<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
VALLICORP HOLDINGS, INC.
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(Name of Issuer)
Common Stock, $0.01 Par Value Per Share
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(Title of Class of Securities)
92023F-106
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(CUSIP Number)
David L. Payne Jonathan D. Joseph
Westamerica Bancorporation Pillsbury Madison & Sutro
1108 Fifth Avenue 235 Montgomery Street
San Rafael, CA 94901 San Francisco, CA 94104
Telephone: (415) 257-8000 Telephone: (415) 983-1071
- ------------------------------------ -------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 11, 1996
---------------------------------------------
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following pages)
Page 1
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CUSIP NO. 92023F-106 13D Page 2
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NAME OF REPORTING PERSON Westamerica Bancorporation
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
94-2156203
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2 (a) [_]
(b) [_]
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SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS
00
4
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
5 []
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
California
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SOLE VOTING POWER
7
NUMBER OF 115,500
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
697,449*
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 115,500
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
-0-
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
812,949*
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES []
12
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
5.8%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14
CO
- ------------------------------------------------------------------------------
* Shared Voting Power over 697,449 of such shares is limited to certain
matters as discussed in Item 5(c) below.
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CUSIP No. 92023F-106 13D Page 3
Item 1. Security and Issuer.
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The class of equity securities to which this statement relates is the
common stock, $0.01 value per share (the "ValliCorp Common Stock"), of ValliCorp
Holdings, Inc., a California corporation ("Issuer"). The address of the
principal office of the Issuer is 8405 North Fresno Street, Fresno, California
93720.
Item 2. Identity and Background.
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This statement is being filed by Westamerica Bancorporation, a California
corporation ("Westamerica"), whose address is 1108 Fifth Avenue, San Rafael,
California 94901. Westamerica is a bank holding company registered under the
Bank Holding Company Act of 1956, as amended. Through its subsidiary banks,
Westamerica Bank and Bank of Lake County, it operates a commercial banking
business through 57 branch offices in northern California and also conducts
mortgage banking activities.
Westamerica is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in connection
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission.
(a), (b), (c) and (f) The name, residence or business address, present
principal occupation or employment (and the name, principal business and address
of any corporation or other organization in which such employment is conducted)
and the citizenship of each of the executive officers and directors of
Westamerica are set forth in the table attached hereto as Schedule A, which is
incorporated herein by reference.
(d) and (e) During the last five years, neither Westamerica nor any of its
current executive officers or directors as listed on Schedule A hereto has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or has been a party to a civil proceeding of a judicial or
administrative body and as a result of such proceeding was or is subjected to
any judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violations with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
- ------ -------------------------------------------------
No funds were required for the acquisition of limited shared voting power
over 697,449 shares of ValliCorp Common Stock, which was obtained pursuant to a
Shareholder Agreement executed by each member of the Board of Directors of
ValliCorp, described more fully in Item 5(c) below, in connection with execution
of the Agreement and Plan of Reorganization described in Item 4 below. Of the
812,949 shares of ValliCorp Common Stock referred to in Item 5(a) below, 115,500
shares were purchased by Westamerica between November 1995 and February 1996
with internal funds.
Item 4. Purpose of the Transaction.
- ------- --------------------------
Westamerica, Issuer and ValliWide Bank, a wholly-owned banking subsidiary
of ValliCorp ("ValliWide"), executed an Agreement and Plan of Reorganization
(the "Agreement") dated as of November 11, 1996, pursuant to which Westamerica
agreed to acquire Issuer in a stock for stock exchange (the "Merger"), subject
to the terms and conditions of the Agreement. The description of Agreement and
the related Agreement and Plan of Merger between Westamerica and Issuer (the
"Merger Agreement") and the
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CUSIP No. 92023F-106 13D Page 4
Stock Option Agreement between Westamerica and Issuer set forth herein are
qualified in their entirety by the terms of the Agreement, the Merger Agreement
(which is attached as Annex A to the Agreement) and the Stock Option Agreement.
The Agreement, with Annex A, and the Stock Option Agreement were previously
filed with the SEC, and are incorporated herein by reference. Terms used herein
and not defined shall be as defined in the Agreement.
EFFECTIVE DATE OF THE MERGER
The Agreement provides that the Merger will be effective upon the date of
the filing with the California Secretary of State of a duly executed Plan of
Merger and officers' certificates prescribed by Section 1103 of the GCL and/or
other documents as required by the DGCL, or at such time thereafter as is
provided by mutual agreement in the Merger Agreement (the "Effective Time").
The date on which the Merger is effective as specified in the Merger Agreement
is referred to herein as the Effective Date. Although the parties have not
adopted any formal timetable, it is presently anticipated that the Merger will
be consummated during the second quarter of 1997 assuming all of the conditions
set forth in the Agreement are theretofore satisfied or waived.
PURCHASE PRICE AND POTENTIAL ADJUSTMENTS
The Purchase Price to be paid for each share of ValliCorp Common Stock is
$21.00 of value in Westamerica Common Stock, subject to adjustment under certain
circumstances.
Specifically, as set forth in the Agreement, the Purchase Price to be paid
to ValliCorp stockholders in the form of Westamerica Common Stock will be as
follows. If the average closing price of Westamerica Common Stock on the NNM
for a period of 20 consecutive trading days ending five trading days prior to
the Effective Date (the "Average Price") is between $48.69 and $53.81, then
ValliCorp stockholders will receive $21.00 of value in Westamerica Common Stock
for each outstanding share of ValliCorp Common Stock (thus, the Exchange Ratio
is determined by dividing $21.00 by the Average Price). If the Average Price is
above $53.81, the Exchange Ratio will be adjusted such that ValliCorp
stockholders will receive the equivalent of 40% of the appreciation above that
amount. For example, for every $1 that the Average Price is above $53.81,
ValliCorp Stockholders will receive approximately an additional $0.16 of value
in Westamerica Common Stock. If the Average Price is below $48.69, then the
Exchange Ratio is fixed at .4313 so that ValliCorp stockholders will receive
.4313 of a share of Westamerica Common Stock in exchange for each share of
ValliCorp Common Stock, provided, however that if the Average Price falls below
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$46.13, the Board of Directors of ValliCorp may choose to either maintain an
Exchange Ratio of .4313 or exercise a right to terminate the Agreement. If
ValliCorp exercises its right to terminate the Agreement, Westamerica may choose
to either increase the exchange ratio to a ratio which will provide
approximately $19.90 of value in Westamerica Common Stock for each ValliCorp
Share (whereupon no termination shall have occurred), or allow the Agreement to
be terminated.
In addition, the Purchase Price may be further adjusted downward based on a
measure of ValliCorp's consolidated shareholders' equity calculated in the
manner and based on certain adjustments set forth in the Agreement. Generally,
at the end of the quarter prior to the Effective Date, ValliCorp's shareholders'
equity (calculated in the manner set forth in the Agreement) must be greater
than or equal to $138,885,000. If said amount is less than $138,885,000 but
more than $125,000,000, then the exchange ratio will be adjusted downward based
on a formula set forth in the Agreement. The formula takes the consolidated
shareholders'
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CUSIP No. 92023F-106 13D Page 5
equity calculated in the manner set forth in the Agreement, divides it by
$138,885,000 (to determine the fraction of book value attained) and then
multiplies the result by the prior exchange ratio to yield the adjusted exchange
ratio. However, if said consolidated shareholders' equity is below
$125,000,000, Westamerica may terminate the Merger Agreement.
TREATMENT OF STOCK OPTIONS
On the Effective Date, the obligations under any stock option plans of
ValliCorp will be assumed by Westamerica. On the Effective Date, options to
purchase shares of ValliCorp Common Stock issued pursuant to ValliCorp's stock
option plans or stock option plans of companies acquired by ValliCorp that are
outstanding will be converted, without any action on the part of the holders
thereof, into options to acquire, upon payment of the adjusted exercise price
(which will equal the exercise price per share for the options immediately prior
to the Merger, divided by the Exchange Ratio), the number of shares of
Westamerica Common Stock the option holder would have received pursuant to the
Merger if he or she had exercised all his or her options immediately prior
thereto. The Merger will accelerate the vesting of all stock options
outstanding under the ValliCorp Key Employees Stock Option Plan and the
Directors Stock Option Plan. Except as noted above each ValliCorp stock option
will otherwise continue on terms and conditions that are consistent with those
that were applicable on the Effective Date.
COVENANTS OF WESTAMERICA AND VALLICORP; CONDUCT OF BUSINESS PRIOR TO THE MERGER
The Agreement contains covenants of Westamerica and ValliCorp concerning,
among other things, (i) the cooperation of each party in obtaining all necessary
or appropriate government approvals in order to cause the Merger to be
consummated; (ii) the prompt notification by either party of any event which
would cause or constitute a breach of any of the representations, warranties or
covenants of that party; (iii) the right of each party to review other's books
and records and the delivery of financial statements to both parties; (iv) the
cooperation by both parties in the issuance of any press releases; (v)
restrictions on Vallicorp's ability to enter into a merger, consolidation, or
other takeover proposal involving any third party; (vi) the requirement that in
the event Westamerica agrees to be acquired by a third-party that said third-
party agree to carry out the terms and provisions of the Agreement; (vii)
certain restrictions on increases in compensation of directors, officers,
employees or agents of ValliCorp and the ValliCorp Subsidiaries; (viii)
restrictions on the payment of dividends by ValliCorp; and (ix) the termination,
modification or merger of ValliCorp's employee welfare benefits plan into
Westamerica's employee welfare benefits plan.
Westamerica has agreed to honor in accordance with their terms all
employment, severance and employee benefits and compensation plans, contracts,
agreements, arrangements, and understandings previously disclosed (collectively,
the "ValliCorp Employment Arrangements"), and ValliCorp has agreed to notify
Westamerica substantially concurrently with the making of any salary increase or
bonus payment required due to a contractual obligation under the terms of any
ValliCorp Employment Arrangement. Westamerica and ValliCorp have also agreed
that promptly following the Effective Time Westamerica shall, at a meeting of
its directors (or pursuant to written consent), take those actions necessary to
cause three persons who are directors of ValliCorp to become directors of
Westamerica. Westamerica has also agreed that following the Effective Date it
will indemnify all persons who are or become directors or officers of ValliCorp
or any ValliCorp Subsidiary prior to the Effective Date to the fullest extent
permitted by applicable law on the basis set forth in the Agreement and all
rights to indemnification and all limitations on liability existing in favor of
said directors and officers in effect on November 11, 1996 shall survive the
Merger and be honored by
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CUSIP No. 92023F-106 13D Page 6
Westamerica for six years after the Effective Date. Westamerica will also cause
all such directors and officers to be covered by ValliCorp's existing directors'
and officers' liability insurance policy for no less than three years after the
Effective Date, provided that Westamerica will not be obligated to make annual
premium payments for such insurance to the extent such premiums exceed 150% of
the most recent premium paid by ValliCorp.
Westamerica will reserve and make available for issuance in connection with
the Merger and in accordance with the terms of the Agreement (i) the Westamerica
Common Stock; and (ii) the maximum number of shares of Westamerica Common Stock
to which holders of Convertible Debentures or the optionholders of ValliCorp may
be entitled to at or after the Effective Date. Westamerica will also use all
reasonable efforts to cause the shares of Westamerica Common Stock to be issued
in the Merger and the shares of Westamerica Common Stock to be reserved for
issuance upon exercise of former ValliCorp stock options to be approved for
listing on the Nasdaq, subject to official notice of issuance, prior to the
Closing Date.
The Agreement provides that ValliCorp and the ValliCorp Subsidiaries will
conduct their respective business in the ordinary course as such was conducted
prior to entering into the Agreement. The Agreement further provides that,
unless Westamerica has given its previous written consent to any act or omission
to the contrary (which consent shall not be unreasonably withheld), ValliCorp
and the ValliCorp Subsidiaries will, until the Effective Date, cause their
respective officers to: (i) use all commercially reasonable efforts to preserve
their respective businesses and business organizations intact; (ii) use all
commercially reasonable efforts to preserve the goodwill of customers and others
having business relations with them and take no action that would impair the
benefit to Westamerica of the goodwill of ValliCorp and the ValliCorp
Subsidiaries or the other benefits of the Merger; (iii) consult with Westamerica
as to the making of any decisions or the taking of any actions in matters other
than in the Ordinary Course of Business; (iv) maintain their respective
properties in customary repair, working order and condition (reasonable wear and
tear excepted); (v) comply in all material respects with all laws, regulations
and decrees applicable to the conduct of their respective businesses; (vi) use
all commercially reasonable efforts to keep in force at not less than their
present limits all policies of insurance (including deposit insurance of the
FDIC) to the extent reasonably practicable in light of the prevailing market
conditions in the insurance industry; (vii) use, in cooperation with
Westamerica, all reasonable efforts to keep available to Westamerica the
services of their present officers and employees (it being understood that
ValliCorp and the ValliCorp Subsidiaries shall have the right to terminate the
employment of any officer or employee in accordance with their established
employment procedures); (viii) comply in all material respects with all orders,
agreements and memoranda of understanding with respect to ValliCorp and the
ValliCorp Subsidiaries made by or with the SEC, Federal Reserve Board, FDIC, or
any other regulatory authority of competent jurisdiction, and promptly forward
to Westamerica all communications received from any such authority and inform
Westamerica of any material restrictions imposed by any governmental authority
on the business of ValliCorp or the ValliCorp Subsidiaries; (ix) file in a
timely manner all reports, tax returns and other documents required to be filed
with federal, state, local and other authorities; and (x) conduct such
environmental audits as ValliCorp or Westamerica deems necessary prior to
foreclosure or otherwise (if information is or becomes available indicating a
risk of environmental contamination) on any property concerning which ValliCorp
or any ValliCorp Subsidiary has knowledge that asbestos or asbestos-containing
materials, PCBs or PCB-contaminated materials, any petroleum product, or
hazardous substance or waste (as defined under any applicable environmental
laws) was or is present, manufactured, recycled, reclaimed, released, stored,
treated, or disposed of, and provide the results of any such audits to and
consult with Westamerica regarding the significance of the audit prior to the
foreclosure on any such property; provided, however, that if Westamerica
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requests any environmental audit(s) which is (are) not required by
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CUSIP No. 92023F-106 13D Page 7
applicable law or regulation or ValliCorp's existing policies, Westamerica shall
pay the costs of any such audit(s).
The Agreement also provides that ValliCorp and the ValliCorp Subsidiaries
will not without the prior consent (such consent not to be unreasonably
withheld) of Westamerica, among other things, (i) commit to or renew any loan
with a principal amount in excess of $250,000, unless Westamerica's comments
concerning said commitment are addressed by ValliWide; provided, however, that
if any loan commitment or loan renewal involves a loan to a borrower who has (a)
any other classified or criticized asset, (b) a total lending relationship of
$250,000 or more, or (c) a renewal involving a classified or criticized asset,
then the relevant loan subject to this provision shall be $100,000; (ii)
purchase any investment security with a maturity in excess of three years, or
sell any investment security in which a gain is recognized; (iii) issue any
certificate of deposit with a rate of interest which exceeds the prevailing
rates at commercial banks in ValliWide's market area; (iv) commit to new capital
commitments or expenditures in excess of $50,000; and (v) commit to make any
construction loan if based on existing construction loans and anticipated
fundings such commitment would, with respect to ValliCorp and the ValliCorp
Subsidiaries on an aggregate basis, caused their respective total construction
loans and construction loan commitments outstanding at the Effective Date to
exceed their respective level of construction loans and construction loan
commitments as of October 31, 1996 (provided, however, that notwithstanding the
foregoing, ValliCorp may make or commit to make up to an additional $10,000,000
in construction loans over the amount of such construction loans and commitments
thereof existing as of said date.
Except with the prior written consent of Westamerica, neither ValliCorp nor
any ValliCorp Subsidiary will propose, declare, set aside or pay any dividend or
other distribution in respect of its common stock (including, without
limitation, any stock dividend or distribution) other than regular quarterly
cash dividends on its common stock in amounts substantially equivalent to
dividends paid in the two years prior to the Agreement date, provided that no
ValliCorp Subsidiary will declare or pay a cash dividend if as a result thereof
the ValliCorp Subsidiary would cease to be adequately capitalized within the
meaning of applicable bank regulations. The parties agreed that ValliCorp may
increase its quarterly dividend to a level that is no more than .4098 times
Westamerica's then current dividend.
No Merger or Solicitation. ValliCorp will not, nor will it permit any
ValliCorp Subsidiaries, or authorize or permit any of its officers, directors or
employees or any investment banker, financial advisor, attorney, accountant or
other representative or agent retained by it or any ValliCorp Subsidiaries, to,
directly or indirectly, solicit, initiate, or encourage (including by way of
furnishing nonpublic information), or take any other action to facilitate, any
inquiries or the making of any proposal which constitutes, or may reasonably be
expected to lead to, any Takeover Proposal, or agree to or endorse any Takeover
Proposal, or participate in any discussions or negotiations, or provide third
parties with any nonpublic information, relating to any such inquiry or
proposal; provided, however, that prior to receipt of the ValliCorp shareholder
-------- -------
approval of the Merger, to the extent required by the fiduciary obligations of
the Board of Directors of ValliCorp, as determined in good faith by the Board of
Directors based on the advice of independent counsel, ValliCorp may, (i) in
response to an unsolicited Takeover Proposal, with prompt notification to
Westamerica, furnish information with respect to ValliCorp and its Subsidiaries
to any person pursuant to a customary confidentiality agreement (as determined
by ValliCorp's independent counsel) and answer questions about such information
(but not the terms of any possible Takeover Proposal) with such Person and (ii)
upon receipt by ValliCorp of an unsolicited Takeover Proposal, with prompt
notification to Westamerica, participate in negotiations regarding such Takeover
Proposal. "Takeover Proposal" means any written inquiry, proposal or offer from
any person relating to any direct or indirect acquisition or purchase of a
substantial amount of the
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CUSIP No. 92023F-106 13D Page 8
assets of ValliCorp or any of its Subsidiaries, other than the transactions
contemplated by this Agreement and the Stock Option Agreement, or of 50% or more
of any class of equity securities of ValliCorp or any of its Subsidiaries or any
tender offer or exchange offer that if consummated would result in any Person
beneficially owning 50% or more of any class of equity securities of ValliCorp
or any of its Subsidiaries, or any merger, consolidation, business combination,
sale of substantially all assets, recapitalization, liquidation, dissolution or
similar transaction involving ValliCorp or any of its Subsidiaries other than
the transactions contemplated by the Merger Agreement and the Stock Option
Agreement.
Except as allowed in the Agreement, neither the Board of Directors of
ValliCorp nor any committee thereof will (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Westamerica, the approval or
recommendation by such Board of Directors or any such committee of this
Agreement or the Merger, (ii) approve or recommend, or propose to approve or
recommend, any Takeover Proposal, or (iii) enter into any agreement with respect
to any Takeover Proposal. Notwithstanding the foregoing, prior to the receipt
of the ValliCorp shareholder approval, the Board of Directors of ValliCorp, to
the extent required by its fiduciary obligations, as determined in good faith by
the Board of Directors based on the advice of independent counsel, may (subject
to the following sentences) withdraw or modify its approval or recommendation of
this Agreement or the Merger, approve or recommend any Superior Proposal (as
defined below), enter into an agreement with respect to such Superior Proposal
or terminate this Agreement, in each case at any time after the third Business
Day following Westamerica's receipt of a written notice advising Westamerica
that the ValliCorp Board of Directors has received a Superior Proposal,
specifying the material terms and conditions of such Superior Proposal and
identifying the person making such Superior Proposal (it being understood that
any amendment to a Superior Proposal will necessitate an additional three
Business Day period). In addition, if ValliCorp proposes to enter into an
agreement with respect to any Takeover Proposal, it will concurrently with
entering into such agreement pay, or cause to be paid, to Westamerica the
Termination Fee as described below. For purposes of the Agreement, "Superior
Proposal" means any bona fide written Takeover Proposal made by a third party to
acquire, directly or indirectly, for consideration consisting of cash and/or
securities, more than 50% of the shares of ValliCorp Common Stock then
outstanding or all or substantially all the assets of ValliCorp and otherwise on
the terms which the Board of Directors of ValliCorp determines in its good faith
judgment that said bona fide Takeover Proposal is reasonably capable of being
completed, taking into account all legal, financial, regulatory and other
aspects of the proposal and the Person making the proposal and (based on the
advice of a financial advisor of nationally recognized reputation) would, if
consummated, be more favorable to ValliCorp's shareholders from a financial
point of view than the Merger.
In addition to the obligation of ValliCorp set forth in the preceding
paragraph, ValliCorp promptly will advise Westamerica orally and in writing of
any request for information or of any Takeover Proposal, or any inquiry with
respect to or which could lead to any Takeover Proposal, the material terms and
conditions of such request, Takeover Proposal or inquiry and the identity of the
Person making any such request, Takeover Proposal or inquiry. ValliCorp will
keep Westamerica fully informed of the status and details (including amendments
or proposed amendments) of any such request, Takeover Proposal or inquiry.
If the Agreement is terminated pursuant to its terms other than by
Westamerica or ValliCorp solely because the Federal Reserve Board or
Superintendent issues a final order denying approval of the Merger, a failure of
the condition requiring Westamerica Common Stock voter approval of the Merger
occurs, or other than by ValliCorp pursuant to a Material Adverse Effect which
has occurred with respect to Westamerica and the Westamerica Subsidiaries taken
as a whole since September 30, 1996 or pursuant to a material breach by either
party not cured within thirty days after written notice thereof, and an
Acquisition Event (as defined in
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CUSIP No. 92023F-106 13D Page 9
the Agreement) occurs within 18 months after the date of such termination,
ValliCorp will pay promptly, but in no event later than two Business Days after
the occurrence of such Acquisition Event, by wire transfer of immediately
available Federal Funds to such account as Westamerica will designate, $6
million (the "Termination Fee") (but only if a Termination Fee has not
theretofore been paid in accordance with the second preceding paragraph).
Westamerica has agreed that, in the event ValliCorp makes payment of the
Termination Fee to Westamerica upon the occurrence of an Acquisition Event in
accordance with the terms of the preceding paragraph, neither Westamerica nor
any of its Affiliates will for a period of five years after the payment of said
Fee (the last day of such period, the "Standstill Termination Date"), unless
specifically invited in writing to do so by ValliCorp and then only to the
extent stated therein, in any manner acquire or agree to acquire or make any
proposal to acquire, directly or indirectly, the beneficial ownership of any
common stock, equity securities or other securities having voting power with
respect to the election of directors of ValliCorp ("Voting Equity"), or any
other securities convertible into Voting Equity or any options, warrants or
other rights to acquire Voting Equity (such convertible securities, options,
warrants or other rights, together with Voting Equities, being hereinafter
called "Voting Securities") of ValliCorp or its Affiliates. From the date the
Termination Fee is paid until the Standstill Termination Date, neither
Westamerica nor any of its Affiliates will, except with the express written
consent of ValliCorp and then only to the extent stated in such written consent,
make or in any way participate, directly or indirectly, in any "solicitation" of
"proxies" (as such terms are defined in Regulation 14A under the Exchange Act)
to vote or seek to advise or influence any person with respect to the voting of
any Voting Securities of ValliCorp or its Affiliates. Westamerica agreed that,
from the date a Termination Fee is paid until the Standstill Termination Date,
neither it nor any of its Affiliates will (i) make any Acquisition Proposal (as
defined below) or proposal with respect to a Business Combination (as defined
below), joint venture, or any other extraordinary business arrangement,
including, but not limited to, a business arrangement which could result in a
change of control of ValliCorp, in each case in respect of ValliCorp or any of
its Affiliates, (ii) take any initiatives involving ValliCorp that would
otherwise require ValliCorp to make a public announcement or make any public
comment or proposal with respect to any Acquisition Proposal or Business
Combination, (iii) join a partnership, limited partnership, syndicate or other
group for the purpose of acquiring, holding, voting or disposing of Voting
Securities of ValliCorp or otherwise become a "person" within the meaning of
section 13(d)(3) of the Exchange Act with respect to any Voting Securities of
ValliCorp or its Affiliates, (iv) enter into any discussions, negotiations,
arrangements or understandings with any third party with respect to any of the
foregoing, (v) knowingly advise, assist or encourage any third party in
connection with any of the foregoing, or (vi) otherwise seek to control or
influence ValliCorp or its management or Board of Directors. "Acquisition
Proposal" means any tender offer or exchange offer or proposal to ValliCorp
(including, without limitation, any proposal or offer to stockholders of
ValliCorp) with respect to a Business Combination or involving the purchase of
25% or more of the outstanding Voting Securities of ValliCorp. "Business
Combination" means (i) a merger, consolidation, acquisition, scheme or other
analogous arrangement in which ValliCorp is a constituent corporation or party
and pursuant to which Voting Securities of ValliCorp are or may be exchanged for
cash, securities or other property or (ii) a sale of all or substantially all of
the assets of ValliCorp and its Affiliates. Notwithstanding anything in the
Agreement to the contrary, Westamerica may vote any ValliCorp Common Stock it
beneficially owned as of November 11, 1996 or sell said stock through any
broker/dealer.
ValliCorp Accruals and Reserves. (i) Prior to the Effective Date,
ValliCorp and the ValliCorp Subsidiaries will review and, to the extent
determined necessary or advisable by Westamerica in its sole discretion,
consistent with GAAP and the accounting rules, regulations and interpretations
of the SEC and its staff, modify and change its loan, OREO, accrual and reserve
policies and practices (including loan
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CUSIP No. 92023F-106 13D Page 10
classifications and levels of tax, loan and OREO reserves and accruals) to (A)
reflect Westamerica's plans with respect to the conduct of ValliCorp's business
following the Merger, and (B) make adequate provision for the costs and expenses
relating thereto so as to be applied consistently on a mutually satisfactory
basis with those of Westamerica. (ii) Prior to the Effective Date, ValliCorp
also will adjust loan loss and OREO reserves (A) in a manner consistent with its
policies and practices as in effect on the date hereof and (B) as may be
appropriate, consistent with generally accepted accounting principles and the
accounting rules, regulations and interpretations of the SEC and its staff, to
the extent determined by Westamerica to be necessary or advisable in its sole
discretion in light of the then anticipated post-closing grading, classification
or disposition of certain ValliCorp assets; provided, however, that ValliCorp
has agreed in no event will its reserve for loan losses constitute less than
100% of total Nonperforming Loans and 1.6% of total loans as of the close of
business on the last Business Day of the calendar quarter preceding the month
during which the Effective Date occurs. "Nonperforming Loans" mean all loans,
leases, other extensions of credit or commitments of ValliCorp and its
subsidiaries finally classified by ValliCorp, its subsidiaries, any bank
regulatory agency, or ValliCorp's independent auditors as "Doubtful," "Loss" or
words of similar import in the case of loans (or that would have been so
classified in the case of other interest-bearing assets which would be subject
to a provision for loan and lease losses) or any loans or extensions of credit
which are on nonaccrual or accruing and 90 days or more past due in the payment
of principal in interest.
The parties agreed to cooperate in preparing for the implementation of the
adjustments contemplated by the above paragraph. Notwithstanding the foregoing,
ValliCorp will not be obligated to take in any respect any action pursuant to
the above paragraph (other than pursuant to the preceding sentence) unless and
until Westamerica acknowledges that, as of the date of said acknowledgment,
certain material conditions to its obligation to consummate the Merger have been
satisfied or waived and Westamerica reasonably believes the Merger will close.
As of the end of the calendar quarter immediately prior to the Effective
Date, ValliCorp and the ValliCorp Subsidiaries will create on their books one or
more reserves and accruals adequate to cover a reasonable estimate, as mutually
agreed to by Westamerica and ValliCorp, of the loss contingencies (consistent
with GAAP) associated with any of the litigation matters or claims previously
disclosed or any environmental contamination on any property of ValliCorp or any
ValliCorp Subsidiary as to which environmental audits will be conducted, unless
outside counsel to ValliCorp has rendered its written opinion to the parties
hereto that the likelihood of the incurrence of such loss is remote.
As of the end of the calendar quarter immediately prior to the Effective
Date, ValliCorp and the ValliCorp Subsidiaries will create on their books such
tax reserves and accruals as will be adequate to cover a reasonable estimate, as
mutually agreed to by Westamerica and ValliCorp, of tax accruals, interest and
penalties (consistent with GAAP) associated with or related to any existing or
threatened tax audit.
Asset Review. ValliCorp will continue to engage its internal asset review
examiners to identify potential losses with respect to loans and other assets on
the books of ValliCorp and its Subsidiaries and who will have reviewed all
Nonperforming Assets and other classified or criticized assets as of a date
within three months preceding the Effective Date. ValliCorp will promptly
provide a copy of such reports to Westamerica. Prior to January 31, 1997, all
assets of ValliCorp and its Subsidiaries, including classified or criticized and
Nonperforming Assets, may be reviewed by Westamerica and Westamerica may provide
a report thereon to ValliCorp setting forth Westamerica's grading or other
assessment thereof (including accounting treatment and loss recognition)
utilizing ValliCorp's regular loan/OREO review criteria consistent with GAAP and
RAP. ValliCorp may either accept and implement Westamerica's grading or other
assessments (including accounting
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CUSIP No. 92023F-106 13D Page 11
treatment and loss recognition) concerning loans or OREO by January 31, 1997,
or, if it does not agree with Westamerica's conclusions as set forth in the
report, refer the matter for resolution by one or more of the independent loan
and appraisal experts agreed upon by the parties (the "Independent Loan
Reviewer" or "Independent Appraiser") who will immediately review and/or
appraise said loan(s) or OREO utilizing ValliCorp's regular loan/OREO review
criteria consistent with GAAP and RAP. With respect to any OREO, based on all
known information available from time to time, if it appears that the then
current independent appraisals may not be accurate or upon request of and at the
expense of Westamerica, ValliCorp will immediately obtain updated independent
appraisals by an Independent Appraiser (utilizing ValliCorp's regular criteria
consistent with GAAP and RAP) and provide copies of all such appraisals to
Westamerica. Any new or additional write-downs or OREO expenses will be
recorded immediately upon receiving any updated independent appraisal.
Structural Changes to Certain ValliWide Branches. With respect to five
ValliWide branches, ValliCorp had determined prior to November 11, 1996 to close
or consolidate those branches (the "Category A Branches"), and Vallicorp agreed
that certain additional branches will be sold, closed or consolidated (the
"Category B Branches"). Except as otherwise agreed by the parties, Vallicorp
agreed to use its commercially reasonable efforts to effect closure,
consolidation or sale of the Categories A and B Branches prior to the end of the
calendar quarter immediately prior to the Effective Date, provided that as to
the Category B Branches, ValliCorp will not be required to actually effect
closure, consolidation or sale of any such branches if under the circumstances
then existing it is reasonably likely that any of certain material conditions to
the Merger set forth in the Agreement will not be satisfied. Westamerica and
ValliCorp have identified certain other branches of ValliWide in addition to
those referred to above (the "Category C Branches") which Westamerica may, in
its discretion, designate for structural changes, including sales,
consolidations and closures, for implementation after the Effective Date.
Retention Bonuses. The parties agreed to cooperate in all reasonable
respects to, by mutual agreement, identify those persons who will receive
retention bonus payments. Such retention bonus payments will be payable to
those persons identified pursuant to the foregoing sentence in accordance with
the terms of retention agreements, which agreements will be in a form reasonably
acceptable to Westamerica.
REPRESENTATIONS AND WARRANTIES; CONDITIONS TO THE MERGER
The Agreement contains representations and warranties by Westamerica and
ValliCorp regarding, among other things, the following: their respective
organization; good standing under the laws of their jurisdiction of
incorporation or organization; authorization to enter into the Agreements;
corporate power to carry out the terms of the Agreements; capitalization;
ownership and capitalization of subsidiaries; the accuracy of SEC documents and
regulatory filings; the lack of any material adverse change; the absence of
undisclosed liabilities; legal actions and proceedings; employee benefit plans;
the accuracy of their respective financial statements, books and records;
compliance with laws, regulations and decrees; brokers and finders; pooling of
interests; loan loss reserves; information furnished for inclusion in the
Registration Statement or Joint Proxy Statement/Prospectus; derivatives
contracts and structured notes; and various aspects of their loans and other
assets.
The Merger will occur only if all required government approvals are in
effect or have been obtained (without the imposition of any materially
burdensome conditions as determined by the Board of Directors of Westamerica or
ValliCorp in its reasonable judgment), the Agreements are approved by the
majority of the
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CUSIP No. 92023F-106 13D Page 12
outstanding shares of ValliCorp Common Stock and of Westamerica Common Stock and
the representations and warranties of the parties are true and correct in all
material respects, and all covenants complied with, in all material respects on
and as of the Effective Date.
Consummation of the Merger is subject to satisfaction of certain other
conditions or the waiver of such conditions by the party entitled to do so.
Such conditions include, among other things, the following: (i) the absence, on
a consolidated basis, of any Material Adverse Effect to either party since
September 30, 1996; (ii) the effectiveness of a registration statement with
respect to the Westamerica Shares to be issued to ValliCorp shareholders as a
result of the Merger; (iii) the approval for listing on the Nasdaq of the
Westamerica shares that may be issued in the Merger; (iv) delivery by
Westamerica to ValliCorp of a certificate, dated the closing Date and signed by
Westamerica's Chairman, President, or any Executive Vice President to the effect
that the conditions regarding representations, warranties and covenants are
satisfied; (v) receipt by ValliCorp of an Opinion of Westamerica's counsel as to
the matters specified in Exhibit 6.2(d) to the Agreement; (vi) the receipt of an
opinion of legal counsel to Westamerica to the effect that, among other things,
under federal and state tax laws, the Merger will not result in any recognized
gain or loss to Westamerica or ValliCorp and, except for any cash received in
lieu of any fractional shares or pursuant to dissenters' rights, no gain or loss
will be recognized by holders of ValliCorp Common Stock who receive Westamerica
Common Stock in exchange for the ValliCorp Common Stock which they hold; (vii)
receipt by ValliCorp from KPMG Peat Marwick LLP of letters addressed to
ValliCorp not more than two Business Days prior to the effective date of the
Registration Statement and a date not more than ten Business Days prior to the
Effective Date, with respect to certain financial information regarding
Westamerica; (viii) lack of an occurrence of an event that will preclude, in the
opinion of KPMG Peat Marwick LLP, the Merger from being accounted for as a
pooling of interests and receipt of a letter from KPMG Peat Marwick LLP to the
effect that the Merger will qualify for the pooling of interests method of
accounting in accordance with generally accepted accounting principles; (ix)
receipt by each party of such certificates and closing documents as counsel for
each party reasonably requests; and (x) receipt by each party (or satisfaction
of forthcoming receipt) of all consents of other parties to and required by
material mortgages, notes, leases, franchises, agreements, licenses and permits
applicable to ValliCorp or Westamerica, as the case may be, and no such consent
or license or permit will have been withdrawn or suspended, unless the failure
to obtain such consents, individually or in the aggregate, would not have a
Material Adverse Effect on ValliCorp or Westamerica, as the case may be.
AMENDMENT; TERMINATION
The Agreement and Merger Agreement may be amended or supplemented at any
time by mutual agreement of the parties. Any such amendment or supplement must
be in writing and approved by their respective boards of directors and/or
officers authorized thereby.
The Agreement and Merger Agreement may be terminated as follows: (i) by
the mutual consent of the Boards of Directors of both Westamerica and ValliCorp
at any time prior to the consummation of the Merger; (ii) by the Board of
Directors of Westamerica on or after August 15, 1997, if (A) any of the
conditions precedent of Westamerica in the agreement have not been fulfilled, or
(B) such conditions have been fulfilled or waived by Westamerica and ValliCorp
has failed to complete the Merger; (iii) by the Board of Directors of
Westamerica if a Material Adverse Effect has occurred with respect to ValliCorp
and the ValliCorp Subsidiaries taken as a whole since September 30, 1996, or
there has been failure or prospective failure on the part of ValliCorp or
ValliWide to comply with its obligations under the Agreement, or any failure or
prospective failure to comply with any of the conditions precedent; (iv) by
Westamerica if, after the
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CUSIP No. 92023F-106 13D Page 13
date of the Agreement, any person (other than Westamerica or any Subsidiary
thereof) becomes and remains for ten Business Days the beneficial owner of 10%
or more of the then outstanding shares of ValliCorp or any Person (other than
Westamerica or a Subsidiary thereof) commences a bona fide tender offer or
exchange offer to acquire at least 10% of the then outstanding shares of
ValliCorp; (v) by the Board of Directors of ValliCorp on or after August 15,
1997, if (A) any of the conditions precedent of ValliCorp have not been
fulfilled, or (B) such conditions have been fulfilled or waived but Westamerica
has failed to complete the Merger; provided, however, that if Westamerica is
engaged at the time in litigation (including an administrative appeal procedure)
relating to an attempt to obtain one or more of the Governmental Approvals or if
Westamerica is contesting in good faith any litigation which seeks to prevent
consummation of the transactions contemplated by the Agreement, such
nonfulfillment will not give ValliCorp the right to terminate this Agreement
until the earlier of (A) twelve months after the date of this Agreement and (B)
sixty days after the completion of such litigation and of any further action by
a governmental agency as a result of any judicial remand, order or directive or
otherwise any waiting period with respect thereto; (vi) by the Board of
Directors of ValliCorp if (A) a Material Adverse Effect occurs with respect to
Westamerica and the Westamerica Subsidiaries taken as a whole since September
30, 1996, or (B) there has been failure or prospective failure to comply with
any condition precedent of ValliCorp; and (vii) by the Board of Directors of
ValliCorp, if the Board of Directors so determines by a vote of a majority of
the members of its entire Board, at any time during the two-day period
commencing one day after the Determination Date, if the Average Price as of the
Determination Date of shares of Westamerica Common Stock shall be less than
$46.13 (the "Minimum Price"); subject, however, to the following three
sentences. If ValliCorp elects to exercise its termination right pursuant to
the immediately preceding sentence, it will give prompt written notice to
Westamerica; provided that such notice of election to terminate may be withdrawn
at any time within the aforementioned two-day period. During the two-day period
commencing on the day after receipt of such notice, Westamerica will have the
option in the case of a failure to satisfy the condition set forth in this
clause, of adjusting the Exchange Ratio to equal a number equal to a quotient
(rounded to the nearest ten thousandth), the numerator of which is the product
of the Minimum Price and .4313 and the denominator of which is the Average
Price. If Westamerica makes an election contemplated by the preceding sentence,
within such two-day period, it will give prompt written notice to ValliCorp of
such election and the revised Exchange Ratio, whereupon no termination will have
occurred pursuant to this Section and this Agreement will remain in effect in
accordance with its terms (except as the Exchange Ratio will have been so
modified), and any references in this Agreement to "Exchange Ratio" will
thereafter be deemed to refer to the Exchange Ratio as adjusted pursuant to this
Section. "Determination Date" means the last day of the 20 trading day period
referred to in the definition of Average Price.
EXPENSES
Unless otherwise agreed by the parties in writing or as otherwise provided
in the Agreement, each party hereto will bear and pay all costs and expenses
incurred by it incident to preparing, entering into and carrying out the
Agreement and to consummating the Merger, including fees and expenses of its own
financial consultants, accountants and counsel, except that Westamerica and
ValliCorp each shall bear and pay 50% of all printing and mailing costs and
filing fees associated with the Registration Statement and Joint Proxy
Statement/Prospectus. Notwithstanding the foregoing, if the Agreement and the
Merger Agreement are terminated by either party pursuant to because of a willful
breach by the other party of any representation, warranty, covenant or
agreement, and provided that the terminating party shall not have been in breach
of any representation and warranty (in any material respect), covenant or
agreement contained herein or in the Merger Agreement, then the breaching party
shall bear and pay all the costs and expenses incurred by the parties, with
respect to the fees and expenses of financial and other consultants, investment
bankers, accountants, counsel
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CUSIP No. 92023F-106 13D Page 14
printers and persons involved in the transactions contemplated by this
Agreement, including the preparation of the Registration Statement and Joint
Proxy Statement/Prospectus and the solicitation of proxies, in each case that
are not employees of the party that incurred such fees and expenses. Final
settlement with respect to the payment of such fees and expenses by the parties
shall be made within thirty days of the termination of the Agreement and the
Merger Agreement.
Notwithstanding anything to the contrary contained in the Agreement, the
aggregate amount of gain realized by Westamerica pursuant to the Stock Option
Agreement from ValliCorp (or the Substitute Option Seller (as defined in the
Stock Option Agreement)), when added to the Termination Fee, if any, received by
Westamerica may not in the aggregate exceed $15,000,000, and, in the event
Westamerica realizes gain in excess of such amount under the Stock Option
Agreement from the Company (or the Substitute Option Seller), Westamerica
undertakes promptly to pay back to ValliCorp, by wire transfer of immediately
available funds, the amount of such excess.
STOCK OPTION AGREEMENT
Shares Subject to the Option. The Stock Option Agreement provides for the
purchase by Westamerica of up to 3,474,187 shares, subject to certain
adjustments, of ValliCorp Common Stock (the "Option Shares") at an exercise
price, subject to certain adjustments, of $18.00 per share, payable in cash (the
"Stock Option"). The Option Shares, if issued pursuant to the Stock Option
Agreement, would represent approximately 19.9% of the issued and outstanding
shares (excluding treasury shares) of ValliCorp's Common Stock after giving
effect to the issuance of any shares pursuant to an exercise of the Stock Option
and in no event will the number of Option Shares exceed 19.9% of ValliCorp's
issued and outstanding Common Stock.
Adjustment of Number of Shares Subject to the Option. The number of shares
of ValliCorp Common Stock subject to the Stock Option will be increased to the
extent that ValliCorp issues additional shares of Common Stock (otherwise than
pursuant to an exercise of the Stock Option) such that the number of Option
Shares will continue to equal 19.9% of the then issued and outstanding shares of
ValliCorp Common Stock after without giving effect to the issuance of shares
pursuant to an exercise of the Stock Option. In the event that ValliCorp issues
or agrees to issue any shares of Common Stock (other than as permitted under the
Agreement) at a price less than $18.00 per share (or lower than an adjusted
price per share), the exercise price will be equal to such lesser price. The
number of shares of ValliCorp Common Stock subject to the Stock Option, and the
applicable exercise price per Option Share, also will be appropriately adjusted
in the event of any stock dividend, split-up, merger, recapitalization,
combination, subdivision, conversion, exchange of shares, or similar event
relating to ValliCorp.
Exercise of the Option. Westamerica or any other holder or holders of the
Stock Option (collectively, the "Holder") may exercise the Stock Option, in
whole or in part, subject to regulatory approval, at any time within 30 days
(subject to extension as provided in the Stock Option Agreement) after both an
"Initial Triggering Event" and a "Subsequent Triggering Event" (as such terms
are hereinafter defined) occur prior to termination of the Stock Option.
"Initial Triggering Event" is defined as the occurrence of any of the
following events:
(i) ValliCorp or any ValliCorp Subsidiary, without Westamerica's
prior written consent, shall enter into an agreement with any person (other
than Westamerica or any subsidiary of Westamerica
<PAGE>
CUSIP No. 92023F-106 13D Page 15
(individually, a "Westamerica Subsidiary," and collectively "Westamerica
Subsidiaries")) to engage in, or the ValliCorp Board recommends that the
ValliCorp Common Stockholders approve or accept (other than as contemplated
by the Agreement), (x) a merger or consolidation, or similar transaction,
involving ValliCorp or any significant ValliCorp subsidiary, (y) the
purchase, lease, or other acquisition representing 15% or more of the
consolidated assets of ValliCorp or any significant ValliCorp subsidiary,
or (z) the purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities representing 10%
or more of the voting power of ValliCorp or any significant ValliCorp
subsidiary (each of the transactions described in the preceding clauses
(x), (y) and (z) being referred to in this paragraph and in the Stock
Option Agreement as "Acquisition Transaction");
(ii) ValliCorp or any ValliCorp subsidiary, without having received
Westamerica's prior written consent, shall have authorized, recommended,
proposed, or publicly announced its intention to authorize, recommend or
propose, an agreement to engage in an Acquisition Transaction with any
person other than Westamerica or a Westamerica Subsidiary, or the ValliCorp
Board shall have publicly withdrawn or modified, or publicly announced its
intent to withdraw or modify, its recommendation that the ValliCorp Common
Stockholders approve the transactions contemplated by the Agreement;
(iii) any person (other than Westamerica, any Westamerica Subsidiary
or any ValliCorp subsidiary action in a fiduciary capacity) shall acquire
beneficial ownership or the right to acquire beneficial ownership of 10% or
more of the outstanding shares of ValliCorp Common Stock;
(iv) any person (other than Westamerica or any Westamerica
Subsidiary) shall make a bona fide proposal to ValliCorp or its
stockholders by public announcement or written communication, that is or
becomes the subject to public disclosure to engage in an Acquisition
Transaction;
(v) a third party shall make a proposal to ValliCorp or its
stockholders to engage in an Acquisition Transaction, followed by ValliCorp
breaching any covenant or obligation contained in the Agreement, such
breach entitling Westamerica to terminate the Agreement, and such breach
not being cured prior to the date that Westamerica sends notice of its
exercise of the Stock Option to ValliCorp; or
(vi) any person (other than Westamerica or any Westamerica
Subsidiary), other than in connection with a transaction to which
Westamerica has given its prior written consent, shall file an application
or notice with the Federal Reserve Board, or other federal or state bank
regulatory authority, which application or notice has been accepted for
processing, for approval to engaged in an Acquisition Transaction.
"Subsequent Triggering Event" is defined as either (A) the acquisition by
any person of beneficial ownership of 15% or more of the then outstanding Common
Stock, or (B) the occurrence of the Initial Triggering Event described in clause
(i) above, except that the percentage referenced to in subclause (z) shall be
15%.
Termination of the Option. The Stock Option Agreement terminates (i) at
the effective time of the Merger, (ii) upon termination of the Agreement in
accordance with the terms thereof if such termination occurs prior to the
occurrence of an Initial Triggering Event, or (iii) 12 months after termination
of the
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CUSIP No. 92023F-106 13D Page 16
Agreement following the occurrence of an Initial Triggering Event (provided that
if an Initial Triggering Event occurs after or continues beyond such
termination, the Stock Option will terminate 12 months from the expiration of
the last Initial Triggering Event, but in no event more than 18 months after
such termination).
Within 30 days (subject to extension as provided in the Stock Option
Agreement) after a Subsequent Triggering Event and prior to the termination of
the Stock Option, Westamerica (on behalf of itself or an subsequent Holder) may
demand that the Stock Option and the related Option shares be registered under
the Securities Act. Upon such demand, ValliCorp must promptly prepare, file and
keep current a shelf registration subject to certain exceptions. Westamerica is
entitled to two such registrations so long as the second request is within 18
months of the first request.
Notwithstanding any other provision of the Stock Option Agreement, if a
Holder, the owner of the Option Shares from time to time (the "Owner"), or
certain related parties offer or propose to engage in an Acquisition Transaction
(other than as contemplated by the Agreement) without the prior written consent
of ValliCorp, then (i) in the case of a Holder or related party thereof, the
Stock Option held by it will immediately terminate and be of no further force or
effect and (ii) in the case of an Owner or any related party thereof, the Option
Shares held by it will be repurchasable by ValliCorp immediately at the then
applicable Stock Option exercise price.
If the Stock Option terminates under certain circumstances as described in
the Stock Option Agreement, Westamerica (or any subsequent Holder) may have as
many as 30 days subsequent to such termination to exercise the Stock Option (or
Substitute Option (as hereinafter defined)) in connection with the resale of
ValliCorp Common Stock or other securities pursuant to a registration statement
as provided in the Stock Option Agreement.
Repurchase at Option of Westamerica. Within 30 days (subject to extension
as provided in the Stock Option Agreement) after a Subsequent Triggering Event
and prior to termination of the Stock Option, subject to regulatory approval,
ValliCorp is required (i) at the request of the Holder, to repurchase the Stock
Option from the Holder at a price (the "Option Repurchase Price") equal to the
amount by which (x) the "market/offer price" (as hereinafter defined) exceeds
(y) the then applicable Stock Option exercise price, multiplied by the number of
shares for which the Stock Option may then be exercised plus Westamerica's Out-
of-Pocket Expenses (as hereinafter defined) to the extent not previously
reimbursed; and (ii) at the request of the Owner, to repurchase such number of
Option Shares from the Owner as the Owner designates at a price per share (the
"Option Share Repurchase Price") equal to the "market/offer price" multiplied by
the number of Option Shares so designated plus Westamerica's out-of-pocket
expenses to the extent not previously reimbursed. "Out-of-Pocket Expenses"
means Westamerica's reasonable out-of-pocket expenses incurred in connection
with the transactions contemplated by the Merger Agreement, including legal,
accounting, and investment banking fees. "Market/offer price" means the highest
of (A) the highest price per share of ValliCorp Common Stock at which a tender
offer or exchange offer therefor has been made, (B) the price per share of
ValliCorp Common Stock to be paid by any third party pursuant to an agreement
with ValliCorp, (C) the highest closing price for shares of ValliCorp Common
Stock quoted on the NYSE or other principal trading market, if applicable,
within the six-month period immediately preceding the date the Holder gives
notice of the required repurchase of the Stock Option or the Owner gives notice
of the required repurchase of the Option Shares, as the case may be, or (D) in
the event of a sale representing 15% or more of ValliCorp's net assets, the sum
of the price paid in such sale for such assets and the current market value of
the remaining assets of ValliCorp as determined by a nationally recognized
investment banking firm, selected by the Holder or the Owner, as the
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CUSIP No. 92023F-106 13D Page 17
case may be, divided by the number of shares of ValliCorp Common Stock
outstanding at the time of such sale.
Substitute Option. In the event that, prior to termination of the Stock
Option, ValliCorp enters into an agreement (i) to consolidate with or merge into
any entity other than Westamerica or any Westamerica Subsidiary and shall not be
the continuing or surviving corporation of such consolidation or merger, (ii) to
permit any entity other than Westamerica or any Westamerica Subsidiary to merge
into ValliCorp with ValliCorp as the continuing or surviving corporation, but in
connection therewith the then outstanding shares of ValliCorp Common Stock are
changed into or exchanged for stock or other securities of any other person or
cash or any other property, or the then outstanding shares or share equivalents
of the merged company, or (iii) to sell or transfer all or substantially all of
its assets to any entity other than to Westamerica or any Westamerica
Subsidiary, then the Stock Option will be converted into, or exchanged for, an
option (a "Substitute Option") to purchase shares of common stock of, at the
Holder's option, either the continuing or surviving corporation of a merger or a
consolidation, the transferee of all or substantially all of ValliCorp's assets,
or the person controlling such continuing or surviving corporation or
transferee. The number of shares subject to the Substitute Option and the
exercise price per share will be determined in accordance with a formula in the
Stock Option Agreement. To the extent possible, the Substitute Option will
contain other terms and conditions that are the same as those in the Stock
Option Agreement (after giving effect to the provisions described in the next
paragraph).
Repurchase of Substitute Option or Shares. Subject to regulatory approval,
the issuer of a Substitute Option will be required to repurchase such option at
the request of the holder thereof and to repurchase any shares of such issuer's
common stock ("Substitute Common Stock") issued upon exercise of a Substitute
Option ("Substitute Shares") at the request of the owner thereof. The
repurchase price for a Substitute Option will equal the amount by which (A) the
"Highest Closing Price" (as hereinafter defined) exceeds (B) the exercise price
of the Substitute Option, multiplied by the number of shares of Substitute
Shares to be repurchased, plus Westamerica's Out-of-Pocket Expenses. As used
herein, "Highest Closing Price" means the highest closing price for shares of
Substitute Common Stock within the six-month period immediately preceding the
date the holder gives notice of the required repurchase of the Substitute Option
or the owner gives notice of the required repurchase of Substitute Shares, as
the case may be.
Assignability. Neither Westamerica nor ValliCorp may assign any of its
respective rights and obligations under the Stock Option Agreement or the Stock
Option to any other person without the other party's written consent, except
that if a Subsequent Triggering Event occurs prior to termination of the Stock
Option, within 30 days thereafter (subject to extension as provided in the Stock
Option Agreement), Westamerica, subject to the Stock Option Agreement, may
assign in whole or in part its rights and obligations thereunder. In addition,
until 30 days after the Federal Reserve Board approves an application by
Westamerica to acquire the Option Shares, Westamerica may not assign its rights
under the Stock Option except in (i) widely dispersed public distribution, (ii)
a private placement in which no one party acquires the right to purchase in
excess of 2% of the voting shares of ValliCorp, (iii) an assignment to a single
party for the purpose of conducting a widely dispersed public distribution on
Westamerica's behalf, or (iv) any other manner approved by the Federal Reserve
Board.
Notice of Exercise. In the event Westamerica (or any subsequent Holder)
wishes to exercise the Stock Option, it must send to ValliCorp a written notice
(the date of which is referred to as the "Notice Date") specifying (i) the total
number of shares it will purchase pursuant to such exercise and (ii) a "Closing
Date" not less than three nor more than 60 days from the Notice Date. If the
purchase and sale of the Stock Option
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CUSIP No. 92023F-106 13D Page 18
cannot be consummated because of an applicable judgment, decree, order, law or
regulation, the period of time referred to in this paragraph shall run from the
date that the restriction on consummation lapses. If prior notification of or
approval of the Federal Reserve Board is required, Westamerica (or any
subsequent Holder) will promptly file the required notice or application. In
such a case, the period of time referred to in this paragraph will run from the
date the notification period expires or any necessary approval is granted. In
no event shall the Closing Date be more than 18 months after the related Notice
Date.
The rights and obligations of Westamerica under the Stock Option Agreement
are subject to receipt of any required regulatory approvals. Without the prior
approval of the Federal Reserve Board, Westamerica may not acquire more than 5%
of the outstanding Common Stock of ValliCorp. Westamerica intends to file an
application for such approval as soon as practicable.
Item 5. Interest in Securities of the Issuer.
- ------- ------------------------------------
a. As of November 11, 1996, Westamerica beneficially owned 812,949 shares
of ValliCorp Common Stock, or approximately 5.8% of the 13,984,039 shares of
ValliCorp Common Stock outstanding as of that date, based upon information
provided by Issuer to Westamerica. To the best of the knowledge of Westamerica,
no executive officer or director of Westamerica owns or has a right to acquire
any shares of ValliCorp Common Stock.
b. Of the shares of ValliCorp Common Stock referred to in Item 5(a),
Westamerica has the sole power to vote and to direct the disposition of 115,500
shares of ValliCorp Common Stock. Westamerica has shared voting power with
respect to certain matters but no dispositive power, as more fully described in
Item 5(c) below, over 697,449 shares of such ValliCorp Common Stock.
c. Of the 115,500 shares of ValliCorp Common Stock over which Westamerica
has sole voting and dispositive power, none were purchased within the previous
six months. The shared voting power with respect to certain matters, as
discussed below, with respect to 697,449 shares of ValliCorp Common Stock was
acquired pursuant to the execution of the Agreement. As a condition to
consummation of the Merger and pursuant to the Agreement, the directors of
Issuer have each executed a Shareholder Agreement (hereinafter, the "Shareholder
Agreements"). References herein to such "shared voting power" are limited to
said directors' contractual obligations to Westamerica pursuant to the
Shareholder Agreements. The description of the Shareholder Agreements set forth
below is qualified in its entirety by the terms of the Shareholder Agreements, a
form of which is attached hereto as Exhibit 3 and incorporated herein by
reference. The Shareholder Agreements obligate each director of ValliCorp to
vote in favor of the Agreement and the transactions contemplated thereby all
shares of ValliCorp Common Stock as to which such individual has sole or shared
voting power. As of November 11, 1996, the Shareholder Agreements cover the
number of shares of ValliCorp Common Stock set forth opposite each such
director's name (based on information provided to Westamerica by ValliCorp),
together with any future shares of ValliCorp Common Stock such ValliCorp
directors may acquire. The Shareholder Agreements terminate upon the earlier of
the Effective Date or the termination of the Agreement in accordance with its
terms.
<TABLE>
<S> <C>
William A. Benneyan 166,768
Louis H. Herwaldt 45,214
</TABLE>
<PAGE>
CUSIP No. 92023F-106 13D Page 19
<TABLE>
<S> <C>
J. Mike McGowan 92,260
Patrick J. Mon Pere 178,981
D. Dwight Odom, M.D. 38,859
Lorenzo Tony Ortega 794
Steven C. Pumphrey -0-
V. Eugene Ross 105,346
Michael J. Ryan, Jr. 52,325
Jerry K. Stanners 13,700
Charles L. Tingey 3,202
</TABLE>
d. Of the 697,449 shares of ValliCorp Common Stock over which shared
voting power as to certain matters was obtained pursuant to the Shareholder
Agreements, Westamerica does not have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of such
shares of ValliCorp Common Stock. Westamerica believes that such rights and
powers are vested in the individual holders of such shares. None of the persons
with such right or power is known by Westamerica to be a five percent or greater
beneficial owner of the shares of ValliCorp Common Stock.
e. Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
- ------ ---------------------------------------------------------------------
to Securities of the Issuer.
---------------------------
On November 11, 1996 Westamerica, Issuer and ValliWide entered into the
Agreement pursuant to which Westamerica agreed to acquire all the outstanding
stock of Issuer as more fully described in Item 4 above. The Agreement is
incorporated herein by reference.
On November 11, 1996, Westamerica and Issuer entered into a Stock Option
Agreement pursuant to which the Issuer agreed to grant to Westamerica an
unconditional, irrevocable option (the "Option") to purchase up to 3,474,187
fully paid and nonassessable shares of Issuer's Common Stock at a price of
$18.00 per share, as more fully described in Item 4., above. The number of
shares granted pursuant to the Stock Option Agreement is adjustable; provided,
however, that in no event shall the number of shares for which the Option is
exercisable exceed 19.9% of Issuer's issued and outstanding Common Stock.
Westamerica may exercise the Option upon the occurrence of the events or
transactions described in the Stock Option Agreement.
On November 11, 1996 Westamerica entered into Shareholder Agreements with
the directors of Issuer, as more fully described in Item 5(c) above, which
provide Westamerica with shared voting power as to certain matters, as more
fully discussed in Item 5(c) above, over 697,449 shares of ValliCorp Common
Stock and any future shares of ValliCorp Common Stock such directors may
acquire. A form of Shareholder Agreement is attached hereto as Exhibit 3 and
incorporated herein by reference.
<PAGE>
CUSIP No. 92023F-106 13D Page 20
Item 7. Materials to be Filed as Exhibits.
- ------ ---------------------------------
Exhibit 1. Agreement and Plan of Reorganization, dated as of November 11, 1996,
among Westamerica Bancorporation, a California corporation,
ValliCorp Holdings, Inc., a Delaware corporation and ValliWide Bank,
a California chartered bank. (Incorporated by reference from Exhibit
2.1 to Westamerica's Current Report on Form 8-K dated November 11,
1996.)
Exhibit 2. Stock Option Agreement, dated as of November 11, 1996, between
Westamerica Bancorporation, a California corporation, and ValliCorp
Holdings, Inc., a Delaware corporation. (Incorporated by reference
from Exhibit 99.1 to Westamerica's Current Report on Form 8-K dated
November 11, 1996.)
Exhibit 3. Form of Shareholder Agreement dated as of November 11, 1996.
<PAGE>
CUSIP No. 92023F-106 13D Page 21
SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated November 21, 1996.
WESTAMERICA BANCORPORATION
By /s/ David L. Payne
-----------------------------
David L. Payne
Chairman of the Board,
Chief Executive Officer and
President
<PAGE>
Schedule A
----------
Directors and Executive Officers of
-----------------------------------
Westamerica Bancorporation
--------------------------
The names, business addresses and present principal occupations or
employment (and name, principal business and address of any corporation or other
organization in which such employment is conducted) of Westamerica's directors
and executive officers are set forth below. If no address is given, the
director's or officer's address is Westamerica Bancorporation, 1108 Fifth
Avenue, San Rafael, California 94901. Unless otherwise indicated, each
occupation set forth opposite an individual's name refers to Westamerica. All
directors and officers are citizens of the United States.
Directors (Including Executive Officers
---------------------------------------
Who Are Directors)
------------------
<TABLE>
<S> <C>
Etta Allen President and owner of Allen Heating
Allen Heating & Sheet and Sheet Metal of Greenbrae
Metal (heating, ventilating, air
31 Industrial Way conditioning and sheet metal
Greenbrae, CA 96906 contractor)
Louis E. Bartolini Manages his personal investments
145 Val Vista
Mill Valley, CA 94941
Charles I. Daniels, Jr. President and owner of
House of Daniels, Inc. House of Daniels, Inc. of Novato
12 Harbor Drive (beverage distribution firm)
Black Point
Novato, CA 94948
Don J. Emerson Manages his personal investments
P.O. Box 69
Cobb, CA 95426
Arthur C. Latno, Jr. Manages his personal investments
67 Convent Court
San Rafael, CA 94901
Patrick D. Lynch Consultant and director for several high
23211 North 144th Drive technology firms
Sun City West, AZ 85375
Catherine Cope MacMillan President and owner of The Firehouse
The Firehouse Restaurant Restaurant in Sacramento
1112 Second Street (restaurant)
Old Sacramento, CA 95814
</TABLE>
<PAGE>
Executive Officers (Who Are Not Directors)
------------------------------------------
<TABLE>
<S> <C>
E. Joseph Bowler Senior Vice President and Treasurer
Robert W. Entwisle Senior Vice President of Westamerica Bank
Evan N. Fricker Vice President and General Auditor
Charles L. Fritz Executive Vice President and Chief Credit Officer
Dennis R. Hansen Senior Vice President and Controller
Thomas S. Lenz Senior Vice President and Chief Credit Administrator
of Westamerica Bank
Hans T.Y. Tjian Senior Vice President and Manager of Operations
and Systems Administration Division of
Westamerica Bank
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Dwight H. Murray, Jr., M.D. Self-employed vascular general surgeon and
3443 Villa Lane, #10 Associate Clinical Professor of Surgery
Napa, CA 94558 at University of California,
Ronald A. Nelson Manages his personal investments
5176 Oak Meadow Drive
Santa Rosa, CA 95401
Carl R. Otto President and Chief Executive Officer
John F. Otto, Inc. of John F. Otto, Inc. in Sacramento (general
P.O. Box 2858 contracting)
Sacramento, CA 95812-2858
David L. Payne Chairman of the Board, Chief
Gibson Radio & Executive Officer and President of
Publishing Co. Westamerica Bancorporation and Chief
P.O. Box 3067 Executive Officer and President of
Vallejo, CA 94590 Gibson Radio and Publishing Company
and Gibson Printing and Publishing Company
in Vallejo (newspaper, commercial printing
and real estate investment companies)
Edward B. Sylvester Owner of Sylvester Engineering, Inc.,
Sylvester Engineering Inc. (a civil engineering and planning
101 Providence Mine Road firm)
Suite 202
Nevada City, CA 95959
</TABLE>
<PAGE>
SCHEDULE 13D
------------
INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
Sequentially
Numbered
Item Description Page
- ------------ ---------------------------------------------------------- ------------
<S> <C> <C>
Exhibit 1 Agreement and Plan of Reorganization, dated as of *
November 11, 1996, among Westamerica
Bancorporation, a California corporation, ValliCorp
Holdings, Inc., a Delaware corporation and ValliWide
Bank, a California chartered bank. (Incorporated by
reference from Exhibit 2.1 to Westamerica's Current
Report on Form 8-K dated November 11, 1996.)
Exhibit 2 Stock Option Agreement, dated as of November 11, *
1996, between Westamerica Bancorporation, a California
corporation, and ValliCorp Holdings, Inc., a Delaware
corporation. (Incorporated by reference from Exhibit 99.1
to Westamerica's Current Report on Form 8-K dated
November 11, 1996.)
Exhibit 3 Form of Shareholder Agreement dated as of
November 11, 1996
</TABLE>
- -------------
*Previously filed.
<PAGE>
EXHIBIT 3
Shareholder Agreement
November 11, 1996
Westamerica Bancorporation
1108 Fifth Avenue
San Rafael, CA 94901
Ladies and Gentlemen:
The undersigned is a director of ValliCorp Holdings, Inc. ("ValliCorp") and
an owner of common stock of ValliCorp ("ValliCorp Common Stock").
ValliCorp and Westamerica Bancorporation ("Westamerica") have entered into
an Agreement and Plan of Reorganization ("Agreement") dated today's date related
to the Merger of ValliCorp into Westamerica. In consideration of the premises
and the representations, warranties, agreements and conditions in this letter
and in the Agreement and in order to induce Westamerica to execute the
Agreement, the undersigned agrees and undertakes, as follows:
The undersigned will vote, in person or by proxy, at any meeting of
shareholders of ValliCorp (or any action by written consent in lieu of a
meeting) to approve the Agreement and the transactions contemplated thereby (the
"Shareholders' Meeting"), all of the shares of ValliCorp stock as to which the
undersigned has sole or shared voting power (the "Shares") as of the record date
established to determine shareholders who have the right to vote at the
Shareholders' Meeting.
The undersigned agrees that, from and after the date of this letter and
through the date of the Shareholders' Meeting (and any postponements or
adjournments thereof), the shareholder will not sell, assign, transfer or
otherwise take any action that will alter or affect in any way the right to vote
the Shares, except (i) with the prior written consent of Westamerica or (ii) to
change such right from that of a shared right of the shareholder to vote the
Shares to a sole right of the shareholder to vote the Shares.
The undersigned represents and warrants that he/she has sole or shared
voting power over __________ Shares covered by the terms of this letter; and
there are no proxies, voting trusts or other agreements or understandings to
which the undersigned or the undersigned's spouse, if any, is a party or bound
or that requires that any of the Shares be voted in any specific manner other
than as provided in this letter.
<PAGE>
Westamerica Bancorporation
November 11, 1996
Page 2
The undersigned agrees that, from and after the Effective Date (as such
term is defined in the Agreement), Section 2(e) of that certain Indemnification
Agreement dated as of September 23, 1996 by and between the undersigned and
ValliCorp (the "Indemnification Agreement") shall be of no further force and
effect as to the undersigned and that such provision shall be deemed to be
superseded as to the undersigned by the proviso to the first sentence and by the
second sentence of Section 5.1(f)(3) of the Agreement.
The undersigned and Westamerica each acknowledge that, in view of the
uniqueness of the obligations of the undersigned in this letter, Westamerica
would not have an adequate remedy at law for money damages in the event that the
promises in this letter have not been performed according to its terms, and,
therefore, the undersigned agrees that Westamerica shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which it may
be entitled at law or in equity.
This letter shall terminate automatically without further action at the
earlier of the Effective Date under the Agreement or the termination of the
Agreement in accordance with its terms.
<PAGE>
Westamerica Bancorporation
November 11, 1996
Page 3
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original instrument, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the
date first above written.
Very truly yours,
---------------------------------
SPOUSAL CONSENT
I am the spouse of _____________________. I hereby confirm that I have
read and understand this letter agreement and agree that it shall bind my
interest in the Shares, if any.
---------------------------
(Spouse's Name)
Accepted and agreed to as of
the date first above written:
WESTAMERICA BANCORPORATION
By:
-----------------------
