filings required in order to obtain any necessary
consents or to comply with any law and providing any information required in
connection therewith.
ARTICLE II
THE CLOSING
2.1 CLOSING DATE. The consummation of the Transactions contemplated by
this Agreement (the "Closing"), unless another date or place is agreed in
writing by the parties hereto, shall take place at the main office of BOS, 5151
Stockdale Highway, Bakersfield, California 93309,
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<PAGE> 14
on a date designated in a written notice to BOS by VIBC within 15 days after the
last of the following shall have occurred: (i) the receipt of all approvals and
consents specified in Article X hereof; (ii) the expiration of the applicable
waiting period under the Bank Merger Act and the Bank Holding Company Act; and
(iii) all conditions specified in Articles VIII, IX and X hereof shall have been
satisfied (the "Closing Date"); provided, however, that if the parties cannot
agree on the Closing Date, the Closing Date shall be the last business day in
such fifteen day period.
2.2 EXECUTION OF MERGER AGREEMENT. Prior to the Closing Date, and as
soon as practicable after the approval of the OTS to organize BOS Interim Bank,
and the approval of this Agreement and the Transactions contemplated hereby by
the shareholder of BOS Interim Bank and the shareholders of BOS and VIBC and the
satisfaction of the conditions precedent to the consummation of the Merger, the
Merger Agreement in the form attached as Exhibit "A" (as amended, if necessary,
to conform to the requirements of law or a governmental authority or agency
having authority over the Merger which requirements are not materially in
contravention of any of the substantive terms hereof) shall be executed by BOS
and BOS Interim Bank. The Merger shall become effective in accordance with the
approval granted by the OTS (the "Effective Time of the Merger").
2.3 DOCUMENTS TO BE DELIVERED. The parties shall deliver, or cause to
be delivered, the documents called for by the Closing Schedule attached hereto
as Schedule 2.3, along with such other documents or certificates as may be
necessary, in the reasonable opinion of counsel for each of the parties, to
effectuate the Transactions called for hereunder. In the event that counsel for
any of the parties believes that documents necessary for the Closing have not
been set forth on the Closing Schedule, counsel shall advise the other party in
writing, no less than five business days prior to the Closing Date, setting
forth a brief description of the additional documents desired and such documents
shall also be provided at the Closing. If, at any time after the Effective Time
of the Merger, the Merged Bank or VIBC or their successors or assigns shall
determine that any further conveyance, assignment or other documents or any
further action is necessary or desirable to further effectuate the Transactions
set forth herein or contemplated hereby, the officers and directors of the
parties hereto shall execute and deliver, or cause to be executed and delivered,
all such documents as may be reasonably required to effectuate such
Transactions, whether at the Closing of thereafter.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BOS
BOS hereby represents and warrants to VIBC as follows:
3.1 ORGANIZATION, STANDING AND POWER. BOS is a federal stock savings
bank, duly organized, validly existing and in good standing under the laws of
the United States, and is authorized by the OTS to conduct business as a federal
savings bank. BOS is a member of the Federal Home Loan Bank of San Francisco and
is an "insured depository institution" as defined in the Federal Deposit
Insurance Act; and BOS has all requisite corporate power and authority to own,
lease and operate its properties and assets and to carry on its business as
presently conducted. Neither the scope of the business of BOS nor the location
of any of its properties requires that it be licensed or qualified to do
business in any jurisdiction other than the State of California. Attached hereto
as Schedule 3.1 are true and correct copies of its Charter and Bylaws, as
amended to the date hereof.
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<PAGE> 15
3.2 CAPITALIZATION. The authorized capitalization of BOS consists of
10,000,000 shares of common stock, $4.00 par value, of which 1,212,265 shares
are issued and outstanding as of the date of this Agreement. As of the date of
this Agreement, the BOS Stock is held of record or beneficially by approximately
205 shareholders and the BOS Stock was not registered under the Securities
Exchange Act of 1934, as amended. All of the outstanding shares of the BOS Stock
are validly issued, fully paid and nonassessable. Except as contemplated herein
and except for fully vested stock options covering 33,000 shares of the BOS
Stock under the BOS 1985 and 1995 Stock Option Plans, there are presently, and
on the Closing Date there will be, no outstanding options, warrants or other
rights in or with respect to the unissued shares of the BOS Stock or any
securities convertible into such BOS Stock, and BOS is not obligated to issue
any additional shares of its BOS Stock or any other security convertible into
its BOS Stock.
3.3 SUBSIDIARIES. Except as set forth on Schedule 3.3, BOS does not
own, directly or indirectly (except as pledgee pursuant to loans which are not
in default or for shares held by BOS as the result of any foreclosure by BOS on
any loan, which shares do not exceed 4.9% of the outstanding common stock of any
such company), any outstanding stock or other voting interests in any
corporation, partnership, joint venture or other entity. Each subsidiary is duly
organized, validly existing and in good standing under the laws of the
jurisdiction set forth on Schedule 3.3.
3.4 AUTHORITY. The execution and delivery by BOS of this Agreement and
the Merger Agreement and the consummation of the Transactions contemplated
hereby and thereby, have been duly and validly authorized by all necessary
corporate action on the part of BOS. The Agreement is, and the Merger Agreement
will be, binding and enforceable obligations of BOS, except as enforceability
thereof may be limited by bankruptcy, insolvency, moratorium or similar laws
affecting the rights of creditors generally or federal savings banks, or by
general equitable principles, or by 12 U.S.C. Section 1818(b)(6)(D). Neither the
execution and delivery by BOS of this Agreement or the Merger Agreement, nor the
consummation of the Transactions contemplated herein or therein, nor compliance
by BOS with any of the provisions hereof or thereof will: (a) conflict with, or
result in a breach of, any provision of its Charter or Bylaws; or (b) except as
set forth in Schedule 3.4, constitute a breach of, or result in default, or give
rise to any rights of termination, cancellation or acceleration, or give rise to
any right by any other person or entity to acquire any security interest in any
assets under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, franchise, license, permit, agreement or other instrument
or obligation to which BOS or any of its properties or assets are subject. No
consent or approval of, notice to or filing with any governmental authority
having jurisdiction over any aspect of the business or assets of BOS, and no
consent or approval of or notice to any other person or entity, is required in
connection with the execution and delivery by BOS of this Agreement or the
Merger Agreement or the consummation by BOS of the Transactions contemplated
hereby or thereby, except: (a) approval of this Agreement and the Merger
Agreement by the shareholders of BOS and BOS Interim Bank; (b) such approvals of
this Agreement, the Merger Agreement, and the Transactions contemplated herein
as may be required by the OTS pursuant to the applicable requirements of the
Home Owners' Loan Act and the Bank Merger Act and/or by the Board of Governors
of the Federal Reserve System as may be required under the Bank Holding Company
Act of 1956, as amended; and (c) as set forth on Schedule 3.4.
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<PAGE> 16
3.5 BRANCHES. Except for its main office located at 5151 Stockdale
Highway, Bakersfield, California 93309, and its branch offices located at 3990
Gosford Road, Bakersfield, California 93309, and 2700 Mount Vernon Avenue,
Bakersfield, California 93306, a loan production office located at 7433 North
First Street, Suite 103, Fresno, California 93720, and a loan servicing office
located at 5555 California Street, Bakersfield, California 93309, BOS does not
operate or conduct business out of any other location and has not applied for or
received permission to open any other branch or to operate out of any other
location.
3.6 FINANCIAL STATEMENTS. Except as disclosed in the notes relating
thereto, or otherwise on Schedule 3.6, the audited financial statements of BOS
as of and for the periods ended December 31, 1996 and 1997, as well as the
unaudited financial statements of BOS as of and for the periods ended June 30,
1997 and 1998, attached hereto as Schedule 3.6 (all of these statements are
collectively referred to herein as the "BOS Financial Statements"): (i) fairly
and accurately present the financial condition of BOS as of the dates thereof
and the results of operations and its cash flows for the periods therein set
forth; (ii) have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved; and (iii) are
based on the books and records of BOS. Except to the extent that VIBC and BOS
have agreed that, following regulatory approval being obtained and the
satisfaction of all other conditions to the Closing and immediately prior to the
Effective Time of the Merger, BOS shall increase its reserves for possible loan
losses by $300,000 over its reserve for possible loan losses as reported in the
BOS Financial Statements as of June 30, 1998 and maintain its reserves for
possible loan losses at a level at least as adequate as so adjusted, BOS's
reserves for possible loan losses as disclosed in the BOS Financial Statements
were adequate as of such dates to absorb reasonably anticipated losses in the
loan portfolio of BOS in view of the size and character of such portfolio, then
current economic conditions, and other pertinent factors; and no facts have
subsequently come to the attention of management of BOS which would cause
management to restate as of any of such dates in any material way the level of
such reserves for possible loan losses. Except to the extent that VIBC and BOS
have agreed that BOS will hereafter fully accrue for all benefits due its
executive officers pursuant to their Salary Continuation Agreements and for all
benefits due its directors pursuant to their Deferred Compensation Plans as a
result of the "change in control" provisions thereof, the BOS Financial
Statements have properly accrued for all known and reasonably anticipated
liabilities and contingencies. With respect to other real estate owned by BOS,
the value attributed thereto for purposes of preparing the BOS Financial
Statements does not exceed the aggregate fair market value of such real estate
as of the date of acquisition of such real estate or as subsequently reduced,
all in accordance with generally accepted accounting principles. With regard to
investments owned by BOS, the value attributed thereto for purposes of preparing
the BOS Financial Statements is in accordance with generally accepted accounting
principles.
3.7 UNDISCLOSED LIABILITIES. BOS does not have any liabilities or
obligations, either accrued or contingent, which are material to BOS taken as a
whole and which have not been: (a) reflected or disclosed in the BOS Financial
Statements; or (b) disclosed in Schedule 3.7. BOS does not know of any basis for
the assertion against it of any liability, obligation or claim (including,
without limitation, that of any regulatory authority) that is reasonably likely
to result in or cause any material adverse change in the business or financial
condition of BOS when taken as a whole, which is not fairly reflected in the BOS
Financial Statements or otherwise disclosed in Schedule 3.7 hereto.
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3.8 TITLE TO ASSETS. BOS has good, valid and marketable title to all
material properties and assets, other than real property and securities pledged
to secure public deposits or retail repurchase agreements, owned or stated to be
owned by BOS and reflected on the BOS Financial Statements, or acquired after
December 31, 1997 (except properties sold or otherwise transferred in the
ordinary course of business since December 31, 1997), free and clear of all
mortgages, liens, encumbrances, pledges or charges of any kind or nature (except
for liens for current taxes not yet due and payable and except as disclosed in
the BOS Financial Statements or in Schedule 3.8 hereto).
3.9 REAL ESTATE. Schedule 3.9 hereto contains a list of all real
property, including leaseholds and "other real estate owned," owned by BOS and
copies of all leases to which BOS is a party. Schedule 3.9 contains, among other
things, an accurate summary of all material commitments which BOS has to improve
real estate owned or leased by it. BOS has good and marketable title to all the
real property, and valid leasehold interests in the leaseholds, described in
Schedule 3.9, free and clear of all mortgages, covenants, conditions,
restrictions, easements, liens, security interests, charges, claims and
encumbrances, except for: (a) rights of lessors, co-lessees or sublessees in
such matters which are reflected in the leases; (b) current taxes not yet due
and payable; (c) as described in any title policies (included in Schedule 3.9);
(d) such imperfections of title and encumbrances, if any, as do not materially
detract from the value of or materially interfere with the present use of such
property; or (e) except as described in Schedule 3.9 hereto. Copies of title
policies for properties described in Schedule 3.9 as owned by BOS have been
delivered or made available to VIBC. The activities of BOS with respect to its
real property owned and their leaseholds for use in connection with their
operations are in all material respects permitted and authorized by applicable
zoning laws, ordinances and regulations and all laws and regulations of any
governmental department or agency relative to environmental matters affecting
such property, except as otherwise disclosed in Schedule 3.9. BOS enjoys quiet
and peaceful possession of all such property. All tangible properties of BOS
that are material to the business, financial condition, results of operations or
prospects of BOS are in a good state of maintenance and repair, except for
ordinary wear and tear, and are adequate for the conduct of the business of BOS
as presently conducted. Except as set forth in Schedule 3.9: (i) the execution
of this Agreement, the performance of the obligations of BOS hereunder and the
consummation of the Transactions contemplated herein do not conflict with and
will not result in a breach or default under any lease, agreement or contract
described in Schedule 3.9, or give any other party thereto a right to terminate
or modify any term thereof; (ii) each lease and agreement under which BOS is a
lessee or holds or operates any property (real, personal or mixed) owned by any
third party is in full force and effect and is a valid and legally binding
obligation of BOS; (iii) BOS and each other party to any such lease or agreement
have performed in all material respects all the obligations required to be
performed by them to date under such lease or agreement and are not in default
in any material respect under any such lease or agreement and there is no
pending or threatened proceeding, or proceeding which BOS has reason to believe
may be threatened, that would interfere with the quiet enjoyment of such
leasehold or such material property by BOS; (iv) no underground storage tanks or
surface impoundments are on or in the real property; and (v) no asbestos is
contained or located on any of the real property. None of such leases or
agreements contain any unusual provision which now or in the future may cause a
material adverse change in the business condition of BOS.
3.10 ENVIRONMENTAL LIABILITIES.
(a) COMPLIANCE. Except as set forth on Exhibit 3.10, BOS is
conducting and, to the best of its knowledge, has conducted its
business, and is using and, to the best of its
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knowledge, has used its properties, whether currently owned, operated
or leased, or owned, operated or leased by BOS at any time in the past,
and all properties in which BOS has a security interest have been used
and are being used, in compliance with all applicable Environmental
Laws (as that term is defined below).
For purposes of this Agreement, "Environmental Law" shall mean
any federal, state, county, or local statute, law, ordinance, rule,
regulation, order, consent, decree, judicial or administrative decision
or directive of the United States or other jurisdiction whether now
existing or as hereinafter promulgated, issued or enacted prior to the
Closing relating to: (i) pollution or protection of the environment,
including natural resources; (ii) exposure of persons, including
employees, to Hazardous Substances (as that term is defined below) or
other products, materials or chemicals; (iii) protection of the public
health or welfare from the effects of products, by-products, wastes,
emissions, discharges or releases of chemicals or other substances from
industrial or commercial activities; or (iv) regulation of the
manufacture, use or introduction into commerce of substances from
industrial or commercial activities; or (iv) regulation of the
manufacture, use or introduction into commerce of substances,
including, without limitation, their manufacture, formulation,
packaging, labeling, distribution, transportation, handling, storage
and disposal. For the purposes of this definition, the term
"Environmental Law" shall include, without limiting the foregoing, the
following statutes, as amended from time to time: (1) the Clean Air
Act, as amended, 42 U.S.C. Section 7401 et seq.; (2) the Federal Water
Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; (3)
the Resource Conservation and Recovery Act of 1976, as amended, 42
U.S.C. Section 6901 et seq.; (4) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (including
the Superfund Amendments and Reauthorization Act of 1986), 42 U.S.C.
Section 2601 et seq.; (5) the Toxic Substances Control Act, as amended,
15 U.S.C. Section 2601 et seq.; (6) the Occupational Safety and Health
Act, as amended, 29 U.S.C. Section 651; (7) the Emergency Planning and
Community Right-To-Know Act of 1986, 42 U.S.C. Section 1101 et seq.;
(8) the Mine Safety and Health Act of 1977, as amended, 30 U.S.C.
Section 801 et seq.; (9) the Safe Drinking Water Act, 42 U.S.C. Section
300f et seq.; and (10) all comparable state and local laws, laws of
other applicable jurisdictions or orders and regulations including, but
not limited to, the Carpenter-Presley-Tanner Hazardous Substance
Account Act, California Health & Safety Code Section 25300 et seq.
(b) NO INVESTIGATIONS. BOS has not received notice that any
property currently owned, operated or leased by BOS or which has been
in the past owned, operated or leased by BOS, or in which BOS has a
security interest, is subject to any existing, pending or threatened
investigation, action or proceeding, including any notice of violation,
by any governmental authority regarding contamination of any part of
the property or infractions of any law, statute, ordinance or
regulation or any license or permit issued by any government agency
pertaining to health, industrial hygiene or environmental safety or
environmental conditions on, under or about the property, except for
such investigations, actions, proceedings, notifications, or
infractions which, in the aggregate, have not had and are not
reasonably likely to have a material adverse effect on BOS.
(c) HAZARDOUS SUBSTANCES. Except as set forth on Schedule
3.10, there are no Hazardous Substances (as that term is defined below)
presently located on, under or about any property which is currently
owned, operated, under the control of, or leased by BOS, or
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in which BOS has a security interest, nor was there any Hazardous
Substances located on, under or about any property prior to or during
the period any such property has been owned, operated, under the
control of, or leased by BOS. There has not been any generation, use,
handling, transportation, treatment or disposal of any Hazardous
Substances in connection with the conduct of the business of BOS that
has or might result in any material liability under any Environmental
Law.
For purposes of this Agreement, the term "Hazardous
Substances" shall mean: (i) substances that are defined or listed in,
or otherwise classified pursuant to, or the use or disposal of which
are regulated by, any Environmental Law as "hazardous substances,"
"toxic substances," or any other formulation intended to define, list
or classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, reproductive
toxicity, or "EP toxicity"; (ii) oil or petroleum derived from
substances and drilling fluids, produced waters, and other wastes
associated with the exploration, development, or production of crude
oil, natural gas, or geothermal resources; (iii) any flammable
substances or explosives, any radioactive materials, any hazardous
wastes or substances, any toxic wastes or substances or any other
materials or pollutants which pose a hazard to any property or to
individuals or entities on or about such property; and (iv) asbestos in
any form or electrical equipment which contains any oil or dielectric
fluid containing levels of polychlorinated biphenyls in excess of 50
parts per million.
3.11 LOANS AND INVESTMENTS. Except as disclosed in Schedule 3.11
hereto: (a) all the loans and investments of BOS are legal, valid and permitted
under federal and state laws and regulations applicable at the time of their
origination or assumption; and (b) BOS is not subject to any liability or claim
for violation of any state or federal law or regulation concerning extensions of
credit, including, without limitation, those relating to discriminatory lending
practices and truth-in-lending. Except for investments that have matured or been
sold, Schedule 3.11 sets forth all of the investments reflected in the balance
sheets of BOS dated December 31, 1997 and June 30, 1998. Except as set forth in
Schedule 3.11, none of such investments is subject to any restriction,
contractual, statutory or other, that would materially impair the ability of BOS
to dispose freely of any such investment at any time, except restrictions on the
public distribution or transfer of such investments under the Securities Act of
1933, as amended, or state securities laws. Except as set forth in Schedule
3.11, as of December 31, 1997, BOS had no holdings of positions in forwards,
futures, options, swaps, interest rate caps, collars and floors, or any other
similar instruments ("Derivative Instruments"). Except as set forth in Schedule
3.11, since January 1, 1996 BOS has not engaged in any transactions in or
involving Derivative Instruments except as agent on the order and for the
account of others. Schedule 3.11 sets forth for each Derivative Instrument held
by BOS since January 1, 1996, the present book value and market value, if
applicable, the open exposure of BOS, if any, and whether any counterparties to
any contract or agreement with respect to any such instrument is in default with
respect to such contract or agreement.
3.12 EXTENSIONS OF CREDIT. Schedule 3.12 sets forth a description of:
(a) by type and classification, if any, all loans, leases or other extensions of
credit by BOS on nonaccrual; (b) by type and classification, if any, all loans,
leases, or other extensions of credit or other real estate owned that have been
classified by the OTS or FDIC examiners, external or internal auditors,
directors, or management as "Watch List," "Specially Mentioned," "Substandard,"
"Doubtful," "Loss" or any
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comparable classification; and (c) all loans, leases or other extensions of
credit of BOS as to which any payment of principal, interest or other amount is
90 days or more past due.
3.13 DEPOSITS. Schedule 3.13 sets forth a list of deposit accounts
outstanding at BOS with an outstanding balance as of June 30, 1998, in excess of
$100,000.00.
3.14 LITIGATION AND GOVERNMENTAL PROCEEDINGS. Except as otherwise
expressly disclosed in Schedule 3.14, BOS is not engaged in, or threatened with,
any legal action or other proceeding before any court or administrative agency
which might be material to its business or in which the amount claimed against
it is $25,000 or more; except as set forth in Schedule 3.14, BOS is not in
default of any of its duties or obligations under, or with respect to, any
judgment, order, writ, injunction or decree of any court or governmental
department, commission, board, bureau, agency or other instrumentality having
jurisdiction over BOS or its business; except as disclosed in Schedule 3.14, BOS
has not been served with notice of and is not, to the best of its knowledge,
under investigation with respect to, any possible violation of any provision of
federal, state or local laws, rules, or regulations; and except as set forth in
Schedule 3.14, BOS is not subject to any order, letter agreement or written
direction of any governmental agency with respect to its financial or operating
ratios, or with respect to any other standards or tests imposed by state and
federal laws and regulations, including, without limitation, those relating to
net worth, liquidity and the maintenance of reserves, nor has any such order,
letter agreement or written direction been proposed to BOS. Schedule 3.14
contains a list identifying any claims pending on behalf of BOS against the
Small Business Administration (the "SBA"), any other governmental agencies, or
any third parties for reimbursement for loan defaults, indicating the date of
the claim, the name of the borrower, and the amount of the claim.
3.15 CONTRACTS AND AGREEMENTS. Except as provided by this Agreement and
except as set forth in Schedule 3.15, BOS is not a party to any contract,
agreement, commitment or offer which may become a binding obligation if accepted
by another person or entity, whether written or oral (collectively referred to
herein as an "Understanding") which individually, or with all other similar
Understandings relating to the same or similar subject matter, falls within any
of the following classifications:
(a) Any loan commitment, agreement, pledge, conditional sale
contract, security agreement, lease (excluding leases of real property
listed in Schedule 3.9), guarantee, subordination agreement or other
similar or related type of Understanding (but not including any deposit
agreements as to which BOS is the debtor), involving the expenditure of
$25,000 or more as to which BOS is a debtor, pledgor, lessee or
obligor;
(b) Any Understanding for the employment of any officer or
employee which is not terminable by BOS without liability, except as
may be provided by law, on not more than 30 days' notice;
(c) Any Understanding with any labor organization;
(d) Any Understanding which obligates BOS for a period in
excess of one year to purchase, sell or provide services, materials,
supplies, merchandise, facilities or equipment;
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(e) Any Understanding for the sale of any of its assets in
excess of $25,000 in amount, or for the grant of any preferential right
to purchase any of its assets, properties or rights in excess of
$25,000 in amount, or which requires the consent of any third party to
the transfer and assignment of any of its assets, properties or rights
in excess of $25,000 in amount, other than in the ordinary course of
business;
(f) Any Understanding for the borrowing of any money by BOS or
for a line of credit to BOS, except borrowings from the Federal Home
Loan Bank of San Francisco in the ordinary course of business;
(g) Any Understanding for any one capital expenditure or
series of related capital expenditures in excess of $25,000;
(h) Any Understanding to make, renew or extend the term of a
loan to any affiliate (as that term is defined for purposes of Rule 144
under the Securities Act of 1933) or group of persons related to any
affiliate, which, including any undisbursed or unfunded amount, when
aggregated with all outstanding indebtedness of such affiliate or group
of related persons to BOS, would exceed $25,000;
(i) Any Understanding of any kind (other than contracts
relating to demand, savings or time deposits) with any director or
officer of BOS or with any affiliate or member of the immediate family
(defined to include a person's spouse, parents, in laws, descendants or
siblings) of any such director, officer or affiliate;
(j) Any Understanding for the sale of loans with recourse; or
(k) Any Understanding not otherwise disclosed pursuant to this
Section 3.15 which is material to the financial condition, results of
operations, assets or business of BOS taken as a whole.
True and correct copies of all contracts, including amendments thereto,
setting forth the foregoing Understandings, are attached as a part of Schedule
3.15.
3.16 PERFORMANCE OF OBLIGATIONS. BOS has performed in all respects all
of the material obligations required to be performed by it to date and BOS is
not in default in any material respect under any agreement, contract or lease to
which it is a party or subject or is otherwise bound and which are material to
the financial condition of BOS taken as a whole; and no party with whom BOS has
an agreement which is of material importance to the business of BOS is in
material default thereunder, except as has been disclosed in Schedule 3.16. With
respect to loan delinquencies, Schedule 3.12 contains the monthly loan
delinquency report dated on or about June 30, 1998, in the form customarily
prepared for and delivered to the Board of Directors of BOS.
3.17 INSURANCE. Except as set forth in Schedule 3.17, BOS has in full
force and effect policies of insurance, including, without limitation, a
banker's blanket bond, with respect to its assets and business and against such
casualties and contingencies and of such amounts, types and forms as are
appropriate for its business, operations, properties and assets and as are usual
and customary in the banking industry. Set forth in Schedule 3.17 hereto is a
schedule of all policies of insurance (other
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than title insurance) carried and owned by BOS; showing the name of the
insurance company, the nature of the coverage, the policy limit, the annual
premiums and the expiration dates. There has been delivered to or made available
to VIBC a copy of each such policy of insurance. BOS has continually for the
past five years maintained a fidelity bond insuring it against acts of
dishonesty by its employees in such amounts as are disclosed in Schedule 3.17.
No claims have been made under such bond. BOS is not aware of any facts which
would form the basis of a claim under any such bond; nor does BOS have any
reason to believe that any insurance coverage will not be renewed by the
existing carrier on substantially the same terms as existing coverage.
3.18 TAXES. Except as set forth in Schedule 3.18 hereto, BOS has timely
filed all federal, state and local tax returns required to be filed by it or on
its behalf. Except as set forth in Schedule 3.18, all taxes shown by such
returns to be due and payable have been paid or are reflected as a liability on
the BOS Financial Statements. None of the federal, state and local tax returns
of BOS have been audited by the Internal Revenue Service or other governmental
authorities having jurisdiction over the examination of such returns except for
the years or periods indicated in Schedule 3.18. All material deficiencies
(including interest and penalties, if any, thereon), if any, imposed as a result
of such examinations have been either paid, or have been accrued as a liability
on the BOS Financial Statements, or are being contested in good faith and are
disclosed in Schedule 3.18. No material tax deficiency has been or to the
knowledge of BOS is proposed to be assessed against BOS by any federal, state or
local authority or agency. BOS has not agreed to any extension of time for the
assessment of any taxes of whatsoever kind or nature payable by it, nor has BOS
waived or been requested to waive any applicable statute of limitations with
relation to the payment of any federal, state or local taxes. The accruals for
taxes reflected on the BOS Financial Statements are adequate for all unpaid
federal, state or local taxes (including interest and penalties, if any,
thereon) due, or which became due for any period commencing prior to December
31, 1997.
3.19 ABSENCE OF CERTAIN CHANGES. Except as disclosed on Schedule 3.19
or as permitted by this Agreement, since December 31, 1997, the business of BOS
has been conducted diligently and only in the ordinary course, in the same
manner as heretofore conducted and there has not been:
(a) Any change (other than changes affecting financial
institutions generally, including changes in interest rates, laws or
regulations) in the financial condition of BOS taken as a whole which
has been materially adverse;
(b) Any declaration, setting aside, or the payment of any
dividend or other distribution with respect to BOS Stock or the
issuance of any additional shares of, or options to purchase, BOS Stock
or any other security of BOS;
(c) Any damage, destruction or loss (whether or not covered by
insurance) which individually or taken as a whole materially adversely
affects the property, business or prospects of BOS;
(d) Any change in accounting methods or practices of BOS;
(e) Any revaluation by BOS of any of BOS's assets except as
may be applicable to available-for-sale securities;
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<PAGE> 23
(f) Any increase in the salary schedule or compensation rate,
or the declaration, payment or commitment or obligation of any kind for
the payment by BOS of a bonus or other additional salary or
compensation, other than in accordance with past practice;
(g) Any sale, assignment or transfer of any material assets of
BOS except in the ordinary course of business;
(h) Any waiver or release of any material right or claim of
BOS, except in the ordinary course of business; or
(i) Any agreement to take any action specified in Sections
3.19(a) through (h) hereof.
3.20 BROKERS' AND FINDERS' FEES. Except for Hovde Financial, Inc., or
as specified in Schedule 3.20, neither BOS nor any of its officers or employees
have paid or agreed to pay, or have done any act which would give rise to the
payment of, any fee, commission or consideration to any agent, broker, finder or
other person on account of services rendered as a broker or finder in connection
with this Agreement or the Transactions contemplated herein, or which has
resulted in, or may give rise to, any obligation on the part of BOS or VIBC
therefor. Schedule 3.20 contains a true and correct copy of the fee agreement
with Hovde Financial, Inc. BOS agrees to indemnify and hold VIBC harmless from
and against any and all claims, liabilities, or obligations with respect to any
other brokers' or finders' fees, commissions, or expenses asserted by any other
person on the basis of any act or statement alleged to have been made by BOS or
its affiliates.
3.21 EMPLOYEES. There are no material controversies pending or
threatened between BOS and any of its employees. Except as disclosed in the BOS
Financial Statements, all material sums due for employee compensation and
benefits have been duly and adequately paid or accrued on the books of BOS.
3.22 REGULATORY REPORTS. Except as otherwise set forth in Schedule
3.22, since January 1, 1995, BOS has filed all reports, returns, registrations
and statements, together with any amendments required to be made with respect
thereto (such reports, filings and amendments referred to hereinafter as "BOS
Filings"), that were required to be filed with (a) the OTS, (b) the FDIC, and
(c) any other applicable regulatory agency, except where the failure to file
such reports, returns, registrations and statements has not had and is not
reasonably expected to have a material adverse effect on the business, financial
condition, results of operations or prospects of BOS. Except as otherwise set
forth in Schedule 3.22, no administrative actions have been taken or orders
issued in connection with such BOS Filings and as of their respective dates,
each of such BOS Filings: (i) complied in all material respects with all rules
and regulations promulgated by the regulatory agency with which it was filed (or
was amended so as to be so promptly following discovery of any such
noncompliance); and (ii) did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Any financial statement contained in any of such BOS
Filings that was intended to present the financial position of BOS fairly
presented the financial position of BOS and was prepared in accordance with
generally accepted accounting principles or banking regulations consistently
applied, except as stated therein, during the periods
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involved. BOS has furnished VIBC with true and correct copies of all BOS Filings
filed by BOS since January 1, 1996.
3.23 BOS EMPLOYEE BENEFIT PLANS AND EMPLOYMENT AND LABOR CONTRACTS.
(a) Schedule 3.23 sets forth and describes all director and/or
employee benefit plans and any collective bargaining agreements, labor
contracts and employment agreements in which BOS participates, or by
which it is bound, including, without limitation: (i) any profit
sharing, deferred compensation, bonus, stock option, stock purchase,
pension, ESOP, retainer consulting, retirement, welfare or incentive
plan or agreement whether legally binding or not; (ii) any written
employment agreement and any other employment agreement whether written
or oral; (iii) any other "employee benefit plan" [within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1975
("ERISA")] (collectively, the "BOS Employment Agreements"); or (iv) any
salary continuation or change in control agreements. Except as set
forth in Schedule 3.23: (i) there are no negotiations, demands or
proposals that are pending or, to the best knowledge of BOS, threatened
that concern matters now covered, or that would be covered, by any
employment agreements or employee benefit plans other than amendments
to plans qualified under Section 401 of the Internal Revenue Code (the
"Code") that are required by the Tax Reform Act of 1986 and later
legislation; (ii) BOS is in material compliance with the requirements
prescribed by any and all rules and regulations currently in effect
including but not limited to ERISA and the Code applicable to all such
employee benefit plans; (iii) BOS is in compliance in all material
respects with all other rules and regulations applicable to employee
benefit plans and employment agreements; (iv) BOS has performed all of
its obligations under all such employee benefit plans and employment
agreements; and (v) there are no actions, suits or claims pending or,
to the best knowledge of BOS, threatened against any such employee
benefit plans, or the assets of such plans, or with respect to any BOS
Employment Agreements, and no facts exist which are reasonably likely
to give rise to any actions, suits or claims (other than routine claims
for benefits) against such plans or the assets of such plans or BOS on
account of any such employment agreements, whether written or oral.
(b) The "employee pension benefit plans" (within the meaning
of Section 312 of ERISA) described on Schedule 3.23 have been duly
authorized by the Board of Directors of BOS. Except as set forth in
Schedule 3.23, each such plan and associated trust is qualified in form
and operation under Section 401(a) and exempt from tax under Section
501(a) of the Code, respectively, and no event has occurred that will
or is reasonably likely to give rise to disqualification of any such
plan or loss of the exemption from tax of any such trust under said
sections. No event has occurred that will or is reasonably likely to
subject any such plans to tax under Section 511 of the Code. None of
such plans has engaged in a merger or consolidation with any other plan
or transferred assets or liabilities from any other plan. No prohibited
transaction (within the meaning of Section 409 or 502(i) of ERISA or
Section 4975 of the Code) or party-in-interest transaction (within the
meaning of Section 406 of ERISA) has occurred with respect to any of
such plans. No employee of BOS has engaged in any transactions which
could subject BOS to indemnify such person against liability. All costs
of plans have been provided for on the basis of consistent methods in
accordance with sound actuarial assumptions and practices. No employee
benefit plan has incurred any "accumulated funding deficiency" (as
defined in ERISA), whether or not waived, taking into
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account contributions made within the period described in Section
412(c)(10) of the Code; nor are there any unfunded amounts under any
employee benefit plan; nor has BOS failed to make any contributions or
pay any amount due and owing as required by law or the terms of any
employee benefit plan or employment agreement. Subject to amendments
that are required by the Tax Reform Act of 1986 as amended and later
legislation, since the last valuation date for each employee pension
benefit plan, there has been no amendment or change to such plan that
would increase the amount of benefits thereunder.
(c) BOS does not sponsor or participate in, and has not
sponsored or participated in, any employee benefit pension plan to
which Section 4021 of ERISA applies that would create a liability under
Title IV of ERISA.
(d) BOS does not sponsor or participate in, and has not
sponsored or participated in, any employee benefit pension plan that is
a "multi-employer plan" (within the meaning of Section 3(37) of ERISA)
that would subject BOS to any liability with respect to any such plan.
(e) All group health plans of BOS (including any plans of
affiliates of BOS that must be taken into account under Section 162(i)
or (k) of the Code as in effect immediately prior to the Technical and
Miscellaneous Revenue Act of 1988 and Section 4980B of the Code) have
been operated in compliance with the group health plan continuation
coverage requirements of Section 4980B of the Code to the extent such
requirements are applicable.
(f) There have been no acts or omissions by BOS that have
given rise to or, to the best knowledge of BOS, may give rise to fines,
penalties, taxes, or related charges under Sections 502(c) or (i) or
4071 of ERISA or Chapter 43 of the Code.
(g) Except as described in Section 3.23(j), BOS does not
maintain any employee benefit plan or employment agreement pursuant to
which any benefit plan or other payment will be required to be made by
BOS or pursuant to which any other benefit will accrue or vest in any
director, officer or employee of BOS, in either case as a result of the
consummation of the transactions contemplated by the Agreement.
(h) No "reportable event," as defined in ERISA, has occurred
with respect to any of the employee benefit plans.
(i) All amendments required to bring each of the employee
benefit plans into conformity with all of the provisions of ERISA and
the Code and all other applicable laws, rules and regulations have been
made.
(j) Schedule 3.23 sets forth the name of each director,
officer or employee of BOS entitled to receive any benefit or any
payment of any amount under any existing employment agreement,
severance plan or other benefit plan as a result of the consummation of
any transaction contemplated in this Agreement, and with respect to
each such person, the nature of such benefit or the amount of such
payment, the event triggering the benefit or payment, and the date of,
and parties to, such employment agreement, severance plan or other
benefit plan. BOS has furnished VIBC with true and correct copies of
all documents with
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respect to the plans and agreements referred to in Schedule 3.23
delivered as of the date of this Agreement, including all amendments
and supplements thereto, and all related summary plan descriptions. For
each of the employee pension benefit plans of BOS referred to in
Schedule 3.23 delivered as of the date of this Agreement, if any, or
except as noted therein, BOS has furnished VIBC with true and correct
copies of: (i) the Form 5500 which was filed in each of the three most
recent plan years, including without limitation, all schedules thereto
and all financial statements with attached opinions of independent
accountants; (ii) the most recent determination letter from the
Internal Revenue Service; (iii) the statement of assets and liabilities
as of the most recent valuation date; and (iv) the statement of changes
in fund balance and in financial position or the statement of changes
in net assets available for benefits under each of said plans for the
most recently ended plan year. The documents referred to in
subdivisions (iii) and (iv) fairly present the financial condition of
each of said plans as of and at such dates and the results of
operations of each of said plans, all in accordance with generally
accepted accounting principles applied on a consistent basis.
3.24 STOCK OPTION PLANS. Schedule 3.24 sets forth a true and correct
copy of BOS's 1985 and 1995 Stock Option Plans and a schedule showing the names,
dates of grant, vesting schedules, termination dates, and option prices for each
option outstanding as of the date of this Agreement. The 1985 and 1995 Stock
Option Plans have been duly approved by the Board of Directors and shareholders
of BOS and by the OTS, each stock option has been approved by the Board of
Directors of BOS, and, upon exercise of the options in accordance with their
terms, the shares of BOS Stock issued have been and will be validly issued,
fully paid and nonassessable.
3.25 ABSENCE OF CERTAIN PRACTICES. Except as may be disclosed to VIBC
on Schedule 3.25, neither BOS, nor any officer, director, employee or agent of
BOS has, directly or indirectly, within the past four years, given or made or
agreed to give or make any illegal commission, payment, gratuity, gift,
political contribution or similar benefit to any customer, supplier,
governmental employee or other person in order to obtain business for or further
the business of BOS.
3.26 NO VIOLATION OF LAW. BOS is in substantial compliance with all
material laws relating to its business or employment practices or the ownership
of its properties, and is in substantial compliance with each material law,
ordinance, order, decree or regulation of any governmental entity applicable to
the conduct thereof or the ownership of the properties related thereto, except
in each case for violations which either individually or in the aggregate do not
and will not have a material adverse effect on the business, financial condition
or results of operations of BOS taken as a whole.
3.27 CERTAIN INTERESTS. Except as disclosed on Schedule 3.27, except in
arm's-length transactions pursuant to normal commercial terms and conditions:
(a) no officer or director of BOS has any material interest in any property,
real or personal, tangible or intangible, used in or pertaining to the business
of BOS except for the normal rights of a shareholder of BOS; (b) no such person
is indebted to BOS except for normal business expense advances or lending
transactions in the ordinary course of business on the same terms, including
interest rates and collateral on loans as those prevailing at the same time for
comparable transactions with others; and (c) BOS is not indebted to any such
person except for amounts due under normal salary or reimbursement of ordinary
business expenses. Except as disclosed on Schedule 3.23, the consummation of the
Transactions contemplated hereby will not (either alone, or upon the occurrence
of any act or event, or with the lapse of time,
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or both) result in any payment (severance or other) becoming due from BOS to any
employee of BOS.
3.28 MINUTE BOOKS. The minute books of BOS accurately reflect all
material actions duly taken by the shareholders, Board of Directors and
committees of BOS and contain true and complete copies of BOS's Charter and
Bylaws and all amendments thereto.
3.29 ACCOUNTING RECORDS; DATA PROCESSING. BOS has records that, in all
material respects, fairly reflect its transactions, and accounting controls
sufficient to ensure that such transactions are in all material respects: (a)
executed in accordance with management's general or specific authorization; and
(b) recorded in conformity with generally accepted accounting principles.
Schedule 3.29 contains a true and correct copy of the OTS's most recent audit of
BOS's data processing system. Except as set forth in Schedule 3.29, the
procedures and equipment, including, without limitation, the data processing
equipment, data transmission equipment, and related peripheral equipment and
software, used by BOS in the operation of its business (including any disaster
recovery facility) to generate and retrieve such records are adequate in
relation to the size and complexity of the business of BOS.
3.30 OPERATING LOSSES. Schedule 3.30 sets forth any individual
Operating Loss (as defined below) in excess of $500.00 that has occurred at BOS
during the period after December 31, 1997. Except as set forth on Schedule 3.30,
since December 31, 1997, no event has occurred, and no action has been taken or
omitted to be taken by any employee of BOS that has resulted in the occurrence
by BOS of an Operating Loss or that might reasonably be expected to result in
the occurrence by BOS of an Operating Loss after December 31, 1997, which, net
of any insurance proceeds payable in respect thereof, exceeds, or would exceed
$10,000 by itself or $50,000 when aggregated with all other Operating Losses
during such period. For purposes of this Agreement, "Operating Loss" means any
loss resulting from cash shortages, lost or misposted items, disputed clerical
and accounting errors, forged checks, payment of checks over stop payment
orders, counterfeit money, wire transfers made in error, theft, robberies,
employee dishonesty, defalcations, check kiting, fraudulent use of credit cards
or electronic teller machines, civil money penalties, fines, litigation, claims,
arbitration awards or other similar acts or occurrences.
3.31 CRA STANDING. BOS's compliance under the Community Reinvestment
Act (the "CRA") should not constitute grounds for either the denial by any
regulatory agency of any application to consummate the Transactions contemplated
by this Agreement or the imposition of a materially burdensome condition in
connection with the approval of any such application. BOS has not been advised
of any concerns regarding compliance with the CRA by any regulatory agency or
any other person.
3.32 YEAR 2000 MATTERS. BOS has completed a review of its computer
systems to identify systems that could be affected by the "Year 2000." The
management of BOS has developed and commenced implementation of a plan to
respond to this issue. Between the date of this Agreement and the Effective Time
of the Merger, BOS shall use commercially practicable efforts to implement
and/or continue to undertake such a plan. BOS has not been advised by any
regulatory authority to undertake any additional actions nor is BOS subject to
any regulatory order, memorandum or directive (other than directives of general
applicability to financial institutions) with respect thereto.
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Year 2000 issues have not had, and are not reasonably expected to have, a
material adverse effect on BOS.
3.33 ACCURACY AND CURRENTNESS OF INFORMATION FURNISHED. The
representations and warranties made by BOS hereby and in the schedules hereto
contain no statements of fact which are untrue or misleading, or omit to state
any material fact which is necessary under the circumstances to prevent the
statements contained herein or in such schedules from being misleading. BOS
hereby covenants that it shall, as of the Effective Time of the Merger, amend
and/or supplement the schedules prepared and delivered pursuant to this Article
III to ensure that the information set forth in such schedules accurately
reflects the then-current status of BOS.
3.34 EFFECTIVE DATE OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. Each representation, warranty, covenant and agreement of BOS set
forth in this Agreement shall be deemed to be made on and as of the date hereof
and, as subsequently amended and/or supplemented as provided in Section 3.33, as
of the Effective Time of the Merger.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF VIBC
VIBC hereby represents and warrants to BOS as follows:
4.1 ORGANIZATION, STANDING AND POWER. VIBC is a California corporation,
duly organized, validly existing and in good standing under the laws of the
State of California and VIBC has all requisite corporate power and authority to
own, lease and operate its properties and assets and to carry on its business as
presently conducted. Neither the scope of the business of VIBC nor the location
of any of its properties requires that it be licensed to do business in any
jurisdiction other than the State of California. Attached hereto as Schedule 4.1
are true and correct copies of its Articles of Incorporation and Bylaws, as
amended to the date hereof.
4.2 CAPITALIZATION. The authorized capitalization of VIBC consists of
10,000,000 shares of Preferred Stock of which none are issued and outstanding
and 25,000,000 shares of Common Stock, no par value, of which 7,803,121 shares
are issued and outstanding as of the date of this Agreement. As of the date of
this Agreement, VIBC Stock was held of record or beneficially by approximately
2,061 shareholders of record and the VIBC Stock was registered under the
Securities Exchange Act of 1934, as amended. All of the outstanding shares of
the VIBC Stock are, and when issued in exchange for the BOS Stock will be,
validly issued, fully paid and nonassessable.
4.3 SUBSIDIARIES. Except for VIB, VIBC does not own, directly or
indirectly (except as pledgee pursuant to loans which are not in default or for
shares held by VIB as the result of any foreclosure by VIB on any loan, which
shares do not exceed 4.9% of the outstanding common stock of any such company),
any outstanding stock or other voting interests in any corporation, partnership,
joint venture or other entity. VIB is a California state banking corporation,
duly organized, validly existing and in good standing under the laws of the
State of California; is an "insured bank" as defined in the Federal Deposit
Insurance Act; and VIB has all requisite corporate power and authority to own,
lease and operate its properties and assets and carry on its business as
presently conducted. Neither the scope of the business of VIB nor the location
of any of its properties requires that it be
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licensed or qualified to do business in any jurisdiction other than the States
of California, Arizona and Nevada. The shares of VIB's common stock held by VIBC
are free and clear of all security interests, encumbrances, restrictions, claims
or other defects in title.
4.4 AUTHORITY. The execution and delivery by VIBC of this Agreement and
the consummation of the Transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of VIBC. The
Agreement is, and the Merger Agreement will be, binding and enforceable
obligations of VIBC and BOS Interim Bank, respectively, except as enforceability
thereof may be limited by bankruptcy, insolvency, moratorium or similar laws
affecting the rights of creditors generally or California corporations, or
federal savings banks, or by general equitable principles, or by 12 U.S.C.
Section 1818(b)(6)(D). Neither the execution and delivery by VIBC of this
Agreement, nor the consummation of the Transactions contemplated herein, nor
compliance by VIBC with any of the provisions hereof will: (a) conflict with, or
result in a breach of, any provision of its Articles of Incorporation or Bylaws;
or (b) except as set forth in Schedule 4.4, constitute a breach of, or result in
default, or give rise to any rights of termination, cancellation or
acceleration, or give rise to any right by any other person or entity to acquire
any security interest in any assets under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, franchise, license, permit,
agreement or other instrument or obligation to which VIBC or any of its
properties or assets are subject. No consent or approval of, notice to or filing
with any governmental authority having jurisdiction over any aspect of the
business or assets of VIBC, and no consent or approval of or notice to any other
person or entity, is required in connection with the execution and delivery by
VIBC of this Agreement or by BOS Interim Bank of the Merger Agreement or the
consummation by VIBC of the Transactions contemplated hereby or thereby, except:
(a) approval of this Agreement and the Merger Agreement by the shareholder of
BOS Interim Bank; (b) such approvals of this Agreement, the Merger Agreement,
and the Transactions contemplated herein and therein as may be required by the
OTS pursuant to the applicable requirements of the Home Owners Loan Act, as
amended, and the Bank Merger Act, as amended, and/or by the Board of Governors
of the Federal Reserve System as may be required under the Bank Holding Company
Act of 1956, as amended; and (c) as set forth on Schedule 4.4.
4.5 FINANCIAL STATEMENTS. Except as disclosed in the notes relating
thereto, or otherwise on Schedule 4.5, the audited consolidated financial
statements of VIBC as of and for the periods ended December 31, 1996 and 1997,
as well as the unaudited consolidated financial statements of VIBC as of and for
the periods ended June 30, 1997 and 1998, attached hereto as Schedule 4.5 (all
of these statements are collectively referred to herein as the "VIBC Financial
Statements"): (i) fairly and accurately present the financial condition of VIBC
as of the dates thereof and the results of operations and its cash flows for the
periods therein set forth; (ii) have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved; and (iii) are based on the books and records of VIBC. VIBC's reserves
for possible loan losses as disclosed in the VIBC Financial Statements were
adequate as of such dates to absorb reasonably anticipated losses in the loan
portfolio of VIBC in view of the size and character of such portfolio, then
current economic conditions, and other pertinent factors; and no facts have
subsequently come to the attention of management of VIBC which would cause
management to restate as of any of such dates in any material way the level of
such reserves for possible loan losses. With respect to other real estate owned
by VIBC, the value attributed thereto for purposes of preparing the VIBC
Financial Statements does not exceed the aggregate fair market value of such
real estate as of the date of acquisition of such real estate or as subsequently
reduced, all in accordance with generally accepted
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accounting principles. With regard to investments owned by VIBC, the value
attributed thereto for purposes of preparing the VIBC Financial Statements is in
accordance with generally accepted accounting principles.
4.6 UNDISCLOSED LIABILITIES. VIBC and VIB do not have any liabilities
or obligations, either accrued or contingent, which are material to VIBC taken
as a whole and which have not been: (a) reflected or disclosed in the VIBC
Financial Statements; or (b) disclosed in Schedule 4.6. VIBC does not know of
any basis for the assertion against it or VIB of any liability, obligation or
claim (including, without limitation, that of any regulatory authority) that is
reasonably likely to result in or cause any material adverse change in the
business or financial condition of VIBC when taken as a whole, which is not
fairly reflected in the VIBC Financial Statements or otherwise disclosed in
Schedule 4.6 hereto.
4.7 TITLE TO ASSETS. VIBC and VIB have good, valid and marketable title
to all material properties and assets, other than real property and securities
pledged to secure public deposits or retail repurchase agreements, owned or
stated to be owned by VIBC or VIB and reflected on the VIBC Financial
Statements, or acquired after December 31, 1997 (except properties sold or
otherwise transferred in the ordinary course of business since December 31,
1997), free and clear of all mortgages, liens, encumbrances, pledges or charges
of any kind or nature (except for liens for current taxes not yet due and
payable and except as disclosed in the VIBC Financial Statements or in Schedule
4.7 hereto).
4.8 REAL ESTATE. Schedule 4.8 hereto contains a list of all real
property, including leaseholds and "other real estate owned," owned or leased by
VIBC or VIB. Schedule 4.8 contains, among other things, an accurate summary of
all material commitments which VIBC or VIB has to improve real estate owned or
leased by it. VIBC or VIB has good and marketable title to all the real
property, and valid leasehold interests in the leaseholds, described in Schedule
4.8, free and clear of all mortgages, covenants, conditions, restrictions,
easements, liens, security interests, charges, claims and encumbrances, except
for: (a) rights of lessors, co-lessees or sublessees in such matters which are
reflected in the leases; (b) current taxes not yet due and payable; (c) as
described in any title policies; (d) such imperfections of title and
encumbrances, if any, as do not materially detract from the value of or
materially interfere with the present use of such property; or (e) except as
described in Schedule 4.8 hereto. Copies of title policies for properties
described in Schedule 4.8 as owned by VIBC or VIB have been made available to
BOS. The activities of VIBC and VIB with respect to their real property owned
and their leaseholds for use in connection with their operations are in all
material respects permitted and authorized by applicable zoning laws, ordinances
and regulations and all laws and regulations of any governmental department or
agency relative to environmental matters affecting such property, except as
otherwise disclosed in Schedule 4.8. VIBC and/or VIB enjoy quiet and peaceful
possession of all such property. All tangible properties of VIBC that are
material to the business, financial condition, results of operations or
prospects of VIBC are in a good state of maintenance and repair, except for
ordinary wear and tear, and are adequate for the conduct of the business of VIBC
and VIB as presently conducted. Except as set forth in Schedule 4.8: (i) the
execution of this Agreement, the performance of the obligations of VIBC
hereunder and the consummation of the Transactions contemplated herein do not
conflict with and will not result in a breach or default under any lease,
agreement or contract described in Schedule 4.8, or give any other party thereto
a right to terminate or modify any term thereof; (ii) each lease and agreement
under which VIBC or VIB is a lessee or holds or operates any property (real,
personal or mixed) owned
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by any third party is in full force and effect and is a valid and legally
binding obligation of VIBC or VIB; (iii) VIBC or VIB and each other party to any
such lease or agreement have performed in all material respects all the
obligations required to be performed by them to date under such lease or
agreement and are not in default in any material respect under any such lease or
agreement and there is no pending or threatened proceeding, or proceeding which
VIBC has reason to believe may be threatened, that would interfere with the
quiet enjoyment of such leasehold or such material property by VIBC or VIB; (iv)
no underground storage tanks or surface impoundments are on or in the real
property; and (v) no asbestos is contained or located on any of the real
property. None of such leases or agreements contain any unusual provision which
now or in the future may cause a material adverse change in the business
condition of VIBC.
4.9 ENVIRONMENTAL LIABILITIES.
(a) COMPLIANCE. Except as set forth on Schedule 4.9, VIBC and
VIB are conducting and, to the best of their knowledge, have conducted
their business, and are using and, to the best of their knowledge, have
used their properties, whether currently owned, operated or leased, or
owned, operated or leased by VIBC or VIB at any time in the past, and
all properties in which VIBC or VIB has a security interest have been
used and are being used, in compliance with all applicable
Environmental Laws.
(b) NO INVESTIGATIONS. Neither VIBC nor VIB has received
notice that any property currently owned, operated or leased by VIBC or
VIB or which has been in the past owned, operated or leased by VIBC or
VIB, or in which VIBC or VIB has a security interest, is subject to any
existing, pending or threatened investigation, action or proceeding,
including any notice of violation, by any governmental authority
regarding contamination of any part of the property or infractions of
any law, statute, ordinance or regulation or any license or permit
issued by any government agency pertaining to health, industrial
hygiene or environmental safety or environmental conditions on, under
or about the property, except for such investigations, actions,
proceedings, notifications, or infractions which, in the aggregate,
have not had and are not reasonably likely to have a material adverse
effect on VIBC.
(c) HAZARDOUS SUBSTANCES. Except as set forth on Schedule 4.9,
there are no Hazardous Substances presently located on, under or about
any property which is currently owned, operated, under the control of,
or leased by VIBC or VIB, or in which VIBC or VIB have a security
interest, nor was there any Hazardous Substances located on, under or
about any property prior to or during the period any such property has
been owned, operated, under the control of, or leased by VIBC or VIB.
There has not been any generation, use, handling, transportation,
treatment or disposal of any Hazardous Substances in connection with
the conduct of the business of VIBC or VIB that has or might result in
any material liability under any Environmental Law.
4.10 LOANS AND INVESTMENTS. Except as disclosed in Schedule 4.10
hereto: (a) all the loans and investments of VIB are legal, valid and permitted
under federal and state laws and regulations applicable at the time of their
origination or assumption; and (b) VIB is not subject to any liability or claim
for violation of any state or federal law or regulation concerning extensions of
credit, including, without limitation, those relating to discriminatory lending
practices and truth-in-lending. Except for investments that have matured or been
sold, Schedule 4.10 sets forth all of the investments
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reflected in the balance sheets of VIB dated December 31, 1997 and June 30,
1998. Except as set forth in Schedule 4.10, none of such investments is subject
to any restriction, contractual, statutory or other, that would materially
impair the ability of VIB to dispose freely of any such investment at any time,
except restrictions on the public distribution or transfer of such investments
under the Securities Act of 1933, as amended, or state securities laws. Except
as set forth in Schedule 4.10, as of December 31, 1997, VIB had no holdings of
positions in Derivative Instruments. Except as set forth in Schedule 4.10, since
January 1, 1996 VIB has not engaged in any transactions in or involving
Derivative Instruments except as agent on the order and for the account of
others. Schedule 4.10 sets forth for each Derivative Instrument held by VIB
since January 1, 1996, the present book value and market value, if applicable,
the open exposure of VIB, if any, and whether any counterparties to any contract
or agreement with respect to any such instrument is in default with respect to
such contract or agreement.
4.11 DEPOSITS. Schedule 4.11 sets forth a list of deposit accounts
outstanding at VIB with an outstanding balance as of July 20, 1998, in excess of
$250,000.00.
4.12 LITIGATION AND GOVERNMENTAL PROCEEDINGS. Except as otherwise
expressly disclosed in Schedule 4.12, VIBC and VIB are not engaged in, or
threatened with, any legal action or other proceeding before any court or
administrative agency which might be material to its or their business or in
which the amount claimed against them is $100,000 or more; except as set forth
in Schedule 4.12, VIBC and VIB are not in default of any of their duties or
obligations under, or with respect to, any judgment, order, writ, injunction or
decree of any court or governmental department, commission, board, bureau,
agency or other instrumentality having jurisdiction over VIBC and VIB or their
businesses; except as disclosed in Schedule 4.12, VIBC and VIB have not been
served with notice of and are not, to the best of their knowledge, under
investigation with respect to, any possible violation of any provision of
federal, state or local laws, rules, or regulations; and except as set forth in
Schedule 4.12, VIBC and VIB are not subject to any order, letter agreement or
written direction of any governmental agency with respect to its financial or
operating ratios, or with respect to any other standards or tests imposed by
state and federal laws and regulations, including, without limitation, those
relating to net worth, liquidity and the maintenance of reserves, nor has any
such order, letter agreement or written direction been proposed to VIBC or VIB.
Schedule 4.12 contains a list identifying any claims pending on behalf of VIB
against the SBA, any other governmental agencies, or any third parties for
reimbursement for loan defaults, indicating the date of the claim, the name of
the borrower, and the amount of the claim.
4.13 CONTRACTS AND AGREEMENTS. Except as provided by this Agreement and
except as forth in Schedule 4.13 VIBC and VIB are not parties to any
Understanding which individually, or with all other similar Understandings
relating to the same or similar subject matter, falls within any of the
following classifications:
(a) Any loan commitment, agreement, pledge, conditional sale
contract, security agreement, lease (excluding leases of real property
listed in Schedule 4.8), guarantee, subordination agreement or other
similar or related type of Understanding (but not including any deposit
agreements as to which VIB is the debtor), involving the expenditure of
$100,000 or more as to which VIBC or VIB is a debtor, pledgor, lessee
or obligor;
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(b) Any Understanding for the employment of any officer or
employee which is not terminable by VIBC or VIB without liability on
not more than 30 days' notice;
(c) Any Understanding with any labor organization;
(d) Any Understanding which obligates VIBC or VIB for a period
in excess of one year to purchase, sell or provide services, materials,
supplies, merchandise, facilities or equipment;
(e) Any Understanding for the sale of any of VIBC's or VIB's
assets in excess of $100,000 in amount, or for the grant of any
preferential right to purchase any of their assets, properties or
rights in excess of $100,000 in amount, or which requires the consent
of any third party to the transfer and assignment of any of their
assets, properties or rights in excess of $100,000 in amount, other
than in the ordinary course of business;
(f) Any Understanding for the borrowing of any money by VIBC
or VIB or for a line of credit to VIBC or VIB, except borrowings from
the Federal Reserve Bank of San Francisco in the ordinary course of
business;
(g) Any Understanding for any one capital expenditure or
series of related capital expenditures in excess of $100,000;
(h) Any Understanding to make, renew or extend the term of a
loan to any affiliate (as that term is defined for purposes of Rule 144
under the Securities Act of 1933) or group of persons related to any
affiliate, which, including any undisbursed or unfunded amount, when
aggregated with all outstanding indebtedness of such affiliate or group
of related persons to VIBC, would exceed $100,000;
(i) Any Understanding of any kind (other than contracts
relating to demand, savings or time deposits) with any director or
officer of VIBC or with any affiliate or member of the immediate family
(defined to include a person's spouse, parents, in laws, descendants or
siblings) of any such director, officer or affiliate;
(j) Any Understanding for the sale of loans with recourse; or
(k) Any Understanding not otherwise disclosed pursuant to this
Section 4.13 which is material to the financial condition, results of
operations, assets or business of VIBC taken as a whole.
True and correct copies of all contracts, including amendments thereto,
setting forth the foregoing Understandings, are attached as a part of Schedule
4.13.
4.14 PERFORMANCE OF OBLIGATIONS. VIBC and VIB have performed in all
respects all of the material obligations required to be performed by them to
date and VIBC or VIB are not in default in any material respect under any
agreement, contract or lease to which they are a party or subject or are
otherwise bound and which are material to the financial condition of VIBC taken
as a whole; no party with whom VIBC or VIB has an agreement which is of material
importance to the business
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of VIBC is in material default thereunder, except as has been disclosed in
Schedule 4.14. With respect to loan delinquencies, Schedule 4.14 contains the
monthly loan delinquency report dated on or about June 30, 1998, in the form
customarily prepared for and delivered to the Board of Directors of VIB.
4.15 INSURANCE. Except as set forth in Schedule 4.15, VIBC and VIB have
in full force and effect policies of insurance, including, without limitation, a
banker's blanket bond, with respect to their assets and business and against
such casualties and contingencies and of such amounts, types and forms as are
appropriate for their business, operations, properties and assets and as are
usual and customary in the banking industry. Set forth in Schedule 4.15 hereto
is a schedule of all policies of insurance (other than title insurance) carried
and owned by VIBC and VIB; showing the name of the insurance company, the nature
of the coverage, the policy limit, the annual premiums and the expiration dates.
There has been delivered to or made available to BOS a copy of each such policy
of insurance. VIB has continually for the past five years maintained a fidelity
bond insuring it against acts of dishonesty by its employees in such amounts as
are disclosed in Schedule 4.15. No claims have been made under such bond. VIBC
is not aware of any facts which would form the basis of a claim under any such
bond; nor does VIBC have any reason to believe that any insurance coverage will
not be renewed by the existing carrier on substantially the same terms as
existing coverage.
4.16 TAXES. Except as set forth in Schedule 4.16 hereto, VIBC and VIB
have timely filed all federal, state and local tax returns required to be filed
by them or on their behalf. Except as set forth in Schedule 4.16, all taxes
shown by such returns to be due and payable have been paid or are reflected as a
liability on the VIBC Financial Statements. None of the federal, state and local
tax returns of VIBC or VIB have been audited by the Internal Revenue Service or
other governmental authorities having jurisdiction over the examination of such
returns except for the years or periods indicated in Schedule 4.16. All material
deficiencies (including interest and penalties, if any, thereon), if any,
imposed as a result of such examinations have been either paid, or have been
accrued as a liability on the VIBC Financial Statements, or are being contested
in good faith and are disclosed in Schedule 4.16. No material tax deficiency has
been or to the knowledge of VIBC is proposed to be assessed against VIBC or VIB
by any federal, state or local authority or agency. Neither VIBC nor VIB have
agreed to any extension of time for the assessment of any taxes of whatsoever
kind or nature payable by it, nor has VIBC or VIB waived or been requested to
waive any applicable statute of limitations with relation to the payment of any
federal, state or local taxes. The accruals for taxes reflected on the VIBC
Financial Statements are adequate for all unpaid federal, state or local taxes
(including interest and penalties, if any, thereon) due, or which became due for
any period commencing prior to December 31, 1997.
4.17 ABSENCE OF CERTAIN CHANGES. Except as disclosed on Schedule 4.17
or as permitted by this Agreement, since December 31, 1997, the business of VIBC
and VIB have been conducted diligently and only in the ordinary course, in the
same manner as heretofore conducted and there has not been:
(a) Any change (other than changes affecting financial
institutions generally, including changes in interest rates, laws or
regulations) in the financial condition of VIBC taken as a whole which
has been materially adverse;
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(b) Any declaration, setting aside, or the payment of any
dividend or other distribution with respect to the VIBC Stock or the
issuance of any additional shares of, or options to purchase, the VIBC
Stock or any other security of VIBC;
(c) Any damage, destruction or loss (whether or not covered by
insurance) which individually or taken as a whole materially adversely
affects the property, business or prospects of VIBC;
(d) Any change in accounting methods or practices of VIBC;
(e) Any revaluation by VIBC of any of VIBC's assets except as
may be applicable to available-for-sale securities;
(f) Any increase in the salary schedule or compensation rate,
or the declaration, payment or commitment or obligation of any kind for
the payment by VIBC of a bonus or other additional salary or
compensation, other than in accordance with past practice;
(g) Any sale, assignment or transfer of any material assets of
VIBC except in the ordinary course of business;
(h) Any waiver or release of any material right or claim of
VIBC, except in the ordinary course of business; or
(i) Any agreement to take any action specified in Sections
4.17(a) through (h) hereof.
4.18 BROKERS' AND FINDERS' FEES. Except as specified in Schedule 4.18,
neither VIBC, VIB, nor any of their officers or employees have paid or agreed to
pay, or have done any act which would give rise to the payment of, any fee,
commission or consideration to any agent, broker, finder or other person on
account of services rendered as a broker or finder in connection with this
Agreement or the Transactions, or which has resulted in, or may give rise to,
any obligation on the part of VIBC or BOS therefor. VIBC agrees to indemnify and
hold BOS harmless from and against any and all claims, liabilities, or
obligations with respect to any brokers' or finders' fees, commissions, or
expenses asserted by any person on the basis of any act or statement alleged to
have been made by VIBC or its affiliates.
4.19 EMPLOYEES. To the best of VIBC's knowledge there are no material
controversies pending or threatened between VIBC or VIB and any of their
employees. Except as disclosed in the VIBC Financial Statements, all material
sums due for employee compensation and benefits have been duly and adequately
paid or accrued on the books of VIBC.
4.20 REGULATORY REPORTS. Except as otherwise set forth in Schedule
4.20, since January 1, 1995, VIBC and VIB have filed all reports, returns,
registrations and statements, together with any amendments required to be made
with respect thereto (such reports, filings and amendments referred to
hereinafter as "VIB Filings"), that were required to be filed with (a) the
California Department of Financial Institutions, (b) the FDIC, (c) the FRB, (d)
the Securities and Exchange Commission (the "SEC"), and (e) any other applicable
regulatory agency, except where the failure to file such reports,
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returns, registrations and statements has not had and is not reasonably expected
to have a material adverse effect on the business, financial condition, results
of operations or prospects of VIBC. Except as otherwise set forth in Schedule
4.20, no administrative actions have been taken or orders issued in connection
with such VIB Filings and as of their respective dates, each of such VIB
Filings: (i) complied in all material respects with all rules and regulations
promulgated by the regulatory agency with which it was filed (or was amended so
as to be so promptly following discovery of any such noncompliance); and (ii)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Any financial statement contained in any of such VIB Filings that
was intended to present the financial position of VIB or VIBC fairly presented
the financial position of VIB or VIBC and was prepared in accordance with
generally accepted accounting principles or banking regulations and/or
securities rules and regulations, as applicable, consistently applied, except as
stated therein, during the periods involved. VIBC has furnished BOS with true
and correct copies of all VIB Filings filed by VIB or VIBC since January 1,
1996.
4.21 VIBC EMPLOYEE BENEFIT PLANS AND EMPLOYMENT AND LABOR CONTRACTS.
(a) Schedule 4.21 sets forth and describes all employee
benefit plans and any collective bargaining agreements, labor contracts
and employment agreements in which VIB or VIBC participates, or by
which they are bound, including, without limitation: (i) any profit
sharing, deferred compensation, bonus, stock option, stock purchase,
pension, ESOP, retainer consulting, retirement, welfare or incentive
plan or agreement whether legally binding or not; (ii) any written
employment agreement and any other employment agreement whether written
or oral; or (iii) any other "employee benefit plan" [within the meaning
of Section 3(3) of "ERISA"] (collectively, the "VIB Employment
Agreements"). Except as set forth in Schedule 4.21: (i) there are no
negotiations, demands or proposals that are pending or, to the best of
VIBC's knowledge, threatened that concern matters now covered, or that
would be covered, by any employment agreements or employee benefit
plans other than amendments to plans qualified under Section 401 of the
Code that are required by the Tax Reform Act of 1986 and later
legislation; (ii) VIB and VIBC are in material compliance with the
requirements prescribed by any and all rules and regulations currently
in effect including but not limited to ERISA and the Code applicable to
all such employee benefit plans; (iii) VIB and VIBC are in compliance
in all material respects with all other rules and regulations
applicable to employee benefit plans and employment agreements; (iv)
VIB and VIBC have performed all of their obligations under all such
employee benefit plans and employment agreements; and (v) there are no
actions, suits or claims pending or, to the best of VIBC's knowledge,
threatened against any such employee benefit plans, the assets of such
plans, or with respect to any VIB Employment Agreements, and no facts
exist which could give rise to any actions, suits or claims (other than
routine claims for benefits) against such plans or the assets of such
plans or VIB or VIBC on account of any such employment agreements,
whether written or oral.
(b) The "employee pension benefit plans" (within the meaning
of Section 312 of ERISA) described on Schedule 4.21 have been duly
authorized by the Board of Directors of VIB or VIBC. Except as set
forth in Schedule 4.21, each such plan and associated trust is
qualified in form and operation under Section 401(a) and exempt from
tax under Section
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501(a) of the Code, respectively, and no event has occurred that will
or is reasonably likely to give rise to disqualification of any such
plan or loss of the exemption from tax of any such trust under said
sections. No event has occurred that will or is reasonably likely to
subject any such plans to tax under Section 511 of the Code. None of
such plans has engaged in a merger or consolidation with any other plan
or transferred assets or liabilities from any other plan. No prohibited
transaction (within the meaning of Section 409 or 502(i) of ERISA or
Section 4975 of the Code) or party-in-interest transaction (within the
meaning of Section 406 of ERISA) has occurred with respect to any of
such plans. No employee of VIB or VIBC has engaged in any transactions
which could subject VIB or VIBC to indemnify such person against
liability. All costs of plans have been provided for on the basis of
consistent methods in accordance with sound actuarial assumptions and
practices. No employee benefit plan has incurred any "accumulated
funding deficiency" (as defined in ERISA), whether or not waived,
taking into account contributions made within the period described in
Section 412(c)(10) of the Code; nor are there any unfunded amounts
under any employee benefit plan; nor has VIB or VIBC failed to make any
contributions or pay any amount due and owing as required by law or the
terms of any employee benefit plan or employment agreement. Subject to
amendments that are required by the Tax Reform Act of 1986 as amended
and later legislation, since the last valuation date for each employee
pension benefit plan, there has been no amendment or change to such
plan that would increase the amount of benefits thereunder.
(c) VIB and VIBC do not sponsor or participate in, and have
not sponsored or participated in, any employee benefit pension plan to
which Section 4021 of ERISA applies that would create a liability under
Title IV of ERISA.
(d) VIB and VIBC do not sponsor or participate in, and have
not sponsored or participated in, any employee benefit pension plan
that is a "multi-employer plan" (within the meaning of Section 3(37) of
ERISA) that would subject VIBC or VIB to any liability with respect to
any such plan.
(e) All group health plans of VIB and VIBC (including any
plans of affiliates of VIB or VIBC that must be taken into account
under Section 162(i) or (k) of the Code as in effect immediately prior
to the Technical and Miscellaneous Revenue Act of 1988 and Section
4980B of the Code) have been operated in compliance with the group
health plan continuation coverage requirements of Section 4980B of the
Code to the extent such requirements are applicable.
(f) There have been no acts or omissions by VIB or VIBC that
have given rise to or, to the best knowledge of VIB or VIBC, may give
rise to fines, penalties, taxes, or related charges under Sections
502(c) or (i) or 4071 of ERISA or Chapter 43 of the Code.
(g) Except as described in Section 4.21(j), VIB and VIBC do
not maintain any employee benefit plan or employment agreement pursuant
to which any benefit plan or other payment will be required to be made
by VIB or VIBC or pursuant to which any other benefit will accrue or
vest in any director, officer or employee of VIB or VIBC, in either
case as a result of the consummation of the transactions contemplated
by the Agreement.
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(h) No "reportable event," as defined in ERISA, has occurred
with respect to any of the employee benefit plans.
(i) All amendments required to bring each of the employee
benefit plans into conformity with all of the provisions of ERISA and
the Code and all other applicable laws, rules and regulations have been
made.
(j) Schedule 4.21 sets forth the name of each director,
officer or employee of VIB or VIBC entitled to receive any benefit or
any payment of any amount under any existing employment agreement,
severance plan or other benefit plan as a result of the consummation of
any transaction contemplated in this Agreement, and with respect to
each such person, the nature of such benefit or the amount of such
payment, the event triggering the benefit or payment, and the date of,
and parties to, such employment agreement, severance plan or other
benefit plan. VIBC has furnished BOS with true and correct copies of
all documents with respect to the plans and agreements referred to in
Schedule 4.21 delivered as of the date of this Agreement, including all
amendments and supplements thereto, and all related summary plan
descriptions. For each of the employee pension benefit plans of VIB or
VIBC referred to in Schedule 4.21 delivered as of the date of this
Agreement, if any, or except as noted therein, VIBC has furnished BOS
with true and correct copies of: (i) the Form 5500 which was filed in
each of the three most recent plan years, including without limitation,
all schedules thereto and all financial statements with attached
opinions of independent accountants; (ii) the most recent determination
letter from the Internal Revenue Service; (iii) the statement of assets
and liabilities as of the most recent valuation date; and (iv) the
statement of changes in fund balance and in financial position or the
statement of changes in net assets available for benefits under each of
said plans for the most recently ended plan year. The documents
referred to in subdivisions (iii) and (iv) fairly present the financial
condition of each of said plans as of and at such dates and the results
of operations of each of said plans, all in accordance with generally
accepted accounting principles applied on a consistent basis.
4.22 STOCK OPTION PLAN. Schedule 4.22 sets forth a true and correct
copy of VIBC's 1997 Stock Option Plan and a schedule showing the names, dates of
grant, vesting schedules, termination dates, and option prices for each option
outstanding as of the date of this Agreement. The 1997 Stock Option Plan has
been duly approved by the Board of Directors and shareholders of VIBC, and
registered under the Securities and Exchange Act of 1934, each stock option has
been approved by the Board of Directors of VIBC, and, upon exercise of the
options in accordance with their terms, the shares of VIBC Stock issued have
been and will be validly issued, fully paid and nonassessable.
4.23 ABSENCE OF CERTAIN PRACTICES. Except as may be disclosed to BOS on
Schedule 4.23, neither VIBC nor VIB, nor any officer, director, employee or
agent of VIBC or VIB has, directly or indirectly, within the past four years,
given or made or agreed to give or make any illegal commission, payment,
gratuity, gift, political contribution or similar benefit to any customer,
supplier, governmental employee or other person in order to obtain business for
or further the business of VIBC or VIB.
4.24 NO VIOLATION OF LAW. VIBC and VIB are in substantial compliance
with all material laws relating to their business or employment practices or the
ownership of their properties, and are
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in substantial compliance with each material law, ordinance, order, decree or
regulation of any governmental entity applicable to the conduct thereof or the
ownership of the properties related thereto, except in each case for violations
which either individually or in the aggregate do not and will not have a
material adverse effect on the business, financial condition or results of
operations of VIBC taken as a whole.
4.25 CERTAIN INTERESTS. Except in arm's-length transactions pursuant to
normal commercial terms and conditions: (a) no officer or director of VIBC or
VIB has any material interest in any property, real or personal, tangible or
intangible, used in or pertaining to the business of VIBC or VIB except for the
normal rights of a shareholder of VIBC; (b) no such person is indebted to VIBC
or VIB except for normal business expense advances or banking transactions in
the ordinary course of business on the same terms, including interest rates and
collateral on loans as those prevailing at the same time for comparable
transactions with others; and (c) VIBC and VIB are not indebted to any such
person except for amounts due under normal salary or reimbursement of ordinary
business expenses. The consummation of the Transactions contemplated hereby will
not (either alone, or upon the occurrence of any act or event, or with the lapse
of time, or both) result in any payment (severance or other) becoming due from
VIBC or VIB to any employee of VIBC or VIB.
4.26 MINUTE BOOKS. The minute books of VIBC and VIB accurately reflect
all material actions duly taken by the shareholders, Boards of Directors and
committees of VIBC or VIB, as applicable, and contain true and complete copies
of VIBC's and VIB's Articles of Incorporation and Bylaws and all amendments
thereto.
4.27 ACCOUNTING RECORDS; DATA PROCESSING. VIBC and VIB have records
that, in all material respects, fairly reflect their transactions and accounting
controls sufficient to ensure that such transactions are in all material
respects: (a) executed in accordance with management's general or specific
authorization; and (b) recorded in conformity with generally accepted accounting
principles. Schedule 4.27 contains a true and correct copy of Maslac &
Associates' most recent audit of VIBC's data processing system. Except as set
forth in Schedule 4.27, the procedures and equipment, including, without
limitation, the data processing equipment, data transmission equipment, and
related peripheral equipment and software, used by VIBC and VIB in the operation
of their businesses (including any disaster recovery facility) to generate and
retrieve such records are adequate in relation to the size and complexity of the
business of VIBC and VIB.
4.28 OPERATING LOSSES. Schedule 4.28 sets forth any individual
Operating Loss in excess of $500.00 that has occurred at VIB during the period
after December 31, 1997. Except as set forth on Schedule 4.28, since December
31, 1997, no event has occurred, and no action has been taken or omitted to be
taken by any employee of VIBC or VIB that has resulted in the occurrence by VIB
of an Operating Loss or that might reasonably be expected to result in the
occurrence by VIB of an Operating Loss after December 31, 1997, which, net of
any insurance proceeds payable in respect thereof, exceeds, or would exceed
$50,000 by itself or $250,000 when aggregated with all other Operating Losses
during such period.
4.29 CRA STANDING. VIB's compliance under the CRA should not constitute
grounds for either the denial by any regulatory agency of any application to
consummate the Transactions contemplated by this Agreement or the imposition of
a materially burdensome condition in connection
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with the approval of any such application. VIB has not been advised of any
concerns regarding compliance with the CRA by any regulatory agency or any other
person.
4.30 YEAR 2000 MATTERS. VIBC and VIB have completed a review of their
computer systems to identify systems that could be affected by the "Year 2000."
The respective management of each of VIBC and VIB has developed and commenced
implementation of a plan to respond to this issue. Between the date of this
Agreement and the Effective Time of the Merger, VIBC and VIB shall each use
commercially practicable efforts to implement and/or continue to undertake such
a plan. Neither VIBC nor VIB has been advised by any regulatory authority to
undertake any additional actions nor are either of VIBC or VIB subject to any
regulatory order, memorandum or directive (other than directives of general
applicability to financial institutions) with respect thereto. Year 2000 issues
have not had, and are not reasonably expected to have, a material adverse effect
on VIBC or VIB.
4.31 ACCURACY AND CURRENTNESS OF INFORMATION FURNISHED. The
representations and warranties made by VIBC hereby and in the schedules hereto
contain no statements of fact which are untrue or misleading, or omit to state
any material fact which is necessary under the circumstances to prevent the
statements contained herein or in such schedules from being misleading. VIBC
hereby covenants that it shall, as of the Effective Time of the Merger, amend
and/or supplement the schedules prepared and delivered pursuant to this Article
IV to ensure that the information set forth in such schedules accurately
reflects the then-current status of VIBC or VIB.
4.32 EFFECTIVE DATE OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. Each representation, warranty, covenant and agreement of VIBC set
forth in this Agreement shall be deemed to be made on and as of the date hereof
and, as subsequently amended and/or supplemented as provided in Section 4.31, as
of the Effective Time of the Merger.
ARTICLE V
COVENANTS OF BOS PRIOR TO CLOSING
BOS hereby covenants and agrees with VIBC as follows:
5.1 BUSINESS RECORDS AND INFORMATION. During the period commencing on
the date hereof, and ending on the Closing Date, BOS will afford VIBC, its
representatives, counsel, accountants, agents and employees reasonable access
during normal business hours to all of its business, operations, properties,
books, files and records and will do everything reasonably necessary to enable
VIBC and its representatives, counsel, accountants, agents and employees to make
a complete examination of the financial statements, business, operations, assets
and properties of BOS and the conditions thereof, and to update such examination
at such reasonable intervals as VIBC shall deem appropriate. Such examination
shall be conducted in cooperation with the officers of BOS in such a manner as
to minimize, to the extent possible consistent with the conducting of a
comprehensive examination, any disruption of or interference with the normal
business operations of BOS. No such examination or VIBC's examination prior to
the date of this Agreement, however, shall constitute a waiver or relinquishment
on the part of VIBC of its right to rely upon the representations, warranties or
covenants made by BOS herein or pursuant hereto. BOS will permit an authorized
representative or representatives of VIBC, designated as such from time to time
by
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VIBC's President (the "VIBC Representative") access during normal business hours
to all of its business, operations, properties, books, files and records for the
additional purpose of rendering any approvals required of VIBC by BOS pursuant
to Section 5.2. BOS will use its best efforts to have the VIBC Representative or
another authorized representative available during BOS's normal business hours
to render approvals required pursuant to Section 5.2. In addition, BOS shall
provide VIBC and the VIBC Representative with three days' notice of all regular
meetings of its Board of Directors and notice, at the same time notice is given
to members, of any committee meeting, and the earliest possible notice of all
special meetings of its Board of Directors. BOS will permit the VIBC
Representative to attend and observe all Board and committee meetings (except
during confidential discussions regarding the Merger), and BOS shall indemnify
and hold harmless VIBC, BOS Interim Bank and the VIBC Representative in
connection with actions taken by BOS (i) pursuant to any approvals obtained
pursuant to Section 5.2 or (ii) during any Board or committee meetings attended
and observed by the VIBC Representative. It is agreed and acknowledged by BOS
that any such indemnification may be deemed a material adverse change pursuant
to Section 8.3 hereof. BOS will hold in strict confidence all documents and
information concerning VIBC or VIB obtained pursuant to Section 6.1 or obtained
previously pursuant to a Letter of Understanding dated June 22, 1998 and will
not use such documents or information for its own benefit (except to the extent
that such documents or information are a matter of public record or require
disclosure in any application necessary to obtain regulatory approval of the
Transactions contemplated by this Agreement) and, if the Transactions
contemplated herein are not consummated, such confidence shall be maintained and
all such documents shall be returned to VIBC, without any copies being retained
by BOS and BOS shall destroy any document, memoranda, notes and other writings
whatsoever prepared by BOS or any of its agents relating to or containing the
confidential information promptly upon notice by VIBC. Upon request by VIBC,
such destruction shall be certified in writing to VIBC by an authorized officer
of BOS supervising such destruction.
5.2 LIMITATIONS UPON BOS PRIOR TO CLOSING. Except as required by this
Agreement, between the date hereof and the Closing Date, without the prior
written consent of VIBC, which shall not be unreasonably withheld and which
shall be deemed granted if within five days after receipt of written request
refusal of such written consent is not received from VIBC by BOS, BOS shall not
do any of the following:
(a) Create or take action to incur any liabilities in excess
of $25,000 or having a term in excess of one year, other than
liabilities incurred in the ordinary course of business or in
connection with the creation or performance of this Agreement;
(b) Except in the usual or ordinary course of business, create
or incur or suffer to exist any mortgage, lien, pledge, security
interest, charge, encumbrance or restriction of any kind against or in
respect of any property or right of BOS securing an obligation in
excess of $25,000 or having a term in excess of one year, and except
for a pledge of security interests given in connection with the
acceptance of repurchase agreements or government deposits;
(c) Make or become a party to any contract or commitment in
excess of $25,000 or having a term in excess of one year, or renew,
extend, amend or modify any contract or commitment in excess of
$25,000, except in the usual and ordinary course of business or except
in connection with the Transactions contemplated in this Agreement or
the Merger Agreement;
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(d) Make any loan, loan commitment, or renewal or extension
thereof ("Loan") to any person or entity, which, individually or when
aggregated with all other outstanding Loans made by BOS to such person
or entity, exceeds $600,000, or make any Loan to any of its directors
or executive officers;
(e) Purchase any loan participation interest in excess of
$200,000;
(f) File a notice of default on any delinquent real estate
secured loan with a principal balance of $200,000 or more;
(g) Make any capital expenditures in excess of $25,000, except
for ordinary and necessary repairs and replacements;
(h) Sell or otherwise dispose of any of its assets or
properties in excess of $25,000 in value, except in the usual and
ordinary course of its business, or charge off any of its assets or
properties in excess of $25,000 in value;
(i) Declare or pay any dividend (cash, in kind, or stock) or
make any other distribution upon, or purchase or redeem, any shares of
BOS Stock;
(j) Except as contemplated herein, issue or sell or obligate
itself to issue or sell any shares of BOS Stock or any other securities
including, without limitation, any capital notes, or any warrants,
rights or options to acquire any shares of BOS Stock or other
securities otherwise than pursuant to this Agreement; except pursuant
to the exercise of the stock options set forth in Schedule 3.24;
(k) Acquire capital stock of any corporation or any interest
in any person except in the usual and ordinary course of its business;
(l) Amend its Charter or Bylaws, except for such amendments as
contemplated by this Agreement;
(m) Grant any salary increase or enter into or amend, except
as may be required by applicable law, any bonus, incentive
compensation, deferred compensation, pension, profit sharing,
retirement, group insurance or other benefit plan or any employment
agreement or consulting agreement or amend its Personnel Policy where
the individual or aggregate cost to BOS is increased, except as
approved by VIBC, which approval shall not be unreasonably withheld;
(n) Pay any obligation or liability, absolute or contingent,
in excess of $25,000 except liabilities shown on the BOS Financial
Statements, or except in the usual and ordinary course of business or
in connection with the Transactions contemplated herein;
(o) Institute, settle or agree to settle any claim, action or
proceeding involving an expenditure by BOS or waiver of its claims in
excess of $25,000 before any court or governmental agency, except in
the usual and ordinary course of its business;
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(p) Invest in any real estate except upon the foreclosure of
loans in the ordinary course of business, or acceptance of a deed in
lieu of foreclosure, in the ordinary course of business;
(q) Except in the usual and ordinary course of its business,
enter into any continuing contract or series of related contracts in
excess of $25,000 for the purchase of materials, supplies, equipment or
services which cannot be terminated without cause and without payment
of any amount as a penalty, bonus, premium or other compensation for
such termination;
(r) Except as contemplated in Section 5.8 hereof, enter into
or amend any contract or agreement (other than loans or bank accounts)
with any officer, director or any affiliate of such person on terms
that are less favorable to BOS than could be obtained from an unrelated
third party on an arm's-length basis;
(s) File any applications for additional branches or to
relocate operations from any existing location, except as contemplated
herein;
(t) Change any of BOS's basic policies and practices with
respect to liquidity management and cash flow planning, marketing,
deposit origination, lending, budgeting, profit and tax planning,
personnel practices, accounting or any other material aspect of its
business or operations, except such change as may be required in the
opinion of BOS's management to respond to economic or market conditions
or as may be required by the rules of the AICPA or FASB, by applicable
law, or by bank regulatory authorities;
(u) Knowingly default in any material respect under any
Understanding to which BOS is a party, and which, individually or
together with other Understandings with respect to which a default by
BOS exists, would materially adversely affect the business, properties,
prospects or financial condition of BOS taken as a whole; or
(v) Conduct its business in a manner that would violate its
Charter or Bylaws or would materially violate or be in material
conflict with any law, ordinance, rule or regulation of any applicable
federal or state authority; provided, however, that no exception to
this Section 5.2(v) shall constitute a waiver of any rights of VIBC
under any other provision of this Agreement.
5.3 AFFIRMATIVE CONDUCT OF BOS PRIOR TO CLOSING. Between the date
hereof and the Closing Date, BOS shall:
(a) Use its best efforts to obtain as expeditiously as
possible and cooperate with others to expeditiously bring about the
satisfaction of the conditions and approvals specified in Articles VII,
VIII, IX and X hereof and advise VIBC promptly in writing of any matter
which would make the representations and warranties set forth in
Article III hereof not true and correct in all material respects at the
Closing;
(b) Use and devote its best efforts consistent with this
Agreement to maintain and preserve intact its present business
organization and to maintain and preserve its relationships
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and goodwill with account holders, borrowers, employees and others
having business relationships with it;
(c) Carefully prepare or review and make available to VIBC
prior to filing all federal, state and local tax returns and reports to
government authorities regarding BOS required to be filed by it between
the date hereof and the Closing;
(d) Furnish VIBC with such financial and other information
with respect to BOS and its properties, business and operations as in
the reasonable opinion of VIBC, counsel for VIBC and counsel for BOS
shall be necessary in order to prepare applications for and obtain the
permits, approvals, nondisapprovals, consents and authorizations
referred to in Article X hereof; such information will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
information contained therein not misleading;
(e) Provide VIBC and the VIBC Representative with BOS's
monthly Board package and all committee meeting packages at the time
provided to BOS's directors (excluding any confidential information
regarding the transactions contemplated hereby);
(f) Provide VIBC all monthly new loan reports, all monthly
past due loan reports, all listings of any new loans placed on
non-accrual, all monthly watchlist reports, and all listings of loans
greater than $100,000 that have been downgraded within two days of when
such reports are prepared;
(g) Provide VIBC with five days' notice and, subject to any
limitation or prohibition of any so-called "right to privacy" law, a
copy of the applicable credit report prior to making any Loan to any
person or entity which, individually or when aggregated with all other
outstanding Loans made by BOS to such person or entity, exceeds
$450,000;
(h) Provide VIBC with five days' notice prior to purchasing or
selling any loan participation interest;
(i) Provide VIBC with five days' notice prior to initiating
any action to foreclose on real estate or personal property collateral
and provide VIBC with monthly status reports on all foreclosed
properties;
(j) Provide VIBC with qualified appraisals on all newly
acquired foreclosed properties and on all existing foreclosed
properties where appraisals are or become more than 12 months old;
(k) Maintain insurance coverage at least equal to that now in
effect on all of its properties and on all properties for which it is
responsible, and carry not less than the same coverage for fidelity,
directors and officers, public liability, personal injury and property
damage that is presently in effect;
(l) Duly observe and conform to lawful requirements applicable
to its business in all material respects;
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(m) Maintain its books of account and records in the regular
manner in accordance with generally accepted accounting principles,
with all applicable statutory and regulatory requirements applied on a
consistent basis;
(n) Provide VIBC with an independent third-party's
profitability analysis of the BOS Mortgage Department, and provide such
analysis to VIBC no later than when BOS provides the analysis to the
OTS;
(o) Following receipt of regulatory approval and the
satisfaction of all other conditions precedent to the Closing and
immediately prior to the Effective Time of the Merger, BOS shall
increase its reserves for possible loan losses by $300,000. These
reserves shall be additive to those provisions contained in BOS's 1998
Operating Plan; and
(p) Notify VIBC by telephone, confirmed promptly in writing,
of any breach or violation on BOS's part of any covenant contained
herein, or of the occurrence of an event which would cause any
warranties or representations made by BOS herein to be or become false
or misleading, or if BOS becomes a party or is threatened with becoming
a party to any legal or equitable proceeding or governmental
investigation, or upon the occurrence of any event which would result
in a material change in the circumstances of BOS described in the
representations and warranties contained herein.
5.4 INDEMNIFICATION. BOS hereby agrees to indemnify and hold harmless
VIBC against, and with respect to, any liability, damages, losses, expenses or
costs arising from or by virtue of any misstatement or omission to state any
fact which is required to be disclosed by BOS for purposes of the inclusion of
such information in any regulatory filing made on behalf of the parties hereto
for the purpose of effecting the terms of this Agreement and consummating the
Transactions contemplated herein and for any material breach of any
representation, warranty, covenant or agreement of BOS under this Agreement.
5.5 EXECUTE AGREEMENT TO MERGE. As soon as possible after receipt of
approval of the OTS to organize BOS Interim Bank, BOS shall execute the Merger
Agreement.
5.6 DISCUSSION WITH THIRD PARTIES.
(a) STRATEGIC TRANSACTIONS. BOS: (i) shall not, and shall
instruct and cause each of its directors, officers, employees, agents,
representatives and advisors ("Representatives") not to, solicit or
encourage, directly or indirectly, inquires or proposals with respect
to any Strategic Transaction Proposal (as hereinafter defined); and
(ii) except as expressly permitted by Section 5.6(b), shall not, and
shall instruct and cause each of its Representatives not to, furnish
any non-public information relating to or participate in any
negotiations, discussions or other activities concerning, any Strategic
Transaction (as hereinafter defined) with any party other than VIBC.
BOS shall notify VIBC promptly after any Strategic Transaction Proposal
is received by, or any negotiations or discussions regarding a
Strategic Transaction Proposal are sought to be initiated with,
directly or indirectly, BOS or any of its Representatives, and shall
disclose to VIBC the identity of the third party making or seeking to
make such Strategic Transaction Proposal, the terms and conditions
thereof and such other information as VIBC reasonably may request;
provided, however, that if BOS receives a
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Strategic Transaction Proposal and the foregoing disclosure of such
Strategic Transaction Proposal to VIBC would violate a confidentiality
agreement by which BOS is bound, BOS (i) shall make the foregoing
disclosure only to the maximum extent permissible under such
confidentiality agreement, (ii) shall return such Strategic Transaction
Proposal to the initiating party without substantive response, and
(iii) to the extent such disclosure has not been made under clause (i)
of this sentence, shall notify VIBC that a Strategic Transaction
Proposal has been received and that the same has been returned to the
initiating party without substantive response. A "Strategic Transaction
Proposal" means any proposal regarding a Strategic Transaction. For
purposes of this Section 5.6, a "Strategic Transaction" means any
acquisition or purchase of all or a significant (i.e., more than 5%)
portion of the assets of or a significant equity interest in, BOS or
any merger or other business combination involving BOS or any
recapitalization involving BOS resulting in an extraordinary dividend
or distribution to BOS's shareholders or a self-tender for or
redemption of some or all of the outstanding shares of BOS Stock.
(b) QUALIFYING PROPOSAL. Notwithstanding Section 5.6(a),
following receipt of a Qualifying Strategic Transaction Proposal (as
hereinafter defined), neither BOS nor any of its Representatives shall
be prohibited from (i) engaging in discussions or negotiations with a
third party which has made a proposal that satisfies the requirements
of a Qualifying Strategic Transaction Proposal and thereafter providing
to such third party information previously provided or made available
to VIBC, provided the third party shall have entered into a
confidentiality agreement, (ii) taking and disclosing to BOS's
shareholders a position contemplated by Rule 14e-2(a) under the
Securities Exchange Act of 1934, or otherwise making disclosure of the
Qualifying Strategic Transaction Proposal to BOS's shareholders, or
(iii) subject to the terms of Section 11.1(d), terminating this
Agreement. For purposes of this Section 5.6, a "Qualifying Strategic
Transaction Proposal" shall mean a bona fide written Strategic
Transaction Proposal with respect to which BOS's Board of Directors
shall have determined, after consultation with BOS's counsel, that the
action by BOS contemplated under either clause (i), (ii) or (iii), as
applicable, of the immediately preceding sentence is required under the
fiduciary duties owed by the Board of Directors to the holders of BOS
Stock, which determination has been made acting in good faith and on
the basis of a written opinion from a financial advisor retained by BOS
to the effect that the financial terms of such Strategic Transaction
Proposal are, from BOS's shareholders' perspective, superior to the
Merger.
(c) DISCLOSURE AND TRADING. Upon receipt of the disclosure by
VIBC of a Strategic Transaction Proposal involving VIBC or any
subsidiary thereof or a VIBC Acquisition Transaction (as that term is
defined in Section 6.5(c) hereof), BOS, its executive officers and
directors shall, and each hereby agrees to, maintain the
confidentiality of all non-public information regarding the Strategic
Transaction Proposal involving VIBC or any subsidiary thereof or the
VIBC Acquisition Transaction to the same extent as required of VIBC
and/or any subsidiary thereof under the terms of any confidentiality
agreement to which VIBC and/or any subsidiary is a party or is bound
and to refrain from trading in VIBC Stock, BOS Stock and the securities
of the party or parties to the Strategic Transaction Proposal or the
VIBC Acquisition Transaction until the earlier of: (i) full public
disclosure of such non-public information has been made and trading in
the subject securities would not be a violation of applicable
securities laws; or (ii) the Strategic Transaction Proposal or the VIBC
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Acquisition Transaction has been terminated or has expired by its terms
and disclosure of such non-public information is permitted under the
terms of any agreement regarding the transaction and trading in the
subject securities would not be a violation of applicable securities
laws.
5.7 STOCK OPTION PLANS. BOS shall cause its 1985 and 1995 Stock Option
Plans to be terminated as of or prior to the Closing Date. To the extent any
heretofore outstanding options are not exercised, such options will be converted
into VIBC stock options pursuant to Section 1.7 of this Agreement.
5.8 CHANGE IN CONTROL AND SALARY CONTINUATION AGREEMENTS. BOS shall
take all steps necessary and appropriate to amend each of its outstanding Change
in Control Agreements and Salary Continuation Agreements to change the
definitions of "good reason" in the following respects: (i) Paragraph 5.4.1 of
the Salary Continuation Agreements and Paragraph 3(d)(i) of the Change in
Control Agreements shall be amended to read as follows:
"the permanent assignment of the Executive by the Company
employing the Executive to duties materially inconsistent
with, or which substantially or materially alters the nature
or status of the Executive's responsibilities immediately
prior to a Change in Control of the Company."
(ii) Paragraph 5.4.4 of the Salary Continuation Agreements and Paragraph
3(a)(iv) of the Change in Control Agreements shall be amended to read as
follows:
"the Company is requiring the Executive to relocated, or the
assignment to the Executive of duties that reasonably require
the Executive to relocated, to any place other than the
Bakersfield, California, metropolitan area."
and (iii) a new Paragraph 5.4.8 of the Salary Continuation Agreements and a new
Paragraph 3(d)(viii) of the Change in Control Agreements shall be added to read
as follows:
"the Company requiring the Executive to travel a substantial
amount of time, except for travel related to corporate
meetings and temporary assignments, to an extent substantially
inconsistent with Executive's business travel obligations at
the time of a Change in Control of the Company."
5.9 PROXY STATEMENT. The proxy statement and/or any other materials or
documents (collectively, the "Proxy Materials") to be used in connection with
the shareholders' meeting required pursuant to Section 7.1 hereof, with respect
to all information set forth therein relating to BOS, the Agreement, the Merger
Agreement and the Transactions, at the time of mailing to shareholders and at
the time of the shareholders' meetings, shall:
(a) Comply in all material respects with the provisions of all
applicable laws and regulations; and
(b) Except with respect to any information regarding VIBC or
VIB supplied to BOS by VIBC for inclusion in the Proxy Materials, not
contain any statement which, at the
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time and in light of the circumstances under which it is made, is false
or misleading with respect to any material fact or not omit to state
any material fact necessary in order to make the statements therein not
false or misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of a proxy for
the same meeting or subject matter that has become false or misleading.
ARTICLE VI
COVENANTS OF VIBC PRIOR TO CLOSING
VIBC hereby covenants and agrees with BOS as follows:
6.1 BUSINESS RECORDS AND INFORMATION. During the period commencing on
the date hereof, and ending on the Closing Date, VIBC will afford BOS, its
representatives, counsel, accountants, agents and employees reasonable access
during normal business hours to all of its business, operations, properties,
books, files and records and will do everything reasonably necessary to enable
BOS and its representatives, counsel, accountants, agents and employees to make
a complete examination of the financial statements, business, operations, assets
and properties of VIBC and VIB and the conditions thereof, and to update such
examination at such intervals as BOS shall deem appropriate. Such examination
shall be conducted in cooperation with the officers of VIBC or VIB in such a
manner as to minimize, to the extent possible consistent with the conducting of
a comprehensive examination, any disruption of or interference with the normal
business operations of VIBC or VIB. No such examination or BOS's examination
prior to the date of this Agreement, however, shall constitute a waiver or
relinquishment on the part of BOS of its right to rely upon the representations,
warranties or covenants made by VIBC herein or pursuant hereto. VIBC will hold
in strict confidence all documents and information concerning BOS obtained
pursuant to Section 5.1 or obtained previously pursuant to a Letter of
Understanding dated June 22, 1998 and will not use such documents or information
for its own benefit (except to the extent that such documents or information are
a matter of public record or require disclosure in any application necessary to
obtain regulatory approval of the Transactions contemplated by this Agreement)
and, if the Transactions contemplated herein are not consummated, such
confidence shall be maintained and all such documents and any documents provided
pursuant to Section 5.3(d) shall be returned to BOS, without any copies being
retained by VIBC and VIBC shall destroy any document, memoranda, notes and other
writings whatsoever prepared by VIBC or any of its agents relating to or
containing the confidential information promptly upon notice by BOS. Upon
request by BOS, such destruction shall be certified in writing to BOS by an
authorized officer of VIBC supervising such destruction.
6.2 LIMITATIONS UPON VIBC PRIOR TO CLOSING. Except as required by this
Agreement, between the date hereof and the Closing Date, without the prior
written consent of BOS, which shall not be unreasonably withheld and which shall
be deemed granted if within ten days after receipt of written request refusal of
such written consent is not received from BOS by VIBC, VIBC shall not do any of
the following:
(a) Create or take action to incur any liabilities in excess
of $1,000,000 or having a term in excess of one year, other than
liabilities incurred in the ordinary course of business or in
connection with the creation or performance of this Agreement;
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(b) Except in the usual or ordinary course of business, create
or incur or suffer to exist any mortgage, lien, pledge, security
interest, charge, encumbrance or restriction of any kind against or in
respect of any property or right of VIBC securing an obligation in
excess of $1,000,000, or having a term in excess of one year, and
except for a pledge of security interests given in connection with the
acceptance of repurchase agreements or government deposits;
(c) Make or become a party to any contract or commitment in
excess of $1,000,000 or having a term in excess of one year, or renew,
extend, amend or modify any contract or commitment in excess of
$1,000,000, except in the usual and ordinary course of business or in
connection with the Transaction and as contemplated by this Agreement
or the Merger Agreement;
(d) Make any capital expenditures in excess of $1,000,000,
except for ordinary and necessary repairs and replacements;
(e) Sell or otherwise dispose of any of its assets or
properties in excess of $1,000,000 in value, except in the usual and
ordinary course of its business;
(f) Pay any obligation or liability, absolute or contingent,
in excess of $1,000,000 except liabilities shown on the VIBC Financial
Statements, or except in the usual and ordinary course of business or
in connection with the Transactions contemplated herein;
(g) Institute, settle or agree to settle any claim, action or
proceeding involving an expenditure by VIBC or VIB or waiver of its
claims in excess of $500,000 before any court or governmental agency,
except in the usual and ordinary course of its business;
(h) Enter into or amend any contract or agreement (other than
loans or bank accounts) with any officer, director or principal
shareholder of VIBC or VIB or any affiliate of such person on terms
that are less favorable to VIBC or VIB than could be obtained from an
unrelated third party on an arm's-length basis;
(i) Change any of VIBC's or VIB's basic policies and practices
with respect to liquidity management and cash flow planning, marketing,
deposit origination, lending, budgeting, profit and tax planning,
personnel practices, accounting or any other material aspect of their
business or operations, except such change as may be required in the
opinion of VIBC's or VIB's management to respond to economic or market
conditions or as may be required by the rules of the AICPA or FASB, by
applicable law, or by bank regulatory authorities;
(j) Knowingly default in any material respect under any
Understanding to which VIBC or VIB is a party, and which, individually
or together with other Understandings with respect to which a default
by VIBC or VIB exists, would materially adversely affect the business,
properties, prospects or financial condition of VIBC taken as a whole;
or
(k) Conduct their business in a manner that would violate
their Articles of Incorporation or Bylaws or would materially violate
or be in material conflict with any law,
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ordinance, rule or regulation of any applicable federal or state
authority; provided, however, that no exception to this Section 6.2(k)
shall constitute a waiver of any rights of BOS under any other
provision of this Agreement.
6.3 AFFIRMATIVE CONDUCT OF VIBC PRIOR TO CLOSING. Between the date
hereof and the Closing Date, VIBC shall:
(a) Use its best efforts to obtain as expeditiously as
possible and cooperate with others to expeditiously bring about the
satisfaction of the conditions and approvals specified in Articles VII,
VIII, IX and X hereof, including the organization of BOS Interim Bank,
and advise BOS promptly in writing of any matter which would make the
representations and warranties set forth in Article IV hereof not true
and correct in all material respects at the Closing;
(b) Use and devote its best efforts consistent with this
Agreement to maintain and preserve intact its present business
organization and to maintain and preserve its relationships and
goodwill with account holders, borrowers, employees and others having
business relationships with it;
(c) Furnish BOS with such financial and other information with
respect to VIBC and its properties, business and operations as in the
reasonable opinion of BOS, counsel for BOS and counsel for VIBC shall
be necessary in order to prepare applications for and obtain the
permits, approvals, nondisapprovals, consents and authorizations
referred to in Article X hereof; such information will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
information contained therein not misleading;
(d) Maintain its and VIB's insurance coverage at least equal
to that now in effect on all of their properties and on all properties
for which they are responsible, and carry the same coverage for
fidelity, directors and officers, public liability, personal injury and
property damage that is presently in effect;
(e) Duly observe and conform to lawful requirements applicable
to its and VIB's business in all material respects;
(f) Maintain its and VIB's books of account and records in the
regular manner in accordance with generally accepted accounting
principles, with all applicable statutory and regulatory requirements
applied on a consistent basis; and
(g) Notify BOS by telephone, confirmed promptly in writing, of
any breach or violation on VIBC's part of any covenant contained
herein, or of the occurrence of an event which would cause any
warranties or representations made by VIBC herein to be or become false
or misleading, or if VIBC becomes a party or is threatened with
becoming a party to any legal or equitable proceeding or governmental
investigation, or upon the occurrence of any event which would result
in a change in the circumstances of VIBC described in the
representations and warranties contained herein.
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6.4 INDEMNIFICATION. VIBC hereby agrees to indemnify and hold harmless
BOS against, and with respect to, any liability, damages, losses, expenses or
costs arising from or by virtue of any misstatement or omission to state any
fact which is required to be disclosed by VIBC for purposes of the inclusion of
such information in any regulatory filing made on behalf of the parties hereto
for the purpose of effecting the terms of this Agreement and consummating the
Transactions contemplated herein and for any material breach of any
representation, warranty, covenant or agreement of VIBC under this Agreement.
6.5 DISCUSSION WITH THIRD PARTIES.
(a) STRATEGIC TRANSACTIONS. VIBC and VIB: (i) shall not, and
shall instruct and cause each of their Representatives not to, solicit
or encourage, directly or indirectly, inquires or proposals with
respect to any Strategic Transaction Proposal (as hereinafter defined);
and (ii) except as expressly permitted by Section 6.5(b), shall not,
and shall instruct and cause each of their Representatives not to,
furnish any non-public information relating to or participate in any
negotiations, discussions or other activities concerning, any Strategic
Transaction (as hereinafter defined) with any party other than BOS.
VIBC and VIB shall notify BOS promptly after any Strategic Transaction
Proposal is received by, or any negotiations or discussions regarding a
Strategic Transaction Proposal are sought to be initiated with,
directly or indirectly, VIBC or VIB or any of their Representatives,
and shall disclose to BOS the identity of the third party making or
seeking to make such Strategic Transaction Proposal, the terms and
conditions thereof and such other information as BOS reasonably may
request; provided, however, that if VIBC or VIB receives a Strategic
Transaction Proposal and the foregoing disclosure of such Strategic
Transaction Proposal to BOS would violate a confidentiality agreement
by which VIBC or VIB is bound, VIBC (i) shall make the foregoing
disclosure only to the maximum extent permissible under such
confidentiality agreement, (ii) shall return such Strategic Transaction
Proposal to the initiating party without substantive response, and
(iii) to the extent such disclosure has not been made under clause (i)
of this sentence, shall notify BOS that a Strategic Transaction
Proposal has been received and that the same has been returned to the
initiating party without substantive response. A "Strategic Transaction
Proposal" means any proposal regarding a Strategic Transaction. For
purposes of this Section 6.5, a "Strategic Transaction" means any
acquisition or purchase of all or a significant (i.e., more than 5%)
portion of the assets of or a significant equity interest in, VIBC or
VIB or any merger or other business combination involving VIBC or VIB
or any recapitalization involving VIBC or VIB resulting in an
extraordinary dividend or distribution to VIBC's or VIB's shareholders
or a self-tender for or redemption of some or all of the outstanding
shares of VIBC Stock.
(b) QUALIFYING PROPOSAL. Notwithstanding Section 6.5(a),
following receipt of a Qualifying Strategic Transaction Proposal (as
hereinafter defined), neither VIBC, VIB, nor any of their
Representatives shall be prohibited from (i) engaging in discussions or
negotiations with a third party which has made a proposal that
satisfies the requirements of a Qualifying Strategic Transaction
Proposal and thereafter providing to such third party information
previously provided or made available to BOS, provided the third party
shall have entered into a confidentiality agreement, (ii) taking and
disclosing to VIBC's shareholders a position contemplated by Rule
14e-2(a) under the Exchange Act, or otherwise making disclosure of the
Qualifying Strategic Transaction Proposal to VIBC's shareholders, or
(iii)
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subject to the terms of Section 11.1(e) terminating this Agreement. For
purposes of this Section 6.5, a "Qualifying Strategic Transaction
Proposal" shall mean a bona fide written Strategic Transaction Proposal
with respect to which VIBC's Board of Directors shall have determined,
after consultation with VIBC's counsel, that the action by VIBC
contemplated under either clause (i), (ii) or (iii), as applicable, of
the immediately preceding sentence is required under the fiduciary
duties owed by the Board of Directors to the holders of VIBC Stock,
which determination has been made acting in good faith and on the basis
of a written opinion from a financial advisor retained by VIBC to the
effect that the financial terms of such Strategic Transaction Proposal
are, from VIBC's shareholders' perspective, superior to the Merger.
(c) VIBC ACQUISITION TRANSACTION. Notwithstanding Sections
6.5(a) or (b) hereof, VIBC or VIB shall be permitted to and may cause
their Representatives to solicit, encourage, discuss, negotiate, enter
into agreements, and carry out and complete transactions regarding a
VIBC Acquisition Transaction; provided, however, that should VIBC enter
into or modify any agreement, or complete without any agreement, any
VIBC Acquisition Transaction which has a material adverse effect upon
VIBC or the Transactions contemplated by this Agreement and the Merger
Agreement without written approval of BOS, then such action shall
constitute a breach under this Agreement giving rise to a right of
termination by BOS in accordance with Section 11.1(e) of this
Agreement. For purposes of this Agreement, the term "VIBC Acquisition
Transaction" shall mean: (i) a merger or consolidation or any similar
transaction where VIBC or any of its subsidiaries will be the surviving
or resulting corporation or where the holders of VIBC Stock or any of
VIBC's subsidiaries immediately prior to the completion of the
transaction will own 50% or more of the surviving or resulting
corporation immediately after the completion of the transaction, (ii) a
purchase, lease or other acquisition of all or substantially all of the
assets of or assumption of all or substantially all the deposits of
another corporation, partnership or limited liability company which
business is permissible under the Bank Holding Company Act of 1956, as
amended, and Regulation Y promulgated pursuant thereto, or (iii) the
purchase or other acquisition of securities representing 10% or more of
the voting power of another corporation, partnership or limited
liability company which business is permissible under the Bank Holding
Company Act of 1956, as amended and Regulation Y promulgated pursuant
thereto. VIBC shall promptly notify BOS of any VIBC Acquisition
Transaction and shall disclose to BOS the identity of the party or
parties to the transaction, and the terms and conditions thereof. To
the extent VIBC makes a disclosure of any non-public information to
BOS, its executive officers and/or directors, then BOS and its
executive officers and directors shall, and each hereby agrees to,
maintain the confidentiality of all non-public information regarding
the VIBC Acquisition Transaction so disclosed and to refrain from
trading in VIBC Stock, BOS Stock and the securities of the party or
parties to the VIBC Acquisition Transaction so disclosed in accordance
with the provisions of Section 5.6(c) hereof.
(d) DISCLOSURE AND TRADING. Upon receipt of the disclosure by
BOS of a Strategic Transaction Proposal involving BOS, VIBC, its
executive officers and directors shall, and each hereby agrees to,
maintain the confidentiality of all non-public information regarding
the Strategic Transaction Proposal involving BOS to the same extent as
required of BOS under the terms of any confidentiality agreement to
which BOS is a party or is bound and to refrain from trading in VIBC
Stock, BOS Stock and the securities of the party or
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parties to the Strategic Transaction Proposal until the earlier of: (i)
full public disclosure of such non-public information has been made and
trading in the subject securities would not be a violation of all
applicable securities laws, or (ii) the Strategic Transaction Proposal
has been terminated or has expired by its terms and disclosure of such
non-public information is permitted under the terms of any agreement
regarding the transaction and trading in the subject securities would
not be a violation of applicable securities laws.
6.6 STOCK OPTION PLAN. VIBC shall take all actions necessary for the
issuance of replacement stock options to holders of stock options pursuant to
BOS's 1985 and 1995 Stock Option Plans in accordance with Section 1.7 hereof.
6.7 PREPARATION OF S-4 AND THE PROXY STATEMENT. VIBC shall promptly
prepare and file with the SEC a Registration Statement on Form S-4, in which the
Proxy Statement prepared jointly by BOS and VIBC will be included. Each of VIBC
and BOS shall use its best efforts to have the S-4 declared effective under the
Securities Act of 1933, as amended, as promptly as practicable after such
filing. VIBC shall also take any action (other than qualifying to do business in
any jurisdiction in which it is now not so qualified) required to be taken under
any applicable state securities laws in connection with the issuance of VIBC
Common Stock in the Merger, and BOS shall furnish all information concerning BOS
and the holders of BOS Common Stock as may be reasonably requested in connection
with any such action.
6.8 PROXY STATEMENT. The Proxy Materials to be used in connection with
the shareholders' meetings required pursuant to Section 7.1 hereof, with respect
to all information set forth therein relating to VIBC, the Agreement, the Merger
Agreement and the Transactions, at the time of mailing to shareholders and at
the time of the shareholders' meetings, shall:
(a) Comply in all material respects with the provisions of all
applicable laws and regulations; and
(b) Except with respect to any information regarding BOS
supplied to VIBC by BOS for inclusion in the Proxy Materials, not
contain any statement which, at the time and in light of the
circumstances under which it is made, is false or misleading with
respect to any material fact or not omit to state any material fact
necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of a proxy for the same
meeting or subject matter that has become false or misleading.
ARTICLE VII
MEETINGS OF SHAREHOLDERS AND FEDERAL SECURITIES LAWS
VIBC and BOS each covenant and agree with the other as follows:
7.1 SHAREHOLDERS' MEETINGS. BOS and VIBC will, promptly after execution
of this Agreement, cause a meeting of their shareholders (hereinafter referred
to as the "BOS Meeting" and the "VIBC Meeting," respectively) to be duly called
and held upon requisite notice for the purpose of:
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(a) Authorizing and approving this Agreement and the
Transactions contemplated herein; and
(b) Conducting such other business as its Board of Directors
deems advisable and proper in connection therewith.
Each of BOS and VIBC, through its Board of Directors, will recommend
that its shareholders approve the Transactions contemplated hereby, and will use
its best efforts to obtain the affirmative votes of the holders of the largest
possible percentage of its outstanding shares of common stock.
7.2 FEDERAL SECURITIES LAWS. In obtaining the consents of their
shareholders to the matters described in Section 7.1 hereof, VIBC and BOS and
their officers, directors, controlling shareholders, and representatives, will,
in all respects, comply with Sections 10 and 14 of the Securities Exchange Act
of 1934, as amended (the "1934 Act"), the rules and regulations of the SEC
promulgated thereunder, the rules and regulations of the OTS promulgated
thereunder, if applicable, and the securities laws of all states in which
shareholders of BOS or VIBC reside, if required. Without in any way limiting the
generality of the forgoing, VIBC and BOS agree with the other that the Notice of
Meeting, Proxy Statement submitted in connection therewith, form of Proxy, and
other solicitation materials that will be used by them in soliciting the
aforesaid shareholder approvals and authorizations (collectively, the "Proxy
Materials"):
(a) Will be filed with, and not be used before the same are
cleared for use by the SEC and the OTS and, to the extent required, the
securities administrators of all states in which their shareholders
reside;
(b) Will contain all of the information required by the 1934
Act and the rules and regulations of the SEC and OTS thereunder; and
(c) Will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, except that
neither party warrants the accuracy or completeness of any information
contained therein which is furnished to it by the other relating to the
business, assets, properties, financial condition or management of the
other or any corporation or person affiliated therewith.
VIBC and BOS will use their respective best efforts to obtain clearance
by all appropriate regulatory authorities for the use of their Proxy Materials.
VIBC and BOS will consult and cooperate with the other in the preparation of all
such Proxy Materials for the BOS Meeting and the VIBC Meeting.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF BOS
All obligations of BOS to consummate the Transactions contemplated
herein are subject to the satisfaction, on or before the Closing Date, of the
following conditions precedent, unless
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compliance with or the occurrence of any one or more of such conditions
precedent is waived in writing by BOS:
8.1 CONTINUED ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of VIBC contained in this Agreement shall be true
and correct in all material respects as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date, except as
otherwise contemplated by this Agreement.
8.2 PERFORMANCE OF OBLIGATIONS. VIBC shall have performed and satisfied
in all material respects all of the covenants, agreements, obligations and
conditions required by this Agreement to be performed and satisfied by VIBC at
or prior to the Closing Date.
8.3 ABSENCE OF MATERIAL CHANGES. Between the date of this Agreement and
the Closing Date there shall have been: (a) no damage, destruction, whether or
not covered by insurance (except damage, destruction or loss for which, prior to
the Closing Date, VIBC has been compensated by insurance in such measure as to
fully cover the replacement or repair of all damage, destruction or loss) or
Operating Loss, materially and adversely affecting the business or prospects of
VIBC taken as a whole; (b) no material adverse change in the business,
operations, financial condition, income, or prospects of VIBC; and (c) an
absence of the institution of litigation involving VIBC or any of its assets
(including VIB) which, if determined adverse to VIBC or VIB, would have a
material adverse effect upon VIBC taken as a whole, unless BOS shall have
received an opinion satisfactory to it of counsel handling such matter stating
that such action or proceeding will not, in all likelihood, have a material
adverse effect upon VIBC.
8.4 OFFICERS' CERTIFICATE. There shall have been delivered to BOS at
the Closing a certificate executed by the President and Chief Executive Officer,
by the Corporate Secretary, and by the Chief Financial Officer of VIBC
certifying, to the best of their knowledge, compliance by VIBC with all of the
provisions of Sections 8.1, 8.2, and 8.3 of this Agreement.
8.5 RECEIPT OF LEGAL OPINION. BOS shall have received a legal opinion
from Horgan, Rosen, Beckham & Coren, L.L.P., counsel for VIBC, addressed to BOS
and dated the Closing Date and substantially in the form set forth on Schedule
8.5 hereto or in such other form as agreed to by the parties.
8.6 FAIRNESS OPINION. BOS shall have received an opinion from an
investment banking or bank consulting firm on or before the date the Proxy
Materials are first mailed for the BOS Meeting to the effect that the
Transactions contemplated by this Agreement are fair and equitable to the
holders of BOS Stock.
8.7 APPOINTMENT OF VIBC DIRECTOR. VIBC shall have delivered to BOS at
the Closing a copy of resolutions duly adopted by its Board of Directors, which
copy shall be certified by its Corporate Secretary, providing for the
appointment of Mr. Ed L. Hickman by VIBC to the VIBC Board of Directors, as
required by Section 1.12 hereof, effective as of the Closing Date.
8.8 CLOSING DOCUMENTS. VIBC shall have delivered to BOS the Closing
documents required pursuant to Schedule 2.3 and Section 2.3 of this Agreement.
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ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF VIBC
All obligations of VIBC to consummate the Transactions contemplated
herein are subject to the satisfaction, on or before the Closing Date, of the
following conditions precedent, unless compliance with or the occurrence of any
one or more of such conditions precedent is waived in writing by VIBC:
9.1 CONTINUED ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of BOS contained in this Agreement shall be true
and correct in all material respects as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date, except as
otherwise contemplated by this Agreement.
9.2 PERFORMANCE OF OBLIGATIONS. BOS shall have performed and satisfied
in all material respects all of the covenants, agreements, obligations and
conditions required by this Agreement to be performed and satisfied by BOS at or
prior to the Closing Date.
9.3 ABSENCE OF MATERIAL CHANGES. Between the date of this Agreement and
the Closing Date there shall have been: (a) no damage, destruction, whether or
not covered by insurance (except damage, destruction or loss for which, prior to
the Closing Date, BOS has been compensated by insurance in such measure as to
fully cover the replacement or repair of all damage, destruction or loss) or
Operating Loss, materially and adversely affecting the business or prospects of
BOS taken as a whole; (b) no material adverse change in the business,
operations, financial condition, income, or prospects of BOS; and (c) an absence
of the institution of litigation involving BOS or any of its assets which, if
determined adverse to BOS, would have a material adverse effect upon BOS, unless
VIBC shall have received an opinion satisfactory to it of counsel handling such
matter stating that such action or proceeding will not, in all likelihood, have
a material adverse effect upon BOS.
9.4 AFFILIATE'S LETTERS. BOS shall have delivered to VIBC Affiliate's
Letters, substantially in the form of Exhibit "C" hereto, signed by each of its
affiliates, in accordance with Section 1.14 hereof.
9.5 RESIGNATION AND APPOINTMENT OF DIRECTORS. BOS shall have delivered
to VIBC at the Closing the written resignations as directors of BOS, effective
as of the Closing Date, of Messrs. Beimler and Warlick. BOS also shall have
delivered to VIBC at the Closing a copy of resolutions duly adopted by its Board
of Directors, which copy shall be certified by its Corporate Secretary,
providing for the appointment of Messrs. Foss and Kern to the BOS Board of
Directors, as required by Section 1.11 hereof, effective as of the Closing Date.
9.6 OFFICERS' CERTIFICATE. There shall have been delivered to VIBC at
the Closing a certificate executed by the President and Chief Executive Officer,
by the Corporate Secretary, and by the Chief Financial Officer of BOS
certifying, to the best of their knowledge, compliance by BOS with all of the
provisions of Sections 9.1, 9.2, 9.3, 9.4 and 9.5 of this Agreement.
9.7 RECEIPT OF LEGAL OPINION. VIBC shall have received a legal opinion
from McCormick, Barstow, Sheppard, Wayte & Carruth, LLP, counsel for BOS,
addressed to VIBC and
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BOS Interim Bank and dated the Closing Date, substantially in the form set forth
as Schedule 9.7 hereto or in such other form as agreed to by the parties.
9.8 FAIRNESS OPINION. VIBC shall have received an opinion from an
investment banking or bank consulting firm on or before the date the Proxy
Materials are first mailed for the VIBC Meeting to the effect that the
Transactions contemplated by this Agreement are fair and equitable to the
holders of VIBC Stock.
9.9 CLOSING DOCUMENTS. BOS shall have delivered to VIBC the Closing
documents required pursuant to Schedule 2.3 and Section 2.3 of this Agreement.
ARTICLE X
CONDITIONS PRECEDENT TO THE MERGER
The obligations of VIBC and BOS to proceed with the Merger and the
Transactions provided for herein are subject to the fulfillment, at or prior to
the Effective Time of Merger, of the following conditions:
10.1 PERMITS AND APPROVALS. Appropriate permits or approvals from the
OTS, the Federal Reserve System, and any other governmental agencies having
jurisdiction which are necessary to carry out the Transactions contemplated in
this Agreement, shall have been received without the imposition of any
conditions or requirements which, in the reasonable opinion of the affected
party, are materially burdensome or undesirable, and the United States
Department of Justice shall not have taken any adverse action within the period
allowed under 12 U.S.C. Section 1828(c)(6). Said permits and approvals shall be
on terms and conditions acceptable to VIBC and BOS and shall include, but shall
not be limited to, the following:
(a) Prior written approval from the OTS to organize BOS
Interim Bank;
(b) Issuance of a charter for BOS Interim Bank by the OTS;
(c) Prior written approval from the OTS for BOS to merge with
BOS Interim Bank pursuant to 12 U.S.C. Section 1828(c)(2)(D);
(d) Receipt of approval from the Board of Governors of the
Federal Reserve System under the Bank Holding Company Act 1956, as
amended, for VIBC to acquire control of BOS; and
(e) The declaration as effective by the SEC of a registration
statement under the Securities Act of 1933, as amended, with respect to
the shares of VIBC Stock to be issued upon consummation of the Merger,
and the approvals of any requisite state securities administrators.
10.2 TAX RULING OR OPINION. Receipt by the parties of a ruling issued
by the Internal Revenue Service or, in lieu thereof, the opinion of Vavrinek,
Trine, Day & Co., L.L.P., to the effect that:
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(a) The Merger qualifies as a reorganization within the
meaning of Section 368(a)(1)(A) of the Internal Revenue Code of 1986,
as amended (the "Code"), and VIBC, BOS, and BOS Interim Bank are
parties to a reorganization under Section 368(d) of the Code;
(b) No gain or loss will be recognized by the parties as a
result of the Merger;
(c) The basis and holding periods of the assets and
liabilities exchanged between the parties to the Merger will be the
same as the basis and holding periods of those assets and liabilities
prior to the Merger;
(d) No gain or loss will be recognized by the holders of BOS
Stock upon the conversion of their shares of BOS Stock into shares of
VIBC Stock (except for any fractional share interests to which they may
be entitled);
(e) Where BOS's shareholders hold their BOS Stock as a capital
asset, the basis of VIBC Stock to be received by BOS shareholders will
be the same as the basis of BOS Stock converted into VIBC Stock;
(f) Where BOS's shareholders hold their BOS Stock as a capital
asset, the holding period of VIBC Stock to be received by holders of
BOS Stock will be the same as the holding period of BOS Stock converted
into VIBC Stock; and
(g) Where cash is received by a shareholder of BOS in lieu of
a fractional share interest in VIBC Stock, the cash will be treated as
being received by the shareholder as a distribution in redemption of
his or her fractional share interest, subject to the provisions and
limitations of Section 302 of the Code.
10.3 ABSENCE OF LITIGATION. On the Closing Date and at the Effective
Time of the Merger:
(a) There shall be no action pending before any court of
competent jurisdiction in which any injunction is sought by any
governmental authority against the Transactions contemplated hereby,
unless VIBC shall have received an opinion satisfactory to it of
counsel handling such matter for VIBC or BOS stating that such action
or proceeding will not, in all likelihood, result in a restraint or
prohibition; and
(b) There shall be in effect no order, writ, injunction or
decree of any court or governmental authority prohibiting the
consummation of any of the Transactions contemplated hereby.
10.4 SHAREHOLDER APPROVALS.
(a) APPROVAL OF MERGER. This Agreement shall have been
approved by the holders of at least two-thirds of the issued and
outstanding shares of BOS Stock entitled to vote, by the holder of at
least two-thirds of the issued and outstanding shares of BOS Interim
Bank Stock entitled to vote, and by the holders of at least a majority
of the issued and outstanding shares of VIBC Stock entitled to vote.
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<PAGE> 59
(b) OTHER ACTIONS. Any and all other actions required by the
shareholders of BOS to authorize or effect the Transactions called for
herein shall have been duly and validly taken.
10.5 CONTINUITY OF INTEREST. Taking into account payments to, and
proposed payments to, holders of Dissenting BOS Shares and Dissenting VIBC
Shares and payments of expenses incurred in connection with the Transactions
called for herein, after the Effective Time of the Merger BOS will hold at least
90% of the fair market value of the net assets and 70% of the fair market value
of the gross assets owned by both it and BOS Interim Bank immediately before the
Effective Time of the Merger. All redemptions and distributions made by BOS
immediately preceding the Effective Time of the Merger and which are part of
this Agreement will be considered as assets held by BOS immediately prior to the
Effective Time of the Merger. No fact, circumstance or event shall have occurred
or is reasonably likely to occur that would cause the Merger not to be deemed a
tax-free reorganization within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended, or that would cause the Merger to not qualify
for pooling-of-interests accounting treatment, including without limitation
payments made on account of fractional shares of VIBC Stock to be issued in
consideration of BOS Stock in the Merger, Dissenting BOS Shares and Dissenting
VIBC Shares.
ARTICLE XI
TERMINATION
11.1 TERMINATION OF THIS AGREEMENT. This Agreement shall terminate and
be of no further force and effect as between the parties hereto, except as to
liability for a material breach of any representation, warranty or covenant
occurring or arising prior to the date of termination, upon the occurrence of
any of the following:
(a) Immediately upon the expiration of 30 days from the date
that VIBC has given notice to BOS of breach or default by BOS in the
performance of any covenant, agreement, representation, warranty, duty
or obligation hereunder; provided, however, that no such termination
shall be effective if, within said 30-day period, BOS shall have
substantially corrected and cured the grounds for the termination as
set forth in said notice of termination;
(b) Immediately upon the expiration of 30 days from the date
that BOS has given notice to VIBC of breach or default by VIBC in the
performance of any covenant, agreement, representation, warranty, duty
or obligation hereunder provided, however, that no such termination
shall be effective if, within said 30-day period VIBC shall have
substantially corrected and cured the grounds for the termination as
set forth in said notice of termination;
(c) Upon the expiration of 30 days after the OTS, the FRB or
any other applicable regulatory agency denies or refuses in writing to
grant the approvals, nondisapprovals, consents, or authorizations
required to be obtained in order to consummate the Transactions
contemplated by this Agreement, unless within said 30-day period the
parties hereto agree to appeal or resubmit the application to the
regulatory authority which has denied or refused to grant such
approval, nondisapproval, consent, authorization or ruling, as the case
may be;
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<PAGE> 60
(d) Immediately after: (i) VIBC is notified by BOS or VIBC
otherwise becomes aware that, pursuant to Section 5.6, BOS has received
a Qualifying Strategic Transaction Proposal; and (ii) payment by BOS to
VIBC of the Termination Fee pursuant to Section 11.4(a) hereof;
(e) Immediately after: (i) BOS is notified by VIBC or BOS
otherwise becomes aware that, pursuant to Section 6.5, VIBC has
received a Qualifying Strategic Transaction Proposal that is not a VIBC
Acquisition Transaction; and (ii) VIBC has provided BOS with evidence
showing that VIBC has used its best efforts by taking all reasonable
measures necessary to provide for the inclusion of BOS in the
Qualifying Strategic Transaction; and (iii) payment by VIBC of the
Termination Fee pursuant to Section 11.4(a) hereof; provided, however,
in the event VIBC has received a Qualifying Strategic Transaction
Proposal that is not a VIBC Acquisition Transaction and that does not
require VIBC to abandon the Merger as a condition to the consummation
of the transaction contemplated by the Qualifying Strategic Transaction
Proposal, then, at BOS's option by written notice to VIBC, this
Agreement will not be terminated and VIBC shall not be obligated to pay
BOS the Termination Fee pursuant to Section 11.4(a) hereof; or (iv)
VIBC is notified by BOS that VIBC has breached this Agreement as set
forth in Section 6.5(c) and payment by VIBC of the Termination Fee
pursuant to Section 11.4(a) hereof.
(f) By notice by VIBC to BOS or by BOS to VIBC, if the Closing
has not occurred on or before January 31, 1999, but subject to the
expiration of any statutory waiting periods following receipt of any
required regulatory approvals received prior to January 31, 1999,
unless said date shall be extended by the mutual agreement of the
parties hereto and unless such failure results primarily from any
material breach pursuant to Sections 11.1(a) or (b) or by virtue of the
events described in Sections 11.1(c), (d) or (e); or
(g) Upon the mutual agreement of the parties hereto.
11.2 IMMATERIAL BREACH. Notwithstanding anything to the contrary
contained herein, no party hereto shall have the right to terminate this
Agreement on account of its own breach or due to any immaterial breach by any
other party hereto of any covenant, agreement, representation, warranty, duty or
obligation hereunder.
11.3 EFFECT OF TERMINATION. If this Agreement shall be terminated as
provided herein, each party shall redeliver all documents, work papers and other
material of the other party relating to the Transactions contemplated herein to
the party furnishing the same, except that the foregoing shall not apply to any
documents, work papers, material or information which is a matter of public
knowledge. No termination of this Agreement under this Article XI for any reason
or in any manner, except as permitted by Sections 11.1 (f), (g) and (h), shall
release, or be construed as so releasing, any party hereto from any liability or
damage to any other party hereto arising out of, in connection with or otherwise
relating to, directly or indirectly, said party's material and bad faith breach,
default or failure in performance of any of its covenants, agreements, duties or
obligations arising hereunder, or any breaches of any representation or warranty
contained herein; provided, however, neither party shall be liable to the other
for termination pursuant to Section 11.1(c) for the failure of the OTS, the FRB,
or any other applicable regulatory agency to grant the approvals,
nondisapprovals, consents, or authorizations required if the failure is not the
result of a material breach by that party of a
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<PAGE> 61
representation, warranty or covenant set forth in this Agreement. If, however,
such termination shall result from an election to terminate by VIBC pursuant to
Section 11.1(a), then BOS shall pay to VIBC, as reasonable and full liquidated
damages and reasonable compensation for the loss sustained thereby and not as a
penalty or forfeiture, the Liquidated Damages as set forth in Section 11.4(b).
If, however, such termination shall result from an election to terminate by BOS
pursuant to Section 11.1(b), then VIBC shall pay to BOS, as reasonable and full
liquidated damages and reasonable compensation for the loss sustained thereby
and not as a penalty for forfeiture, the Liquidated Damages as set forth in
Section 11.4(b). If, however, such termination shall result from an election to
terminate by VIBC or BOS pursuant to Section 11.1(d), then BOS shall pay to VIBC
the Termination Fee pursuant to Section 11.4(a). If, however, such termination
shall result from an election to terminate by BOS or VIBC pursuant to Section
11.1(e), then VIBC shall pay to BOS the Termination Fee pursuant to Section
11.4(a).
11.4 TERMINATION FEE AND LIQUIDATED DAMAGES.
(a) TERMINATION FEE. The Termination Fee shall be the amount
of $750,000 (the "Termination Fee") in the event this Agreement is
terminated pursuant to Section 11.1(d) or Section 11.1(e).
(b) LIQUIDATED DAMAGES. As reasonable and full liquidated
damages and reasonable compensation for the loss sustained and not as a
penalty or forfeiture in the event that this Agreement is terminated
pursuant to Section 11.1(a) or Section 11.1(b), the liquidated damages
shall be the amount of $150,000 (the "Liquidated Damages").
(c) EXCLUSIVE REMEDY. Except in the event the responsible
party fails to pay the Termination Fee or the Liquidated Damages, as
applicable, within ten business days after receipt of an invoice
therefor, which period shall be extended by an additional reasonable
time if the responsible party has reasonably disputed the existence or
amount of such obligations, timely receipt of such payment shall
constitute an exclusive remedy, and following such receipt and
acceptance, the receiving party shall be barred from recovering damages
for any breach of any term of this Agreement.
ARTICLE XII
GENERAL PROVISIONS
12.1 EXPENSES. VIBC and BOS agree that VIBC and BOS shall each bear
their own expenses incurred in connection with the negotiation, preparation, and
performance of this Agreement, including legal and accounting fees, printing
costs, filing fees, and other necessary expenses regardless of whether the
Merger or any of the Transactions contemplated under this Agreement are
consummated.
12.2 NOTICES. All notices, demands or other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered in
person, or if sent by Federal Express, overnight delivery United States mail, or
other overnight delivery service, or sent by facsimile transmission (with
confirmation) addressed as follows:
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<PAGE> 62
(i) If to VIBC, to:
VIB Corp
1498 Main Street
El Centro, California 92243
Attention: Mr. Dennis L. Kern, President and CEO
Fax: (760) 337-3229
With a copy to:
Horgan, Rosen, Beckham & Coren, L.L.P.
21700 Oxnard Street, Suite 1400
Woodland Hills, California 91365-4335
Attention: S. Alan Rosen, Esq.
Fax: (818) 340-6190
(ii) If to BOS, to:
Bank of Stockdale, F.S.B.
5151 Stockdale Highway
Bakersfield, California 93309
Attention: Mr. Ed L. Hickman, President and CEO
Fax: (805) 833-9469
With a copy to:
McCormick, Barstow, Sheppard, Wayte & Carruth, LLP
5 Riverpark Place East
Fresno, California 93720
Attention: Kenneth Alan Baldwin, Esq.
Fax: (209) 433-2485
The persons or addresses to which mailings or deliveries shall be made
may change from time to time by notice given pursuant to the provisions of this
Section 12.2. Any notice, demand or other communications given pursuant to the
provisions of this Section 12.2 shall be deemed to have been given on the date
actually delivered or the business day following the date sent by overnight
delivery, as the case may be.
12.3 SUCCESSORS AND ASSIGNS. All terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective transferees, successors and assigns; provided, however, that except
as otherwise contemplated hereby, this Agreement and all rights, privileges,
duties and obligations of the parties hereto may not be assigned or delegated by
any party hereto without the prior written consent of the other parties to this
Agreement.
12.4 THIRD PARTY BENEFICIARIES. BOS and VIBC intend that this Agreement
shall not benefit or create any right or cause of action in or on behalf of any
person other than BOS or VIBC.
12.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
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<PAGE> 63
12.6 GOVERNING LAW. This Agreement is made and entered into in the
State of California and the internal laws (without regard to the conflict of law
provisions thereof) of that state shall govern the validity and interpretation
hereof and the performance of the parties hereto of their respective duties and
obligations hereunder, except as required by applicable provisions of Title 12
of the United States Code.
12.7 CAPTIONS. The captions contained in this Agreement and the
Exhibits and Schedules hereto are for convenience of reference only and do not
form a part of or affect the interpretation of this Agreement.
12.8 EXHIBITS AND SCHEDULES. The Exhibits and Schedules attached hereto
are an integral part of this Agreement and each Exhibit and Schedule shall be
applicable as if set forth in full in the text hereof only with respect to the
sections of this Agreement to which it is cross-referenced. In the event there
is any absolute unconditional representation contained in this Agreement, said
representation shall be modified by any contrary information set forth on a
Schedule which expressly cross-references to the section where the absolute or
unconditional representation is contained.
12.9 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the parties hereto contained in this Agreement or any Exhibit or Schedule
hereto shall terminate after the Effective Time of the Merger and shall be of no
further force and effect. Nothing in this Article XII shall be construed as
limiting the applicable statute of limitations in the event the Transactions are
not consummated.
12.10 WAIVER AND MODIFICATION. No waiver of any term, provision or
condition of this Agreement, whether by conduct or otherwise, in any one or more
instances shall be deemed to be or construed as a further or continuing waiver
of any such term, provision or condition of this Agreement. This Agreement may
be modified or amended only by an instrument of equal formality signed by the
parties or their duly authorized agents.
12.11 ATTORNEYS' FEES. In the event any of the parties to this
Agreement brings an action or suit against any other party by reason of any
breach of any covenant, agreement, representation, warranty or other provision
hereof, the substantially prevailing party in whose favor final judgment is
entered shall be entitled to have and recover of and from the other party all
reasonable costs and expenses incurred or sustained by such prevailing party in
connection with such suit or action, including, without limitation, legal fees
and court costs.
12.12 KNOWLEDGE. In all representations and warranties concerning the
knowledge of BOS, VIBC or VIB, wherever included herein, there shall be imputed
to BOS, VIBC or VIB the actual and constructive knowledge and notice of their
respective current directors and executive officers.
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12.13 ENTIRE AGREEMENT. The making, execution and delivery of this
Agreement by the parties hereto have been induced by no representations,
statements, warranties or agreements other than those herein expressed. This
Agreement embodies the entire understanding of the parties and there are no
further or other agreements or understandings, written or oral, in effect
between the parties relating to the subject matter hereof, unless expressly
referred to by reference herein.
12.14 CONSENTS. Any and all consents required to be obtained from any
of the parties hereto under this Agreement shall not be unreasonably withheld
and shall be deemed given unless the requesting party receives written notice to
the contrary from the party to whom such request is made within ten business
days after request therefor.
12.15 SEVERABILITY. If any portion of this Agreement shall be deemed by
a court of competent jurisdiction to be unenforceable, the remaining terms
hereof shall provide for the consummation of the Transactions contemplated
herein in substantially the same manner as originally set forth at the date this
Agreement was executed.
12.16 PRESS RELEASE. No press release or other public disclosure of
matters related to this Agreement of any of the Transactions contemplated hereby
shall be made by VIBC, BOS Interim Bank, or BOS unless the other parties shall
have provided their prior consent to the form and substance thereof; provided,
however, that nothing herein shall be deemed to prohibit any party hereto from
making any disclosure which its counsel deems necessary or advisable in order to
fulfill such party's disclosure obligations imposed by law.
12.17 ARBITRATION. Any controversy or claim arising out of or relating
to this Agreement, or the breach hereof, and which arises after the effective
date of this Agreement, shall be settled by arbitration to take place in Los
Angeles, California, in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, and judgment upon the award rendered by the
arbitrator or arbitrators may be entered in any court having jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
<TABLE>
<CAPTION>
BANK OF STOCKDALE, F.S.B. VIB CORP
<S> <C>
By: /s/ Ed L. Hickman By: /s/ Dennis L. Kern
---------------------------------------- ---------------------------------------
Ed L. Hickman Dennis L. Kern
Its: President and Chief Executive Officer Its: President and Chief Executive Officer
By: /s/ Fred H. Carlisle, Jr. By: /s/ Charlotte Studer
---------------------------------------- ---------------------------------------
Fred H. Carlisle, Jr. Charlotte Studer
Its: Corporate Secretary Its: Corporate Secretary
</TABLE>
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<PAGE> 1
AGREEMENT
TO
ASSUME LIABILITIES AND
TO ACQUIRE ASSETS OF
BRANCH OFFICE
Dated as of September 22, 1998
Between
FREMONT INVESTMENT & LOAN
as Seller
and
VALLEY INDEPENDENT BANK
as Buyer
<PAGE> 2
INDEX
ARTICLE I
Definitions
<TABLE>
<CAPTION>
Page
----
<S> <C>
1.1 Agreement......................................................................... 1
1.2 Assets............................................................................ 1
1.3 Assumption Price.................................................................. 1
1.4 Branch............................................................................ 1
1.5 Branch Deposit Trial Balance Report............................................... 1
1.6 Branch Loan Trial Balance Report.................................................. 2
1.7 Business Day...................................................................... 2
1.8 Claim............................................................................. 2
1.9 Closing Date and Closing.......................................................... 2
1.10 Commissioner...................................................................... 2
1.11 Deposits.......................................................................... 2
1.12 Environmental Law................................................................. 2
1.13 FRB............................................................................... 3
1.14 Governmental Body................................................................. 3
1.15 Hazardous Substances.............................................................. 3
1.16 Lease............................................................................. 3
1.17 Liabilities....................................................................... 3
1.18 Loans............................................................................. 3
1.19 Personal Property................................................................. 3
1.20 Premises.......................................................................... 3
1.21 Retained Assets................................................................... 4
1.22 Retained Liabilities.............................................................. 4
ARTICLE II
Assumption of Liabilities and Acquisition of Assets
2.1 Assumption of Deposits, Interest and Certain Other Liabilities.................... 4
2.2 Assumption of Obligations......................................................... 4
2.3 Retained Liabilities.............................................................. 4
2.4 Transfer of Assets................................................................ 6
2.5 Assignment of Leases; Etc......................................................... 7
2.6 Retained Assets................................................................... 7
2.7 Individual Retirement Accounts.................................................... 7
ARTICLE III
Assumption Price; Allocation
3.1 Determination and Payment of Assumption Price..................................... 8
3.2 Allocation of the Consideration for Acquisition of the Branch..................... 8
3.3 Assumption Price Deposit.......................................................... 8
</TABLE>
i
<PAGE> 3
ARTICLE IV
Representations, Warranties and Covenants
<TABLE>
<S> <C>
4.1 Representations, Warranties and Covenants of the Seller........................... 9
4.1.1 Powers and Authority................................................... 9
4.1.2 Other Agreements....................................................... 9
4.1.3 Branch Reports......................................................... 9
4.1.4 Branch Information..................................................... 10
4.1.5 Personal Property...................................................... 10
4.1.6 Premises............................................................... 10
4.1.7 Contracts and Agreements............................................... 10
4.1.8 Pending Litigation..................................................... 11
4.1.9 Compliance with the Law................................................ 11
4.1.10 Employees.............................................................. 11
4.1.11 Environmental Liabilities.............................................. 11
4.1.12 Deposits at the Branch................................................. 12
4.1.13 Loans at the Branch.................................................... 12
4.1.14 No Material Adverse Change............................................. 12
4.1.15 Branch Employees....................................................... 13
4.1.16 Brokers................................................................ 13
4.1.17 Representations and Warranties......................................... 13
4.2 Representations, Warranties and Covenants of the Buyer............................ 13
4.2.1 Powers and Authority................................................... 13
4.2.2 Other Agreements....................................................... 13
4.2.3 Pending Litigation..................................................... 14
4.2.4 Branch Employees....................................................... 14
4.2.5 Brokers................................................................ 14
4.2.6 Representations and Warranties......................................... 14
ARTICLE V
Obligations of the Parties Before Closing Date
5.1 Obligations of Both Parties....................................................... 14
5.1.1 Administrative Approvals............................................... 14
5.1.2 Best Efforts........................................................... 15
5.2 Obligations of Seller............................................................. 15
5.2.1 Shareholder Approval of Agreement...................................... 15
5.2.2 Access to Information.................................................. 15
5.2.3 Conduct of Business.................................................... 15
5.2.4 Ordinary Course and Other Activities................................... 15
5.2.5 Condition of Assets.................................................... 16
5.2.6 Consents............................................................... 16
5.2.7 Personal Property Report............................................... 16
5.2.8 Deposit Update......................................................... 16
5.2.9 Loan Update............................................................ 16
5.2.10 Data Conversion........................................................ 16
5.2.11 Extension Fee.......................................................... 16
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
5.2.12 No Breach.............................................................. 17
5.3 Obligations of Buyer.............................................................. 17
5.3.1 Shareholder Approval of Agreement...................................... 17
5.3.2 Notification of Deposits and Loans Rejected............................ 17
5.3.3 Lease Negotiations..................................................... 17
5.3.4 Extension Fee.......................................................... 17
5.3.5 No Breach.............................................................. 17
ARTICLE VI
Conditions Precedent to Closing
6.1 Conditions Precedent to Performance by Both Parties............................... 18
6.1.1 Shareholder Approval................................................... 18
6.1.2 Approval of the Commissioner........................................... 18
6.1.3 Approval of the FRB.................................................... 18
6.1.4 Other Regulatory Approvals............................................. 18
6.1.5 No Claim............................................................... 18
6.1.6 Closing Date........................................................... 18
6.2 Conditions Precedent to Buyer's Performance....................................... 18
6.2.1 Accuracy of Warranties and Performance of Obligations.................. 18
6.2.2 Copies of Documents.................................................... 19
6.2.3 Consents and Approvals................................................. 19
6.2.4 Matters Relating to the Premises....................................... 19
6.2.5 Books and Records...................................................... 19
6.2.6 Force Majeure.......................................................... 19
6.2.7 Assumption of Safe Deposit Box Business................................ 19
6.2.8 Disclosure of Employee Matters......................................... 19
6.2.9 Material Changes....................................................... 19
6.2.10 Deposits............................................................... 19
6.2.11 Legal Opinion.......................................................... 19
6.3 Conditions Precedent to Seller's Performance...................................... 19
6.3.1 Accuracy of Warranties and Performance of Obligations.................. 20
6.3.2 Copies of Documents.................................................... 20
6.3.3 Legal Opinion.......................................................... 20
ARTICLE VII
Closing
7.1 Closing........................................................................... 20
7.2 Seller's Obligations at the Closing............................................... 20
7.2.1 Transfer of Assets..................................................... 20
7.2.2 Certificates and Further Documents..................................... 20
7.2.3 Premises, Books and Records............................................ 21
7.2.4 Payment of Assumption Price............................................ 21
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
7.3 Buyer's Obligations at the Closing................................................ 21
7.3.1 Assumption of Liabilities.............................................. 21
7.3.2 Purchase of Assets..................................................... 21
7.3.3 Further Documents...................................................... 21
ARTICLE VIII
Obligations of the Parties After the Closing
8.1 Seller's Obligations.............................................................. 21
8.1.1 Business Relationships................................................. 21
8.1.2 Banking Relationships.................................................. 21
8.1.3 Confidentiality........................................................ 22
8.1.4 Notification of Customers.............................................. 22
8.1.5 Right to Hire Branch Employees......................................... 22
8.1.6 Removal of the Seller's Property....................................... 22
8.1.7 Restrictive Covenant................................................... 22
8.2 Obligations of Both Parties After the Closing..................................... 22
8.2.1 Transfer of Credits by the Seller...................................... 22
8.2.2 Transit Items.......................................................... 22
8.2.3 Further Documents...................................................... 23
8.2.4 Prorations; Sales and Use Taxes; Insurance............................. 23
8.2.5 Adjustment of Assumption Price......................................... 24
8.2.6 Other Transitional Matters............................................. 24
ARTICLE IX
Remedies
9.1 Termination....................................................................... 24
9.2 Effect of Termination............................................................. 24
9.3 Litigation Costs.................................................................. 25
ARTICLE X
Miscellaneous Provisions
10.1 Notices........................................................................... 25
10.2 Entire Agreement.................................................................. 25
10.3 Third-Party Rights................................................................ 26
10.4 Successors and Assigns............................................................ 26
10.5 Public Notice..................................................................... 26
10.6 Survival of Warranties and Obligations............................................ 26
10.7 Severability...................................................................... 26
10.8 Expenses.......................................................................... 27
10.9 Counterparts...................................................................... 27
10.10 Headings and Construction......................................................... 27
10.11 Governing Law..................................................................... 27
10.12 Knowledge......................................................................... 27
10.13 Indemnification................................................................... 27
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
Section
EXHIBITS Reference
- -------- ---------
<S> <C> <C>
A Branch Account Trial Balance Report Section 1.5
B Branch Loan Trial Balance Report Section 1.6
C Branch Lease Section 1.16
D List of Contracts, Commitments and Agreements Section 2.2(b)
Applicable to the Branch (with designations of
those items for which copies are not available)
E List of Personal Property of Seller Section 2.4(b)
F Employee Information Section 4.1.10
G List of Material Adverse Changes in Seller's Business Section 4.1.14
H Assignment of Lease and Consent of Lessor Section 5.2.6
I Transitional Matters Section 5.2.10;Section 8.1;Section 8.2
J Form of Seller's Legal Opinion Section 6.2.11
K Form of Buyer's Legal Opinion Section 6.3.3
SCHEDULE
- --------
1 Method of Determination of Assumption Price Section 3.1
</TABLE>
v
<PAGE> 7
THIS AGREEMENT TO ASSUME LIABILITIES AND TO ACQUIRE ASSETS OF BRANCH OFFICE
is entered into as of September 22, 1998 between Fremont Investment & Loan, a
California industrial loan company (the "Seller") having its main office and
principal place of business in Anaheim, California, and Valley Independent Bank,
a California banking corporation (the "Buyer") having its main office and
principal place of business in El Centro, California, with reference to the
following:
RECITALS
A. WHEREAS, the Seller leases the premises and operates a branch office
(the "Branch") at 2091 West Florida Avenue, Suite 100, Hemet, California 92545
and conducts business as an industrial loan company at the Branch;
B. WHEREAS, the Seller is willing to transfer to the Buyer, or its
assignee, certain assets and business of the Branch and the Buyer is willing to
assume certain liabilities, duties and obligations of the Seller in respect of
the Branch, in consideration for the payment of certain sums and all upon the
terms and subject to the conditions set forth herein; and
C. WHEREAS, the Buyer is willing to purchase, receive and acquire said
assets, to assume said liabilities, duties and obligations of the Seller, and to
commence a banking business at the Branch in consideration for the receipt of
certain sums and upon the terms and subject to the conditions set forth herein;
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, conditions, representations and warranties contained in this
Agreement, the Buyer and the Seller agree as follows:
ARTICLE I
DEFINITIONS
Unless the context otherwise specifies and requires, each of the terms
defined in this Article I shall, for all purposes of this Agreement to Assume
Liabilities and to Acquire Assets of Branch Office, have the meaning set forth
herein, and all of the following definitions shall be equally applicable to both
the singular and the plural forms of the terms defined:
1.1 Agreement. The term "Agreement" means this Agreement to Assume
Liabilities and to Acquire Assets of Branch Office.
1.2 Assets. The term "Assets" means only those certain assets and
properties owned, held or used by the Seller set forth in Section 2.4 as assets,
tangible and intangible, real, personal and mixed, which are to be transferred
to and purchased by the Buyer.
1.3 Assumption Price. The term "Assumption Price" shall have the meaning
assigned to it in Section 3.1.
1.4 Branch. The term "Branch" means the branch Office operated by Seller
located at 2091 West Florida Avenue, Suite 100, Hemet, California 92545.
1.5 Branch Deposit Trial Balance Report. The term "Branch Deposit Trial
Balance Report" means the internally prepared schedules of Deposits setting
forth the name and address of the account holder, the account number, the type,
rate and balance or principal amount of the
1
<PAGE> 8
deposit account, and the accrued but unpaid interest thereon, duly certified by
the Chief Financial Officer of the Seller to be in accordance with the
representations and warranties set forth in Section 4.1.3. The Branch Deposit
Trial Balance Report as of August 31, 1998, is attached hereto as Exhibit A.
1.6 Branch Loan Trial Balance Report. The term "Branch Loan Trial Balance
Report" means the internally prepared schedule of loans setting forth the name
and address of the borrower, the account number, the type, rate and balance or
principal amount of the loan outstanding or committed, or both, and the accrued
but unpaid interest thereon, duly certified by the Chief Financial Officer of
the Seller to be in accordance with the representation and warranties set forth
in Section 4.1.3. The Branch Loan Trial Balance Report as of August 31, 1998, is
attached hereto as Exhibit B.
1.7 Business Day. The term "Business Day" means each Monday, Tuesday,
Wednesday, Thursday or Friday that banks or industrial loan companies in
California are not required or permitted by law to be closed.
1.8 Claim. The term "Claim" shall have the meaning assigned to it in
Section 4.1.8.
1.9 Closing Date and Closing. The term "Closing Date" means the date when
the transactions contemplated by this Agreement shall be consummated, as set
forth in Section 7.1, and the term "Closing" means the consummation of the
transactions contemplated in this Agreement, as provided in Article VII hereof.
1.10 Commissioner. The term "Commissioner" shall have the meaning assigned
to it in Section 5.1.1.
1.11 Deposits. The term "Deposits," for any given date, means all
liabilities of the Seller carried on the books of the Branch to customers
arising from deposits which are demand deposits, savings deposits, money market
or NOW deposits, or time certificates of deposit, and which are included on a
Branch Deposit Trial Balance Report for that date excluding, however: (i) any
such liabilities relating to deposits maintained as compensating balances for
loans not included in the Assets; (ii) interbranch deposits; (iii) any such
liabilities assumed after the date of this Agreement at rates in excess of the
Seller's stated rates; and (iv) any such liabilities as may be mutually
determined by the Seller and the Buyer.
1.12 Environmental Law. The term "Environmental Law" means any federal,
state, county, or local statute, law, ordinance, rule, regulation, order,
consent, decree, judicial or administrative decision or directive of the United
States or other jurisdiction whether now existing or as hereinafter promulgated,
issued or enacted relating to: (i) pollution or protection of the environment,
including natural resources; (ii) exposure of persons, including employees, to
Hazardous Substances or other products, materials or chemicals; (iii) protection
of the public health or welfare from the effects of products, by-products,
wastes, emissions, discharges or releases of chemical or other substances from
industrial or commercial activities; or (iv) regulation of the manufacture, use
or introduction into commerce of substances, including, without limitation,
their manufacture, formulation, packaging, labeling, distribution,
transportation, handling, storage and disposal. For the purposes of this
definition, the term "Environmental Law" shall include, without limiting the
foregoing, the following statutes, as amended from time to time: (1) the Clean
Air Act, as amended, 42 U.S.C. Section 7401 et seq.; (2) the Federal Water
Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; (3) the
Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section
6901 et seq.; (4) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (including the Superfund Amendments and
Reauthorization Act of 1986), 42 U.S.C. Section 2601 et seq.; (5) the
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Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; (6)
the Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651; (7)
the Emergency Planning and Community Right-To-Know Act of 1986, 42 U.S.C.
Section 1101 et seq.; (8) the Mine Safety and Health Act of 1977, as amended, 30
U.S.C. Section 801 et seq.; (9) the Safe Drinking Water Act, 42 U.S.C. Section
300f et seq.; and (10) all comparable state and local laws, laws of other
applicable jurisdiction or orders and regulations including, but not limited to,
the Carpenter-Presley-Tanner Hazardous Substance Account Act, California Health
& Safety Code Section 25300 et seq.
1.13 FRB. The term "FRB" means the Board of Governors of the Federal
Reserve System and/or the Federal Reserve Bank of San Francisco.
1.14 Governmental Body. The term "Governmental Body" shall have the meaning
assigned to it in Section 4.1.8.
1.15 Hazardous Substances. The term "Hazardous Substances" means: (i)
substances that are defined or listed in, or otherwise classified pursuant to,
or the use or disposal of which are regulated by, any Environmental Law as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity"; (ii) oil or petroleum derived from substances and drilling fluids,
produced waters, and other wastes associated with the exploration, development,
or production of crude oil, natural gas, or geothermal resources; (iii) any
flammable substances or explosives, any radioactive materials, any hazardous
wastes or substances, any toxic wastes or substances or any other materials or
pollutants which pose a hazard to any property or to individuals or entities on
or about such property; and (iv) asbestos in any form or electrical equipment
which contains any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of 50 parts per million.
1.16 Lease. The term "Lease" means that certain Office Sublease dated
September 15, 1994 by and between The Bank of Hemet, a California banking
corporation, as landlord (the "lessor"), and the Seller, as tenant, covering the
Branch Premises and expiring on December 31, 1998, a copy of which is attached
hereto as Exhibit C.
1.17 Liabilities. The term "Liabilities" means only those certain
liabilities, duties and obligations of the Seller in connection, in whole or in
part, with the business or affairs of the Branch which are to be assumed by the
Buyer pursuant to Sections 2.1 and 2.2.
1.18 Loans. The term "Loans," for any given date, means all Branch loans
secured by Branch Deposits, including overdrafts, carried on the books and
records of the Branch together with all guarantees given with respect thereto
and all of the Seller's rights and interest therein and thereto, the right to
receive the unpaid principal and interest on such acquired loans, all checks,
drafts, notes, instruments, contracts and other evidences of the respective
borrowers' obligations to repay and provide security or collateral therefor, and
all files, books, and records with respect thereto.
1.19 Personal Property. The term "Personal Property" shall have the meaning
assigned to it in Section 4.1.5.
1.20 Premises. The terms "Premises" or "Branch Premises" shall mean the
leasehold interest located at 2091 West Florida Avenue, Suite 100, Hemet,
California 92545, consisting of approximately 4,427 usable square feet.
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1.21 Retained Assets. The term "Retained Assets" means the assets of the
Seller which are referred to in Section 2.6.
1.22 Retained Liabilities. The term "Retained Liabilities" means all
liabilities and obligations of the Seller, of any kind or description, whether
known, unknown, disclosed, undisclosed, direct, indirect, absolute, fixed,
contingent or otherwise, other than the Liabilities.
ARTICLE II
ASSUMPTION OF LIABILITIES AND ACQUISITION OF ASSETS
2.1 Assumption of Deposits, Interest and Certain Other Liabilities. In
reliance on the covenants, conditions, representations and warranties of the
Seller included herein, at the Closing the Buyer shall assume and agree to pay,
perform and discharge, as and when such payments or performances are due:
(a) all Deposits as of the Closing Date, including (as provided in
Paragraph 1 of Schedule 1 hereto) accrued interest thereon to the Closing
Date; subject, however, to any right the Buyer may have to change
applicable interest rates as legally permitted or required; provided,
however, the Buyer acknowledges that the Seller's Passbook, Passbook
Statement, Liquid IRA and MMDA accounts bear interest rates guaranteed
through December 31, 1998; and subject, further, to the Buyer's
unconditional right to reject and not assume: (i) any "brokered" time
certificates of deposit (as defined by the rules and regulations of the
Federal Deposit Insurance Corporation ("FDIC")); and (ii) any public
deposits; and
(b) only such other liabilities of the Seller pertaining to the Branch
as the Buyer shall have agreed in writing, with the written consent of the
Seller, on or before the Closing Date, to assume.
2.2 Assumption of Obligations. At the Closing, the Buyer shall also assume
and agree to pay and discharge, but only if and to the extent that the Buyer
succeeds to the rights and benefits of the Seller under the terms thereof, all
of the obligations of the Seller arising after the Closing Date or to be
performed after the Closing Date under the following contracts, commitments and
agreements, subject to the provisions of Section 2.3:
(a) the Lease;
(b) the contracts, commitments and agreements, if any, set forth on
Exhibit D hereto, to the extent that such contracts, commitments and
agreements are applicable to the Branch; and
(c) all of the obligations of the Seller in respect of the Branch not
reflected in Exhibit D, but only to the extent that such obligations are
applicable to the Branch and are incurred subsequent to the date of this
Agreement and, as permitted by the terms of this Agreement, are approved in
writing by the Buyer.
2.3 Retained Liabilities. The Seller agrees that the Buyer has not agreed
to assume or pay, shall not be required to assume or be obligated to pay,
perform or discharge, and shall have no liability or obligation with respect to,
whether on the Closing Date or otherwise, the Retained Liabilities, including,
but not limited to:
(a) any liability or obligation of the Seller to the extent the same
shall have been paid, performed or discharged or which by its terms was
required to be paid,
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performed or discharged on or prior to the Closing Date, except that
certain expenses in connection with the operation of the Branch are to be
prorated in accordance with the provisions of Section 8.2.4;
(b) any liability or obligation under any lease, contract, commitment
or agreement which is not either set forth in Exhibits C or D or referred
to in Section 2.2(c) or any lease, contract, commitment or agreement,
whether or not set forth in Exhibits C or D hereto or referred to in
Section 2.2(c) to the extent not applicable to the Branch; any liability or
obligation of the Seller with respect to any insurance policy maintained by
the Seller with respect to the Branch; any liability, obligation, cost or
expense arising out of or in connection with any Claim whether commenced
before, on or after the Closing Date, with respect to any condition,
transaction or event which relates to or involves the business, properties,
assets, liabilities or affairs of the Branch or the Seller's conduct of
business at the Branch on or prior to the Closing Date except to the extent
such liability, obligation, cost or expense is expressly assumed in writing
by the Buyer; and any liability or obligation with respect to any employees
of the Seller arising on or prior to the Closing Date or in connection with
their employment by the Seller including any liability for any "employee
pension benefit plan," as that term is defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974;
(c) any liability or obligation of the Seller arising subsequent to
the Closing Date arising out of or in connection with any transactions or
events which occurred on or prior to the Closing Date except to the extent
that such liability or obligation is expressly assumed hereunder or in
writing by the Buyer;
(d) any liability or obligation of the Seller for federal, state or
local taxes on or measured by income;
(e) any liability or obligation of the Seller arising out of or in
connection with any lease, contract, agreement or commitment which is not
assigned to or expressly assumed hereunder or in writing by the Buyer;
(f) any liability or obligation of the Seller arising out of
activities or omissions of the Seller taking place after the Closing Date;
(g) any liability or obligation the Seller may have under or in
respect of any deposit at the Branch and excluded from the definition of
"Deposits" pursuant to Section 1.11, except as expressly assumed by the
Buyer hereunder or in writing prior to or at the Closing;
(h) any liability or obligation the Seller may have under or in
respect of any deposit at the Branch and excluded from the Deposits assumed
by the Buyer pursuant to Section 2.1(a);
(i) any liability of the Seller relating to the ownership, operation
or utilization of real property in violation of any Environmental Law; and
(j) any other liability or obligation the Seller may have incurred or
may incur prior to, on or following the Closing Date in connection with the
operations, business or affairs of the Branch, except as specifically
provided in Sections 2.1 and 2.2 or to the extent such liability or
obligation is expressly assumed hereunder or in writing by the Buyer.
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2.4 Transfer of Assets. In consideration of assumption of the Liabilities
and payment of the amounts called for by Article III at the Closing, the Seller
shall irrevocably sell, transfer, assign and deliver to the Buyer and the Buyer
shall purchase and accept delivery of the following Assets:
(a) all Branch Loans secured by Branch Deposits, including (as
provided in Paragraph 3 of Schedule 1 hereto) accrued interest thereon to
the Closing Date; provided, however the Buyer has the right to reject any
such loans upon notice to the Seller at least two (2) Business Days prior
to the Closing Date;
(b) all of the Seller's right, title and interest in and to the
Personal Property set forth on Exhibit E attached hereto and incorporated
herein by this reference, other than any such Personal Property disposed of
in the ordinary course of business prior to the Closing Date and in
accordance with the provisions of this Agreement and other than any signs
or proprietary items; plus any and all substitutions therefor and
replacements and additions thereto which are purchased by the Seller prior
to the Closing Date and which are agreed to by the Buyer, together with the
Seller's books and records with respect thereto;
(c) all of the Seller's right, title and interest in and to the Lease
and all contracts, commitments and agreements which the Buyer is assuming
pursuant to Sections 2.1 and 2.2, together with Seller's books and records
with respect thereto, and all right, title and interest to all deposits,
prepayments and payments, whether as an advance, deposit or otherwise, with
respect thereto. To the extent such contracts, commitments or other
agreements relate to the conduct of business by the Seller at the Branch
and at locations other than the Branch, such contracts, commitments or
agreements shall be assigned to the Buyer only to the extent the same are
applicable to the Branch. If the Seller shall have received, on or prior to
the Closing Date, any payments under any such contract, commitment or
agreement (whether as an advance, deposit or otherwise) which relate to the
conduct of business at the Branch after the Closing Date, then an amount
equal to the aggregate of such payments shall be deemed to be a Liability
assumed by the Buyer for the purpose of calculating the Assumption Price
pursuant to Article III hereof;
(d) all of the Seller's right, title and interest in and to all cash
on hand at the Branch and cash due from banks to the Branch with respect to
Deposits assumed on the Closing Date and all of the Seller's rights in and
to the Deposits as of the Closing Date, subject, in the case of the
Deposits, to the individual depositors' continuing right of withdrawal;
(e) all assets of the Seller used at the Branch as of June 30, 1998 or
acquired thereafter in the ordinary and regular course of business of the
Branch and which have not been disposed of in the ordinary and regular
course of business of the Branch and in accordance with this Agreement on
or prior to the Closing Date, except for the Retained Assets;
(f) all of the Seller's right, title and interest in the Branch
Premises, together with the Seller's books and records with respect
thereto;
(g) all claims and causes of action the Seller has or might have
against any third party arising out of, in connection with or with respect
to the Assets or the Liabilities, including, but not limited to, claims
under the Seller's insurance policies with respect to the Assets or the
Liabilities;
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(h) all of the business connected with the Assets and Liabilities
being transferred hereunder and goodwill, if any, of the Branch; and
(i) all other assets of the Branch not listed in this Section 2.4,
including all items in transit and routine suspense resources, but not
including any asset set forth in Section 2.6 herein. The Seller shall hold
the Buyer harmless from any loss regarding any items in transit which are
rejected if it creates an overdraft in an account which does not have
adequate funds on deposit at the time of the Closing to cover said items.
Notwithstanding the foregoing provisions of this Section 2.4, if the
assignment or attempted assignment of any Asset would be invalid or would
constitute a breach of any lease, contract, agreement or commitment to which the
Seller is a party or by which it may be bound, that Asset shall be used, held
and/or received by the Seller for the benefit of the Buyer in accordance with
the Buyer's instructions and at the Buyer's expense, and the Seller shall,
without further consideration, convey, transfer, assign and deliver to the Buyer
all such Assets at the earliest time practicable. The Seller shall not be liable
to the Buyer for any loss or liability incurred in connection with any such
Asset or the Seller's handling of any such Asset, except to the extent that such
loss or liability is due to the Seller's gross negligence or intentional
misconduct.
All such sales, conveyances, transfers, assignments and deliveries shall be
effected by such assignments, deeds, bills of sale and other instruments as
shall be reasonably requested by counsel for the Buyer.
2.5 Assignment of Leases; Etc. The Seller shall obtain the consents
necessary for the assignment of the Lease and the contracts, commitments and
agreements set forth on Exhibit D.
2.6 Retained Assets. Notwithstanding any provision of this Agreement to the
contrary, the following assets and the Seller's right, title and interest
therein shall not be transferred to or purchased by the Buyer at the Closing:
(a) all Loans of the Branch rejected by the Buyer as well as all loans
not secured by Branch Deposits;
(b) all funds relating to retirement and pension plans or programs
benefitting employees employed by the Seller at the Branch;
(c) all of the Seller's insurance policies maintained with respect to
the Branch;
(d) any tangible personal property not listed on Exhibit E, except for
such tangible personal property substituted for, replaced for, or added to
the Personal Property set forth on Exhibit E which are purchased by the
Seller prior to the Closing Date and which are agreed to by the Buyer; and
(e) any non-routine suspense resources.
2.7 Individual Retirement Accounts. With respect to Branch Deposits which
are Individual Retirement Accounts ("IRAs"), the Seller will use its best
efforts and will cooperate with the Buyer, both before and after the Closing, in
taking whatever actions are reasonably necessary to accomplish either the
appointment of the Buyer as successor custodian or the delegation to the Buyer
of the Seller's authority and responsibility as custodian of all such IRA
deposits except self-directed IRA deposits, including but not limited to,
sending to the depositors thereof appropriate notices, cooperating with the
Buyer in effecting the foregoing, and filing any
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appropriate applications with applicable Governmental Bodies. If any such
delegation is made to the Buyer, the Buyer will perform all of the duties to
delegated and comply with the terms of the Seller's agreement with the depositor
of the IRA deposits affected thereby.
ARTICLE III
ASSUMPTION PRICE; ALLOCATION
3.1 Determination and Payment of Assumption Price. The Seller and the Buyer
agree that on the Closing Date the Seller will pay to the Buyer, by official
bank or clearing house check or by wire transfer of immediately available funds
to an account at the Buyer's main office at El Centro, California, in the manner
directed by the Buyer in a notice to the Seller on the day next preceding the
Closing Date, an amount (the "Assumption Price") equal to: (i) the aggregate
amount of the Liabilities to be assumed by the Buyer pursuant hereto determined
in accordance with Schedule 1 attached hereto; plus (ii) the amount of $250,000;
less (iii) the sum of (a) the cash on hand and due from banks at the Branch
transferred to the Buyer hereunder, plus (b) the book value of the Personal
Property acquired pursuant to Section 2.4(b), plus (c) the book value of the
Loans acquired pursuant to Section 2.4(a) determined in accordance with Schedule
1 attached hereto, plus (d) an amount equal to one percent (1%) of the Deposits
assumed pursuant to Section 2.1(a), exclusive of any Deposits rejected by the
Buyer pursuant to Section 2.1(a) and exclusive of accrued interest thereon. The
aggregate amount of the Liabilities shall be determined in accordance with
Schedule 1 in good faith by an accounting to be conducted jointly by the Buyer
and the Seller based upon the Branch Deposit Trial Balance Report prepared by
the Seller. The book value of the Loans acquired shall be determined in
accordance with Schedule 1 in good faith by an accounting to be conducted
jointly by the Buyer and the Seller based upon the Branch Loan Trial Balance
Report prepared by the Seller. The book value of the Personal Property acquired
pursuant to Section 2.4(b) shall be determined in accordance with Schedule 1 in
good faith by an accounting to be conducted jointly by the Buyer and the Seller
based upon the books and records of the Branch. The Buyer and the Seller shall
complete their provisional accounting on the Business Day next preceding the
Closing Date and shall jointly execute, and shall deliver to each other on the
Closing Date, a certificate setting forth the amount of cash on hand and due
from banks at the Branch transferred to the Buyer hereunder, the amount of such
Liabilities, the book value of the Loans and Personal Property acquired, and
stating the Assumption Price to be paid by the Seller to the Buyer on the
Closing Date. Final determination of the Assumption Price and final settlement
of any payment or refund shall be made in accordance with Section 8.2.5.
3.2 Allocation of the Consideration for Acquisition of the Branch. The
Buyer and the Seller hereby agree that the amount paid by the Buyer for the
Assets, business and properties acquired by the Buyer hereunder, including the
Premises and the Personal Property, shall be allocated as determined in Section
3.1. The Buyer and the Seller agree that the valuations set forth in Section 3.1
were determined by the Buyer and the Seller in good faith and at arm's length
and that the Assumption Price to be paid by the Seller to the Buyer pursuant to
the terms of this Agreement has been agreed upon and established, and the
respective parties have entered into this Agreement, on the basis of the
valuations as determined herein and in Schedule 1.
3.3 Assumption Price Deposit. Simultaneously with the execution of this
Agreement the Buyer is hereby depositing the amount of $250,000 with the Seller
(the "Assumption Price Deposit"), receipt of which is hereby acknowledged. The
Assumption Price Deposit shall be held by the Seller in the Buyer's name in a
noninterest-bearing deposit account at the Seller. Upon consummation of the
transactions contemplated in this Agreement the Buyer shall be credited the
amount of the Assumption Price Deposit as set forth in Section 3.1 and Buyer
shall forfeit any further claim to the Assumption Price Deposit. In the event
the transactions contemplated in this Agreement are not consummated for the
reasons set forth in Section 9.1(a)(ii) or 9.1(a)(iii)(a), then, pursuant to
Section 9.2, the Buyer shall forfeit any further claim to the Assumption Price
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Deposit. Except as expressly provided in this Section or in Section 9.2, in the
event the transactions contemplated in this Agreement are not consummated for
any other reasons, then the Seller shall immediately refund the Assumption Price
Deposit to the Buyer.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
4.1 Representations, Warranties and Covenants of the Seller. The Seller
hereby represents, warrants and covenants to the Buyer as follows:
4.1.1 Powers and Authority. The Seller is a California-chartered
industrial loan company duly organized, validly existing and in good standing
under the laws of the State of California with full power and authority to
conduct an industrial loan business at the Branch as now conducted by it, to own
and lease all of the assets owned or held under lease by it at the Branch and to
sell the Branch (except to the extent that the approvals contemplated by
Sections 6.1.1, 6.1.2, 6.1.3 and 6.1.4 have not yet been obtained). The Seller
conducts, and on the Closing Date will conduct, an industrial loan business at
the Branch and does not, and will not on the Closing Date, operate a trust
department at the Branch. The execution and delivery of this Agreement by the
Seller have been duly authorized by all necessary corporate action on the part
of the Seller (other than approval of this Agreement and the transactions
contemplated hereby by the Seller's shareholders, if required by law), which
authorization will not have been altered, amended, modified or revoked before
the Closing Date, and, upon execution and delivery, this Agreement, subject to
its approval by the Seller's shareholders, if required by law, will constitute a
valid and binding obligation of the Seller enforceable in accordance with its
terms. Further, provided all of the conditions specified in Sections 6.1.1.
through 6.1.4 have been satisfied prior to the Closing Date, on the Closing Date
the Seller will have the full power and authority to grant, sell and assign all
rights and properties to be sold and assigned hereunder and to perform its
obligations hereunder. The Deposits contemplated to be assumed hereunder will
not be more than ten percent (10%) of the Seller's total deposits as of June 30,
1998 and, therefore, the Seller may perform its obligations pursuant to this
Agreement without shareholder approval.
4.1.2 Other Agreements. Provided all of the conditions specified in
Section 6.1 have been satisfied prior to the Closing Date, the execution and
delivery of this Agreement by the Seller and the consummation of the
transactions contemplated herein will not:
(a) result in a material breach of or violate any of the material
terms or conditions of, or constitute a material default under, the
Seller's articles of incorporation or bylaws or any contract,
agreement, commitment, indenture, note, bond, license, mortgage, deed
of trust or other instrument or obligation to which the Seller is a
party or by which it or any of its properties or assets may be bound
or affected; or
(b) violate any law, or any rule or regulation of any
Governmental Body, or any order, writ, injunction, judgment or decree
of any court or Governmental Body applicable to the Seller, the Assets
or the business of the Branch that would have a material adverse
effect upon the transactions contemplated by this Agreement.
4.1.3 Branch Reports. The Branch Deposit Trial Balance Report included
in Exhibit A and to be provided to the Buyer pursuant to Section 5.2.8 and the
Branch Loan Trial Balance Report included in Exhibit B and to be provided to the
Buyer pursuant to Section 5.2.9: (i) are or will be prepared in accordance with
the books and records of the Seller maintained by the Seller in the ordinary and
regular course of its business relating to the conduct of business at
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the Branch; and (ii) are or will be substantially correct and substantially
complete and fairly present the material information required pursuant to
Sections 1.5 and 1.6, respectively.
4.1.4 Branch Information. The financial information used in
determining the aggregate amount of the Liabilities, the cash on hand at the
Branch, the book value of the Loans acquired, the book value of the Personal
Property acquired, and the Assumption Price in accordance with the provisions of
Section 3.1 will be prepared in accordance with the books and records of the
Seller maintained by the Seller in the ordinary and regular course of its
business relating to the conduct of business at the Branch, will be
substantially complete and substantially correct and will fairly present the
material financial and other data regarding the Branch. The books and records of
the Seller maintained by the Seller with respect to its business at the Branch
are, and until the Closing Date will be, kept and prepared in accordance with
the accounting principles applied by the Seller with respect to its other branch
offices.
4.1.5 Personal Property. Exhibit E attached hereto and incorporated
herein contains an itemized list of all equipment, furniture and other tangible
personal property leased or owned by the Seller which is to be transferred or
sold to the Buyer pursuant to this Agreement (the "Personal Property"). Unless
otherwise indicated on Exhibit E, the Seller has, and on the Closing Date will
have, good and marketable title to all of the Personal Property, in each case
free and clear of all mortgages, pledges, liens, security interests, conditional
sale agreements, charges, encumbrances and restrictions of every kind and
nature.
4.1.6 Premises. The Seller will deliver the Premises to the Buyer at
the Closing in substantially the same condition as it is in on the date hereof;
except for reasonable wear and tear and repairs which, to the best of the
Seller's knowledge, are the responsibility of the landlord. As of this date, to
the best of the Seller's knowledge, there are no repairs to be completed by the
landlord. With respect to the Lease, neither the Seller nor, to the best of the
Seller's knowledge, the landlord is, and on the Closing Date neither the Seller
nor, to the best of the Seller's knowledge, the landlord will be, in default
under the Lease and the Lease has not been amended and is currently in full
force and effect in the form attached hereto as Exhibit C, except as provided in
Sections 5.2.4. and 5.3.3. On the Closing Date, there will be no additional
premises leased to or owned by the Seller in connection, in whole or in part,
with the business of the Branch.
4.1.7 Contracts and Agreements. Exhibit D attached hereto and
incorporated herein is, to the best of the Seller's knowledge, after due
inquiry, a complete and correct list of all contracts, agreements and other
commitments (other than policies of insurance and retirement, pension, bonus,
profit-sharing, stock option, stock purchase and other fringe benefit plans),
entered into in connection, in whole or in part, with the business of the
Branch, whether written or oral, and of all proposed or uncompleted capital
expenditures or major maintenance projects heretofore authorized in connection,
in whole or in part, with the business of the Branch. Each contract, agreement
and other commitment set forth in Exhibit D is, and on the Closing Date will be,
and each contract, agreement or other commitment referred to in Section 2.2(c)
on the Closing Date will be, valid and enforceable in accordance with its terms.
To the extent available (and, if not available after diligent search, clearly
indicated on Exhibit D as not available), a complete and correct copy of each
written contract, agreement and other commitment will be delivered to the Buyer
within thirty (30) days from the date hereof, and a substantially complete and
substantially correct detailed summary of each oral contract, agreement and
other commitment and of each uncompleted and proposed capital expenditure or
major maintenance project listed in Exhibit D is set forth in Exhibit D. Except
as otherwise set forth in Exhibit D, each contract, agreement and other
commitment listed therein is, and on the Closing Date will be, assignable to the
Buyer by the Seller without the consent of any third party and without any
payment or penalty, and the Seller has not taken any action which impairs the
right of further assignment thereof by
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any immediate or remote assignee of the Seller. The Seller is not, and on the
Closing Date will not be, in default in any material respect under any contract,
agreement or commitment set forth in Exhibit D or referred to in Section 2.2(c)
and, to the best of the Seller's knowledge, no other party under any such lease,
contract agreement or commitment is in default in any material respect
thereunder, and, to the best of the Seller's knowledge, all of the same are free
and clear of all mortgages, pledges, liens, security interests, conditional sale
agreements, charges, encumbrances and restrictions of any kind and nature
created by or on behalf of the Seller.
4.1.8 Pending Litigation. There is no action, suit, claim, charge,
complaint, proceeding or investigation (each a "Claim") pending or, to the best
of the Seller's knowledge, threatened against the Seller which would materially
adversely affect the business of the Branch, any of the Assets, the transactions
contemplated hereby, or the Seller's ability to perform its obligations
hereunder, at law or in equity, in any court, before any arbitrator or
arbitration tribunal or before or by any federal, state, municipal or other
domestic or international governmental authority, department, commission, board,
agency or other instrumentality (collectively, a "Governmental Body"). There is
no outstanding judgment, order, writ, injunction or decree of any court, any
arbitrator or arbitration tribunal or any Governmental Body against or affecting
the business of the Branch or any of the assets used in connection, in whole or
in part, with the business of the Branch, which would materially adversely
affect the transactions contemplated hereby or the Seller's ability to perform
its obligations hereunder.
4.1.9 Compliance with the Law. Other than a certificate to engage in
the industrial loan business issued by the State of California and a certificate
of authorization to establish a branch facility issued by the State of
California, to the best of the Seller's knowledge, after due inquiry, the Seller
is not required to obtain or maintain any license, permit, authorization or
approval from any Governmental Body in order to conduct its industrial loan
business at the Branch as now conducted by it and to own and operate the
properties and assets utilized by it in such business. No Claim is pending nor
has the Seller been threatened with any Claim wherein the remedy sought is the
revocation or limitation of any governmental license or permit and the Seller
does not know of any basis or grounds for any such revocation or limitation. To
the best of the Seller's knowledge, the Seller has complied with all laws,
rules, regulations, ordinances, codes, orders, licenses and permits relating to
and materially affecting the conduct of its banking business at the Branch.
4.1.10 Employees. Exhibit F attached hereto and incorporated herein
contains a complete and accurate list of the names and titles of all officers
and employees of the Seller employed at the Branch. The Buyer may, subject to
employee consent, on a confidential basis, review the salaries, wages, and all
other forms of compensation and benefits provided to the Branch officers and
employees and any existing employment agreements, contracts or commitments with
any such officers and employees. With respect to the Branch there are at
present, and on the Closing Date except as previously disclosed to the Buyer in
writing, there will be no disputes or controversies with any union, no pending
or threatened union organization drives or representation elections, no known
threats of strikes or work stoppages, and no payments due from the Seller to,
and no collective bargaining contracts with, any union.
4.1.11 Environmental Liabilities. To the best of the Seller's
knowledge, the Seller is conducting and has conducted the business of the
Branch, and is using and has used the Premises in compliance with all applicable
Environmental Laws. To the best of the Seller's knowledge, the Premises and all
real property in which there is a security interest for a Loan are not subject
to any existing, pending or threatened investigation, action or proceeding,
including any notice of violation, by any Governmental Body regarding
contamination of any part of thereof or infractions of any law, statute,
ordinance or regulation or any license or permit issued by any Governmental Body
pertaining to health, industrial hygiene or environmental safety or
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environmental conditions on, under or about the Premises or such real estate,
except for such investigations, actions, proceedings, notifications or
infractions which, in the aggregate, have not caused and could not cause a
material adverse change in the business condition or results of operations of
the Branch. To the best of the Seller's knowledge, there has not been any
generation, use, handling, transportation, treatment or disposal of any
Hazardous Substances in connection with the conduct of the business of the
Branch or such real estate that has or might result in any material liability
under any Environmental Law.
4.1.12 Deposits at the Branch. The Seller's deposits are insured by
the FDIC pursuant to the Bank Insurance Fund. None of the Deposits are
"brokered" deposits or public deposits. Since December 31, 1997 the Seller has
not transferred, and between the date hereof and the Closing Date, the Seller
will not transfer, any Deposits to any of the Seller's other branches, except in
accordance with the express request of the depositor in the ordinary and regular
course of business, or except as may be agreed in writing by the Buyer or as may
be provided for in this Agreement.
4.1.13 Loans at the Branch. All of the Loans represent actual loan
transactions, are legal, valid and enforceable, except pursuant to bankruptcy
and similar laws, and are authorized under applicable federal and state laws
and, except as set forth on Exhibit B hereto, the Seller's books and records
accurately reflect the payment history and present balance as to each such Loan.
Except as set forth in Exhibit B, none of the borrowers on said Loans has
notified the Seller of any offset or defense, valid or invalid, to its
obligations under said Loans and none of said Loans is in default, classified by
any examining authority, specifically reserved against (as compared to general
reserves) or nonperforming. The Seller makes no representation or warranty
concerning the collectability of any Loan acquired by the Buyer hereunder.
4.1.14 No Material Adverse Change. Since December 31, 1997, and except
as to the Retained Assets and the Retained Liabilities and except as to the
effects of this transaction, to the best of the Seller's knowledge: (i) the
Seller has conducted the business of the Branch in the ordinary and regular
course thereof; (ii) except as otherwise set forth in Exhibit G hereto, there
has not been any: 1) material adverse change in the business, operations or
prospects of the Branch or in its condition, financial or otherwise, or in its
assets or liabilities as reflected on Exhibits A and B; 2) damage, destruction
or loss affecting the Branch Premises, business or assets, whether or not
covered by insurance, which, either singly or in the aggregate, has materially
affected said business or assets or which is substantial in amount; 3) material
change in the nature of or in the condition, other than financial, of the
business of the Branch; 4) event or condition of any character whatsoever the
occurrence of which materially and adversely affected the business, operations,
prospects, Premises, or assets of the Branch; or 5) to the best of the Seller's
knowledge, event or condition of any character whatsoever which is reasonably
likely to result in a material change in the nature of the business of the
Branch or a material adverse change in the condition, financial or otherwise, of
said business or is reasonably likely materially and adversely to affect said
business, operations, prospects, Premises, liabilities or assets, other than any
event or condition which is generally known and understood by persons
knowledgeable in the industry to affect the industry or the economy in general
and other than as contemplated by this Agreement; and (iii) in its conduct of
the business of the Branch, the Seller has not, except in the ordinary and
regular course of the business of the Branch, incurred any material liabilities
or material obligations, or purchased or otherwise acquired, mortgaged, pledged
or subjected to any lien, charge or other encumbrance, or sold or transferred
any material assets, or canceled any material debts or material claims, or
suffered any material and extraordinary losses, or breached any material
contract or material commitment, or waived any rights of material value.
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4.1.15 Branch Employees. The Seller agrees to use its best efforts to
assist the Buyer in retaining the services of all of the Branch employees the
Buyer desires to retain pursuant to Section 4.2.4 and the Seller shall not
compete with the Buyer for those Branch employees; provided, however, nothing
contained herein shall preclude a Branch employee from requesting the Seller to
continue his or her employment with the Seller.
4.1.16 Brokers. Except for Banksite, a sole proprietorship, all
negotiations relating to this Agreement have been carried on between and on
behalf of the Buyer and the Seller directly, without the intervention of any
agent or broker. The Seller hereby agrees to indemnify the Buyer and hold the
Buyer harmless from and against any claims for any loss, liability, damages,
cost or expense incurred by reason of any brokerage commission or finder's fee
alleged to have been payable because of any act, omission or statement of the
Seller.
4.1.17 Representations and Warranties. No representation or warranty
by the Seller contained in this Agreement or any exhibit hereto or in any
written statements, certificates or other documents furnished to the Buyer
pursuant to this Agreement or in connection with the transactions contemplated
hereby contains or will contain any untrue statement of a material fact nor will
all of such representations and warranties and all of the contents of this
Agreement and all of such statements, certificates and other documents, taken as
a whole, omit to state any material fact necessary to make the statements herein
or therein not misleading. Each and all of the foregoing warranties and
representations are deemed made as of the date hereof and at the Closing.
4.2 Representations, Warranties and Covenants of the Buyer. The Buyer
hereby represents, warrants and covenants to Seller as follows:
4.2.1 Powers and Authority. The Buyer is a California-chartered
banking corporation duly organized, validly existing and in good standing under
the laws of the State of California with full power and authority to conduct a
commercial banking business as now conducted by it. The execution and delivery
of this Agreement by the Buyer have been duly authorized by all necessary
corporation action on the part of the Buyer (other than approval of this
Agreement and the transactions contemplated hereby by the Buyer's shareholders,
if required by law), which authorization will not have been altered, amended,
modified or revoked before the Closing Date, and, upon execution and delivery,
this Agreement, subject to its approval by the Buyer's shareholders, if required
by law, will constitute a valid and binding obligation of the Buyer enforceable
in accordance with its terms. Further, provided all of the conditions specified
in Sections 6.1.1. through 6.1.4 have been satisfied prior to the Closing Date,
on the Closing Date the Buyer will have the full power and authority to purchase
and assume all rights and properties to be purchased and assigned hereunder and
to perform its obligations hereunder and to operate a branch facility on the
Premises.
4.2.2 Other Agreements. Provided all of the conditions specified in
Section 6.1 have been satisfied prior to the Closing Date, the execution and
delivery of this Agreement on behalf of the Buyer and the consummation of the
transactions contemplated herein will not:
(a) result in the breach of or violate any of the material terms
or conditions of, or constitute a material default under, the Buyer's
articles of incorporation or bylaws or any contract, agreement,
commitment, indenture, note, bond, license, mortgage, deed of trust or
other instrument or obligation to which the Buyer is a party or by
which it or any of its properties or assets may be bound or affected;
or
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(b) violate any law, or any rule or regulation of any
Governmental Body, or any order, writ, injunction, judgment or decree
of any court or Governmental Body applicable to the Buyer, the Assets,
the Liabilities or the business of the Branch that would have a
material adverse effect upon the transactions contemplated by this
Agreement.
4.2.3 Pending Litigation. There is no pending or, to the best of the
Buyer's knowledge, threatened Claim involving the Buyer, at law or in equity or
before any Governmental Body, which would materially adversely affect the
transactions contemplated hereby or the Buyer's ability to perform its
obligations hereunder.
4.2.4 Branch Employees. The Buyer agrees to use its best efforts to
retain all the employees of the Branch as listed on Exhibit F attached hereto
and agrees to notify the Seller ten (10) Business Days prior to the Closing of
any employees the Buyer will not employ; provided, however, that nothing
contained herein shall obligate the Buyer to employ any of the Branch employees
or preclude the termination of any employee by the Buyer for cause which may
include, but is not limited to, Branch staff reduction(s). The Buyer further
agrees that all Employees of the Branch hired by the Buyer will be entitled to
any and all rights and benefits, and be subject to any and all obligations of
any other employee of the Buyer, and for purposes of any existing employee
benefit plan of the Buyer, such former employees of Seller retained by the Buyer
will be considered employees of the Buyer from the date the employee was
employed by the Seller, to the extent permissible under the terms of the Buyer's
plan or policy.
4.2.5 Brokers. Except for the broker engaged by the Seller, Banksite,
all negotiations relating to this Agreement have been carried out between and on
behalf of the Buyer and the Seller directly without the intervention of any
agent or broker. The Buyer hereby agrees to indemnify the Seller and hold the
Seller harmless from and against any claims for any loss, liability, damages,
cost or expense incurred by reason of any brokerage commission or finder's fee
alleged to have been payable because of any act, omission or statement of the
Buyer.
4.2.6 Representations and Warranties. No representation or warranty of
the Buyer contained in this Agreement or any exhibit hereto or in any written
statement, certificate or other document furnished to the Seller pursuant to
this Agreement or in connection with the transactions contemplated hereby
contains or will contain any untrue statement of a material fact nor will all
such representations and warranties and all of the contents of this Agreement
and all of such statements, certificates and other documents omit to state any
material fact necessary to make the statements herein or therein not misleading.
Each and all of the foregoing warranties and representations are deemed made as
of the date hereof and at the Closing.
ARTICLE V
OBLIGATIONS OF THE PARTIES BEFORE CLOSING DATE
5.1 Obligations of Both Parties. The Seller and the Buyer agree that
subsequent to the date hereof and prior to the Closing Date:
5.1.1 Administrative Approvals. Promptly following execution of this
Agreement, the parties shall, with copies to the other of all submitted
material, submit this Agreement to the California Commissioner of Financial
Institutions (the "Commissioner") for approval, as required in Section 4879.09
of the California Financial Code, and the Buyer shall submit this Agreement to
the FRB for approval, as required by 12 U.S.C. Section 1828(c)(2). The parties
hereto shall also promptly file, either individually or jointly, as may be
required, all other applications, amendments thereto, supporting documents and
affidavits, and shall publish all other notices and perform all other acts which
may be required by law or regulation to obtain the final
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approvals of the Commissioner, the FRB and any other Governmental Body whose
approval is a prerequisite to the consummation of the transactions contemplated
herein. The Seller and the Buyer shall furnish the other upon request all such
information and material concerning the Branch, the Seller or the Buyer, as the
case may be, required for inclusion in, or preparation of, any applications
required to be made for any regulatory approvals to the acquisition by the Buyer
of the Branch from the Seller hereunder and the transactions hereby
contemplated, and shall keep each other apprized on a current basis of the
processing and status of all such filings and applications for regulatory
approvals.
5.1.2 Best Efforts. Each party hereto will use its best efforts to
effectuate the transactions hereby contemplated and to fulfill the conditions of
its obligations under this Agreement.
5.2 Obligations of Seller. The Seller agrees that subsequent to the date
hereof and prior to the Closing Date:
5.2.1 Shareholder Approval of Agreement. This Agreement will be
submitted to the shareholders of Seller for approval to the extent necessary
under Section 4879.04 of the California Financial Code. If required, the Seller
agrees to seek shareholder approval, in conformance with all appropriate legal
requirements, accompanied by the favorable recommendations of its board of
directors.
5.2.2 Access to Information. Without interfering with the normal
course of business at the Branch, the Buyer and its counsel, accountants and
other representatives shall have full access, upon reasonable notice and mutual
convenience, to all properties, assets, books, accounts, records, contracts and
documents of the Seller related to the conduct of business at the Branch
contemplated to be transferred or assigned hereunder and, in addition thereto,
the Seller shall furnish or cause to be furnished to the Buyer and its
representatives, at the Buyer's expense, such copies of said copies of said
books, accounts, records, contracts and documents as may be reasonably
requested.
5.2.3 Conduct of Business. The Seller shall, except as to the Retained
Assets and the Retained Liabilities: (i) conduct business at the Branch only in
the ordinary course, consistent with past practices; (ii) carry on the Branch's
business practices and keep the Branch's books of account, records and files in
substantially the same manner as heretofore; (iii) use its best efforts to
preserve the Branch's business organization intact, to retain the services of
the Branch's present officers and employees and to preserve the goodwill of the
Branch's depositors, customers and suppliers and others having business
relations with the Branch; and (iv) duly and timely file all reports and returns
required to be filed with any Governmental Body with respect to the business of
the Branch.
5.2.4 Ordinary Course and Other Activities. Except as set forth in
this Agreement, the Seller shall not, without the prior written consent of the
Buyer: (i) sell, lease, abandon, assign, transfer, license, encumber or
otherwise dispose of any Personal Property or Assets other than in the ordinary
course of business, or enter into any agreement to do so; (ii) except as
otherwise expressly provided herein, transfer any Assets or Deposits from the
Branch to the Seller's other branches or operations, subject, in the case of
Deposits, to the individual depositor's continuing right of withdrawal; (iii)
enter into any leases, contracts, agreements or other commitments, whether
written or oral, in connection, in whole or in part, with the business of the
Branch other than leases, as lessee, of personal property (copies of which shall
be provided to the Buyer) under which the Seller is not liable or obligated in
an amount in excess of $5,000 in the aggregate and all such leases, contracts,
agreements and commitments so entered into by the Seller shall be assignable to
the Buyer by the Seller without the consent of any third party and
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without any payment or penalty, and the Seller will not take any action which
impairs the right of further assignment thereof by any immediate or remote
assignee of the Seller; (iv) increase the compensation or the annual rate of
compensation or change the method of determining the compensation of any
employee listed in Exhibit F hereto except in accordance with the Seller's
existing policies and practices with respect to compensation and bonuses at the
Branch and only in the ordinary course; (v) relocate, or file any application to
relocate, the Branch, except as such an application may be necessary to relocate
the Branch as a result of a fire or other natural disaster, and except as may be
necessary to transfer the Retained Assets and the Retained Liabilities after the
Closing Date; (vi) enter into a new lease for the Branch Premises for the period
subsequent to December 31, 1998; or (vii) enter into any contract, agreement,
commitment, understanding or other arrangement to dispose of the Branch or the
Assets or Liabilities other than pursuant to the terms of this Agreement.
5.2.5 Condition of Assets. The Seller shall keep and maintain the
Premises, all Personal Property and all of the Assets in good operating
condition and repair, subject to reasonable wear and tear and further subject to
the provisions of Section 6.2.6.
5.2.6 Consents. The Seller will use its best efforts to obtain and
deliver to the Buyer on or prior to the Closing Date all required consents
authorizing the transfer and assignment to the Buyer of, or the substitution of
the Buyer for the Seller under, the Lease and all contracts, agreements and
commitments that are to be sold, conveyed, transferred, assigned and delivered
to the Buyer hereunder, including, but not limited to, those set forth in
Exhibit D hereto and all other Assets, each such consent to be effective prior
to or as of the Closing Date. The assignment of the Lease and the landlord's
consent shall be in substantially in the form of Exhibit H. All such other
consents shall be in form and substance reasonably satisfactory to counsel for
the Buyer.
5.2.7 Personal Property Report. On the day next preceding the Closing
Date the Seller will prepare and furnish to the Buyer an update of the Personal
Property Exhibit E as of the day next preceding the Closing Date. Such final
Exhibit E shall comply with the representations and warranties set forth in
Section 4.1.5.
5.2.8 Deposit Update. Not later than five (5) Business Days prior to
the Closing Date the Seller shall deliver to the Buyer a Branch Deposit Trial
Balance Report listing the Deposits to be assumed by the Buyer. On the day next
preceding the Closing Date the Seller shall deliver to the Buyer an updated
Branch Deposit Trial Balance Report.
5.2.9 Loan Update. Not later than five (5) Business Days prior to the
Closing Date the Seller shall deliver to the Buyer a Branch Loan Trial Balance
Report listing the Loans to be purchased by the Buyer. On the day next preceding
the Closing Date the Seller shall deliver to the Buyer an updated Branch Loan
Trial Balance Report.
5.2.10 Data Conversion. At the Buyer's reasonable request, the Seller
shall cooperate with the Buyer in its data conversion for the Branch prior to
the Closing and for sixty (60) days thereafter, including, but not limited to,
all reasonable assistance in converting loan and deposit accounts, merchant
account relationships, and ATM cards.
5.2.11 Extension Fee. In the event the transactions contemplated in
this Agreement are not consummated prior to January 1, 1999, the Seller agrees
to refund the pro rata portion of the current month's extension fee paid by the
Buyer pursuant to Section 5.3.4; said refund shall be paid upon termination of
this Agreement or upon consummation of the transactions contemplated in this
Agreement.
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5.2.12 No Breach. The Seller shall not take or fail to take any action
which taking or failure would cause or constitute a breach, or would, if it had
been taken or failed to be taken prior to the date hereof, have caused or
constituted a breach, of any of the representations and warranties set forth in
Section 4.1; the Seller will, in the event of, or promptly after becoming aware
of the occurrence of, or the impending or threatened occurrence of, any event
which would cause or constitute a breach or would, if it had occurred prior to
the date hereof, have caused or constituted a breach of any of the
representations and warranties set forth in Section 4.1 or the covenants set
forth in Sections 5.1 or 5.2, or which may result in the nonfulfillment of any
condition set forth in Sections 6.1 or 6.2, give detailed notice thereof to the
Buyer; and the Seller will use its best efforts to prevent or promptly to remedy
such breach or failure to fulfill such covenant or condition.
5.3 Obligations of Buyer. The Buyer agrees that subsequent to the date
hereof and prior to the Closing Date:
5.3.1 Shareholder Approval of Agreement. This Agreement will be
submitted to the shareholders of the Buyer for approval to the extent necessary
under Section 4879.04 of the California Financial Code. If required, the Buyer
agrees to seek shareholder approval, in conformance with all appropriate legal
requirements, accompanied by the favorable recommendations of its board of
directors.
5.3.2 Notification of Deposits and Loans Rejected. The Buyer agrees
that, at least two (2) Business Days prior to the Closing the Buyer will notify
the Seller, in writing, identifying: (i) the Deposits included on the Branch
Deposit Trial Balance Report provided pursuant to the first sentence of Section
5.2.8 which the Buyer is rejecting pursuant to Section 2.1(a); and (ii) the
Loans included on the Branch Loan Trial Balance Report provided pursuant to the
first sentence of Section 5.2.9 which the Buyer is rejecting pursuant to Section
2.4(a).
5.3.3 Lease Negotiations. The Buyer will immediately commence
negotiations in coordination with the Seller regarding lease terms subsequent to
September 30, 1998, for the Branch Premises.
5.3.4 Extension Fee. The Buyer agrees that: (i) in the event the
transactions contemplated in this Agreement are not consummated prior to January
1, 1999, and this Agreement has not otherwise been terminated, the Buyer will
pay the amount of $10,000 to the Seller as an extension fee for the month of
January, to be pro rated in the event the transactions contemplated in this
Agreement are consummated, or this Agreement is otherwise terminated, during the
month of January; and (ii) in the event the transactions contemplated in this
Agreement are not consummated prior to February 1, 1999, and this Agreement has
not otherwise been terminated, the Buyer will pay the amount of $10,000 to the
Seller as an extension fee for the month of February, to be pro rated in the
event the transactions contemplated in this Agreement are consummated, or this
Agreement is otherwise terminated, during the month of February.
5.3.5 No Breach. The Buyer shall not take or fail to take any action
which taking or failure would cause or constitute a breach, or would, if it had
been taken or failed to be taken prior to the date hereof, have caused or
constituted a breach, of any of the representations and warranties set forth in
Section 4.2; the Buyer will, in the event of, or promptly after becoming aware
of the occurrence of, or the impending or threatened occurrence of, any event
which would cause or constitute a breach or would, if it had occurred prior to
the date hereof, have caused or constituted a breach of any of the
representations and warranties set forth in Section 4.2 or the covenants set
forth in Sections 5.1 or 5.3, or which may result in the nonfulfillment of any
condition set forth in Sections 6.1 or 6.3, give detailed notice thereof to the
Seller; and the Buyer
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will use its best efforts to prevent or promptly to remedy such breach or
failure to fulfill such covenant or condition.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.1 Conditions Precedent to Performance by Both Parties. The obligations of
the Buyer and the Seller to consummate the transactions contemplated in this
Agreement are expressly subject to the satisfaction, on or before the Closing
Date, of each and all of the conditions set forth below, which conditions may
not be waived by either party:
6.1.1 Shareholder Approval. This Agreement shall have been duly
approved by the shareholders of the Buyer and the Seller if and to the extent
required and in any manner permitted by Section 4879.04 of the California
Financial Code; such approval being evidenced either by a vote at a
shareholders' meeting validly called for such purpose or by a writing duly
executed by the required number of shareholders.
6.1.2 Approval of the Commissioner. The Commissioner shall have given
all necessary approvals of this Agreement, including approval of a partial
business unit sale as set forth in Section 4879.02 of the California Financial
Code on terms and conditions which are not materially adverse to either party
hereto.
6.1.3 Approval of the FRB. The FRB shall have given all necessary
consents to the consummation of the transactions contemplated in this Agreement,
including the consent required pursuant to 12 U.S.C. Section 1828(c)(2), on
terms and conditions which are not materially adverse to either party hereto.
6.1.4 Other Regulatory Approvals. All other regulatory approvals and
actions shall have been obtained and taken as necessary to permit consummation
of the transactions contemplated herein in accordance with all applicable laws,
regulations and orders, on terms which are not materially adverse to either
party hereto.
6.1.5 No Claim. No Claim shall have been instituted by any
Governmental Body challenging the transactions hereby contemplated or seeking to
restrain their consummation and no Claim shall have been instituted or, to the
knowledge of either party hereto, threatened, challenging the legality of such
transactions or seeking to restrain their consummation which, in the opinion of
counsel for either party hereto, would make it impossible or inadvisable for the
parties to consummate such transactions.
6.1.6 Closing Date. The Closing shall occur on or prior to December
11, 1998, unless the date for the Closing is extended by mutual agreement.
6.2 Conditions Precedent to Buyer's Performance. The obligations of
the Buyer to perform its obligations under this Agreement are subject to the
satisfaction, on or before the Closing Date, of each and all of the conditions
set forth below in this Section 6.2. The Buyer may waive any or all of these
conditions in whole or in part without prior notice; provided, however, that if
the Seller shall be in default of any of its representations, warranties or
covenants under this Agreement, no such waiver of a condition shall constitute a
waiver by the Buyer of any of its rights or remedies at law or in equity.
6.2.1 Accuracy of Warranties and Performance of Obligations. The
representations and warranties of the Seller contained in Section 4.1 shall be
true and correct as of the Closing Date as if made on such date, and the
obligations set forth in Sections 5.1 and 5.2
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to be performed by the Seller on or before the Closing Date shall have been so
performed in all material respects; and the Seller shall have delivered to the
Buyer a certificate of its President and its Chief Financial Officer to such
effect.
6.2.2 Copies of Documents. True and complete copies of all documents
reasonably requested by the Buyer shall have been furnished to the Buyer
promptly after request therefore and, in any event, in advance of the Closing
Date.
6.2.3 Consents and Approvals. The Buyer shall have received the
consents the Seller is required to use its best efforts to obtain and deliver to
the Buyer on or before the Closing Date pursuant to Section 5.2.6 and all
licenses, permits, authorizations and approvals required by any Governmental
Body in connection with its conduct of business at the Branch.
6.2.4 Matters Relating to the Premises. The Seller shall have
delivered to the Buyer a duly executed Assignment of Lease and a duly executed
Consent of Lessor substantially in the form set forth as Exhibit H. The Buyer
and the Lessor shall have entered into a lease for the Branch Premises for the
period subsequent to December 31, 1998, on terms and conditions no less
favorable to the Buyer than prevailing market conditions for comparable property
in Hemet.
6.2.5 Books and Records. The Seller shall have made available to the
Buyer its Branch books and records as required under Section 5.2.2.
6.2.6 Force Majeure. The Seller shall maintain insurance as presently
in force on the Assets of the Branch including the Premises. In the event the
Seller suffers a loss due to earthquake, fire, flood, accident or other casualty
which adversely affects the value of any of the Assets or conduct of the
business at the Branch being acquired by the Buyer hereunder, the Buyer shall
have fifteen (15) Business Days from the date of written notice of such event
within which to terminate this Agreement by giving written notice to the Seller.
Should the Buyer not terminate this Agreement pursuant to this Section 6.2.6
within such fifteen (15) Business Day period, at the Closing the Buyer shall
take the Assets and business acquired hereunder as is, together with the
insurance proceeds or the Seller's right to the insurance proceeds relating to
the damaged Assets and business.
6.2.7 Assumption of Safe Deposit Box Business. The Buyer and the
Seller shall do all things necessary to transfer any safe deposit box business
at the Branch (if any) to the Buyer.
6.2.8 Disclosure of Employee Matters. There shall not have been
disclosed to the Buyer any matter pursuant to the third sentence of Section
4.1.10.
6.2.9 Material Changes. Except with respect to the Retained Assets and
the Retained Liabilities and the effects of this transaction, there shall not
have been any material change in the business or operations of the Branch from
that as of June 30, 1998.
6.2.10 Deposits. At the Closing the Deposits to be assumed by the
Buyer pursuant to Section 2.1(a) shall total at least Eighty Million Dollars
($80,000,000).
6.2.11 Legal Opinion. At the Closing the Seller shall have delivered
the opinion of its counsel, Law Offices of Stephanie E. Allen, in substantially
the form set forth in Exhibit J.
6.3 Conditions Precedent to Seller's Performance. The obligations of
the Seller to perform its obligations under this Agreement are subject to the
satisfaction, on or before the
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Closing Date, of each and all of the conditions set forth below in this Section
6.3. The Seller may waive any or all of these conditions in whole or in part
without prior notice; provided, however, that if the Buyer shall be in default
of any of its representations, warranties or covenants under this Agreement, no
such waiver of a condition shall constitute a waiver by the Seller of any of its
rights or remedies at law or in equity.
6.3.1 Accuracy of Warranties and Performance of Obligations. The
representations and warranties of the Buyer contained in Section 4.2 shall be
true and correct as of the Closing Date as if made on such date, and the
obligations set forth in Sections 5.1 and 5.3 to be performed by the Buyer on or
before the Closing Date shall have been so performed in all material respects;
and the Buyer shall have delivered to the Seller a certificate of its President
and its Chief Financial Officer to such effect.
6.3.2 Copies of Documents. True and complete copies of all documents
reasonably requested by the Seller shall have been furnished to the Seller
promptly after request therefore and, in any event, in advance of the Closing
Date.
6.3.3 Legal Opinion. At the Closing the Buyer shall have delivered the
opinion of its counsel, Horgan, Rosen, Beckham & Coren, L.L.P., in substantially
the form set forth in Exhibit K.
ARTICLE VII
CLOSING
7.1 Closing. The closing (the "Closing") of the transactions contemplated
by this Agreement shall take place at the Branch at 5:00 p.m., Pacific time, on
the first Friday which is a Business Day following the date on which the last to
occur of the following events shall have occurred: (i) receipt of written
approval of the transactions hereby contemplated by the FRB and the expiration
of the applicable waiting period under the Bank Merger Act; (ii) such written
approvals of this Agreement and the transactions hereby contemplated as may be
required under the California Financial Code have been given by the Commissioner
and have become effective; and (iii) receipt of any other approvals required
from any Governmental Body; or at such time or such other date as the Buyer and
the Seller agree, at the Branch or such other place as the Buyer and the Seller
may agree.
7.2 Seller's Obligations at the Closing. At the Closing, the Seller shall
do the following:
7.2.1 Transfer of Assets. The Seller shall convey, transfer, assign
and deliver to the Buyer, by instruments satisfactory in form and substance to
the Buyer and its counsel, good and marketable title to the Assets, free and
clear of any mortgages, pledges, liens, security interests, conditional sale
agreements, charges and encumbrances and restrictions of any kind and nature
whatsoever except as permitted in this Agreement, and shall execute, acknowledge
and deliver such grant deeds, bills of sale, assignments, conveyances and other
assurances, documents and instruments of transfer as may reasonably be requested
by the Buyer for the purpose of assigning, transferring, granting, conveying and
confirming to the Buyer and reducing to its possession, any and all property to
be conveyed and transferred under this Agreement.
7.2.2 Certificates and Further Documents. The Seller shall deliver to
the Buyer all of the Documents and other instruments to be delivered to the
Buyer pursuant to Sections 6.1 and 6.2 and not previously furnished to the Buyer
and such other certificates and documents as may reasonably be requested by the
Buyer with respect to the fulfillment of the conditions specified in Sections
6.1 and 6.2.
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7.2.3 Premises, Books and Records. The Seller shall deliver physical
possession of the Branch and all of the files, documents, papers, agreements,
books of account and records pertaining to the Assets and Liabilities being
transferred and assumed hereunder. The Seller agrees to make available any
records kept by the Seller relating to the Branch and not delivered hereunder.
7.2.4 Payment of Assumption Price. Pursuant to Section 3.1, at the
Closing the Seller shall credit or pay to the Buyer in the manner directed by
the Buyer on the Business Day next preceding the Closing Date the amount of the
Assumption Price to be paid to the Buyer hereunder.
7.3 Buyer's Obligations at the Closing. At the Closing, the Buyer shall do
the following:
7.3.1 Assumption of Liabilities. The Buyer shall deliver to the Seller
an undertaking in form and substance satisfactory to the Seller and its counsel
whereby the Buyer assumes and agrees to perform and discharge: (i) all of the
Liabilities set forth in Section 2.1; and (ii) all of the obligations which are
set forth in Section 2.2 and which arise after the Closing Date or are to be
performed after the Closing Date, except those obligations set forth in Sections
2.2(b) or (c), if any, which cannot be transferred without the consent of third
parties and as to which the Seller shall have been unable to obtain such
consent.
7.3.2 Purchase of Assets. The Buyer shall purchase and accept delivery
of the Assets transferred pursuant to Section 7.2.1.
7.3.3 Further Documents. The Buyer shall deliver to the Seller all of
the documents and other instruments to be delivered to the Seller pursuant to
Sections 6.1 and 6.3 and not previously furnished to the Seller and such other
certificates and documents as may reasonably be requested by the Seller with
respect to the fulfillment of the conditions set forth in Sections 6.1 and 6.3.
ARTICLE VIII
OBLIGATIONS OF THE PARTIES AFTER THE CLOSING
8.1 Seller's Obligations. The Seller agrees that, after the Closing Date:
8.1.1 Business Relationships. The Seller shall not cause, or attempt
to cause or induce, any person or firm now or hereafter supplying goods,
services or credit to the Branch to cease or diminish the furnishing of such
goods, services or credit.
8.1.2 Banking Relationships. For a period of five (5) years following
the Closing Date, the Seller will not directly or indirectly solicit deposits
from or loans to persons or entities who were Branch customers or depositors on
the date hereof, on the Closing Date or during the period between the date
hereof and the Closing Date; provided, however, that nothing in this Section
8.1.2 shall prevent the Seller from: (i) soliciting deposits or loans in
connection with advertising or solicitations directed to the public generally;
(ii) soliciting deposits from or loans to a major or statewide depositor which
has deposits at locations other than the Branch (such as, for example, a company
with more than one location or a public entity); (iii) soliciting deposits or
loans outside the State of California; (iv) continuing any existing lending or
deposit relationships domiciled at any of the Seller's Offices other than the
Branch; (v) making loans or accepting deposits applied for or made by such
Branch customers or depositors in the absence of such solicitation; or (vi)
making loans or accepting deposits applied for or made by such Branch customers
or depositors who represent Retained Assets or Retained Liabilities.
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8.1.3 Confidentiality. Neither party shall divulge or communicate,
except as may be required by applicable law, use to the detriment of the other
or for the benefit of any other person or persons, or misuse in any way, any
confidential information or trade secrets of the other acquired in connection
with or in any manner relating to this Agreement and the transactions
contemplated herein; provided, however, that the foregoing shall not apply to
any information: (i) that was or is otherwise available to the public; (ii) that
was readily available to the other party on a non-confidential basis prior to
disclosure pursuant to this Agreement; (iii) that was already lawfully in the
possession of the other party; (iv) that becomes available to a party on a non-
confidential basis after disclosure pursuant to this Agreement; or (v) that is
requested or required by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigation demand or similar
process by or of any Governmental Body. The foregoing provisions of this Section
8.1.3 shall not prohibit or limit the Buyer's use of any such information in its
conduct of its business at the Branch.
8.1.4 Notification of Customers. Promptly after the Closing Date: (i)
the Seller shall notify all persons obligated to make payments under loans that
are Retained Assets to make all future payments in respect to said obligations
to a specified address other than that of the Branch; (ii) the Seller shall
notify all persons whose deposit accounts are Retained Liabilities that all
deposits and withdrawals pertaining thereto shall be made at a specified address
other than that of the Branch; and (iii) the parties shall jointly notify all
other customers of the Branch of the change of ownership of the Branch.
8.1.5 Right to Hire Branch Employees. Pursuant to Section 4.2.4, the
Buyer shall have the right to employ all persons who are employees of the Branch
on the Closing Date, subject only to the right of any such employee to terminate
his or her employment. The Seller shall not solicit any employee that the Buyer
has agreed to hire, unless or until that employee has terminated his or her
employment with the Buyer.
8.1.6 Removal of the Seller's Property. Not later than five (5)
Business Days after the Closing Date, the Seller will remove from the Branch
premises, at Seller's expense, all of its personal property not being
transferred to the Buyer, including but not limited to, negotiable instruments,
stationery, forms, labels, logos, building signs, shipping materials, brochures
and advertising material. If the Seller does not do so, the Buyer may dispose of
same in any manner.
8.1.7 Restrictive Covenant. For a period of five (5) years after the
Closing Date the Seller and its successors and assigns shall not operate a
branch office within a five (5) mile radius of the Branch. The parties agree
that stand-alone automated teller machines ("ATMs") do not constitute branch
offices for purposes of this Agreement, so long as the Seller restricts the
activities of its stand-alone ATMs to that of dispensing cash and other products
or services and does not allow its ATMs to accept deposits and/or perform any
loan-related activities.
8.2 Obligations of Both Parties After the Closing.
8.2.1 Transfer of Credits by the Seller. The Seller agrees that it
will transfer to the Buyer any deposits and loan payments accepted by it after
the Closing Date for credit to transferred accounts, but it shall be under no
obligation to accept such deposits or loan payments.
8.2.2 Transit Items. After the Closing, each party hereto shall
generally use its best efforts to assist the other party in the adjustment and
delivery of all overages and shortages of documentary and cash items in transit,
items in collection, and any ACH, POS, wire transfers and ATM transactions
("Transit Items") as of the Closing Date, as the interest in such Transit Items
of the respective parties hereto may appear.
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8.2.3 Further Documents. After the Closing: (i) each of the parties
hereto shall execute and deliver, or cause to be executed and delivered, all
such deeds, documents and other instruments, and will take or cause to be taken
all further or other action, as the other party or its counsel may reasonably
deem necessary or desirable in order to vest in and confirm to the Buyer title
to and possession of all of the Assets and to carry out the full intent and
purpose of this Agreement; and (ii) each of the parties will permit the other
access to and the right to inspect and copy the books and records of such party
as may be reasonably necessary or appropriate to enable such other party to
prepare such further document, instruments, reports or tax returns as such other
party or its counsel determine to be necessary.
8.2.4 Prorations; Sales and Use Taxes; Insurance.
(a) The Seller and the Buyer agree that all expenses of operating
the Branch prior to, on or after the Closing Date, including but not
limited to, state and local personal property taxes, expenses for
utilities, rent, wages, salaries, accrued vacations and payments in
respect of the leases, contracts, commitments and agreements referred
to in Section 2.2, shall, to the extent possible, be determined and
prorated as of the Closing Date in connection with the determination
of the Assumption Price pursuant hereto. To the extent that such
expenses are not capable of being prorated as of the Closing Date,
such expenses shall, to the extent possible, be prorated by the Buyer
and the Seller and all unresolved Transit Items shall be allocated
between the Buyer and the Seller in accordance with Section 8.2.2
within ninety (90) days after the Closing Date and (i) all such
expenses paid by the Seller on or prior to the Closing Date and
attributable to the operation of the Branch after the Closing Date
(including any payments by the Seller in respect of the Lease and any
of the contracts, commitments and agreements referred to in Section
2.2) shall be paid by the Buyer to the Seller within ten (10) Business
Days after notice from the Seller to the Buyer of the amount thereof
not prorated as of the Closing Date in connection with the
determination of the Assumption Price, and (ii) all such expenses
unpaid at the Closing Date and attributable to the operation of the
Branch on or prior to the Closing Date (including any payments by the
Buyer in respect of the Lease and any of the contracts, commitments
and agreements referred to in Section 2.2) and any payments by the
Buyer in respect of any of the Retained Liabilities shall be paid by
the Seller to the Buyer within ten (10) Business Days after notice
from the Buyer to the Seller of the amount thereof, and (iii) all
remaining Transit Items shall be finally settled and paid within ten
(10) Business Days. The Buyer shall, after the Closing, hold the
Seller harmless from any liability on account of and shall pay to the
Seller, within ten (10) Business Days after notice from the Seller to
the Buyer of the amount thereof, any payments by the Seller on account
of any amounts to be paid by the Buyer pursuant to clause (i) of the
immediately preceding sentence, and the Seller shall, after the
Closing, hold the Buyer harmless from any liability on account of and
shall pay to the Buyer, within ten (10) Business Days after notice
from the Buyer to the Seller of the amount thereof, any payments by
the Buyer on account of any amounts to be paid by the Seller pursuant
to clause (ii) of the immediately preceding sentence. The party making
any such reimbursement pursuant to the provisions of this Section
8.2.4(a) shall be deemed to have made such payment to the ultimate
recipient of the payment.
(b) The Buyer and the Seller agree that all sales and use taxes,
if any, payable in connection with this Agreement and the transactions
hereby contemplated, shall be paid by the Seller.
(c) The Buyer and the Seller agree that no insurance policies are
to be prorated and that the Buyer will procure or maintain its own
insurance with respect to the Branch effective as of the Closing Date.
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8.2.5 Adjustment of Assumption Price. The Buyer and the Seller
acknowledge and agree that the payment of the Assumption Price at the Closing
pursuant to Section 7.2.4 will be based on pre-Closing amounts of the Deposits,
Loans, cash on hand, etc. Within three (3) Business Days after the Closing Date
the Buyer and the Seller shall re-calculate the Assumption Price in accordance
with Section 3.1 and Schedule 1, utilizing final amounts for the Deposits,
Loans, cash on hand, etc. as of the Closing Date. Any balance or refund due to
the Buyer or to the Seller, respectively, shall be paid in the manner directed
by the recipient on the next Business Day.
8.2.6 Other Transitional Matters. The Buyer and the Seller agree to
cooperate with respect to all transitional matters to effect the orderly
transfer of the business of the Branch, including taking the actions outlined in
EXHIBIT I.
ARTICLE IX
REMEDIES
9.1 Termination.
(a) Notwithstanding any provision to the contrary herein, and
notwithstanding the fact that the shareholders of the Buyer may have
approved this Agreement, this Agreement may be terminated at any time at or
prior to the Closing Date: (i) by mutual written agreement authorized by
the boards of directors of the Seller and the Buyer; (ii) by either the
Seller or the Buyer if the Closing shall not have taken place prior to
February 26, 1999; (iii) by the Seller if (a) any of the conditions set
forth in Sections 6.1 or 6.3 shall not have been fulfilled on or prior to
the Closing Date or shall become incapable of fulfillment by such date; or
(b) a Claim of the type referred to in Section 6.1.5 shall have been
instituted; and (iv) by the Buyer if (a) any of the conditions set forth in
Sections 6.1 or 6.2 shall not have been fulfilled on or prior to the
Closing Date or shall become incapable of fulfillment by such date; or (b)
a Claim of the type referred to in Section 6.1.5 shall have been
instituted.
(b) If any party hereto breaches or defaults any representation,
warranty, covenant or agreement made by it hereunder in any material
respect, the non-defaulting party may, on or before the Closing Date, give
notice of termination of this Agreement in the manner provided in Section
10.1. Such notice shall specify with particularity the breach or default
upon which such notice is based, and termination shall be effective ten
(10) Business Days after the date of such notice unless the specified
breach or default has been cured on or before such effective date.
Notwithstanding anything to the contrary herein, no party hereto shall have
the right to terminate this Agreement on account of its own breach or
because of any non-material breach by any party hereto of any of its or
their covenants, agreements, representations, warranties, duties or
obligations hereunder.
9.2 Effect of Termination. If this Agreement shall be terminated by the
Seller pursuant to Sections 9.1(a)(ii), 9.1(a)(iii) or 9.1(b) for failure of any
of the conditions set forth in Section 6.3 then as reasonable and full
liquidated damages and reasonable compensation for the loss sustained and not as
a penalty or forfeiture, the Buyer shall forfeit any claim to the Assumption
Price Deposit. If this Agreement shall be terminated by the Buyer pursuant to
Sections 9.1(a)(iv) or 9.1(b) for failure of any of the conditions set forth in
Section 6.2, then as reasonable and full liquidated damages and reasonable
compensation for the loss sustained and not as a penalty or forfeiture the
Seller shall pay the amount of $25,000 to the Buyer upon demand by the Buyer
given in writing in the manner provided in Section 10.1.
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9.3 Litigation Costs. If any legal action or other proceeding is brought
for the enforcement of this Agreement, or because of an alleged dispute, breach,
default or misrepresentation in connection with any of its provisions, the
successful or prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in such action or proceeding, in
addition to any other relief to which it may be entitled. The Seller shall
defend, hold harmless and pay to the Buyer the amount of any damages, costs or
expenses with respect to any Claim arising out of a condition, transaction or
event with respect to the Branch occurring on or before the Closing Date,
provided, however, that the Seller shall not be required to so defend, hold
harmless or pay if said Claim is based upon a liability or obligation which the
Buyer expressly has assumed in writing, whether pursuant to this Agreement or
otherwise. The Buyer shall defend, hold harmless and pay to the Seller the
amount of any damages, costs or expenses with respect to any Claim arising out
of a condition, transaction or event with respect to the Branch occurring after
the Closing Date; provided, however, that the Buyer shall not be required to so
defend, hold harmless or pay if said claim is based upon a liability or
obligation which the Seller has retained, whether pursuant to this Agreement or
otherwise.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Notices. All notices, requests, demands, waivers or other
communications hereunder must be in writing and shall be deemed given if
delivered personally or if sent by registered or certified mail, return receipt
requested, proper postage prepaid, to the parties at the following addresses or
at such other addresses as may be specified by a like notice:
If to the Buyer: Valley Independent Bank
1498 Main Street
El Centro, California 92243
Attention: Dennis L. Kern,
President and CEO
With a copy to: Horgan, Rosen, Beckham & Coren, LLP
21700 Oxnard Street, Suite 1400
Woodland Hills, California 91365
Attention: S. Alan Rosen, Esq.
If to the Seller: Fremont Investment & Loan
175 N. Riverview Drive
Anaheim, California 92808
Attention: Murray L. Zoota
President and CEO
With a copy to: Law Offices of Stephanie E. Allen
1301 Dove Street, Suite 1020
Newport Beach, CA 92660
Attention: Stephanie E. Allen, Esq.
10.2 Entire Agreement. This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter hereof and supersedes any
and all prior and contemporaneous agreements, representations and understandings
of the parties with respect to the subject matter hereof. No supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by all of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed, or shall constitute, a waiver of any other provision,
whether
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or not similar, nor shall any waiver constitute a continuing waiver. No waiver
shall be binding unless in a writing executed by the party making the waiver.
10.3 Third-Party Rights. Nothing in the Agreement, whether expressed or
implied, is intended to confer any rights or remedies upon any persons other
than the parties hereto and their respective legal representatives, successors
and assigns; nor is any thing in this Agreement intended to relieve or discharge
the obligations or liabilities of any third persons to any party to this
Agreement; nor shall any provision hereof give any third person any right of
subrogation or action over against any party to this Agreement.
10.4 Successors and Assigns. This Agreement shall be binding on, and shall
inure to the benefit of, the parties hereto and their legal representatives,
successors and assigns. The parties hereto expressly acknowledge that the Buyer
has advised the Seller that the Buyer's holding company, VIB Corp, is in
negotiations to acquire a financial institution headquartered in Riverside
County and that the Buyer may elect to assign its rights and obligations
hereunder to that financial institution (the "Assignee"), which assignment is
hereby approved by the Seller. In the event the Buyer assigns its rights and
obligations, the Assignee will supplement Sections 4.2, 5.1.1, 5.3, and 6.1 of
this Agreement, as may be necessary, to reflect the Assignee's legal status, to
identify its appropriate regulator, and to reflect applicable statutory
citations and requirements. No assignment by any party hereunder shall relieve
said party of any of its obligations or duties hereunder. The Buyer agrees to
notify the Seller of any assignment on or before September 25, 1998; provided,
however, in the event VIB Corp's acquisition of the Assignee is terminated or in
the event the Assignee otherwise fails to perform the Buyer's obligations
pursuant to this Agreement, the Seller and the Buyer agree that the Buyer may
revoke the assignment and perform its obligations pursuant to this Agreement.
10.5 Public Notice. Upon execution of this Agreement the Buyer and the
Seller shall jointly issue a press release for general circulation with respect
to the transactions contemplated hereby. Contemporaneously with the publication
thereof, the Buyer and the Seller shall jointly meet with and inform the Branch
employees of the transactions contemplated hereby. In addition to the foregoing,
neither the Buyer nor the Seller shall cause to be made any advertisement,
solicitation or public announcement regarding this Agreement or the transactions
contemplated herein between the date hereof and the Closing Date without the
prior approval of the other party, except as may otherwise be provided in this
Agreement or as may be required pursuant to a regulatory filing upon advice by
counsel that such advertisement, solicitation or public announcement is required
by law. In any of the foregoing events, the other party to this Agreement shall
be provided a reasonable opportunity to review and comment upon such
advertisement, solicitation, public announcement or regulatory filing (except
materials reasonably deemed confidential) prior to its dissemination. Any
consent or approval required by this Section 10.5 shall not be unreasonably
withheld.
10.6 Survival of Warranties and Obligations. All statements,
certifications, indemnifications, representations and warranties made herein by
the parties to this Agreement, and their respective covenants, agreements and
obligations to be performed pursuant to the terms hereof, shall survive the
Closing Date, notwithstanding any examination by or on behalf of any party
hereto, notwithstanding any notice of a breach or of a failure to perform not
waived in writing and notwithstanding the consummation of the transactions
hereby contemplated with knowledge of such breach or failure.
10.7 Severability. If any provision of this Agreement, as applied to any
party or to any circumstance, shall be adjudged by a court to be void, invalid
or unenforceable, the same shall in no way affect any other provision of this
Agreement, the application of any such provision in any other circumstance, or
the validity of enforceability of the other provisions of this Agreement.
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10.8 Expenses. Except as otherwise specifically provided herein, all
expenses incurred by the Buyer in connection with this Agreement shall be paid
and discharged by the Buyer and all expenses incurred by the Seller in
connection with this Agreement shall be paid and discharged by the Seller and
none of the Seller's expenses in connection herewith shall be charged to the
Branch.
10.9 Counterparts. The Agreement may be executed simultaneously or in one
or more counterparts, each of which may be deemed an original, but all of which
together shall constitute one and the same instrument, it not being necessary in
making proof of this Agreement to produce or account for more than one
counterpart executed by each party hereto.
10.10 Headings and Construction. All section headings are included only for
convenience and are not intended to be a full and accurate description of the
contents of the Sections hereof and in no way limit, define or describe the
scope or intent of this Agreement or any provision hereof.
10.11 Governing Law. This Agreement shall be construed in accordance with,
and governed by, the laws of the State of California.
10.12 Knowledge. In all representations and warranties concerning the
knowledge of the Buyer or the Seller, wherever included herein, there shall be
imputed to the Buyer or the Seller the actual and constructive knowledge and
notice of their respective current directors and executive officers.
10.13 Indemnification. The Buyer and the Seller each agree to indemnify and
hold harmless the other and its affiliates and their officers, directors,
agents, servants and employees from and against any and all claims, actions,
demands, enforcement proceedings, causes of action, damages, liabilities,
expenses (including, without limitation, reasonable attorney's fees), costs and
fines which may be incurred, suffered, sustained or paid arising out of or
related to the breach by either the Buyer or the Seller, as the case may be, of
any representation, warranty, covenant or agreement in this Agreement. Without
limiting the generality of the foregoing, each party shall promptly indemnify
and hold harmless the other party for any liabilities assumed or retained by
such party in the event such liabilities are asserted against such other party.
IN WITNESS WHEREOF, the Seller and the Buyer have cause this Agreement to
be executed in counterparts by their respective Presidents and Secretaries or
Assistant Secretaries as of the date first above written.
VALLEY INDEPENDENT BANK FREMONT INVESTMENT & LOAN
By: /s/ Dennis L. Kern By: /s/ Murray L. Zoota
------------------------------- ---------------------------------
Dennis L. Kern, President and CEO Murray L. Zoota, President and CEO
By: /s/ Charlotte Studer By: /s/ Karen K. Wooley
------------------------------- ---------------------------------
Charlotte Studer, Secretary Karen K. Wooley, Assistant Secretary
27
