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 (Date of earliest event reported): October 3, 1999
NORTH VALLEY BANCORP
(Exact name of registrant as specified in its charter)
California 0-10652 94-2751350
(State or other (File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
880 East Cypress Avenue 96002
Redding, California
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (530) 221-8400
This Form 8-K consists of 3 pages. The Exhibit Index is on Page 4.
5. Other Events
On October 4, 1999, the Registrant, North Valley Bancorp,
and Six Rivers National Bank, a national banking association with
its head office in Eureka, California, issued a joint news
release announcing the signing of an Agreement and Plan of
Reorganization and Merger dated October 3, 1999 (the "Agreement")
by and among North Valley Bancorp, Six Rivers National Bank and
NVB Interim National Bank, an interim national banking
association to be formed at the direction of North Valley Bancorp
to facilitate a tax-free merger intended to be accounted for as a
pooling of interests (the "Merger"). A copy of the October 4,
1999, news release is attached hereto as Exhibit 99.1.
Pursuant to the Agreement, it is expected that Six Rivers
National Bank will merge with and into NVB Interim National Bank
and the resulting national banking association will continue as a
wholly owned subsidiary of North Valley Bancorp, with the name
"Six Rivers National Bank." North Valley Bancorp is currently
the holding company for North Valley Bank, a California banking
corporation with its head office in Redding, California. Thus,
upon consummation of the transactions contemplated by the
Agreement, North Valley Bancorp would have two banking
subsidiaries: Six Rivers National Bank and North Valley Bank.
Under the terms of the Agreement, the shareholders of Six
Rivers National Bank will be entitled to exchange their shares of
Six Rivers National Bank Common Stock, held on the record date,
for shares of North Valley Bancorp Common Stock. The number of
shares exchanged will depend on the average price of North Valley
Bancorp Common Stock on The Nasdaq National Market for a 20-day
period prior to the closing. If the average price is not less
than $10.00 and is not more than $12.06, the conversion ratio
will be 1.450. If the average price is not less than $12.07 and
is not more than $12.50, the conversion ratio will be determined
by dividing $17.50 by the average price. If the average price is
more than $12.50 but is not more than $15.00, the conversion
ratio will be 1.400, and if the average price is more than
$15.00, the conversion ratio will be determined according to a
formula intended to give the shareholders of Six Rivers National
Bank approximately 40 percent of the appreciation. If the
average price is less than $10.00, the Board of Directors of Six
Rivers National Bank will have the right to terminate the
Agreement or to accept a conversion ratio of 1.450 and proceed
with the closing.
The Agreement has been approved by the Boards of
Directors of North Valley Bancorp and Six Rivers National Bank.
The Merger is subject to the approval of the North Valley Bancorp
shareholders, the approval of the Six Rivers National Bank
shareholders, all applicable regulatory approvals and other terms
and conditions customary for transactions of this type. Subject
to satisfaction of the conditions set forth in the Agreement, it
is estimated that the closing of the Merger will occur in the
first or second quarter of the year 2000.
The foregoing summary is qualified in its entirety by
reference to the Agreement attached hereto as Exhibit 2.1 and
incorporated herein by this reference.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
2.1 Agreement and Plan of Reorganization and Merger
dated October 3, 1999
99.1 Joint News Release of October 4, 1999
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.
NORTH VALLEY BANCORP
(Registrant)
Date: October 12 , 1999. By: /s/ Sharon L. Benson
Sharon L. Benson
Senior Vice President and
Chief Financial Officer
Exhibit Index
No. Identity Page Nos.
2.1 Agreement and Plan of Reorganization and Merger dated
October 3, 1999 5
99.1 Joint News Release of October 4, 1999 73
EXECUTION COPY
AGREEMENT
AND
PLAN OF REORGANIZATION AND MERGER
BY AND AMONG
NORTH VALLEY BANCORP,
NVB INTERIM NATIONAL BANK
AND
SIX RIVERS NATIONAL BANK
OCTOBER 3, 1999
TABLE OF CONTENTS
Page
Recitals -1-
1. THE MERGER -2-
1.1. Effective Date and Time -2-
1.2. Effect of the Merger -2-
2. CONVERSION AND CANCELLATION OF SHARES -3-
2.1. Conversion of SRNB Shares. -3-
2.2 Fractional Shares -4-
2.3 Surrender of SRNB Shares -4-
2.4 Further Transfers of SRNB Shares -5-
2.5. Adjustments -5-
2.6 Treatment of Stock Options -5-
2.7 Dissenting Shareholders -6-
2.8 NVB Interim National Bank as Party -6-
3. COVENANTS OF THE PARTIES -6-
3.1. Covenants of NVBancorp -6-
a. Amendment of Articles and Bylaws. -6-
b. Appointment of Holding Company Directors -6-
c. Amendment of NVBancorp Stock Option Plan -7-
d. Reservation, Issuance and Registration of
NVBancorp Shares -7-
e. Nasdaq Stock Market Listing -7-
f. Director and Officer Liability -7-
g. Business Combination -9-
3.2. Covenants of SRNB -9-
a. Termination of SRNB Stock Option Plan -9-
b. Termination or Merger of SRNB Benefit Plans -9-
c. Capital Commitments and Expenditures. -9-
d. Compensation -10-
e. Loans. -10-
f. Certain Notices. -10-
g. Loan Review -11-
h. Loan Provision -11-
i. No Merger or Solicitation -11-
3.3. Mutual Covenants of NVBancorp and SRNB -12-
a. Appointment of Executive Officers -12-
b. Appointment of Bank Directors -12-
c. Executive Management Committee -13-
d. Classified Board of Directors -13-
e. Approval by Shareholders -13-
f. Shareholder Lists and Other Information -14-
g. Government Approvals -14-
h. Notification of Breach of Representations,
Warranties and Covenants. -14-
i. Financial Statements -14-
j. Conduct of Business in the Ordinary Course -15-
k. Press Releases -17-
l. Employee Benefit Plans -18-
m. Changes in Capital Stock; Dividends -18-
n. Access to Properties, Books and Records;
Confidentiality -19-
o. Loan Performance -19-
p. Preparation of Joint Proxy Statement/Prospectus-20-
q. Rights Plans. -20-
4. REPRESENTATIONS AND WARRANTIES OF SRNB -20-
a. Corporate Status and Power to Enter Into
Agreements -21-
b. Articles, Bylaws, Books and Records -21-
c. Compliance With Laws, Regulations and Decrees -21-
d. Capitalization -21-
e. Trademarks and Trade Names -22-
f. Financial Statements, Regulatory Reports -22-
g. Tax Returns -23-
h. Material Adverse Change -24-
i. No Undisclosed Liabilities -24-
j. Properties and Leases -24-
k. Material Contracts -25-
l. Classified Loans -26-
m. No Restrictions on Investments -26-
n. Employment Benefit Plans/ERISA -26-
o. Collective Bargaining and Employment Agreements-27-
p. Compensation of Officers and Employees -28-
q. Legal Actions and Proceedings -28-
r. Execution and Delivery of the Agreement -28-
s. Retention of Broker or Consultant -29-
t. Insurance -29-
u. Loan Loss Reserves -30-
v. Transactions With Affiliates -30-
w. Risk Management Instruments -30-
x. Year 2000. -31-
y. Community Reinvestment Act Compliance -31-
z. Information in NVBancorp Registration Statement-31-
aa. Accuracy and Effective Date of Representations and
Warranties, Covenants and Agreements -31-
5. REPRESENTATIONS AND WARRANTIES OF NVBancorp -32-
a. Corporate Status and Power to Enter Into
Agreements -32-
b. Articles, Bylaws, Books and Records -32-
c. Compliance With Laws, Regulations and Decrees -33-
d. Capitalization -33-
e. Trademarks and Trade Names -34-
f. Financial Statements, Regulatory Reports -34-
g. Tax Returns -34-
h. Material Adverse Change -35-
i. No Undisclosed Liabilities -36-
j. Properties and Leases -36-
k. Material Contracts -37-
l. Classified Loans -37-
m. No Restrictions on Investments -38-
n. Employment Benefit Plans/ERISA -38-
o. Collective Bargaining and Employment Agreements-39-
p. Compensation of Officers and Employees -39-
q. Legal Actions and Proceedings -40-
r. Execution and Delivery of the Agreement -40-
s. Retention of Broker or Consultant -41-
t. Insurance -41-
u. Loan Loss Reserves -41-
v. Transactions With Affiliates -42-
w. Risk Management Instruments -42-
x. Year 2000 -42-
y. Community Reinvestment Act Compliance -43-
z. Information in NVBancorp Registration Statement-43-
aa. Accuracy and Effective Date of Representations and
Warranties, Covenants and Agreements -43-
6. SECURITIES ACT OF 1933; SECURITIES EXCHANGE ACT OF 1934 -44-
a. Preparation and Filing of Registration Statement-44-
b. Effectiveness of Registration Statement -44-
c. Sales and Resales of Common Stock -44-
d. Rule 145 -45-
7. CONDITIONS TO THE OBLIGATIONS OF NVBancorp -45-
a. Representations and Warranties -45-
b. Compliance and Performance Under Agreement -45-
c. Material Adverse Change -45-
d. Approval of Agreement -46-
e. Officer's Certificate -46-
f. Opinion of Counsel -46-
g. Absence of Proceedings -46-
h. Effectiveness of Registration Statement -46-
i. Government Approvals -46-
j. Tax Opinion -47-
k. Accountant's Comfort Letters -47-
l. Dissenting Shares -48-
m. Unaudited Financials -48-
n. Affiliate Agreements -48-
o. Closing Documents -48-
p. Consents -48-
q. Fairness Opinion -49-
r. Accounting Treatment -49-
s. Shareholder Agreements -49-
t. Performance Tests -49-
u. Compliance with Consent Agreement -49-
8. CONDITIONS TO THE OBLIGATIONS OF SRNB -49-
a. Representations and Warranties -50-
b. Compliance and Performance Under Agreement -50-
c. Material Adverse Change -50-
d. Approval of Agreement -50-
e. Officer's Certificate -50-
f. Opinion of Counsel -50-
g. Absence of Proceedings -51-
h. Effectiveness of Registration Statement -51-
i. Government Approvals -51-
j. Tax Opinion -51-
k. Accountant's Comfort Letters -52-
l. Dissenting Shares -52-
m. Unaudited Financials -53-
n. Affiliate Agreements -53-
o. Closing Documents -53-
p. Consents -53-
q. Fairness Opinion -53-
r. Accounting Treatment -53-
s. Shareholder Agreements -54-
9. CLOSING -54-
a. Closing Date -54-
b. Delivery of Documents -54-
c. Filings -54-
10. POST-CLOSING MATTERS -54-
11. EXPENSES -55-
12. AMENDMENT; TERMINATION -55-
a. Amendment -55-
b. Termination -55-
c. Termination Date -58-
d. Notice -58-
e. Effect of Termination; Liquidated Damages -58-
13. INDEMNIFICATION -59-
13.1. By NVBancorp -59-
13.2. By SRNB -59-
13.3. Notification -60-
14. MISCELLANEOUS -60-
a. Notices -60-
b. Knowledge -61-
c. Binding Agreement -61-
d. Material Adverse Effect -61-
e. Survival of Representations and Warranties -61-
f. Governing Law -61-
g. Attorneys' Fees. -62-
h. Entire Agreement; Severability -62-
i. Counterparts -62-
EXHIBITS
A. Merger Agreement
B. SRNB Affiliate Agreement
C. SRNB Shareholder Agreement
D. NVBancorp Affiliate Agreement
E. NVBancorp Shareholder Agreement
AGREEMENT
AND
PLAN OF REORGANIZATION AND MERGER
THIS AGREEMENT AND PLAN OF REORGANIZATION AND MERGER, dated
as of October 3, 1999, ("Agreement"), is made and entered into by
and among North Valley Bancorp, a California corporation
("NVBancorp"), NVB Interim National Bank, an interim national
banking association to be formed at the direction of NVBancorp
("Interim Bank") and Six Rivers National Bank, a national banking
association ("SRNB").
Recitals:
A. The Boards of Directors of NVBancorp and SRNB deem it
advisable and in the best interests of NVBancorp and
SRNB, and their respective shareholders, that
NVBancorp, Interim Bank and SRNB enter into a business
combination, with the expectation that the resulting
multi-bank holding company structure will combine the
best elements of NVBancorp, North Valley Bank, a
California state-chartered banking corporation and
currently the wholly owned subsidiary of NVBancorp
("NVB"), and SRNB. Pursuant to a forward triangular
merger under the authority of 12 U.S.C. 215a, SRNB
shall merge with and into Interim Bank (the "Merger")
and the resulting national banking association will
continue with the national bank charter number of SRNB
and the name "Six Rivers National Bank" as a wholly-
owned subsidiary of NVBancorp.
B. Upon organization of the Interim Bank, the Interim Bank
will become a party to this Agreement by the execution
and delivery of an addendum to this Agreement, in form
and substance acceptable to NVBancorp, SRNB and the
directors and shareholders of the Interim Bank.
C. This Agreement and the Merger Agreement,
substantially in the form attached hereto as Exhibit A
and intended to be filed with the Office of the
Comptroller of the Currency (the "Merger Agreement"),
have been approved by the Boards of Directors of
NVBancorp and SRNB, and will be approved by the
directors and shareholders of the Interim Bank, and the
principal terms of the Merger will be submitted for
approval of the shareholders of NVBancorp and SRNB at
special meetings of their respective shareholders.
D. The Merger is intended to qualify as a tax-free
reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended (the "IRC"),
and the Merger shall be accounted for as a "pooling of
interests."
E. Pursuant to the Merger, each SRNB shareholder will
receive, in exchange for each share of SRNB common
stock ("SRNB Share" or "SRNB Shares"), the number of
shares of NVBancorp common stock ("NVBancorp Share" or
"NVBancorp Shares") determined in accordance with the
conversion ratio as more fully set forth in this
Agreement and in the Merger Agreement (the "Conversion
Ratio").
F. The Boards of Directors of NVBancorp, NVB and SRNB have
determined that the Merger and the other transactions
contemplated by this Agreement are consistent with, and
will contribute to the furtherance of, their respective
business strategies and goals.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements contained herein and in the Merger Agreement,
the parties hereto agree as follows:
1. THE MERGER.
1.1. Effective Date and Time. Subject to the terms and
conditions of this Agreement, the Merger shall become effective
on the date ("Effective Date") and at the time ("Effective Time
of the Merger") selected by the parties after the Merger has been
certified by the Office of the Comptroller of the Currency
("OCC"), an executed copy of the Merger Agreement has been filed
with and accepted by the OCC, all Government Approvals have been
received and satisfied and all other conditions to the Merger
set forth in this Agreement have been satisfied.
1.2. Effect of the Merger. Subject to the terms and
conditions of this Agreement, at the Effective Time of the
Merger, SRNB shall be merged with and into the Interim Bank and
the resulting national banking association in the Merger (the
"Resulting Bank") will continue as a wholly-owned subsidiary of
NVBancorp with the national bank charter number of SRNB and the
name "Six Rivers National Bank." All assets, rights, privileges,
immunities, powers, franchises and interests of SRNB in and to
every type of property (real, personal and mixed) and chooses in
action, as they exist as of the Effective Date, including
appointments, designations and nominations and all other rights
and interests as trustee, executor, administrator, registrar of
stocks and bonds, guardian of estate, assignee, receiver and in
every other fiduciary capacity, shall pass and be transferred to
and vest in the Resulting Bank by virtue of the Merger at the
Effective Time of the Merger without any deed, conveyance or
other transfer; the separate corporate existence of SRNB and the
Interim Bank shall cease; and the Resulting Bank shall be deemed
to be the same entity as each of SRNB and the Interim Bank and
shall be subject to all of their duties and liabilities of every
kind and description. The Resulting Bank shall be responsible
and liable for all the liabilities and obligations of each of
SRNB and the Interim Bank; and any claim existing or action or
proceeding pending by or against SRNB or the Interim Bank may be
prosecuted as if the Merger had not taken place, or the Resulting
Bank may be substituted in the place of SRNB or the Interim Bank.
Neither the rights of creditors nor any liens upon the property
of either SRNB or the Interim Bank shall be impaired by reason of
the Merger.
2. CONVERSION AND CANCELLATION OF SHARES.
2.1. Conversion of SRNB Shares. At the effective time of
the Merger, by virtue of the Merger and without any action on the
part of NVBancorp, SRNB or any holder of SRNB Shares, subject to
Section 3.1.g. hereof, each outstanding SRNB Share (other than
any shares as to which dissenters' rights have been perfected as
provided in Section 2.7 hereof), shall be converted into the
right to receive a number of NVBancorp Shares (or fraction
thereof, subject to Section 2.2 hereof) based on a conversion
ratio (the "Conversion Ratio") determined as follows:
a. If the Average Closing Price is not less than
$10.00 and is not more than $12.06, the Conversion
Ratio shall be 1.450.
b. If the Average Closing Price is not less than
$12.07 and is not more than $12.50, the Conversion
Ratio shall be determined by dividing $17.50 by
the Average Closing Price.
c. If the Average Closing Price is more than $12.50
but is not more than $15.00, the Conversion Ratio
shall be 1.400.
d. If the Average Closing Price is less than $10.00,
the provisions of Section 12.b.(xvi) hereof shall
be applicable.
e. If the Average Closing Price is greater than
$15.00, the Conversion Ratio shall be determined
in accordance with the following formula:
Conversion Ratio = $21.00 + 0.56 x (Average Closing Price minus $15.00)
Average Closing Price
f. In addition to sub-paragraphs a. through e. above,
if the shareholders' equity of SRNB as of the
Determination Date is less than $19,000,000, then
NVBancorp and SRNB shall re-calculate and modify
the Conversion Ratio by reducing the Conversion
Ratio determined in accordance with sub-paragraphs
a. through e. above by 0.0P10 for each whole
$100,000 amount of shortfall then existing in the
shareholders' equity of SRNB. For example, if the
Average Closing Price is $12.50, but the
shareholders' equity of SRNB is $18,899,000, then
the Conversion Ratio shall be 1.390. As used
herein, "shareholders' equity of SRNB" shall be
the sum of the following components as reflected
on the books of SRNB: (i) common stock par value,
plus (ii) additional paid in capital, plus (iii)
retained earnings (or accumulated deficit), which,
as of June 30, 1999, was $19,151,000.
As used herein, "Average Closing Price" means the average of the
daily average of bid and ask prices of NVBancorp Shares on the
Nasdaq National Market for the twenty (20) consecutive trading
(business) days ending at the end of the third trading (business)
day immediately preceding the Effective Time of the Merger,
rounded to four decimal places (whether or not trades occurred on
those days). The third business day prior to the date of the
Proposed Closing Date, as defined in Section 9.a. hereof, is
hereinafter called the "Determination Date."
2.2 Fractional Shares. Notwithstanding any other provision
hereof, no fractional shares of NVBancorp Shares shall be issued
to holders of SRNB Shares. In lieu thereof, each such holder
entitled to a fraction of a NVBancorp Share shall receive, at the
time of surrender of the certificate or certificates representing
such holder's SRNB Shares, an amount in cash equal to the market
value per share of the NVBancorp Shares, being the closing price
of NVBancorp Shares on the Nasdaq National Market on the trading
(business) day immediately preceding the Effective Time of the
Merger, multiplied by the fraction of an NVBancorp Share to
which such holder otherwise would be entitled. No such holder
shall be entitled to dividends, voting rights, interest on the
value of, or any other rights in respect of a fractional share.
2.3 Surrender of SRNB Shares.
a. Prior to the Effective Date, NVBancorp shall
appoint ChaseMellon Shareholder Services, L.L.C., or its
successor, or any other bank or trust company (having capital of
at least $50 million) mutually acceptable to NVBancorp and SRNB,
as exchange agent (the "Exchange Agent") for the purpose of
exchanging certificates representing SRNB Shares and at and after
the Effective Time of the Merger, NVBancorp shall issue and
deliver to the Exchange Agent such number of certificates
representing NVBancorp Shares and cash for payment of fractional
shares, as shall be required to be delivered to holders of SRNB
Shares pursuant to Article 2 of the Merger Agreement. As soon as
practicable after the Effective Time of the Merger, each holder
of SRNB Shares converted pursuant to Section 2.1, upon surrender
to the Exchange Agent of one or more certificates for such SRNB
Shares for cancellation, will be entitled to receive a
certificate or certificates representing the number of NVBancorp
Shares determined in accordance with Section 2.1 and a payment in
cash with respect to fractional shares, if any, determined in
accordance with Section 2.2.
b. No dividends or other distributions of any kind
which are declared payable to shareholders of record of the
NVBancorp Shares after the Effective Date will be paid to persons
entitled to receive such certificates for NVBancorp Shares until
such persons surrender their certificates representing SRNB
Shares. Upon surrender of such certificates representing SRNB
Shares, the holder thereof shall be paid, without interest, any
dividends or other distributions with respect to the NVBancorp
Shares as to which the record date and payment date occurred on
or after the Effective Date and on or before the date of
surrender.
c. If any certificate for NVBancorp Shares is to be
issued in a name other than that in which the certificate for
SRNB Shares surrendered in exchange therefor is registered, any
transfer costs or expenses (except taxes) required by reason of
the issuance of certificates for such NVBancorp Shares in a name
other than the registered holder of the certificate surrendered
shall be paid by the person requesting such change.
d. All dividends or distributions, and any cash to be
paid pursuant to Section 2.2 in lieu of fractional shares, if
held by the Exchange Agent for payment or delivery to the holders
of unsurrendered certificates representing SRNB Shares and
unclaimed at the end of one year from the Effective Date, shall
(together with any interest earned thereon) at such time be paid
or redelivered by the Exchange Agent to NVBancorp, and after such
time any holder of a certificate representing SRNB Shares who has
not surrendered such certificate to the Exchange Agent shall,
subject to applicable law, look, as a general creditor, only to
NVBancorp for payment or delivery of such dividends or
distributions or cash, as the case may be.
2.4 Further Transfers of SRNB Shares. At the Effective
Time of the Merger, the stock transfer books of SRNB shall be
closed and no transfer of SRNB Shares theretofore outstanding
shall thereafter be made.
2.5. Adjustments. If, between the date of this Agreement
and the Effective Date, the outstanding shares of NVBancorp
Shares or SRNB Shares shall have been changed into a different
number of shares or a different class by reason of any
reclassification, recapitalization, split-up, combination,
exchange of shares or readjustment, or a stock dividend thereon
shall be declared with a record date within such period, the
number of NVBancorp Shares to be issued and delivered in the
Merger in exchange for each outstanding SRNB Share shall be
correspondingly adjusted.
2.6 Treatment of Stock Options.
a. Each person holding one or more options to
purchase SRNB Shares ("SRNB Option" or "SRNB Options") pursuant
to the Six Rivers National Bank Stock Option Plan, as amended to
date ("SRNB Stock Option Plan") shall have the right, in his or
her discretion, to either:
(i) exercise any vested portion (including any
portion vested as a result of the Merger) of the SRNB Option
to acquire SRNB Shares prior to the Effective Date; or
(ii) as of the Effective Time of the Merger,
surrender the SRNB Option agreement to NVBancorp, in
which event such person will be entitled to receive a
substitute option ("Substitute Option") exercisable for
(a) the number of NVBancorp Shares equal to the number
of SRNB Shares for which such person held SRNB Options
multiplied by the Conversion Ratio and rounded down to
the nearest whole share, and (b) the exercise price for
the shares subject to the SRNB Option shall be adjusted
by dividing the pre-Merger exercise price for the SRNB
Option by the Conversion Ratio, rounded to the nearest
penny.
b. The Substitute Options to be received in exchange
for SRNB Options shall be, to the greatest extent practicable,
vested to the same extent as before the Merger (including any
portion vested as a result of the Merger), shall continue to vest
on the same vesting schedule as provided under the original
applicable SRNB Option agreement, shall be exercisable as
provided in the original applicable SRNB Option agreement and
shall otherwise preserve the characteristics, terms and
conditions of the original SRNB Option to the greatest extent
possible, subject to the requirements of law and any applicable
rules and regulations of the OCC.
2.7 Dissenting Shareholders. Any SRNB Shares held by
persons who have satisfied the requirements of 12 U.S.C.
215a(b) ("Section 215a(b)") with respect to such SRNB Shares
shall not be converted pursuant to this Agreement, but the
holders thereof shall be entitled only to such rights as are
granted them by Section 215a(b). Each dissenting shareholder who
is entitled to payment of his or her SRNB Shares pursuant to
Section 215a(b) shall receive payment from NVBancorp in an amount
as determined pursuant to Section 215a(b).
2.8 NVB Interim National Bank as Party. NVBancorp and SRNB
agree that, when organized and chartered by the OCC, the Interim
Bank shall become a party to this Agreement by the execution and
delivery of an addendum to the Agreement, in form and substance
acceptable to NVBancorp, SRNB and the directors and shareholders
of the Interim Bank.
3. COVENANTS OF THE PARTIES.
3.1. Covenants of NVBancorp. During the period from the
date of this Agreement and continuing until the Effective Time of
the Merger, except as expressly contemplated or permitted by this
Agreement or to the extent that SRNB shall otherwise consent in
writing, which consent will not be unreasonably withheld or
delayed more than three (3) business days after the request for
consent is delivered:
a. Amendment of Articles and Bylaws. The Board of
Directors of NVBancorp shall take all necessary corporate action,
to be effective at the Effective Time of the Merger, to amend the
Articles of Association and Bylaws of the Interim Bank to the
extent required by applicable law or regulation and subject to
any required approvals of shareholders, government agencies or
regulatory authorities, to: (i) change the name of the Resulting
Bank to "Six Rivers National Bank"; and (ii) provide for a range
in the number of authorized directors of not less than five (5)
and not more than eleven (11), and to adopt a resolution fixing
the exact number of directors at eight (8) or such other number
agreed to by NVBancorp and SRNB.
b. Appointment of Holding Company Directors.
Promptly after the Effective Time of the Merger, two (2) of the
existing directors of SRNB (to be designated by the NVBancorp
Board of Directors) shall be appointed to the NVBancorp Board of
Directors. One such director shall serve as a Class II Director
and the other such director shall serve as a Class III Director,
under the classified Board structure contemplated by
Section 3.3.d. below.
c. Amendment of NVBancorp Stock Option Plan.
NVBancorp shall take all necessary corporate action, including
any required approval of the shareholders of NVBancorp to amend
its 1998 Employee Stock Incentive Plan or establish a new stock
option plan (at the meeting described in Section 3.3.e hereof)
and shall cause to be filed and become effective under the
Securities Act of 1933, as amended (the "1933 Act"), as of the
Effective Time of the Merger, a registration statement with
respect to the options to be granted and shares to be issued
thereunder to fulfill the obligations to grant Substitute Options
to holders of SRNB Options pursuant to Section 2.6 of this
Agreement.
d. Reservation, Issuance and Registration of
NVBancorp Shares. NVBancorp shall reserve for issuance in
connection with the Merger and in accordance with the terms of
this Agreement (i) a number of NVBancorp Shares sufficient to
complete the exchange of NVBancorp Shares for the outstanding
SRNB Shares pursuant to the Conversion Ratio and the provisions
of Section 2.1 above and (ii) the maximum number of NVBancorp
Shares to which the holders of Substitute Options may be entitled
pursuant to Section 2.6 above at or after the Effective Time of
the Merger. NVBancorp shall cause such NVBancorp Shares to be
registered under the 1933 Act, as provided in Section 6 below.
e. Nasdaq Stock Market Listing. NVBancorp shall take
all necessary action to list NVBancorp's Shares with the Nasdaq
Stock Market for trading on the Nasdaq National Market, to be
effective as soon as practicable following the Effective Time of
the Merger.
f. Director and Officer Liability. In the event of
any threatened or actual claim, action, suit, proceeding or
investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action, suit,
proceeding or investigation in which any person who is now, or
has been at any time prior to the date of this Agreement, or who
becomes prior to the Effective Time, a director or officer of
SRNB ("Indemnified Parties") is, or is threatened to be, made a
party based in whole or in part on, or arising in whole or in
part out of, or pertaining to (i) the fact that he is or was a
director or officer of SRNB or any predecessor or (ii) this
Agreement or any of the transactions contemplated hereby, whether
in any case asserted or arising before or after the Effective
Date, NVBancorp and SRNB agree to cooperate and use their best
efforts to defend against and respond thereto. It is understood
and agreed that after the Effective Date, NVBancorp shall
indemnify and hold harmless, as and to the fullest extent
permitted by law, each such Indemnified Party against any losses,
claims, damages, liabilities, costs, expenses (including
reasonable attorney's fees and expenses in advance of the final
disposition of any claim, suit, proceeding or investigation to
each Indemnified Party to the fullest extent permitted by law
upon receipt of any undertaking required by applicable law),
judgments, fines and amounts paid in settlement in connection
with any such threatened or actual claim, action, suit,
proceeding or investigation and in the event of any such
threatened or actual claim, action, suit, proceeding, or
investigation (whether asserted or arising before or after the
Effective Date), the Indemnified Parties may retain counsel
reasonably satisfactory to them after consultation with
NVBancorp; provided, however, that (1) NVBancorp shall have the
right to assume the defense thereof and upon such assumption
NVBancorp shall not be liable to any Indemnified Party for any
legal expenses of other counsel or any other expenses
subsequently incurred by any Indemnified Party in connection with
the defense thereof, except that if NVBancorp elects not to
assume such defense or counsel for the Indemnified Parties
reasonably advises the Indemnified Parties that there are issues
which raise conflicts of interest between NVBancorp and the
Indemnified Parties, the Indemnified Parties may retain counsel
reasonably satisfactory to them after consultation with
NVBancorp, and NVBancorp shall pay the reasonable fees and
expenses of such counsel for the Indemnified Parties, (2)
NVBancorp shall be obligated pursuant to this paragraph to pay
for only one firm of counsel for all Indemnified Parties, unless
an Indemnified Party shall have reasonably concluded; based on
the advice of counsel, that in order to be adequately
represented, separate counsel is necessary for such Indemnified
Party, in which case, NVBancorp shall be obligated to pay for
such separate counsel, (3) NVBancorp shall not be liable for any
settlement effected without its prior written consent (which
consent shall not be unreasonably withheld), and (4) NVBancorp
shall have no obligation hereunder to any Indemnified Party when
and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final and
nonappealable, that indemnification of such Indemnified Party in
the manner contemplated hereby is prohibited by applicable law;
provided, further, that NVBancorp hereby expressly undertakes the
indemnification of certain officers and directors and former
officers and directors in existing matters for which
indemnification is being provided by SRNB and, notwithstanding
the provisions of this Section 3.1.f., such indemnification shall
be on the same terms and subject to the same limitations as shall
exist on the Effective Date. Any Indemnified Party wishing to
claim Indemnification under this Section 3.1.f., upon learning of
any such claim, action, suit, proceeding or investigation, shall
notify NVBancorp thereof, provided that the failure to so notify
shall not affect the obligations of NVBancorp under this
Section 3.1.f. except to the extent such failure to notify
materially prejudices NVBancorp. NVBancorp's obligations under
this Section 3.1.f. continue in full force and effect for a
period of four (4) years from the Effective Date; provided,
however, that all rights to indemnification in respect of any
claim ("Claim") asserted or made within such period shall
continue until the final disposition of such Claim and provided
further that NVBancorp shall have the right of setoff against any
payments required to be made by NVBancorp to an Indemnified Party
pursuant to this Section 3.1.f. to the extent that such
Indemnified Party shall have received the indemnification to
which such Indemnified Party is entitled from an insurer under a
directors' and officers' liability insurance policy maintained by
SRNB or NVBancorp.
NVBancorp, from and after the Effective Date, will
directly or indirectly cause the persons who served as directors
or officers of SRNB on or before the Effective Date to be covered
by NVBancorp's existing directors' and officers' liability
insurance policy (provided that NVBancorp may substitute therefor
policies of at least the same coverage and amounts containing
terms and conditions which are not less advantageous than such
policy) or so-called tail coverage obtained in connection with
SRNB's directors' and officers' liability insurance policies in
effect as of the Effective Date; provided that NVBancorp shall
not be obligated to make annual premium payments for such
insurance to the extent such premiums exceed 150% of the premiums
paid as of the date hereof by SRNB for such insurance. Subject
to the preceding sentence, such insurance coverage, shall
commence on the Effective Date and will be provided for a period
of no less than three (3) years after the Effective Date. From
the date hereof through the Effective Date and subject to the
foregoing, SRNB shall use its best efforts to arrange for tail
coverage related to its then current policies of directors' and
officers' liability insurance and, following the Effective Date,
NVBancorp shall exercise those rights which it may have to in
order to commence such coverage. In connection with any active,
pending claim under an existing SRNB directors' and officers'
liability insurance policy, NVBancorp will take no action that
would have the effect of waiving any such claim and will not omit
to take any action that is necessary to preserve such a claim.
In the event NVBancorp or any of its successors or
assigns (A) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of
such consolidation or merger, or (B) transfers or conveys all or
substantially all of its properties and assets to any person,
then, and in each such case, to the extent necessary, proper
provision shall be made so that the successors and assigns of
NVBancorp assume the obligations set forth in this Section 3.1.f.
The provisions of this Section 3.1.f. are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party
and his or her heirs and representatives.
g. Business Combination. NVBancorp shall not solicit
or accept any offer from any third party regarding a Business
Combination (as defined in Section 3.2.i. below) of NVBancorp or
NVB with any other entity unless such offer is expressly
conditioned upon the performance by NVBancorp or the successor in
interest of NVBancorp's obligations under this Agreement. In the
event of such a Business Combination, the Conversion Ratio shall
be 1.400.
3.2. Covenants of SRNB. During the period from the date of
this Agreement and continuing until the Effective Time of the
Merger, except as expressly contemplated or permitted by this
Agreement or to the extent that NVBancorp shall otherwise consent
in writing, which consent will not be unreasonably withheld or
delayed more than three (3) business days after the request for
consent is delivered:
a. Termination of SRNB Stock Option Plan. SRNB shall
take all necessary action to cause the termination of the SRNB
Stock Option Plan at the Effective Time of the Merger and the
exercise or surrender (in exchange for Substitute Options) of
SRNB Options outstanding thereunder.
b. Termination or Merger of SRNB Benefit Plans. If
requested by NVBancorp and subject to the mutual agreement of the
parties, SRNB shall take all necessary action to cause the
termination or merger of SRNB Employee Plans (as defined in
Section 4.n. hereof) at the Effective Time of the Merger.
c. Capital Commitments and Expenditures. After the
execution of this Agreement, no new capital commitments shall be
entered into, and no capital expenditures shall be made by SRNB
in excess of Fifty Thousand Dollars ($50,000) in the aggregate,
including but not limited to, creation of any new branches and
acquisitions or leases of real property, except commitments or
expenditures within existing operating and capital budgets
heretofore furnished to and approved in writing by NVBancorp.
d. Compensation. SRNB shall not make or approve any
increase in the compensation payable or to become payable by it
to any of its directors, officers, employees or agents with
annual salaries in excess of Seventy-five Thousand Dollars
($75,000) (including but not limited to compensation through any
profit sharing, pension, retirement, severance, incentive or
other employee benefit program or arrangement other than
compensation related to a SRNB Employee Stock Ownership Plan
contribution for 1999 which is consistent with the amount
contributed for 1998), nor shall any bonus payment or any
agreement or commitment to make a bonus payment be made, nor
shall any stock option, warrant or other right to acquire capital
stock be granted (except as provided in Section 2.6), or
employment agreement (other than any such employment agreement
that may arise by operation of law upon the hiring of any new
employee) or consulting agreement be entered into by SRNB with
any such directors, officers, employees or agents unless
NVBancorp has given its prior written consent. Nothing herein
shall prevent the payment to officers and employees of SRNB of
regular salary increases, consistent with past practices in
connection with regular salary reviews or bonuses consistent with
past practices, as heretofore disclosed by SRNB to NVBancorp.
e. Loans. SRNB shall not, without first having
obtained the written consent of NVBancorp (which shall be deemed
to have been given if no response is provided following written
request therefor within three (3) business days of receipt of
such request), cause, allow, or suffer its officers or agents to
commit to any loan or renewal which does not comply in all
material respects with its credit policies in effect and as
disclosed and provided to NVBancorp prior to the date of this
Agreement, provided, however, that all new stand-alone extensions
of credit over Two Hundred Thousand Dollars ($200,000), except
for conforming FHLMC and FNMA loans, shall be subject to such
prior written consent. The prior written consent of NVBancorp
shall be deemed waived for any new stand-alone extension of
credit which is below Two Hundred Thousand Dollars ($200,000)
and where such new stand-alone extension of credit is either in
compliance with SRNB credit policy and the approving officer has
the requisite lending authority or has (have) been approved by
the SRNB loan committee or equivalent committee of the SRNB Board
of Directors performing such function. SRNB shall promptly
provide to NVBancorp for its review and comment relevant
information concerning any proposed new stand-alone extension of
credit in excess of One Hundred Thousand Dollars ($100,000).
f. Certain Notices. SRNB shall notify NVBancorp
promptly (but not less often than weekly) in writing upon the
occurrence of any of the following:
(i) the classification of any loan as "Non-
Accrual," "Watch," "Other Assets Specially Mentioned,"
"Substandard," "Doubtful" or "Loss"; or
(ii) the filing or commencement of any legal
action or other proceeding or investigation against
SRNB.
g. Loan Review. Until the Effective Date, SRNB will
submit to NVBancorp upon request (but not less often than
monthly) a list of loans that may reasonably be described as or
are included in any of the following categories or
specifications: (i) any new stand-alone extension of credit over
One Hundred Thousand Dollars ($100,000), (ii) any restructured
loan as defined under SFAS 15, regardless of amount, (iii) any
renewal or upgrade or other change in status of an existing loan
over Fifty Thousand Dollars ($50,000), and (iv) any renewal of an
existing loan previously classified by management or internal
policy or procedure of SRNB, or by any outside review examiner,
accountant or any bank regulatory authority as "Non-Accrual,"
"Watch," "Other Assets Specially Mentioned," "Substandard,"
"Doubtful," or "Loss," or classified using categories or words
with similar import, in a commitment amount over Twenty-five
Thousand Dollars ($25,000) or where the aggregate debt of the
borrower and its affiliates and/or related interests will exceed
Twenty-five Thousand Dollars ($25,000). SRNB will provide to
NVBancorp a copy of the loan approval/credit write-up and
supporting information on any loan described in subsections (i),
(ii), (iii) or (iv) above at the time of delivery of such list of
loans. Copies of such supporting information shall be returned
to SRNB within seven (7) days of receipt.
h. Loan Provision. SRNB shall maintain adequate
reserves for loan losses. Without limiting the generality of the
foregoing, each month following the date of this Agreement
through the Effective Date, SRNB shall expense as a provision to
its allowance for loan losses, such amount as may be required by
the written loan loss policy and procedures adopted by the Board
of Directors of SRNB and provided to NVBancorp prior to the date
of this Agreement.
i. No Merger or Solicitation.
(i) Subject to the continuing fiduciary duty of
the Board of Directors of SRNB to its shareholders,
prior to the Effective Time of the Merger, SRNB shall
not effect or agree to effect or enter into a
transaction or series of transactions with one or more
third persons, groups or entities providing for the
acquisition of all or a substantial part of SRNB or its
subsidiaries, whether by way of merger, exchange of
stock, sale of assets, or otherwise ("Business
Combination"), acquire or agree to acquire any of its
own capital stock or the capital stock or asset (except
in a fiduciary capacity or in the Ordinary Course of
Business) of any other entity, or commence any
proceedings for winding up and dissolution affecting
either of them.
(ii) Subject to the continuing fiduciary duty of
the Board of Directors of SRNB to its shareholders,
prior to the Effective Time of the Merger, neither SRNB
nor any of its officers, directors or affiliates, nor
any investment banker, attorney, accountant or other
agent, advisor or representative retained by SRNB shall
(a) solicit or encourage, directly or indirectly, any
inquiries, discussions or proposals for, continue,
propose or enter into discussions or negotiations
looking toward, or enter into any agreement or
understanding providing for, any Business Combination
with any third party; or (b) disclose, directly or
indirectly, any nonpublic information to any
corporation, partnership, person or other entity or
group concerning SRNB's business and properties or
afford any such other party access to its properties,
books or records or otherwise assist or encourage any
such other party in connection with the foregoing, or
(c) furnish or cause to be furnished any information
concerning its business, financial condition,
operations, properties or prospects to another person,
having any actual or prospective role with respect to
any such Business Combination.
(iii) SRNB shall notify NVBancorp immediately
of the details of any indication of interest of any
person, corporation, firm, association or group to
acquire by any means a controlling interest in SRNB or
engage in any Business Combination with SRNB.
(iv) Notwithstanding anything to the contrary
contained in this Agreement, in the event the Board of
Directors of SRNB receives a bona fide unsolicited
offer for a Business Combination of SRNB with another
entity, and reasonably determines, upon advice of
counsel, that as a result of such offer, any duty to
act or to refrain from doing any act pursuant to this
Agreement is inconsistent with the continuing fiduciary
duties of the Board of Directors to its shareholders,
subject to the provisions of this Agreement including,
without limitation, Section 12.e.(ii) and the rights
accorded NVBancorp thereunder which shall remain in
effect, such duty to act or to refrain from doing any
act shall be excused and such failure to act or refrain
from doing any act shall not (a) constitute the failure
of any condition, breach of any covenant or otherwise
constitute any breach of this Agreement, or (b) create
any claim or cause of action asserting any liability
against any member of the Board of Directors of SRNB.
3.3. Mutual Covenants of NVBancorp and SRNB.
a. Appointment of Executive Officers. At the
Effective Time of the Merger, the following persons shall become
executive officers of the Resulting Bank and shall be appointed
to the positions indicated: Michael W. Martinez, Chief Executive
Officer and Chief Financial Officer, Shelton Francis, Executive
Vice President and Chief Credit Officer and Marjorie Plum,
Executive Vice President and Branch Administrator.
b. Appointment of Bank Directors. At the Effective
Time of the Merger, all of the six (6) existing directors of
SRNB, as named below, shall become members of the Board of
Directors of the Resulting Bank, to serve until their successors
are duly elected and qualified: William T. Kay, Jr., Dolores M.
Vellutini, Kevin D. Hartwick, Warren L. Murphy, J. Michael
McGowan and Michael W. Martinez. In addition, two (2) of the
existing directors of NVBancorp (to be designated by the
NVBancorp Board of Directors) shall also become members of the
Board of Directors of the Resulting Bank at the Effective Time of
the Merger.
c. Executive Management Committee. From and after
the Effective Time of the Merger, Michael W. Martinez, President
and Chief Executive Officer of SRNB, shall become a member of the
Executive Management Committee of NVBancorp.
d. Classified Board of Directors. After execution
hereof, the NVBancorp Board of Directors will adopt an amendment
(the "Amendment") to the NVBancorp's Articles of Incorporation
("Articles") and Bylaws to provide that the NVBancorp Board of
Directors shall be divided into three classes of directors, each
consisting of a number of directors equal as nearly as
practicable to one-third the total number of directors, for so
long as such Board consists of at least nine (9) authorized
directors and, in the event that the total number of authorized
directors on such Board is at least six (6) but less than nine
(9), for classification of the Board of Directors into two
classes, each consisting of a number of directors equal as nearly
as practicable to one-half the total number of directors.
Pursuant to the Amendment, each class of directors would be
subject to election every third year and would serve for a
three-year term for so long as the Board remained classified into
three classes, or would be subject to election every second year
and would serve for a two-year term in the event the Board were
classified into two classes. Currently, all of the directors of
NVBancorp are elected each year to serve a one-year term.
NVBancorp shall cause the Amendment to be submitted for the
approval of its shareholders, together with the other principal
terms of the Merger, as provided in Section 3.3.e. below. In
connection with the approval of the Merger as provided in Section
3.3.e., SRNB shall advise its shareholders of the proposed
Amendment and inform its shareholders that their approval of the
Merger will constitute their consent to the Amendment. If the
Merger, including the Amendment, is approved by the shareholders
of NVBancorp and SRNB, the NVBancorp Board of Directors will, for
purposes of initial implementation, designate three classes of
directors for election at the 2000 Annual Meeting of Shareholders
of NVBancorp, as follows: Class I will be elected initially for
a one-year term expiring at the 2001 NVBancorp Annual Meeting of
Shareholders; Class II will be elected initially for a two-year
term expiring at the 2002 NVBancorp Annual Meeting of
Shareholders; and Class III will be elected for a three-year term
expiring at the NVBancorp Annual Meeting of Shareholders to be
held in the year 2003; and, in each case, until their successors
are duly elected and qualified. At each NVBancorp Annual Meeting
after the 2000 Annual Meeting, only directors of the class whose
term is expiring would be voted upon, and upon election each such
director would serve a three-year term. Commencing with the
NVBancorp Annual Meeting of Shareholders scheduled to occur in
2001, directors elected to Class I would serve for a three-year
term and until their successors are duly elected and qualified,
subject to any decrease in the total number of authorized
directors, as described above. Subsequently, in the years 2002
and 2003, directors elected to Class II and Class III,
respectively, would also be elected for a three-year term and
until their successors are duly elected and qualified.
e. Approval by Shareholders. NVBancorp and SRNB
shall each cause the principal terms of the Merger to be
submitted promptly for the approval of their respective
shareholders at meetings to be called and held in accordance with
applicable laws. Subject to continuing fiduciary duties to their
shareholders, the Board of Directors of NVBancorp and the Board
of Directors of SRNB, in authorizing the execution and delivery
of this Agreement, unanimously recommend that the principal terms
of the Merger be approved by their respective shareholders. In
connection with the call of such meetings, NVBancorp and SRNB
shall cause the Joint Proxy Statement/Prospectus described in
Section 6 of this Agreement to be mailed to their respective
shareholders. Subject to its continuing fiduciary duty to the
shareholders of NVBancorp or SRNB, as the case may be, the Board
of Directors of NVBancorp and the Board of Directors of SRNB
shall at all times prior to and during such meetings of their
respective shareholders recommend that the principal terms of the
Merger be approved and, subject to such duty, use its best
efforts to cause such approvals.
f. Shareholder Lists and Other Information. After
execution hereof, each of NVBancorp and SRNB shall from time to
time make available to the other party, upon request, a list of
its shareholders and their addresses and such other information
as the other party shall reasonably request regarding the
ownership of the common stock of NVBancorp and SRNB,
respectively.
g. Government Approvals. Each party will use its
best efforts in good faith to take or cause to be taken as
promptly as practicable all such steps as shall be necessary to
obtain (i) the prior approval of the Merger and the transactions
contemplated pursuant to this Agreement and the Merger Agreement
by the Federal Deposit Insurance Corporation (the "FDIC") under
the Bank Merger Act, the Board of Governors of the Federal
Reserve System (the "FRB") under the Bank Holding Company Act of
1956, as amended, the OCC under the National Bank Act and other
federal laws and regulations applicable to national banking
associations, and (ii) all other such consents or approvals of
government agencies and regulatory authorities as shall be
required by law or otherwise desirable, and shall do any and all
acts and things necessary or appropriate in order to cause the
Merger to be consummated on the terms provided in the Merger
Agreement and this Agreement as promptly as practicable. All
approvals referred to in this Section 3.3.g. are hereinafter
referred to as the "Government Approvals."
h. Notification of Breach of Representations,
Warranties and Covenants. Each party shall promptly give written
notice to the each other party upon becoming aware of the
occurrence or impending or threatened occurrence of any event
which would cause or constitute a breach of any of the
representations, warranties or covenants of that party contained
or referred to in the Merger Agreement or this Agreement and
shall use its best efforts to prevent the same or to remedy the
same promptly.
i. Financial Statements.
(v) NVBancorp and SRNB have delivered or shall
deliver to each other prior to the date hereof true and
correct copies of (consolidated, as applicable)
statements of income, changes in shareholders' equity
and, as applicable, statements of cash flows, for the
six (6) months ended June 30, 1999 , and for the fiscal
years ended December 31, 1998, 1997, 1996, 1995 and
1994, and balance sheets as of the six (6) month period
ended June 30, 1999, and as of December 31, 1998, 1997,
1996, 1995 and 1994. Such financial statements at
December 31, 1998, 1997, 1996, 1995 and 1994 and for
the fiscal years ended December 31, 1998, 1997, 1996,
1995 and 1994 have been or shall be audited by Deloitte
& Touche LLP, as independent public accountants for
NVBancorp during the relevant periods, and Deloitte &
Touche LLP, as independent public accountants for SRNB
during the relevant periods, and include or shall
include an opinion of such accounting firm to the
effect that such financial statements have been
prepared in accordance with generally accepted
accounting principles consistently applied throughout
the periods covered by such financial statements and
present fairly, in all material respects, the
(consolidated, as applicable) financial position,
results of operations and cash flows of each party at
the dates indicated and for the periods then ending.
The opinions of such accounting firm do not and shall
not contain any qualifications.
(vi) NVBancorp and SRNB shall provide to each
other, at or prior to the Effective Date, copies of all
financial statements and proxy statements issued or to
be issued to its shareholders between the date of this
Agreement and the Effective Date.
(vii) NVBancorp and SRNB have delivered or
shall deliver, to each other true and complete copies
of its Annual Reports to Shareholders for the years
ended December 31, 1999, 1998, 1997, 1996, 1995 and
1994, all periodic reports required to be filed by it
pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act") or
Section 12(i) of the 1934 Act since December 31, 1993,
all proxy statements and other written material
furnished to its shareholders since December 31, 1993,
and all other material reports, including call reports,
relating to NVBancorp, NVB and SRNB filed by NVBancorp,
NVB and SRNB with the FDIC, the California Department
of Financial Institutions, FRB, or OCC during 1994
through the Effective Date. As of their respective
filing dates, each of the documents described in the
preceding sentence complied or shall comply in all
material respects with all legal and regulatory
requirements applicable thereto.
j. Conduct of Business in the Ordinary Course. Prior
to the Effective Time of the Merger:
(i) NVBancorp and SRNB shall conduct their
businesses (including the businesses of their
subsidiaries) in the ordinary course as heretofore
conducted. For purposes of this Agreement, the
"Ordinary Course of Business" of each party shall
consist of the banking and related businesses as
presently conducted by it and its subsidiaries in
compliance with customary safe and sound banking
practices and applicable laws and regulations. Unless
a party has given its previous written consent (which
shall not be unreasonably withheld and shall be deemed
to have been given if no response is provided following
written request therefor within three (3) business days
of receipt of such request) to any act or omission to
the contrary, each party shall, and shall cause its
subsidiaries to, until the Effective Date:
(a) preserve its business and business
organizations intact;
(b) preserve the good will of customers and
others having business relations with it and take
no action that would impair the benefit to each
party of the goodwill of it or the other benefits
of the Merger;
(c) consult with each party as to the making
of any decisions or the taking of any actions in
matters other than in the Ordinary Course of
Business;
(d) maintain its properties in customary
repair, working order and condition (reasonable
wear and tear excepted);
(e) comply with all laws, regulations and
decrees applicable to
the conduct of its business;
(f) use its best efforts to keep in force at
not less than its 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;
(g) use its reasonable best commercial
efforts to keep available the services of its
present officers and employees (it being
understood that each party shall have the right to
terminate the employment of any of its officers or
employees in accordance with its established
employment procedures);
(h) comply with all orders of and agreements
or memoranda of understanding with respect to it
made by or with, the FDIC, FRB, OCC, or any other
government agency or regulatory authority of
competent jurisdiction, and promptly forward to
each party all communications received from any
such agency or authority that are not prohibited
by such agency or authority from being so
disclosed and inform each party of any material
restrictions imposed by any government agency or
regulatory authority on its business;
(i) file in a timely manner (taking into
account any extensions duly obtained) all reports,
tax returns and other documents required to be
filed with federal, state, local and other
authorities;
(j) conduct an environmental audit prior to
foreclosure on any property concerning which it
has knowledge, or should have knowledge, that
asbestos or asbestos-containing material, PCB's 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 such audit to and consult
with each party regarding the significance of the
audit prior to the foreclosure on any such
property;
(k) not sell, lease, pledge, assign,
encumber or otherwise dispose of any of its assets
except in the Ordinary Course of Business, for
adequate value, without recourse and consistent
with its customary practice;
(l) not take any action with respect to its
investments or risk management arrangements which
are inconsistent with the policies established by
its Board of Directors;
(m) not take any action to create, relocate
or terminate the operations of any banking office
or branch, or to form any new subsidiary or
affiliated entity; and
(n) not settle or otherwise take any action
to release or reduce any of its rights with
respect to any litigation involving a claim of
more than Twenty-five Thousand Dollars ($25,000)
in which it is a party.
k. Press Releases. No party shall issue any press
release or written statement for general circulation relating to
the Merger, this Agreement or the Merger Agreement unless
previously provided to each party for review and approval (which
approval will not be unreasonably withheld or delayed) and each
party shall cooperate with each other party in the development
and distribution of all news releases and other public
information disclosures with respect to the Merger, this
Agreement or the Merger Agreement; provided that a party may,
without the consent of each other party, make any disclosure with
regard to the Merger, this Agreement or the Merger Agreement that
it determines with advice of counsel is required under any
applicable law or regulation.
l. Employee Benefit Plans. The parties agree that
the employee benefit plans of SRNB shall be terminated, frozen,
modified or merged into the employee benefit plans of NVBancorp
on or after the Effective Date in accordance with applicable laws
and regulations and the provisions of the IRC, as determined by
mutual agreement of the parties or by NVBancorp. On the
Effective Date, SRNB employees that become employees of NVBancorp
or NVB will commence participation in NVBancorp's employee
benefit plans in accordance with the terms and conditions
provided under such plans; provided, however, that each employee
of SRNB who becomes an employee of NVBancorp or NVB or the
national bank resulting from the merger of SRNB with and into the
Interim Bank ("Transferred Employee") shall receive credit for
his or her years of service with SRNB for purposes of eligibility
and vesting under NVBancorp's employee benefit plans; provided,
further, that each Transferred Employee who elects coverage under
NVBancorp's health plan within thirty (30) days after coverage is
extended to him or her shall not be subject to any pre-existing
condition limitation under such health plan; provided, further
that for a period of twelve (12) months following the Effective
Date, each Transferred Employee shall continue to be entitled to
the benefits of the SRNB severance policy in effect as of the
date of this Agreement.
m. Changes in Capital Stock; Dividends. On or after
the date hereof and at or prior to the Effective Time of the
Merger, except with the prior written consent of each other party
or as otherwise provided in this Agreement and the Merger
Agreement:
(i) No party shall amend its Articles of
Incorporation or Association or Bylaws or the Articles
of Incorporation or Bylaws of its subsidiary; make any
change in their respective authorized, issued or
outstanding capital stock or any other equity security;
issue, grant, sell, pledge, assign or otherwise
encumber or dispose of, or purchase, redeem, retire or
otherwise acquire (other than in a fiduciary capacity),
shares of or securities convertible into, capital stock
or other equity securities of their respective
companies, or enter into any agreement, call or
commitment of any character so to do; grant or issue
any stock option relating to or right to acquire shares
of their capital stock or other equity security; or
agree to do any of the foregoing, except as expressly
provided herein. Nothing herein shall prohibit the
issuance of shares upon exercise of options granted
under the NVBancorp 1989 Director Stock Option Plan,
the NVBancorp 1998 Employee Stock Incentive Plan or the
NVBancorp 1999 Director Stock Option Plan or the SRNB
Stock Option Plan and outstanding at the time this
Agreement is executed; and
(ii) Neither NVBancorp nor SRNB shall 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 or semi-annual cash dividends on
its common stock in amounts substantially equivalent to
cash dividends paid in the two (2) years prior to the
date hereof (it being understood that declaration of a
quarterly or semi-annual cash dividend equal to the
most recent previous quarterly or semi-annual cash
dividend will be deemed to meet this standard).
n. Access to Properties, Books and Records;
Confidentiality. Prior to the Effective Time of the Merger, each
party shall give each other party and its counsel, independent
accountants and agents, full access during normal business hours
and upon reasonable request, to all of its properties, books,
contracts, commitments and records including, but not limited to,
the corporate, financial and operational records, papers,
reports, instructions, procedures, tax returns and filings tax
settlement letters, material contracts or commitments, regulatory
examinations and correspondences (but excluding any documents or
materials subject to the attorney-client privilege or related to
consideration of the Merger), and shall allow each other party to
make copies of such materials (excluding regulatory examinations
and correspondence to the extent prohibited by applicable law or
regulation) and shall furnish each other party with all such
information concerning its affairs as each other party may
reasonably request. Each party shall also use its best efforts
to cause its independent accountants to make available to each
other party, its accountants, counsel and other agents, to the
extent reasonably requested in connection with such review, such
independent accountants' work papers and documentation relating
to its work papers and its audits of the books and records of
each party. The availability or actual delivery of such
information about a party shall not affect the covenants,
representations and warranties of any party contained in this
Agreement and in the Merger Agreement. Each party shall use its
best efforts to cause its officers, directors, employees,
auditors, independent accountants and attorneys to cooperate with
each other party in its reasonable requests for information.
Each party shall treat as confidential all such information in
the same manner as each party treats similar confidential
information of its own, and if this Agreement is terminated, each
party shall continue to treat all such information as
confidential and to cause its employees to keep all such
information confidential and shall return such documents
theretofore delivered by each other party as each other party
shall request, and shall use such information, or cause it to be
used, solely for the purposes of evaluating and completing the
transactions contemplated hereby; provided that each party may
disclose any such information to the extent required by federal
or state securities laws or otherwise required by any government
agency or regulatory authority, or by generally accepted
accounting principles. The foregoing confidentiality obligations
shall not apply in respect of any information publicly available
or to any information previously known to the party in question,
the use of which is not otherwise restricted. Notwithstanding
the foregoing, the parties agree to comply with the terms and
provisions of that certain Confidentiality Agreement entered into
between the parties dated June 22, 1999, and any inconsistency
between the terms and provisions of that Confidentiality
Agreement and the foregoing provisions shall be resolved in favor
of the terms and provisions contained in the Confidentiality
Agreement.
o. Loan Performance. From and after the date of this
Agreement until the Effective Date, each party will provide to
the other the following reports for each such month concurrent
with the distribution of the monthly board report materials for
the respective Boards of Directors of NVBancorp, NVB and SRNB:
(i) a status report on all loans classified as
other assets specially mentioned, special
mention, substandard, doubtful or loss;
(ii) past due reports by loan;
(iii) non-accrual reports by loan;
(iv) loss reports by loan;
(v) restructured loans reports; and
(vi) quarterly call reports submitted to
regulators during such month, if any.
p. Preparation of Joint Proxy Statement/Prospectus.
SRNB shall cooperate with NVBancorp in the preparation pursuant
to Section 6 hereof of a joint proxy statement and prospectus of
NVBancorp and SRNB to be sent to the shareholders of NVBancorp
and SRNB (the proxy materials and prospectus, together with any
amendments or supplements thereto, being herein referred to as
the "Joint Proxy Statement/Prospectus").
q. Rights Plans. Prior to the date of this
Agreement, each of NVBancorp and SRNB has adopted a rights plan
with respect to its common stock and each has entered into a
shareholder rights agreement. NVBancorp and SRNB agree to
cooperate and take any and all action necessary or desirable from
time to time until the Effective Time of the Merger, including
the execution of an amendment to either or both of such
shareholder rights agreements, in order to ensure that no
shareholder rights will "flip-in" as a result of the execution
and delivery of this Agreement or the Merger or any of the
transactions described herein.
4. REPRESENTATIONS AND WARRANTIES OF SRNB.
SRNB represents and warrants to NVBancorp that, except as
set forth on a schedule (the "SRNB Disclosure Schedule") to be
delivered to NVBancorp within ten (10) business days after the
execution and delivery of this Agreement, corresponding in number
with the applicable section of this Agreement:
a. Corporate Status and Power to Enter Into
Agreements. (i) SRNB is a national banking association,
organized and existing under the laws of the United States of
America, (ii) subject to obtaining the Government Approvals and
approval of the principal terms of the Merger by the SRNB
shareholders, SRNB has all necessary corporate power to enter
into this Agreement and the Merger Agreement and to carry out all
of the terms and provisions hereof and thereof to be carried out
by it, (iii) SRNB holds a currently valid national bank charter,
issued by the OCC to engage in the commercial banking business
with offices in the State of California at the locations at which
it is licensed and currently conducts business, and (iv) except
for the Consent Order dated April 12, 1999 (the "Consent
Agreement") between SRNB and the OCC and as set forth in the SRNB
Disclosure Schedule, SRNB is not subject to any directive,
resolution, memorandum of understanding or order of the FDIC,
FRB, OCC or any other regulatory authority having jurisdiction
over its business or any of its assets or properties. SRNB is in
substantial compliance in all material respects with its
obligations under the Consent Agreement. Neither the scope of
the business of SRNB nor the location of its properties requires
it to be licensed to do business in any jurisdiction other than
the State of California. SRNB's deposits are insured by the FDIC
to the maximum extent permitted by applicable law and regulation.
b. Articles, Bylaws, Books and Records. The copies
of the Articles of Association and Bylaws of SRNB heretofore
delivered to NVBancorp are complete and accurate copies thereof
as in effect on the date hereof. The minute books of SRNB made
available to NVBancorp contain a complete and accurate record of
all meetings of SRNB's Board of Directors (and committees
thereof) and shareholders. The corporate books and records
(including financial statements) of SRNB fairly reflect the
material transactions to which SRNB is a party or by which its
properties are subject or bound, and such books and records have
been properly kept and maintained.
c. Compliance With Laws, Regulations and Decrees.
SRNB (i) has the corporate power to own or lease its properties
and to conduct its business as currently conducted, (ii) to its
knowledge, has complied in all material respects with, and is not
in material default of any laws, regulations, ordinances, orders
or decrees applicable to the conduct of its business and the
ownership of its properties, including but not limited to all
federal and state laws (including but not limited to the Bank
Secrecy Act), rules and regulations relating to the offer, sale
or issuance of securities, and the operation of a commercial
bank, other than where such noncompliance or default is not
likely to result in a material limitation on the conduct of the
business of SRNB or is not likely to otherwise have a material
adverse effect on SRNB, (iii) has not failed to file with the
proper federal, state, local or other authorities any material
report or other document required to be filed, and (iv) has all
approvals, authorizations, consents, licenses, clearances and
orders of, and has currently effective all registrations with,
all government and regulatory authorities which are necessary to
the business and operations of SRNB as now being conducted.
d. Capitalization. As of the date of this Agreement,
the authorized capital stock of SRNB consists of 10,000,000
shares of SRNB common stock, par value $5.00 per share, of which
1,476,128 shares are duly authorized, validly issued, fully paid
and nonassessable and currently outstanding. Said capital stock
has been offered, sold and issued in compliance with all
applicable securities laws. As of the date of this Agreement,
there are outstanding options to purchase 100,387 shares of SRNB
common stock, at a weighted average exercise price of $12.47 per
share, issued pursuant to the SRNB Stock Option Plan. Said
options were issued and, upon issuance in accordance with the
terms of the outstanding options, said shares shall be issued, in
compliance with all applicable securities laws. Otherwise, other
than rights under the SRNB Rights Agreement dated as of October
1, 1998, there are no outstanding (i) options, agreements, calls
or commitments of any character which would obligate SRNB to
issue, sell, pledge, assign or otherwise encumber or dispose of,
or to purchase, redeem or otherwise acquire, any SRNB common
stock or any other equity security of SRNB, or (ii) warrants or
options relating to, rights to acquire, or debt or equity
securities convertible into, shares of SRNB common stock or any
other equity security of SRNB. The outstanding common stock of
SRNB is registered with the Securities and Exchange Commission
(the "Commission") pursuant to Section 12(g) of the 1934 Act.
Except as collateral for outstanding loans held in its loan
portfolio, directly or indirectly, any equity interest in any
bank, corporation or other entity.
e. Trademarks and Trade Names. To the best of its
knowledge, SRNB (i) owns and has the exclusive right to use all
trademarks, trade names, patents, copyrights, service marks,
trade secrets, or other intellectual property rights
(collectively, "Intellectual Property Rights") used in or
necessary for the conduct of its business as now or heretofore
conducted; and (ii) its not infringing upon the Intellectual
Property Rights of any other person or entity. No claim is
pending or threatened by any person or entity against or
otherwise affecting the use by SRNB of any Intellectual Property
Rights and, to the best of its knowledge, there is no valid basis
for any such claim.
f. Financial Statements, Regulatory Reports. No
financial statement or other document provided or to be provided
to NVBancorp as required by Section 3.3(i) hereof, as of the date
of such document, contained, or as to documents to be delivered
after the date hereof, will contain, any untrue statement of a
material fact, or, at the date thereof, omitted or will omit to
state a material fact necessary in order to make the statements
contained therein, in light of the circumstances under which such
statements were or will be made, not misleading; provided,
however, that information as of a later date shall be deemed to
modify contrary information as of any earlier date. SRNB has
filed all material documents and reports required to be filed by
them with the OCC and any other government agency or regulatory
authority having jurisdiction over its business, assets or
properties. All such reports conform in all material respects
with the requirements promulgated by such government agencies and
regulatory authorities. All compliance or corrective action
relating to SRNB required by government agencies and regulatory
authorities having jurisdiction over SRNB has been taken. Except
as disclosed in such statements, reports or documents, SRNB have
not received any notification, formally or informally, from any
agency or department of any federal, state or local government or
any regulatory authority or the staff thereof (i) asserting that
it is not in compliance with any of the statutes, regulations or
ordinances which such government or regulatory authority
enforces, or (ii) threatening to revoke any license, franchise,
permit or government authorization. SRNB has paid all
assessments made or imposed by any government agency. SRNB has
delivered to NVBancorp copies of all annual management letters
and opinions, and has made available to NVBancorp for inspection
all reviews, correspondence and other documents in the files of
SRNB prepared by certified public accountants engaged by SRNB and
delivered to SRNB since December 31, 1994. The financial records
of SRNB have been, and are being and shall be, maintained in all
material respects in accordance with all applicable legal and
accounting requirements sufficient to insure that all
transactions reflected therein are, in all material respects,
executed in accordance with management's general or specific
authorization and recorded in conformity with generally accepted
accounting principles at the time in effect. The data processing
equipment, data transmission equipment, related peripheral
equipment and software used by SRNB in the operation of its
business to generate and retrieve its financial records are
adequate for the current needs of SRNB.
g. Tax Returns.
(i) SRNB has timely filed all federal,
state, county, local and foreign tax returns required
to be filed by it, including, without limitation,
estimated tax, use tax, excise tax, real property and
personal property tax reports and returns, employer's
withholding tax returns, other withholding tax returns
and Federal Unemployment Tax Returns, and all other
reports or other information required or requested to
be filed by SRNB, and each such return, report or other
information was, when filed, complete and accurate in
all material respects. SRNB has paid all taxes, fees
and other government charges, including any interest
and penalties thereon, when they have become due,
except those that are being contested in good faith,
which contested matters have been disclosed to
NVBancorp. SRNB has not been requested to give nor has
it given any currently effective waivers extending the
statutory period of limitation applicable to any tax
return required to be filed by it for any period.
There are no claims pending against SRNB for any
alleged deficiency in the payment of any taxes, and
SRNB does not know of any pending or threatened audits,
investigations or claims for unpaid taxes or relating
to any liability in respect of any taxes. There have
been no events, including a change in ownership, that
would result in a reappraisal and establishment of a
new base-year full value for purposes of applicable
provisions of the California Constitution, of any real
property owned in whole or in part by SRNB or to the
best of SRNB's knowledge, of any real property leased
by SRNB.
(ii) SRNB has heretofore delivered to
NVBancorp copies of all its tax returns with respect to
taxes payable to the United States of America and the
State of California for the fiscal years ended December
31, 1998, 1997, 1996, 1995 and 1994.
(iii) No consent has been filed relating to
SRNB pursuant to Section 341(f) of the IRC.
h. Material Adverse Change. Except as heretofore
disclosed in writing by SRNB to NVBancorp, since June 30, 1999,
there has been (i) no material adverse change in the business,
assets, licenses, permits, franchises, results of operations or
financial condition of SRNB (whether or not in the Ordinary
Course of Business), (ii) no change in any of the assets,
licenses, permits or franchises of SRNB that has had or can
reasonably be expected to have a material adverse effect on any
of the items listed in clause (h)(i) above, (iii) no damage,
destruction, or other casualty loss (whether or not covered by
insurance) that has had or can reasonably be expected to have a
material adverse effect on any of the items listed in clause
(h)(i) above, (iv) no amendment, modification, or termination of
any existing, or entering into of any new, contract, agreement,
plan, lease, license, permit or franchise that is material to the
business, financial condition, assets, liabilities or operations
of SRNB, except in the Ordinary Course of Business; and (v) no
disposition by SRNB of one or more assets that, individually or
in the aggregate, are material to SRNB, except sales of assets in
the Ordinary Course of Business.
i. No Undisclosed Liabilities. Except for items for
which reserves have been established in the unaudited balance
sheets of SRNB as of June 30, 1999, SRNB has not incurred or
discharged, and is not legally obligated with respect to, any
indebtedness, liability (including, without limitation, a
liability arising out of an indemnification, guarantee, hold
harmless or similar arrangement) or obligation (accrued or
contingent, whether due or to become due, and whether or not
subordinated to the claims of its general creditors), other than
as a result of operations in the Ordinary Course of Business
after such date. No agreement pursuant to which any loans or
other assets have been or will be sold by SRNB entitles the buyer
of such loans or other assets, unless there is a material breach
of a representation or covenant by SRNB, to cause SRNB to
repurchase such loan or other asset or to pursue any other form
of recourse against SRNB. SRNB has not knowingly made or shall
make any representation or covenant in any such agreement that
contained or shall contain any untrue statement of a material
fact or omitted or shall omit to state a material fact necessary
in order to make the statements contained therein, in light of
the circumstances under which such representations and/or
covenants were made or shall be made, not misleading. No cash,
stock or other dividend or any other distribution with respect to
the SRNB Shares has been declared, set aside or paid, nor have
any of the SRNB Shares been purchased, redeemed or otherwise
acquired, directly or indirectly, by SRNB since December 31,
1996.
j. Properties and Leases.
(i) SRNB has good and marketable title, free and
clear of all liens and encumbrances and the right of
possession, subject to existing leaseholds, to all real
properties and good title, free and clear of all liens
and encumbrances, to all other property and assets,
tangible and intangible, reflected in the SRNB balance
sheet as of June 30, 1999 (except property held as
lessee under leases disclosed in writing prior to the
date hereof and except personal property sold or
otherwise disposed of since June 30, 1999, in the
Ordinary Course of Business), except for (a) liens for
taxes or assessments not delinquent, (b) such other
liens and encumbrances and imperfections of title as do
not materially affect the value of such property as
reflected in the SRNB balance sheet as of June 30,
1999, or as currently shown on the books and records of
SRNB and which do not interfere with or impair its
present and continued use, or (c) exceptions disclosed
in title reports and preliminary title reports, copies
of which have been provided to NVBancorp. To the
knowledge of SRNB, all tangible properties of SRNB
conform in all material respects with all applicable
ordinances, regulations and zoning laws. All tangible
properties of SRNB are in a good state of maintenance
and repair and are adequate for the current business of
SRNB. No properties of SRNB, and, to the best of
SRNB's knowledge, no properties in which SRNB holds a
collateral or contingent interest or purchase option,
are the subject of any pending or threatened
investigation, claim or proceeding relating to the use,
storage or disposal on such property of or
contamination of such property by any toxic or
hazardous waste material or substance. To the best of
its knowledge, SRNB does not own, possess or have a
collateral or contingent interest or purchase option in
any properties or other assets which contain or have
located within or thereon any hazardous or toxic waste
material or substance unless the location of such
hazardous or toxic waste material or other substance or
its use thereon conforms in all material respects with
all federal, state and local laws, rules, regulations
or other provisions regulating the discharge of
materials into the environment. As to any real
property not owned or leased by SRNB and held as
security for a loan or in which SRNB otherwise has an
interest, SRNB has not controlled, directed or
participated in the operation or management of any such
real property or any facilities or enterprise conducted
thereon, such that it has become an owner or operator
of such real property under applicable environmental
laws.
(ii) All properties held by SRNB under leases
are held under valid, binding and enforceable leases,
with such exceptions as are not material and do not
interfere with the conduct of the business of SRNB, and
SRNB enjoys quiet and peaceful possession of such
leased property. SRNB is not in material default in
any respect under any material lease, agreement or
obligation regarding its properties to which it is a
party or by which it is bound.
(iii) Except as disclosed to NVBancorp in
writing, all of SRNB's rights and obligations under the
leases referred to in Section 4(j)(ii) above do not
require the consent of any other party to the
transaction contemplated by this Agreement and the
Merger Agreement. Where required, SRNB shall obtain,
prior to the Effective Date, the consent of such
parties to such transaction.
k. Material Contracts. Except as disclosed in the
SRNB Disclosure Schedule and excluding loans, lines of credit,
loan commitments or letters of credit to which SRNB is a party,
SRNB is not a party to or bound by any contract or other
agreement made in the Ordinary Course of Business which involves
aggregate future payments by or to SRNB of more than Twenty-five
Thousand Dollars ($25,000) and which is made for a fixed period
expiring more than one year from the date hereof, and SRNB is not
a party to or bound by any agreement not made in the Ordinary
Course of Business which is to be performed at or after the date
hereof. Each of the contracts and agreements disclosed to
NVBancorp pursuant to this Section 4(k) is a legal and binding
obligation (subject to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally and subject,
as to enforceability, to equitable principles of general
applicability), and no breach or default (and no condition which,
with notice or passage of time, or both, could become a breach or
default) exists with respect thereto.
l. Classified Loans. Except as disclosed in the SRNB
Disclosure Schedule, there are no loans presently owned by SRNB
that have been classified by SRNB management or SRNB internal
policy or procedure, any outside review examiner, accountant or
any bank regulatory authority as "Non-Accrual," "Watch," "Other
Assets Specially Mentioned," "Substandard," "Doubtful," or "Loss"
or classified using categories or words with similar import and
all loans or portions thereof so classified shall have been
reserved to the extent required. SRNB regularly review and
appropriately classify their loans in accordance with all
applicable legal and regulatory requirements and generally
accepted banking practices. All loans and investments of SRNB
are legal, valid and binding obligations enforceable in
accordance with their respective terms and are not subject to any
setoffs, counterclaims or disputes (subject to applicable
bankruptcy, insolvency and similar laws affecting creditors'
rights generally and subject, as to enforceability, to equitable
principles of general applicability), except as disclosed in the
SRNB Disclosure Schedule or reserved for in the unaudited balance
sheet of SRNB as of June 30, 1999, and were duly authorized under
and made in compliance with applicable federal and state laws and
regulations. SRNB does not have any extensions of credit,
investments, guarantees, indemnification agreements or
commitments for the same (including without limitation
commitments to issue letters of credit, to create acceptances, or
to repurchase securities, federal funds or other assets) other
than those documented on the books and records of SRNB.
m. No Restrictions on Investments. Except for
pledges to secure public and trust deposits and repurchase
agreements in the Ordinary Course of Business and securities
classified as "held-to-maturity" as defined under SFAS No. 115,
none of the investments reflected in the SRNB balance sheet as of
June 30, 1999, and none of the investments made by SRNB since
June 30, 1999, is subject to any restriction, whether contractual
or statutory, which materially impairs the ability of SRNB to
freely dispose of such investment at any time.
n. Employment Benefit Plans/ERISA.
(i) SRNB has provided to NVBancorp an
accurate list setting forth all bonus, incentive
compensation, profit-sharing, pension, retirement,
stock purchase, stock option, deferred compensation,
severance, hospitalization, medical, dental, vision,
group insurance, death benefit, disability and other
fringe benefit plans, trust agreements, arrangements
and commitments of SRNB (including but not limited to
any such plans, agreements, arrangements and
commitments applicable to former employees or retired
employees, or for which such persons are eligible)
(collectively, "Employee Plans"), if any, together with
copies of all such Employee Plans that are documented
and any and all contracts of employment, and has made
available to NVBancorp any Board of Directors' minutes
(or committee minutes) authorizing, approving or
guaranteeing such Employee Plans and contracts; and
(ii) All contributions, premiums or other
payments due from SRNB to (or under) any Employee Plans
have been fully paid or adequately provided for on
SRNB's audited financial statements for the year ended
December 31, 1998 or unaudited financial statements for
the six (6) months ended June 30, 1999. All accruals
thereon (including, where appropriate, proportional
accruals for partial periods) have been made in
accordance with generally accepted accounting
principles consistently applied on a reasonable basis;
and
(iii) SRNB has disclosed in writing to
NVBancorp the names of each director, officer and
employee of SRNB; and
(iv) The Employee Plans have been
administered where required in substantial compliance
with ERISA, the IRC and the terms of such Employee
Plans, and there is no pending or threatened litigation
relating to any such Employee Plan; and
(v) SRNB has not offered in the past health
benefits for retired employees and has no intention to
offer any additional health or other benefits for
retired employees; and
(vi) Each Employee Plan is in full force and
effect, and neither SRNB nor any other party thereto is
in material default under any of them, and there have
been no claims of default and there are no facts or
conditions which if continued, or on notice, will
result in a material default under any Employee Plans;
and
(vii) SRNB has provided to NVBancorp a list of
all agreements or other understandings pursuant to
which the consummation of the transactions contemplated
hereby will (a) entitle any current or former employee
or officer of SRNB to severance pay, unemployment
compensation or any other payment, or (b) accelerate
the time of payment or vesting or increase the amount
of compensation due any such employee or officer.
o. Collective Bargaining and Employment Agreements.
Except as provided in this Agreement or as previously disclosed
to NVBancorp and NVB in writing, SRNB does not have any union or
collective bargaining or written employment agreements, contracts
or other agreements with any labor organization or with any
member of management, or any management or consultation agreement
not terminable at will by SRNB without liability and no such
contract or agreement has been requested by, or is under
discussion by management with, any group of employees, any member
of management or any other person. There are no material
controversies pending between SRNB and any current or former
employees, and to the best of SRNB's knowledge, there are no
efforts presently being made by any labor union seeking to
organize any of such employees.
p. Compensation of Officers and Employees. Except as
disclosed in the SRNB Disclosure Schedule, (i) no officer or
employee of SRNB is receiving aggregate direct remuneration at a
rate exceeding Seventy-five Thousand Dollars ($75,000) per annum,
and (ii) the consummation of the transactions contemplated by
this Agreement and the Merger Agreement will not (either alone or
upon the occurrence of any additional or further acts or events)
result in any payment (whether of severance pay or otherwise)
becoming due from SRNB or NVBancorp to any employee of SRNB.
q. Legal Actions and Proceedings. Except as
disclosed in the SRNB Disclosure Schedule, SRNB is not a party
to, or so far as known to it, threatened with, and to SRNB's
knowledge, there is no reasonable basis for, any legal action or
other proceeding or investigation before any court, any
arbitrator of any kind or any government agency, and SRNB is not
subject to any potential adverse claim, the outcome of which
could involve the payment or receipt by SRNB of any amount in
excess of Twenty-five Thousand Dollars ($25,000), unless an
insurer has agreed to defend against and pay the amount of any
resulting liability without reservation, or, if any such legal
action, proceeding, investigation or claim will not involve the
payment by SRNB of a monetary amount, which could have a material
adverse effect on SRNB or its business or property or the
transactions contemplated hereby. SRNB has no knowledge of any
pending or threatened claims or charges under the Community
Reinvestment Act, before the Equal Employment Opportunity
Commission, the California Department of Fair Housing & Economic
Development, the California Unemployment Appeals Board, or any
federal or state human relations commission or agency. There is
no labor dispute, strike, slow-down or stoppage pending or, to
the best of the knowledge of SRNB, threatened against SRNB.
r. Execution and Delivery of the Agreement.
(i) The execution and delivery of this
Agreement and the Merger Agreement have been duly
authorized by the Board of Directors of SRNB and, when
the principal terms of the Merger, this Agreement and
the Merger Agreement have been duly approved by the
affirmative vote of the holders of two-thirds of the
outstanding SRNB Shares at a meeting of shareholders
duly called and held, the Merger, this Agreement and
the Merger Agreement will be duly and validly
authorized by all necessary corporate action on the
part of SRNB.
(ii) This Agreement has been duly executed
and delivered by SRNB and (assuming due execution and
delivery by NVBancorp) constitutes, and the Merger
Agreement, upon its execution and delivery by SRNB (and
assuming due execution and delivery by NVBancorp) will
constitute, a legal and binding obligation of SRNB in
accordance with its terms.
(iii) The execution and delivery by SRNB of
this Agreement and the Merger Agreement and the
consummation of the transactions herein and therein
contemplated (a) do not violate any provision of the
Articles of Association or Bylaws of SRNB, or violate
in any material respect any provision of federal or
state law or any government rule or regulation
(assuming (1) receipt of the Government Approvals, (2)
receipt of the requisite SRNB shareholder approval
referred to in Section 4(r)(i) hereof, (3) due
registration of the NVBancorp Shares under the 1933
Act, and (4) receipt of appropriate permits or
approvals under state securities or "blue sky" laws),
and (b) do not require any consent of any person under,
conflict in any material respect with or result in a
material breach of, or accelerate the performance
required by any of the terms of, any material debt
instrument, lease, license, covenant, agreement or
understanding to which SRNB is a party or by which it
is bound or any order, ruling, decree, judgment,
arbitration award or stipulation to which SRNB is
subject, or constitute a material default thereunder or
result in the creation of any lien, claim, security
interest, encumbrance, charge, restriction or right of
any third party of any kind whatsoever upon any of the
properties or assets of SRNB.
s. Retention of Broker or Consultant. No broker,
agent, finder, consultant or other party (other than legal,
compliance, loan reviewers and accounting advisors) has been
retained by SRNB or is entitled to be paid based upon any
agreements, arrangements or understandings made by SRNB in
connection with any of the transactions contemplated by this
Agreement or the Merger Agreement, except that SRNB has engaged
the firm of Hoefer & Arnett, Inc. to provide consulting services
to SRNB, including an opinion regarding the fairness of the
consideration to be received by SRNB shareholders in the Merger.
SRNB has provided NVBancorp with a true and accurate copy of its
agreement(s) with Hoefer & Arnett, Inc.
t. Insurance. SRNB is and continuously since its
inception has been, insured with reputable insurers against all
risks normally insured against by banks, and all of the insurance
policies and bonds maintained by SRNB are in full force and
effect, SRNB is not in default thereunder and all material claims
thereunder have been filed in due and timely fashion. In the
best judgment of the management of SRNB, such insurance coverage
is adequate for SRNB. Since December 31, 1998, there has not
been any damage to, destruction of, or loss of any assets of SRNB
not covered by insurance that could have a material adverse
effect on the business, financial condition, properties, assets
or results of operations of SRNB.
u. Loan Loss Reserves. The allowance for loan losses
in the SRNB balance sheets dated December 31, 1998, June 30,
1999, and as of the Determination Date are and will be adequate
in all material respects under the requirements of all applicable
state and federal laws and regulations to provide for possible
loan losses on outstanding loans, net of recoveries. SRNB has
disclosed to NVBancorp in writing prior to the date hereof, and
will promptly inform NVBancorp of the amounts of all loans,
leases, other extensions of credit or commitments, or other
interest-bearing assets of SRNB, that have been classified as of
the date hereof or hereafter by SRNB management or SRNB internal
policy or procedure, any outside review examiner, accountant or
any bank regulatory authority as "Other Loans Specially
Mentioned," "Special Mention," "Substandard," "Doubtful," or
"Loss" or classified using categories or words with similar
import in the case of loans (or that would have been so
classified, in the case of other interest-bearing assets, had
they been loans). Notwithstanding the above, SRNB shall be under
no obligation to disclose to NVBancorp any such classification by
any bank regulatory authority where such disclosure would violate
any obligation of confidentiality of SRNB imposed by such bank
regulatory authority. SRNB has furnished and will continue to
furnish to NVBancorp true and accurate information concerning the
loan portfolio of SRNB, and no material information with respect
to the loan portfolio has been or will be withheld from
NVBancorp.
v. Transactions With Affiliates. Except in the
Ordinary Course of Business, SRNB has not extended credit,
committed itself to extend credit, or transferred any asset to or
assumed or guaranteed any liability of the employees or directors
of SRNB, or to any spouse or child of any of them, or to any of
their "affiliates" or "associates" as such terms are defined in
Rule 405 under the 1933 Act. SRNB has not entered into any other
transactions with the employees or directors of SRNB or any
spouse or child of any of them, or any of their affiliates or
associates, except as disclosed in writing to NVBancorp. Any
such transactions have been on terms no less favorable to SRNB
than those which would prevail in an arms-length transaction with
an independent third party. SRNB has not violated any applicable
regulation of any government agency or regulatory authority
having jurisdiction over SRNB in connection with any such
transactions described in this subsection
w. Risk Management Instruments. All interest rate
swaps, caps, floors, option agreements, futures and forward
contracts and other similar risk management arrangements, whether
entered into for SRNB's own account (all of which are listed on
the SRNB Disclosure Schedule), if any, were entered into in
accordance with prudent business practices and all applicable
laws, rules, regulations and regulatory policies and with
counterparties believed to be financially responsible at the
time; and each of them constitutes the valid and legally binding
obligation of SRNB, enforceable in accordance with its terms
(except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles), and
are in full force and effect. Neither SRNB, nor to SRNB's
knowledge, any other party thereto, is in breach of any of its
obligations under any such agreement or arrangement.
x. Year 2000. To the knowledge of SRNB, the mission
critical computer software operated by SRNB is currently capable
of providing, or is being adapted to provide, uninterrupted
millennium functionality to record, store, process and present
calendar dates falling on or after January 1, 2000 in
substantially the same manner and with substantially the same
functionality as such mission critical software records, stores,
processes and presents such calendar dates falling on or before
December 31, 1999. To the knowledge of SRNB, the costs of
adaptations referred to in this clause will not have a material
adverse effect with respect to the business and operations of
SRNB. SRNB has not received, and does not reasonably expect to
receive, any deficiency notice from any federal banking
authority. SRNB has previously disclosed to NVBancorp a complete
and accurate copy of its plan, including an estimate of
anticipated associated costs, for addressing the issues set forth
in all Federal Financial Institutions Examination Council
Interagency Statements as such issues affect SRNB. Between the
date of this Agreement and the Effective Time, SRNB shall use
commercially reasonable and practicable efforts to implement such
plan.
y. Community Reinvestment Act Compliance. SRNB is in
substantial compliance with the applicable provisions of the
Community Reinvestment Act of 1977 and the regulations
promulgated thereunder (collectively, the "CRA") and has received
a CRA rating of "satisfactory" from the OCC in its most recent
examination, and SRNB has no knowledge of the existence of any
fact or circumstance or set of facts or circumstances which could
be reasonably expected to result in SRNB failing to be in
substantial compliance with such provisions or having its current
rating lowered.
z. Information in NVBancorp Registration Statement.
The information pertaining to SRNB which has been or will be
furnished to NVBancorp for or on behalf of SRNB for inclusion in
the NVBancorp Registration Statement and the Joint Proxy
Statement/Prospectus, or in the applications to be filed to
obtain the Government Approvals (the "Applications"), does not
and will not contain any untrue statement of any material fact or
omit or will omit to state any material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not
misleading; provided, however, that information of a later date
shall be deemed to modify contrary information as of an earlier
date. All financial statements of SRNB included in the NVBancorp
Registration Statement and the Joint Proxy Statement/Prospectus,
or the Applications, will present fairly the financial condition
and results of operations of SRNB at the dates and for the
periods covered by such statements in accordance with generally
accepted accounting principles consistently applied throughout
the periods covered by such statements. SRNB shall promptly
advise NVBancorp in writing if prior to the Effective Time of the
Merger SRNB shall obtain knowledge of any facts that would make
it necessary to amend or supplement the NVBancorp Registration
Statement, the Joint Proxy Statement/Prospectus or any
Application, in order to make the statements therein not
misleading or to comply with applicable law or regulation.
aa. Accuracy and Effective Date of Representations and
Warranties, Covenants and Agreements. Each representation,
warranty, covenant and agreement of SRNB set forth in this
Agreement shall be deemed to be made on and as of the date hereof
(except to the extent that a representation or warranty is
qualified as set forth in a Schedule corresponding in number with
the applicable section of such representation or warranty and
delivered on or before the Document Delivery Date, and upon such
delivery it shall be deemed made on and as of the date of
delivery), the Closing Date and the Effective Time of the Merger.
No representation or warranty by SRNB, and no statement by SRNB
in any certificate, agreement, schedule or other document
furnished or to be furnished in connection with the transactions
contemplated by this Agreement or the Merger Agreement, was or
will be inaccurate, incomplete or incorrect in any material
respect as of the date furnished or contains or will contain any
untrue statement of a material fact or omits or will omit to
state any material fact necessary to make such representation,
warranty or statement not misleading to NVBancorp.
5. REPRESENTATIONS AND WARRANTIES OF NVBancorp.
In the following representations and warranties, all
references to assets, liabilities, properties, rights,
obligations, financial condition, operations, knowledge,
information and other characteristics of NVBancorp shall be
deemed to include reference to those characteristics of NVBancorp
on a consolidated basis, except as the context otherwise
indicates or requires. NVBancorp represents and warrants to SRNB
that, except as set forth on a schedule (the "NVBancorp
Disclosure Schedule") to be delivered to SRNB within ten (10)
business days after the execution and delivery of this Agreement,
corresponding in number with the applicable section of this
Agreement:
a. Corporate Status and Power to Enter Into
Agreements. (i) NVBancorp is a corporation duly incorporated,
validly existing and in good standing under California law and is
a registered bank holding company under the Bank Holding Company
Act of 1956, as amended, (ii) subject to obtaining the Government
Approvals and approval of the principal terms of the Merger by
the NVBancorp shareholders, NVBancorp has all necessary corporate
power to enter into this Agreement and the Merger Agreement and
to carry out all of the terms and provisions hereof and thereof
to be carried out by it, (iii) NVB holds a currently valid
license issued by the California Commissioner of Banking to
engage in the commercial banking business in the State of
California at the locations at which it is licensed and currently
conducts business, and (iv) neither NVBancorp nor NVB is subject
to any directive, resolution, memorandum of understanding or
order of the FDIC, FRB, California Commissioner of Banking or any
other regulatory authority having jurisdiction over its business
or any of its assets or properties. Neither the scope of the
business of NVBancorp nor the location of its properties requires
NVBancorp or NVB to be licensed to do business in any
jurisdiction other than the State of California. NVB's deposits
are insured by the FDIC to the maximum extent permitted by
applicable law and regulation.
b. Articles, Bylaws, Books and Records. The copies
of the Articles of Incorporation and Bylaws of NVBancorp
heretofore delivered to SRNB are complete and accurate copies
thereof as in effect on the date hereof. The minute books of
NVBancorp made available to SRNB contain a complete and accurate
record of all meetings of NVBancorp's Board of Directors (and
committees thereof) and shareholders. The corporate books and
records (including financial statements) of NVBancorp fairly
reflect the material transactions to which NVBancorp is a party
or by which its properties are subject or bound, and such books
and records have been properly kept and maintained.
c. Compliance With Laws, Regulations and Decrees.
NVBancorp (i) has the corporate power to own or lease its
properties and to conduct its business as currently conducted,
(ii) to its knowledge, has complied in all material respects
with, and is not in material default of any laws, regulations,
ordinances, orders or decrees applicable to the conduct of its
business and the ownership of its properties, including but not
limited to all federal and state laws (including but not limited
to the Bank Secrecy Act), rules and regulations relating to the
offer, sale or issuance of securities, and the operation of a
commercial bank, other than where such noncompliance or default
is not likely to result in a material limitation on the conduct
of the business of NVBancorp or is not likely to otherwise have a
material adverse effect on NVBancorp and NVB taken as a whole,
(iii) have not failed to file with the proper federal, state,
local or other authorities any material report or other document
required to be filed, and (iv) have all approvals,
authorizations, consents, licenses, clearances and orders of, and
have currently effective all registrations with, all government
agencies and regulatory authorities which are necessary to the
business and operations of NVBancorp and NVB as now being
conducted.
d. Capitalization. As of the date of this Agreement,
the authorized capital stock of NVBancorp consists of 20,000,000
shares of NVBancorp common stock, no par value, of which
3,707,816 shares are duly authorized, validly issued, fully paid
and nonassessable and currently outstanding, and 5,000,000 shares
of NVBancorp preferred stock of which no shares are outstanding.
A total of 125,000 shares of Series A Junior Participating
Preferred Stock have been designated by the NVBancorp Board of
Directors for purposes of the NVBancorp Shareholder Protection
Rights Agreement dated as of September 9, 1999. Said capital
stock has been offered, sold and issued in compliance with all
applicable securities laws. As of the date of this Agreement,
there are currently outstanding options to purchase 484,096
shares of NVBancorp common stock, at a weighted average exercise
price of $11.39 per share, issued pursuant to the NVBancorp 1989
Director Stock Option Plan, the NVBancorp 1998 Employee Stock
Incentive Plan and the NVBancorp 1999 Director Stock Option Plan.
Said options were issued and, upon issuance in accordance with
the terms of the outstanding options said shares shall be issued,
in compliance with all applicable securities laws. Otherwise,
other than rights under the NVBancorp Shareholder Protection
Rights Agreement dated as of September 9, 1999, there are no
outstanding (i) options, agreements, calls or commitments of any
character which would obligate NVBancorp to issue, sell, pledge,
assign or otherwise encumber or dispose of, or to purchase,
redeem or otherwise acquire, any NVBancorp common stock or any
other equity security of NVBancorp, or (ii) warrants or options
relating to, rights to acquire, or debt or equity securities
convertible into, shares of NVBancorp common stock or any other
equity security of NVBancorp. NVBancorp owns all of the
outstanding equity securities of NVB. Except as collateral for
outstanding loans held in their loan portfolios, neither
NVBancorp nor NVB owns, directly or indirectly, any equity
interest in any bank (other than NVBancorp's ownership of NVB),
corporation or other entity.
e. Trademarks and Trade Names. To the best of
NVBancorp's knowledge, NVBancorp and NVB (i) own and have the
exclusive right to use all Intellectual Property Rights used in
or necessary for the conduct of their businesses as now or
heretofore conducted; and (ii) are not infringing upon the
Intellectual Property Rights of any other person or entity. No
claim is pending or threatened by any person or entity against or
otherwise affecting the use by NVBancorp or NVB of any
Intellectual Property Rights and, to the best of its knowledge,
there is no valid basis for any such claim.
f. Financial Statements, Regulatory Reports. No
financial statement or other document provided or to be provided
to SRNB as required by Section 3.3(i) hereof, as of the date of
such document, contained, or as to documents to be delivered
after the date hereof, will contain, any untrue statement of a
material fact, or, at the date thereof, omitted or will omit to
state a material fact necessary in order to make the statements
contained therein, in light of the circumstances under which such
statements were or will be made, not misleading; provided,
however, that information as of a later date shall be deemed to
modify contrary information as of any earlier date. NVBancorp
has filed all material documents and reports required to be filed
by it with the Commission, FDIC, FRB, the California Department
of Financial Institutions and any other government agency or
regulatory authority having jurisdiction over their business,
assets or properties. All such reports conform in all material
respects with the requirements promulgated by such government
agencies and regulatory authorities. All compliance or
corrective action relating to NVBancorp and NVB required by
government agencies and regulatory authorities having
jurisdiction over NVBancorp or NVB has been taken. Except as
disclosed in such statements, reports or documents, neither
NVBancorp nor NVB has received any notification, formally or
informally, from any agency or department of any federal, state
or local government or any regulatory authority or the staff
thereof (a) asserting that it is not in compliance with any of
the statutes, regulations or ordinances which such government or
regulatory authority enforces, or (b) threatening to revoke any
license, franchise, permit or government authorization.
NVBancorp and NVB have paid all assessments made or imposed by
any government agency. NVBancorp has delivered to SRNB copies of
all annual management letters and opinions, and has made
available to SRNB for inspection all reviews, correspondence and
other documents in the files of NVBancorp prepared by certified
public accountants engaged by NVBancorp and delivered to
NVBancorp since December 31, 1994. The financial records of
NVBancorp have been, and are being and shall be, maintained in
all material respects in accordance with all applicable legal and
accounting requirements sufficient to insure that all
transactions reflected therein are, in all material respects,
executed in accordance with management's general or specific
authorization and recorded in conformity with generally accepted
accounting principles at the time in effect. The data processing
equipment, data transmission equipment, related peripheral
equipment and software used by NVBancorp in the operation of its
business to generate and retrieve its financial records are
adequate for the current needs of NVBancorp.
g. Tax Returns.
(i) NVBancorp has timely filed all federal,
state, county, local and foreign tax returns required
to be filed by it, including, without limitation,
estimated tax, use tax, excise tax, real property and
personal property tax reports and returns, employer's
withholding tax returns, other withholding tax returns
and Federal Unemployment Tax Returns, and all other
reports or other information required or requested to
be filed by NVBancorp, and each such return, report or
other information was, when filed, complete and
accurate in all material respects. NVBancorp has paid
all taxes, fees and other government charges, including
any interest and penalties thereon, when they have
become due, except those that are being contested in
good faith, which contested matters have been disclosed
to SRNB. NVBancorp has not been requested to give nor
has it given any currently effective waivers extending
the statutory period of limitation applicable to any
tax return required to be filed by it for any period.
There are no claims pending against NVBancorp for any
alleged deficiency in the payment of any taxes, and
NVBancorp does not know of any pending or threatened
audits, investigations or claims for unpaid taxes or
relating to any liability in respect of any taxes.
There have been no events, including a change in
ownership, that would result in a reappraisal and
establishment of a new base-year full value for
purposes of applicable provisions of the California
Constitution, of any real property owned in whole or in
part by NVBancorp or to the best of NVBancorp's
knowledge, of any real property leased by NVBancorp.
(ii) NVBancorp has heretofore delivered to SRNB
copies of all its tax returns with respect to taxes
payable to the United States of America and the State
of California for the fiscal years ended December 31,
1998, 1997, 1996, 1995 and 1994.
(iii) No consent has been filed relating to
NVBancorp pursuant to Section 341(f) of the IRC.
h. Material Adverse Change. Except as heretofore
disclosed in writing by NVBancorp to SRNB, since June 30, 1999,
there has been (i) no material adverse change in the business,
assets, licenses, permits, franchises, results of operations or
financial condition of NVBancorp (whether or not in the Ordinary
Course of Business), (ii) no change in any of the assets,
licenses, permits or franchises of NVBancorp that has had or can
reasonably be expected to have a material adverse effect on any
of the items listed in clause (h)(i) above, (iii) no damage,
destruction, or other casualty loss (whether or not covered by
insurance) that has had or can reasonably be expected to have a
material adverse effect on any of the items listed in clause
(h)(i) above, (iv) no amendment, modification, or termination of
any existing, or entering into of any new, contract, agreement,
plan, lease, license, permit or franchise that is material to the
business, financial condition, assets, liabilities or operations
of NVBancorp, except in the Ordinary Course of Business, and (v)
no disposition by NVBancorp of one or more assets that,
individually or in the aggregate, are material to NVBancorp,
except sales of assets in the Ordinary Course of Business.
i. No Undisclosed Liabilities. Except for items for
which reserves have been established in the unaudited balance
sheets of NVBancorp as of June 30, 1999, NVBancorp has not
incurred or discharged, and is not legally obligated with respect
to, any indebtedness, liability (including, without limitation, a
liability arising out of an indemnification, guarantee, hold
harmless or similar arrangement) or obligation (accrued or
contingent, whether due or to become due, and whether or not
subordinated to the claims of its general creditors), other than
as a result of operations in the Ordinary Course of Business
after such date. No agreement pursuant to which any loans or
other assets have been or will be sold by NVBancorp entitles the
buyer of such loans or other assets, unless there is a material
breach of a representation or covenant by NVBancorp to cause
NVBancorp repurchase such loan or other asset or to pursue any
other form of recourse against NVBancorp. NVBancorp has not
knowingly made or shall make any representation or covenant in
any such agreement that contained or shall contain any untrue
statement of a material fact or omitted or shall omit to state a
material fact necessary in order to make the statements contained
therein, in light of the circumstances under which such
representations and/or covenants were made or shall be made, not
misleading.
j. Properties and Leases.
(i) NVBancorp has good and marketable title, free
and clear of all liens and encumbrances and the right
of possession, subject to existing leaseholds, to all
real properties and good title, free and clear of all
liens and encumbrances, to all other property and
assets, tangible and intangible, reflected in the
NVBancorp balance sheet as of June 30, 1999 (except
property held as lessee under leases disclosed in
writing prior to the date hereof and except personal
property sold or otherwise disposed of since June 30,
1999, in the Ordinary Course of Business), except for
(a) liens for taxes or assessments not delinquent, (b)
such other liens and encumbrances and imperfections of
title as do not materially affect the value of such
property as reflected in the NVBancorp balance sheet as
of June 30, 1999, or as currently shown on the books
and records of NVBancorp and which do not interfere
with or impair its present and continued use, or (c)
exceptions disclosed in title reports and preliminary
title reports, copies of which have been provided to
SRNB. All tangible properties of NVBancorp conform in
all material respects with all applicable ordinances,
regulations and zoning laws. To the knowledge of
NVBancorp, all tangible properties of NVBancorp are in
a good state of maintenance and repair and are adequate
for the current business of NVBancorp. No properties
of NVBancorp, and, to the best of NVBancorp's
knowledge, no properties in which NVBancorp holds a
collateral or contingent interest or purchase option,
are the subject of any pending or threatened
investigation, claim or proceeding relating to the use,
storage or disposal on such property of or
contamination of such property by any toxic or
hazardous waste material or substance. To the best of
NVBancorp's knowledge, NVBancorp does not own, possess
or have a collateral or contingent interest or purchase
option in any properties or other assets which contain
or have located within or thereon any hazardous or
toxic waste material or substance unless the location
of such hazardous or toxic waste material or other
substance or its use thereon conforms in all material
respects with all federal, state and local laws, rules,
regulations or other provisions regulating the
discharge of materials into the environment. As to any
real property not owned or leased by NVBancorp and held
as security for a loan or in which NVBancorp otherwise
has an interest, NVBancorp has not controlled, directed
or participated in the operation or management of any
such real property or any facilities or enterprise
conducted thereon, such that it has become an owner or
operator of such real property under applicable
environmental laws.
(ii) All properties held by NVBancorp under leases
are held under valid, binding and enforceable leases,
with such exceptions as are not material and do not
interfere with the conduct of the business of
NVBancorp, and NVBancorp enjoy quiet and peaceful
possession of such leased property. NVBancorp is not
in material default in any respect under any material
lease, agreement or obligation regarding its properties
to which it is a party or by which it is bound.
(iii) Except as disclosed to SRNB in writing,
all of NVBancorp's rights and obligations under the
leases referred to in Section 5(j)(ii) above do not
require the consent of any other party to the
transaction contemplated by this Agreement and the
Merger Agreement. Where required, NVBancorp shall
obtain, prior to the Effective Date, the consent of
such parties to such transactions.
k. Material Contracts. Except as previously
disclosed to SRNB in writing and excluding loans, lines of
credit, loan commitments or letters of credit to which NVBancorp
is a party, NVBancorp is not a party to or bound by any contract
or other agreement made in the Ordinary Course of Business which
involves aggregate future payments by or to NVBancorp of more
than Seventy-five Thousand Dollars ($75,000) and which is made
for a fixed period expiring more than one year from the date
hereof, and NVBancorp is not a party to or bound by any agreement
not made in the Ordinary Course of Business which is to be
performed at or after the date hereof. Each of the contracts and
agreements disclosed to SRNB pursuant to this Section 5(k) is a
legal and binding obligation (subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally
and subject, as to enforceability, to equitable principles of
general applicability), and no breach or default (and no
condition which, with notice or passage of time, or both, could
become a breach or default) exists with respect thereto.
l. Classified Loans. Except as previously disclosed
to SRNB in writing, there are no loans presently owned by
NVBancorp that have been classified by NVBancorp management or
NVBancorp internal policy or procedure, any outside review
examiner, accountant or any bank regulatory authority as "Non-
Accrual," "Watch," "Other Assets Specially Mentioned,"
"Substandard," "Doubtful," or "Loss" or classified using
categories or words with similar import and all loans or portions
thereof so classified have been reserved to the extent required.
NVBancorp regularly reviews and appropriately classifies its
loans in accordance with all applicable legal and regulatory
requirements and generally accepted banking practices. All loans
and investments of NVBancorp are legal, valid and binding
obligations enforceable in accordance with their respective terms
and are not subject to any setoffs, counterclaims or disputes
(subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and subject, as to
enforceability, to equitable principles of general
applicability), except as disclosed to SRNB in writing or
reserved for in the unaudited balance sheet of NVBancorp as of
June 30, 1999, and were duly authorized under and made in
compliance with applicable federal and state laws and
regulations. NVBancorp has no extensions of credit, investments,
guarantees, indemnification agreements or commitments for the
same (including without limitation commitments to issue letters
of credit, to create acceptances, or to repurchase securities,
federal funds or other assets) other than those documented on the
books and records of NVBancorp.
m. No Restrictions on Investments. Except for
pledges to secure public and trust deposits and repurchase
agreements in the Ordinary Course of Business and securities
classified as "held-to-maturity" as defined under SFAS No. 115,
none of the investments reflected in the NVBancorp balance sheet
as of June 30, 1999, and none of the investments made by
NVBancorp since June 30, 1999, is subject to any restriction,
whether contractual or statutory, which materially impairs the
ability of NVBancorp to freely dispose of such investment at any
time.
n. Employment Benefit Plans/ERISA.
(i) NVBancorp has provided to SRNB an accurate
list setting forth all bonus, incentive compensation,
profit-sharing, pension, retirement, stock purchase,
stock option, deferred compensation, severance,
hospitalization, medical, dental, vision, group
insurance, death benefit, disability and other fringe
benefit plans, trust agreements, arrangements and
commitments of NVBancorp (including but not limited to
any such plans, agreements, arrangements and
commitments applicable to former employees or retired
employees, or for which such persons are eligible)
(collectively, "Employee Plans"), if any, together with
copies of all such Employee Plans that are documented
and any and all contracts of employment, and has made
available to SRNB any Board of Directors' minutes (or
committee minutes) authorizing, approving or
guaranteeing such Employee Plans and contracts; and
(ii) All contributions, premiums or other payments
due from NVBancorp to (or under) any Employee Plans
have been fully paid or adequately provided for on
NVBancorp's audited financial statements for the year
ended December 31, 1998 or unaudited financial
statements for the six months ended June 30, 1999. All
accruals thereon (including, where appropriate,
proportional accruals for partial periods) have been
made in accordance with generally accepted accounting
principles consistently applied on a reasonable basis;
and
(iii) NVBancorp has disclosed in writing to
SRNB the names of each director, officer and employee
of NVBancorp and NVB; and
(iv) The Employee Plans have been administered
where required in substantial compliance with ERISA,
the IRC and the terms of such Employee Plans, and there
is no pending or threatened litigation relating to any
such Employee Plan; and
(v) Except as disclosed in the NVBancorp
Disclosure Schedule, NVBancorp and NVB have not offered
in the past health benefits for retired employees and
have no intention to offer any additional health or
other benefits for retired employees; and
(vi) Each Employee Plan is in full force and
effect, and neither NVBancorp, NVB, nor any other party
thereto is in material default under any of them, and
there have been no claims of default and there are no
facts or conditions which if continued, or on notice,
will result in a material default under any Employee
Plans; and
(vii) NVBancorp has provided to SRNB a list of
all agreements or other understandings pursuant to
which the consummation of the transactions contemplated
hereby will (a) entitle any current or former employee
or officer of NVBancorp or NVB to severance pay,
unemployment compensation or any other payment, or (b)
accelerate the time of payment or vesting or increase
the amount of compensation due any such employee or
officer.
o. Collective Bargaining and Employment Agreements.
Except as disclosed in the NVBancorp Disclosure Schedule,
NVBancorp has no union or collective bargaining or written
employment agreements, contracts or other agreements with any
labor organization or with any member of management, or any
management or consultation agreement not terminable at will by
NVBancorp without liability and no such contract or agreement has
been requested by, or is under discussion by management with, any
group of employees, any member of management or any other person.
There are no material controversies pending between NVBancorp and
any current or former employees, and to the best of NVBancorp's
knowledge, there are no efforts presently being made by any labor
union seeking to organize any of such employees.
p. Compensation of Officers and Employees. Except as
disclosed in the NVBancorp Disclosure Schedule, (i) no officer or
employee of NVBancorp or NVB is receiving aggregate direct
remuneration at a rate exceeding Seventy-five Thousand Dollars
($75,000) per annum, and (ii) the consummation of the
transactions contemplated by this Agreement and the Merger
Agreement will not (either alone or upon the occurrence of any
additional or further acts or events) result in any payment
(whether of severance pay or otherwise) becoming due from
NVBancorp to any employee of NVBancorp.
q. Legal Actions and Proceedings. Except as
disclosed in the NVBancorp Disclosure Schedule, NVBancorp is not
a party to, or so far as known to it, threatened with, and to
NVBancorp's knowledge, there is no reasonable basis for, any
legal action or other proceeding or investigation before any
court, any arbitrator of any kind or any government agency, and
NVBancorp is not subject to any potential adverse claim, the
outcome of which could involve the payment or receipt by
NVBancorp of any amount in excess of Fifty Thousand Dollars
($50,000), unless an insurer has agreed to defend against and pay
the amount of any resulting liability without reservation, or, if
any such legal action, proceeding, investigation or claim will
not involve the payment by NVBancorp of a monetary amount, which
could reasonably be expected to have a material adverse effect on
NVBancorp or its business or property or the transactions
contemplated hereby. NVBancorp has no knowledge of any pending
or threatened claims or charges under the Community Reinvestment
Act, before the Equal Employment Opportunity Commission, the
California Department of Fair Housing and Economic Development,
the California Unemployment Appeals Board, or any federal or
state human relations commission or agency. There is no labor
dispute, strike, slow-down or stoppage pending or, to the best of
the knowledge of NVBancorp, threatened against NVBancorp.
r. Execution and Delivery of the Agreement.
(i) The execution and delivery of this Agreement
and the Merger Agreement have been duly authorized by
the Boards of Directors of NVBancorp and, when the
principal terms of the Merger, this Agreement and the
Merger Agreement have been duly approved by the
affirmative vote of the holders of a majority of the
outstanding NVBancorp Shares at a meeting of
shareholders duly called and held, the Merger, this
Agreement and the Merger Agreement will be duly and
validly authorized by all necessary corporate action on
the part of NVBancorp.
(ii) This Agreement has been duly executed and
delivered by NVBancorp and (assuming due execution and
delivery by SRNB) constitutes, and the Merger
Agreement, upon its execution and delivery by NVBancorp
and the Interim Bank (and assuming due execution and
delivery by the Interim Bank and SRNB) will constitute,
a legal and binding obligation of NVBancorp in
accordance with its terms.
(iii) The execution and delivery by NVBancorp
of this Agreement and the Merger Agreement and the
consummation of the transactions herein and therein
contemplated (a) do not violate any provision of the
Articles of Incorporation or Bylaws of NVBancorp,
respectively, or violate in any material respect any
provision of federal or state law or any government
rule or regulation (assuming (1) receipt of the
Government Approvals, (2) receipt of the requisite
NVBancorp shareholder approval referred to in Section
5(r)(i) hereof, (3) due registration of the NVBancorp
Shares under the 1933 Act, and (4) receipt of
appropriate permits or approvals under state securities
or "blue sky" laws, and (b) do not require any consent
of any person under, conflict in any material respect
with or result in a material breach of, or accelerate
the performance required by any of the terms of, any
material debt instrument, lease, license, covenant,
agreement or understanding to which NVBancorp is a
party or by which it is bound or any order, ruling,
decree, judgment, arbitration award or stipulation to
which NVBancorp is subject, or constitute a material
default thereunder or result in the creation of any
lien, claim, security interest, encumbrance, charge,
restriction or right of any third party of any kind
whatsoever upon any of the properties or assets of
NVBancorp.
s. Retention of Broker or Consultant. No broker,
agent, finder, consultant or other party (other than legal,
compliance, loan reviewers and accounting advisors) has been
retained by NVBancorp or is entitled to be paid based upon any
agreements, arrangements or understandings made by NVBancorp in
connection with any of the transactions contemplated by this
Agreement or the Merger Agreement, except that NVBancorp has
engaged the firm of Alex Sheshunoff & Co. to act as its financial
advisor and to render an opinion regarding the fairness of the
Conversion Ratio in the Merger, from a financial point of view,
to NVBancorp shareholders. NVBancorp has provided SRNB with a
true and accurate copy of its agreement(s) with Alex Sheshunoff &
Co.
t. Insurance. NVBancorp is and continuously since
its inception have been, insured with reputable insurers against
all risks normally insured against by bank holding companies and
banks, and all of the insurance policies and bonds maintained by
NVBancorp are in full force and effect, NVBancorp is not in
default thereunder and all material claims thereunder have been
filed in due and timely fashion. In the best judgment of the
management of NVBancorp, such insurance coverage is adequate for
NVBancorp. Since December 31, 1994, there has not been any
damage to, destruction of, or loss of any assets of NVBancorp not
covered by insurance that could reasonably be expected to have a
material adverse effect the business, financial condition,
properties, assets or results of operations of NVBancorp.
u. Loan Loss Reserves. The allowance for loan losses
in the NVBancorp consolidated balance sheets dated December 31,
1998 and June 30, 1999, are, and as of the Determination Date
will be, adequate in all material respects under the requirements
of all applicable state and federal laws and regulations to
provide for possible loan losses on outstanding loans, net of
recoveries. NVBancorp has disclosed to SRNB in writing prior to
the date hereof, and will promptly inform SRNB of the amounts of
all loans, leases, other extensions of credit or commitments, or
other interest-bearing assets of NVBancorp and NVB, that have
been classified as of the date hereof or hereafter by NVBancorp
or NVB management or NVBancorp or NVB internal policy or
procedure, any outside review examiner, accountant or any bank
regulatory authority as "Non-Accrual," "Watch," "Other Assets
Specially Mentioned," "Substandard," "Doubtful," or "Loss" or
classified using categories or words with similar import in the
case of loans (or that would have been so classified, in the case
of other interest-bearing assets, had they been loans).
Notwithstanding the above, NVBancorp shall be under no obligation
to disclose to SRNB any such classification by any bank
regulatory authority, where such disclosure would violate any
obligation of confidentiality of NVBancorp or NVB imposed by such
bank regulatory authority. NVBancorp has furnished and will
continue to furnish to SRNB true and accurate information
concerning the loan portfolio of NVBancorp and NVB, and no
material information with respect to the loan portfolio has been
or will be withheld from SRNB.
v. Transactions With Affiliates. Except in the
Ordinary Course of Business, NVBancorp has not extended credit,
committed itself to extend credit, or transferred any asset to or
assumed or guaranteed any liability of the employees or directors
of NVBancorp, or to any spouse or child of any of them, or to any
of their "affiliates" or "associates" as such terms are defined
in Rule 405 under the 1933 Act. NVBancorp has not entered into
any other transactions with the employees or directors of
NVBancorp or any spouse or child of any of them, or any of their
affiliates or associates, except as disclosed in writing to SRNB.
Any such transactions have been on terms no less favorable to
NVBancorp than those which would prevail in an arms-length
transaction with an independent third party. NVBancorp has not
violated any applicable regulation of any government agency or
regulatory authority having jurisdiction over NVBancorp in
connection with any such transactions described in this
subsection.
w. Risk Management Instruments. All interest rate
swaps, caps, floors, option agreements, futures and forward
contracts and other similar risk management arrangements, whether
entered into for NVBancorp's own account, or for the account of
one or more of NVBancorp's subsidiaries or their customers (all
of which are listed on the NVBancorp Disclosure Schedule), if
any, were entered into in accordance with prudent business
practices and all applicable laws, rules, regulations and
regulatory policies and with counterparties believed to be
financially responsible at the time; and each of them constitutes
the valid and legally binding obligation of NVBancorp or one of
its subsidiaries, enforceable in accordance with its terms
(except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles), and
are in full force and effect. Neither NVBancorp nor its
subsidiaries, nor to NVBancorp's knowledge, any other party
thereto, is in breach of any of its obligations under any such
agreement or arrangement.
x. Year 2000. To the knowledge of NVBancorp, the
mission critical computer software operated by NVBancorp and/or
any of its subsidiaries is currently capable of providing, or is
being adapted to provide, uninterrupted millennium functionality
to record, store, process and present calendar dates falling on
or after January 1, 2000 in substantially the same manner and
with substantially the same functionality as such mission
critical software records, stores, processes and presents such
calendar dates falling on or before December 31, 1999. To the
knowledge of NVBancorp, the costs of adaptations referred to in
this clause will not have a material adverse effect with respect
to the business and operations of NVBancorp. Neither NVBancorp
nor any of its subsidiaries has received, and does not reasonably
expect to receive, any deficiency notice from any federal or
California banking authority. NVBancorp has previously disclosed
to SRNB a complete and accurate copy of its and its subsidiaries'
plan, including an estimate of anticipated associated costs, for
addressing the issues set forth in all Federal Financial
Institutions Examination Council Interagency Statements as such
issues affect NVBancorp and/or its subsidiaries. Between the
date of this Agreement and the Effective Time, NVBancorp and NVB
shall use commercially reasonable and practicable efforts to
implement such plan.
y. Community Reinvestment Act Compliance. NVBancorp
is in substantial compliance with the applicable provisions of
the Community Reinvestment Act of 1977 and the regulations
promulgated thereunder (collectively, the "CRA") and has received
a CRA rating of "satisfactory" from the FDIC in its most recent
examination, and neither NVBancorp nor NVB has no knowledge of
the existence of any fact or circumstance or set of facts or
circumstances which could be reasonably expected to result in
NVBancorp failing to be in substantial compliance with such
provisions or having its current rating lowered.
z. Information in NVBancorp Registration Statement.
The information pertaining to NVBancorp which has been or will be
included in the NVBancorp Registration Statement and the Joint
Proxy Statement/Prospectus, or in the Applications to be filed to
obtain the Government Approvals, does not and will not contain
any untrue statement of any material fact or omit or will omit to
state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading;
provided, however, that information of a later date shall be
deemed to modify contrary information as of an earlier date. All
financial statements of NVBancorp included in the NVBancorp
Registration Statement and the Joint Proxy Statement/Prospectus,
or the Applications, will present fairly the financial condition
and results of operations of NVBancorp at the dates and for the
periods covered by such statements in accordance with generally
accepted accounting principles consistently applied throughout
the periods covered by such statements. NVBancorp shall promptly
advise SRNB in writing if prior to the Effective Time of the
Merger NVBancorp shall obtain knowledge of any facts that would
make it necessary to amend or supplement the NVBancorp
Registration Statement, the Joint Proxy Statement/Prospectus or
any Application, in order to make the statements therein not
misleading or to comply with applicable law or regulation.
aa. Accuracy and Effective Date of Representations and
Warranties, Covenants and Agreements. Each representation,
warranty, covenant and agreement of NVBancorp set forth in this
Agreement shall be deemed to be made on and as of the date hereof
(except to the extent that a representation or warranty is
qualified as set forth in the NVBancorp Disclosure Schedule in a
section corresponding in number with the applicable section of
such representation or warranty), the Closing Date and the
Effective Time of the Merger. No representation or warranty by
NVBancorp, and no statement by NVBancorp in any certificate,
agreement, schedule or other document furnished or to be
furnished in connection with the transactions contemplated by
this Agreement or the Merger Agreement, was or will be
inaccurate, incomplete or incorrect in any material respect as of
the date furnished or contains or will contain any untrue
statement of a material fact or omits or will omit to state any
material fact necessary to make such representation, warranty or
statement not misleading to SRNB.
6. SECURITIES ACT OF 1933; SECURITIES EXCHANGE ACT OF 1934.
a. Preparation and Filing of Registration Statement.
NVBancorp shall promptly prepare and file with the Commission (i)
a registration statement on the appropriate form (the "NVBancorp
Registration Statement") under and pursuant to the provisions of
the 1933 Act for the purpose of registering a sufficient number
of NVBancorp Shares to complete the exchange of NVBancorp Shares
for the outstanding SRNB Shares pursuant to the Conversion Ratio
and the provisions of Section 2.1 above, and (ii) in sufficient
time to be effective on or before the Effective Time of the
Merger one or more registration statements or amendments to
existing registration statements under the 1933 Act for the
purpose of registering the maximum number of NVBancorp Shares to
which the holders of Substitute Options may be entitled pursuant
to Section 2.6 above at or after the Effective Time of the
Merger. NVBancorp shall promptly prepare a Joint Proxy
Statement/Prospectus for the purpose of submitting the principal
terms of the Merger (including the Amendment, as described in
Section 3.3.d. hereof), this Agreement and the Merger Agreement
to the shareholders of NVBancorp for approval. SRNB shall
cooperate in all reasonable respects with regard to the
preparation of the Joint Proxy Statement/Prospectus and will
promptly prepare and file with the OCC its proxy materials,
incorporating the Joint Proxy Statement/Prospectus, for the
purpose of submitting the principal terms of the Merger
(including the Amendment, as described in Section 3.3.d. hereof),
this Agreement and the Merger Agreement to the shareholders of
SRNB for approval. The Joint Proxy Statement/Prospectus in
definitive form is expected to serve as the prospectus to be
included in the NVBancorp Registration Statement. NVBancorp and
SRNB shall each provide promptly to the other such information
concerning its business and financial condition and affairs as
may be required or appropriate for inclusion in the NVBancorp
Registration Statement or the Joint Proxy Statement/Prospectus or
the SRNB proxy materials, and shall cause its counsel and
auditors to cooperate with the other's counsel and auditors in
the preparation of the NVBancorp Registration Statement and the
Joint Proxy Statement/Prospectus and the SRNB proxy materials.
b. Effectiveness of Registration Statement.
NVBancorp and SRNB shall use their best efforts to have the
NVBancorp Registration Statement and any amendments or
supplements thereto declared effective under the 1933 Act as soon
as practicable, and thereafter NVBancorp and SRNB shall
distribute the Joint Proxy Statement/Prospectus to holders of
their respective common stock in accordance with applicable laws
and the Articles of Incorporation and Bylaws of each.
c. Sales and Resales of Common Stock. NVBancorp
shall not be required to maintain the effectiveness of the
NVBancorp Registration Statement for the purpose of sale or
resale of the NVBancorp Shares by any person.
d. Rule 145. Securities representing NVBancorp
Shares issued to affiliates of SRNB (as determined by counsel to
NVBancorp and SRNB) under Rule 145 of the 1933 Act pursuant to
the Merger Agreement may be subject to stop transfer orders and a
restrictive legend which confirm and state that such securities
representing NVBancorp Shares have been issued or transferred to
the registered holder as the result of a transaction to which
Rule 145 under the 1933 Act applies, and that such securities may
not be sold, hypothecated, transferred or assigned, and the
issuer or its transfer agent shall not be required to give effect
to any attempted sale, hypothecation, transfer or assignment,
except (i) pursuant to a then current effective registration
statement under the 1933 Act, (ii) in a transaction permitted by
Rule 145 as to which the issuer has, in the opinion of its
counsel, received reasonably satisfactory evidence of compliance
with the provisions of Rule 145, or (iii) in a transaction which,
in the opinion of counsel satisfactory to the issuer or as
described in a "no action" or interpretive letter from the staff
of the Securities and Exchange Commission, is not required to be
registered under the 1933 Act.
7. CONDITIONS TO THE OBLIGATIONS OF NVBancorp.
The obligations of NVBancorp under this Agreement are, at
its option, subject to fulfillment at or prior to the Effective
Time of the Merger of each of the following conditions; provided,
however, that any one or more of such conditions may be waived by
the Board of Directors of NVBancorp at any time at or prior to
the Effective Time of the Merger:
a. Representations and Warranties. The
representations and warranties of SRNB in Section 4 hereof shall
be true and correct in all material respects on and as of the
date of this Agreement (except to the extent that a
representation or warranty is qualified as set forth in the SRNB
Disclosure Schedule corresponding in number with the applicable
section of such representation or warranty), the Closing Date and
the Effective Time of the Merger, with the same effect as though
such representations and warranties had been made on and as of
each such date or time except as to any representation or
warranty which specifically relates to an earlier date or time.
b. Compliance and Performance Under Agreement. SRNB
shall have performed and complied in all material respects with
all terms, agreements, covenants and conditions of this Agreement
and the Merger Agreement required to be performed or complied
with by it at or prior to the Effective Time of the Merger.
c. Material Adverse Change. No material adverse
change shall have occurred since June 30, 1999, in the business,
financial condition, results of operations or assets of SRNB.
Other than as set forth in the SRNB Disclosure Schedule, SRNB
shall not be a party to or threatened with, and to the best of
SRNB's knowledge there is no reasonable basis for, any legal
action or other proceeding before any court, any arbitrator of
any kind or any government agency. No material adverse change
shall have occurred as a result of any subsequent legal actions
or proceedings, or any subsequent developments in the legal
actions or proceedings as set forth in the SRNB Disclosure
Schedule, which in the reasonable judgment of NVBancorp, could
have a material adverse effect on the business, financial
condition, results of operations or assets of SRNB.
d. Approval of Agreement. The principal terms of the
Merger, this Agreement and the Merger Agreement shall have been
duly approved by (i) the affirmative vote or consent of the
holders of a two-thirds majority of the outstanding SRNB Shares
and (ii) the affirmative vote or consent of the holders of a
majority of the outstanding NVBancorp Shares.
e. Officer's Certificate. NVBancorp shall have
received a certificate, dated the Effective Date, signed on
behalf of SRNB by its President and Chief Financial Officer and
its Executive Vice President and Branch Administrator, in
substantially the form delivered to NVBancorp with the SRNB
Disclosure Schedule.
f. Opinion of Counsel. McCutchen, Doyle, Brown &
Enersen LLP, counsel to SRNB, shall have delivered to NVBancorp
its opinion dated the Effective Date in form and substance
acceptable to NVBancorp and its counsel.
g. Absence of Proceedings. No legal, administrative,
arbitration, investigatory or other proceeding by any government
agency or regulatory authority shall have been instituted or
threatened to restrain or prohibit the Merger or the transactions
contemplated by this Agreement.
h. Effectiveness of Registration Statement. The
NVBancorp Registration Statement and any amendments or
supplements thereto shall have become effective under the 1933
Act, no stop order suspending the effectiveness of such
Registration Statement shall be in effect and no proceedings for
such purpose shall have been initiated or threatened by or before
the Commission and the NVBancorp Shares registered thereby shall
have received all state securities and "blue sky" permits or
approvals required to consummate the transactions contemplated by
this Agreement and the Merger Agreement.
i. Government Approvals. All Government Approvals
shall be in effect, and all conditions or requirements prescribed
by law or by any such Approvals shall have been satisfied;
provided, however, that no Government Approval shall be deemed to
have been received if it shall require the divestiture or
cessation of any of the present businesses or operations
conducted by any of the parties hereto or shall impose any other
condition or requirement, which condition or requirement
NVBancorp in its reasonable judgment shall deem to be materially
burdensome (in which case NVBancorp shall promptly notify SRNB).
For purposes of this agreement no condition or requirement shall
be deemed to be "materially burdensome" if such condition or
requirement does not materially differ from conditions or
requirements regularly imposed in orders approving transactions
of the type contemplated by this Agreement and compliance with
such condition or requirement would not:
(i) require the taking of any action materially
inconsistent with the manner in which NVBancorp, NVB or
SRNB has conducted its business previously;
(ii) have a material adverse effect on the
business, financial condition or results of operations
of NVBancorp, NVB or SRNB; or
(iii) preclude satisfaction of any of the
conditions to consummation of the transactions
contemplated by this Agreement.
j. Tax Opinion. McCutchen, Doyle, Brown & Enersen
LLP shall have delivered to NVBancorp and SRNB a tax opinion
subject to customary assumptions and exceptions included in such
opinions and the prior delivery of certificates from SRNB and
NVBancorp, substantially to the effect that under federal income
tax law and California income and franchise tax law:
(i) the Merger will not result in any
recognized gain or loss to NVBancorp or SRNB;
(ii) except for any cash received in lieu of any
fractional share, no gain
or loss will be recognized by holders of SRNB Shares
who receive NVBancorp Shares in exchange for the SRNB
Shares which they hold;
(iii) the holding period of NVBancorp Shares
exchanged for SRNB Shares will include the holding
period of the SRNB Shares for which they are exchanged,
assuming the SRNB Shares are capital assets in the
hands of the holder thereof at the Effective Date;
(iv) the basis of the NVBancorp Shares received in
the exchange will be the same as the basis of the SRNB
Shares for which they are exchanged, less any basis
attributable to fractional shares for which cash is
received; and
(v) an SRNB shareholder who dissents to the
Merger and receives cash for his or her SRNB Shares
will be treated as having received a distribution in
redemption of his or her SRNB Shares, subject to the
provisions and limitations of Section 302 of the IRC.
k. Accountant's Comfort Letters. On or prior to the
date of effectiveness of the NVBancorp Registration Statement,
NVBancorp shall have received a letter addressed to NVBancorp
from Deloitte & Touche LLP, independent public accountants for
SRNB, in form and substance satisfactory to NVBancorp and its
counsel and customary for "comfort" letters prepared in
accordance with the provisions of Statement of Accounting
Standards No. 71, Interim Financial Information. NVBancorp shall
also have received from Deloitte & Touche LLP, a "comfort" letter
dated the Effective Date, in form and substance satisfactory to
NVBancorp and its counsel, as to such matters, as of a specified
date not more than five (5) business days prior to the Effective
Date, as NVBancorp may reasonably request.
l. Dissenting Shares. Holders of not more than ten
percent (10%) of the outstanding SRNB Shares and NVBancorp Shares
shall have perfected dissenter's rights pursuant to 12 U.S.C.
215a (by voting against the Merger at the SRNB meeting of
shareholders or by giving notice in writing at or prior to such
meeting that he or she dissents from the Merger and thereafter
submitting a timely request for the value of his or her SRNB
Shares in the manner required by the National Bank Act and the
rules and regulations of the OCC) and pursuant to Chapter 13 of
the California General Corporation Law, respectively.
m. Unaudited Financials. Not later than five (5)
business days prior to the Effective Date, SRNB shall have
furnished NVBancorp a copy of its most recently prepared
unaudited month-end consolidated financial statements, including
a balance sheet and statement of income of SRNB, for the month
ending at least ten (10) business days prior to the Effective
Date.
n. Affiliate Agreements. NVBancorp shall have
received signed affiliate agreements on or before the date of
mailing the Joint Proxy Statement/Prospectus to the shareholders
of SRNB and NVBancorp, from each person who, in the opinion of
SRNB's and NVBancorp's counsel, might be deemed to be an
affiliate of SRNB or NVBancorp under Rule 144 or 145 of the 1933
Act. Said agreements will include provisions restricting certain
actions by an affiliate related to SRNB Shares or NVBancorp
Shares, including the sale, purchase, acquisition or transfer of
SRNB Shares or NVBancorp Shares in a manner which may render
pooling-of-interests accounting treatment unavailable in the
Merger, and shall be substantially in the form attached hereto as
Exhibit C.
o. Closing Documents. NVBancorp shall have received
such certificates and other closing documents as counsel for
NVBancorp shall reasonably request.
p. Consents. SRNB shall have received, or NVBancorp
shall have satisfied itself that SRNB will receive, all consents
of third parties as may be required including consents of other
parties to and required by material mortgages, notes, leases,
franchises, agreements, licenses and permits applicable to SRNB,
in each case in form and substance reasonably satisfactory to
NVBancorp and its counsel, and no such consent or license or
permit shall have been withdrawn or suspended.
q. Fairness Opinion. The Board of Directors of
NVBancorp shall have received an opinion of Alex Sheshunoff &
Co., dated the date of this Agreement and the date of mailing or
a date within three (3) days prior to the date of mailing the
Joint Proxy Statement/Prospectus, to the effect that the
Conversion Ratio in the Merger is fair, from a financial point of
view, to NVBancorp shareholders, and such opinion shall not have
been withdrawn by the Effective Time of the Merger.
r. Accounting Treatment. NVBancorp shall have
received a letter from Deloitte & Touche LLP, subject to
customary qualifications and receipt of such certificates as may
be reasonable and customary in connection with such letters,
satisfactory in form and substance to NVBancorp and its counsel,
to the effect that the Merger shall qualify for the pooling-of-
interests method of accounting in accordance with generally
accepted accounting principles, plus a copy of the letter to SRNB
from Deloitte & Touche LLP as described in Section 8.r. hereof.
There shall have been no determination by any court, tribunal,
regulatory authority or other government agency, that the Merger
fails or will fail to qualify for pooling-of-interests accounting
treatment.
s. Shareholder Agreements. NVBancorp and SRNB shall
have received signed shareholder agreements from members of the
Boards of Directors and the executive officers of NVBancorp and
SRNB on or before the date of mailing the Joint Proxy
Statement/Prospectus, pursuant to which each such person in their
capacity as a shareholder commits to vote their NVBancorp Shares
or SRNB Shares in favor of the Merger and the transactions
contemplated thereby and pursuant to this Agreement and the
Merger Agreement, and to recommend to shareholders, subject to
the exercise of fiduciary duties, that they vote in favor of the
Merger and the transactions contemplated thereby and pursuant to
this Agreement and the Merger Agreement. Said agreements shall
be substantially in the form attached hereto as Exhibit D.
t. Performance Tests. As of the Determination Date,
the Closing Date and the Effective Date, SRNB shall have (i)
total shareholders' equity and leverage, tier 1 and total risk-
based capital ratios, respectively, in amounts required to comply
with the "well capitalized" category of applicable federal
banking regulations, and (ii) total reserves for losses on
outstanding loans shall be in compliance with the SRNB loan loss
policy and procedures described in Section 3.2.i. hereof and at a
level which, in the reasonable determination of NVBancorp, are
adequate for regulatory purposes and for purposes of generally
accepted accounting principles.
u. Compliance with Consent Agreement. SRNB shall be
in substantial compliance in all material respects with its
obligations under the Consent Agreement.
8. CONDITIONS TO THE OBLIGATIONS OF SRNB.
The obligations of SRNB under this Agreement are, at its
option, subject to the fulfillment at or prior to the Effective
Time of the Merger of each of the following conditions provided,
however, that any one or more of such conditions may be waived by
the Board of Directors of SRNB at any time at or prior to the
Effective Time of the Merger:
a. Representations and Warranties. The
representations and warranties of NVBancorp in Section 5 hereof
shall be true and correct in all material respects on and as of
the date of this Agreement (except to the extent that a
representation or warranty is qualified as set forth in the
NVBancorp Disclosure Schedule corresponding in number with the
applicable section of such representation or warranty), the
Closing Date and the Effective Time of the Merger, with the same
effect as though such representations and warranties had been
made on and as of each such date or time except as to any
representation or warranty which specifically relates to an
earlier date or time.
b. Compliance and Performance Under Agreement.
NVBancorp shall have performed and complied in all material
respects with all terms, agreements, covenants and conditions of
this Agreement and the Merger Agreement required to be performed
or complied with by NVBancorp at or prior to the Effective Time
of the Merger.
c. Material Adverse Change. No material adverse
change shall have occurred since June 30, 1999, in the business,
financial condition, results of operations or assets of NVBancorp
and NVB taken as a whole, and NVBancorp shall not be a party to
or threatened with, and to the best of NVBancorp's knowledge
there is no reasonable basis for, any legal action or other
proceeding before any court, any arbitrator of any kind or any
government agency, which legal action or proceeding, in the
reasonable judgment of SRNB, could have a material adverse effect
on the business, financial condition, results of operations or
assets of NVBancorp and NVB taken as a whole.
d. Approval of Agreement. The principal terms of the
Merger, this Agreement and the Merger Agreement shall have been
duly approved by (i) the affirmative vote or consent of the
holders of a majority of the outstanding NVBancorp Shares and
(ii) the affirmative vote or consent of the holders of a two
thirds majority of the outstanding SRNB Shares.
e. Officer's Certificate. SRNB shall have received a
certificate, dated the Effective Date, signed on behalf of
NVBancorp by its President and its Chief Financial Officer, in
substantially the form delivered to SRNB with the NVBancorp
Disclosure Schedule.
f. Opinion of Counsel. Coudert Brothers, NVBancorp's
counsel, shall have delivered to SRNB its opinion dated the
Effective Date in form and substance acceptable to SRNB and its
counsel.
g. Absence of Proceedings. No legal, administrative,
arbitration, investigatory or other proceeding by any government
agency or regulatory authority shall have been instituted or
threatened to restrain or prohibit the Merger or the transactions
contemplated by this Agreement.
h. Effectiveness of Registration Statement. The
NVBancorp Registration Statement and any amendments or
supplements thereto shall have become effective under the 1933
Act, no stop order suspending the effectiveness of such
Registration Statement shall be in effect and no proceedings for
such purpose shall have been initiated or threatened by or before
the Commission and the NVBancorp Shares registered thereby shall
have received all state securities and "blue sky" permits or
approvals required to consummate the transactions contemplated by
this Agreement and the Merger Agreement.
i. Government Approvals. All Government Approvals
shall be in effect, and all conditions or requirements prescribed
by law or by any such Approvals shall have been satisfied;
provided, however, that no Government Approval shall be deemed to
have been received if it shall require the divestiture or
cessation of any of the present businesses or operations
conducted by any of the parties hereto or shall impose any other
condition or requirement, which condition or requirement SRNB in
its reasonable judgment shall deem to be materially burdensome
(in which case SRNB shall promptly notify NVBancorp). For
purposes of this agreement no condition or requirement shall be
deemed to be "materially burdensome" if such condition or
requirement does not materially differ from conditions or
requirements regularly imposed in orders approving transactions
of the type contemplated by this Agreement and compliance with
such condition or requirement would not:
(i) require the taking of any action materially
inconsistent with the manner in which SRNB, NVBancorp
or NVB has conducted its business previously;
(ii) result in a material adverse change on the
business, financial condition or results of operations
of SRNB, NVBancorp or NVB; or
(iii) preclude satisfaction of any of the
conditions to consummation of the transactions
contemplated by this Agreement.
j. Tax Opinion. McCutchen, Doyle, Brown & Enersen
LLP shall have delivered to NVBancorp and SRNB a tax opinion
subject to customary assumptions and exceptions included in such
opinions and the prior delivery of certificates from SRNB and
NVBancorp, substantially to the effect that under federal income
tax law and California income and franchise tax law:
(i) the Merger will not result in any recognized
gain or loss to SRNB, NVBancorp;
(ii) except for any cash received in lieu of any
fractional share, no gain or loss will be recognized
by holders of SRNB Shares who receive NVBancorp Shares
in exchange for the SRNB Shares which they hold;
(iii) the holding period of NVBancorp Shares
exchanged for SRNB Shares will include the holding
period of the SRNB Shares for which they are exchanged,
assuming the SRNB Shares are capital assets in the
hands of the holder thereof at the Effective Date;
(iv) the basis of the NVBancorp Shares received in
the exchange will be the same as the basis of the SRNB
Shares for which they are exchanged, less any basis
attributable to fractional shares for which cash is
received; and
(v) an SRNB shareholder who dissents to the
Merger and receives cash for his or her SRNB Shares
will be treated as having received a distribution in
redemption of his or her SRNB Shares, subject to the
provisions and limitations of Section 302 of the IRC.
k. Accountant's Comfort Letters. On or prior to the
date of effectiveness of the NVBancorp Registration Statement,
SRNB shall have received a letter addressed to SRNB from Deloitte
& Touche LLP, independent public accountants for NVBancorp, in
form and substance satisfactory to SRNB and its counsel and
customary for "comfort" letters prepared in accordance with the
provisions of Statement of Accounting Standards No. 71, Interim
Financial Information. SRNB shall also have received from
Deloitte & Touche LLP a "comfort" letter dated the Effective
Date, in form and substance satisfactory to SRNB and its counsel,
as to such matters, as of a specified date not more than five (5)
business days prior to the Effective Date, as SRNB may reasonably
request.
l. Dissenting Shares. Holders of not more than ten
percent (10%) of the outstanding SRNB Shares and NVBancorp Shares
shall have perfected dissenter's rights pursuant to 12 U.S.C.
215a (by voting against the Merger at the SRNB meeting of
shareholders or by giving notice in writing at or prior to such
meeting that he or she dissents from the Merger and thereafter
submitting a timely request for the value of his or her SRNB
Shares in the manner required by the National Bank Act and the
rules and regulations of the OCC) and pursuant to Chapter 13 of
the California General Corporation Law, respectively.
m. Unaudited Financials. Not later than five (5)
business days prior to the Effective Date, NVBancorp shall have
furnished SRNB a copy of its most recently prepared unaudited
month-end consolidated financial statements, including a balance
sheet and statement of income of NVBancorp, for the month ending
at least ten (10) business days prior to the Effective Date.
n. Affiliate Agreements. SRNB shall have received
signed affiliate agreements on or before the Document Delivery
Date, from each person who, in the opinion of SRNB's and
NVBancorp's counsel, might be deemed to be an affiliate of SRNB
or NVBancorp under Rule 144 or 145 of the 1933 Act. Said
agreements will include provisions restricting certain actions by
an affiliate related to SRNB Shares or NVBancorp Shares,
including the sale, purchase, acquisition or transfer of SRNB
Shares or NVBancorp Shares in a manner which may render pooling-
of-interests accounting treatment unavailable in the Merger, and
shall be substantially in the form attached hereto as Exhibit E.
o. Closing Documents. SRNB shall have received such
certificates and other closing documents as counsel for SRNB
shall reasonably request.
p. Consents. NVBancorp shall have received, or SRNB
shall have satisfied itself that NVBancorp will receive, all
consents of third parties as may be required including consents
of other parties to and required by material mortgages, notes,
leases, franchises, agreements, licenses and permits applicable
to NVBancorp, in each case in form and substance reasonably
satisfactory to SRNB, and no such consent or license or permit
shall have been withdrawn or suspended.
q. Fairness Opinion. The Board of Directors of SRNB
shall have received an opinion of Hoefer & Arnett Incorporated,
dated the date of this Agreement and the date of mailing or a
date within three (3) days prior to the date of mailing the Joint
Proxy Statement/Prospectus, to the effect that the Conversion
Ratio in the Merger is fair, from a financial point of view, to
SRNB and its shareholders, and such opinion shall not have been
withdrawn by the Effective Time of the Merger.
r. Accounting Treatment. SRNB shall have received a
letter from Deloitte & Touche LLP, subject to customary
qualifications and receipt of such Certificates as may be
reasonable and customary in connection with such letters,
satisfactory in form and substance to SRNB and its counsel, to
the effect that no conditions exist that would preclude SRNB from
being a party to a transaction intended to qualify for the
pooling-of-interests method of accounting in accordance with
generally accepted accounting principles. There shall have been
no determination by any court, tribunal, regulatory authority or
other government agency, that the Merger fails or will fail to
qualify for pooling-of-interests accounting treatment.
s. Shareholder Agreements. SRNB and NVBancorp shall
have received signed shareholder agreements from members of the
Boards of Directors and the executive officers of SRNB and
NVBancorp on or before the Document Delivery Date, pursuant to
which each such person in their capacity as a shareholder commits
to vote their SRNB Shares or NVBancorp Shares in favor of the
Merger and the transactions contemplated thereby and pursuant to
this Agreement and the Merger Agreement, and to recommend to
shareholders, subject to the exercise of fiduciary duties, that
they vote in favor of the Merger and the transactions
contemplated thereby and pursuant to this Agreement and the
Merger Agreement. Said agreements shall be substantially in the
form attached hereto as Exhibit F.
9. CLOSING.
a. Closing Date. On the third business day following
receipt of all required regulatory approvals (not including any
applicable waiting periods), the parties shall select a proposed
date for the consummation of the Merger (the "Proposed Closing
Date") which the parties shall use their reasonable best efforts
to cause to be the Closing Date. The closing (the "Closing")
shall, unless another date, time or place is agreed to in writing
by NVBancorp and SRNB, be held at the offices of Coudert
Brothers, 303 Almaden Boulevard, Fifth Floor, San Jose,
California 95110, at a time mutually agreed upon between the
parties and on a date as soon as practicable but not less than
fifteen (15) days following the last to occur of (i) the
expiration of any waiting periods under applicable law or
regulation, and (ii) the date on which all conditions to the
obligations of the parties to consummate the Merger have been
satisfied (the "Closing Date").
b. Delivery of Documents. At the Closing, the
parties shall use their respective best efforts to deliver or
cause to be delivered the opinions, certificates and other
documents required to be delivered by this Agreement.
c. Filings. At the Closing, NVBancorp and SRNB shall
instruct their respective representatives to make or confirm such
filings as shall be required in the opinion of counsel to
NVBancorp and SRNB to give effect to the Merger.
10. POST-CLOSING MATTERS.
NVBancorp will prepare and file with the Commission on the
appropriate form as soon as practicable the results of combined
operations of NVBancorp, NVB and the Resulting Bank for the first
full calendar quarter after the Effective Date.
11. EXPENSES.
Each party hereto agrees to pay as incurred its expenses
incident to the Merger and transactions contemplated pursuant to
this Agreement in compliance with generally accepted accounting
principles, without right of reimbursement from the other party
and whether or not the transactions contemplated by this
Agreement or the Merger Agreement shall be consummated, relating
to the payment of costs and expenses incurred by such party
incident to the performance of its obligations under this
Agreement and the Merger Agreement, including without limitation,
costs incident to the preparation of the Merger Agreement, this
Agreement, the NVBancorp Registration Statement and Joint Proxy
Statement/Prospectus (including the audited financial statements
of the parties contained therein) and incident to the
consummation of the Merger and of the other transactions
contemplated herein and in the Merger Agreement, including the
fees and disbursements of counsel, accountants, consultants and
financial advisers employed by such party in connection
therewith. Each party shall bear the costs of distributing the
Joint Proxy Statement/Prospectus and other proxy materials and
information relating to these transactions to its shareholders
and of conducting a meeting of its shareholders. Notwithstanding
the foregoing, each party shall pay one-half of (i) the
printing costs of the Registration Statement and the Joint Proxy
Statement/Prospectus, (ii) fees and costs related to obtaining a
tax opinion and (iii) fees and costs related to obtaining a
letter from Deloitte & Touche LLP, regarding pooling-of-interests
accounting treatment; provided, however, that in the event of a
termination pursuant to Section 12.b.(v) or Section 12.b.(xi)
hereof, by reason of a failure to fulfill the condition in
Section 7.l. or Section 8.l., respectively, then each party shall
pay one-half of items (i), (ii) and (iii) set forth above in
this Section 11 plus one-half of (iv) all fees and costs
payable pursuant to state "blue sky" securities laws, (v) the fee
required to be paid to the Commission to register the NVBancorp
Shares, (vi) the fees and costs related to any amendments to the
NVBancorp 1998 Employee Stock Incentive Plan or for the
preparation of a new NVBancorp Stock Option Plan including the
cost of obtaining any permits or approvals of government agencies
and regulatory authorities and applicable filing fees and (vii)
the fees related to preparation and filing of applications with
government agencies or regulatory authorities for approval of the
transactions contemplated by the Merger, this Agreement and the
Merger Agreement. The fees and costs related to the listing of
the NVBancorp Shares with the Nasdaq Stock Market for trading on
the Nasdaq National Market shall be paid by NVBancorp.
12. AMENDMENT; TERMINATION.
a. Amendment. This Agreement and the Merger
Agreement may be amended by NVBancorp and SRNB at any time prior
to the Effective Time of the Merger without the approval of the
shareholders of NVBancorp and shareholders of SRNB with respect
to any of their terms except the terms relating to the Conversion
Ratio or the form or amount of consideration to be delivered to
the SRNB shareholders in the Merger or otherwise as required by
applicable law.
b. Termination. This Agreement and the Merger
Agreement may be terminated as follows:
(i) By the mutual consent of the Boards of
Directors of NVBancorp and SRNB at any time prior to
the Effective Time of the Merger.
(ii) By the Boards of Directors of NVBancorp or
SRNB upon the failure of the shareholders of NVBancorp
or SRNB to give the requisite approval of this
Agreement and the transactions contemplated hereby.
(iii) By the Boards of Directors of NVBancorp
or SRNB upon the expiration of thirty (30) days after
any government agency or regulatory authority denies or
refuses to grant any approval, consent or qualification
required to be obtained in order to consummate the
transactions contemplated by this Agreement unless,
within said thirty (30) day period after such denial or
refusal, NVBancorp and SRNB agree to appeal such denial
or refusal or agree to amend and re-submit the
application to the government agency or regulatory
authority that has denied or refused to grant the
approval, consent or qualification requested.
(iv) By the Board of Directors of NVBancorp within
five (5) business days after receipt by NVBancorp of
the SRNB Disclosure Schedule.
(v) By the Board of Directors of NVBancorp on or
after the Termination Date, if any of the conditions in
Section 7 to which the obligations of NVBancorp are
subject have not been fulfilled.
(vi) By the Board of Directors of NVBancorp if a
material adverse change shall have occurred since June
30, 1999, in the business, financial condition, results
of operations or assets of SRNB.
(vii) By the Board of Directors of NVBancorp
in the event that SRNB or its affiliates enter into a
Business Combination.
(viii) By the Board of Directors of NVBancorp
upon the expiration of forty-five (45) days from
delivery of written notice by NVBancorp to SRNB of
SRNB's breach of or failure to satisfy any covenant or
agreement contained in this Agreement resulting in a
material impairment of the benefit reasonably expected
to be derived by NVBancorp and NVB from the performance
or satisfaction of such covenant or agreement (provided
that such breach has not been waived by NVBancorp or
cured by SRNB prior to expiration of such forty-five
(45) day period).
(ix) By the Board of Directors of SRNB within five
(5) business days after receipt by SRNB of the
NVBancorp Disclosure Schedule.
(x) By the Board of Directors of SRNB if
NVBancorp fails to comply with the provisions of
Section 3.1.g.
(xi) By the Board of Directors of SRNB on or after
the Termination Date, if any of the conditions
contained in Section 8 to which the obligations of SRNB
are subject have not been fulfilled.
(xii) By the Board of Directors of SRNB if a
material adverse change shall have occurred since June
30, 1999 in the business, financial condition, results
of operations or assets of NVBancorp and NVB taken as a
whole.
(xiii) By the Board of Directors of SRNB upon
the expiration of forty-five (45) days from delivery of
written notice by SRNB to NVBancorp of NVBancorp's
breach of or failure to satisfy any covenant or
agreement contained in this Agreement resulting in a
material impairment of the benefit reasonably expected
to be derived by SRNB from the performance or
satisfaction of such covenant or agreement (provided
that such breach has not been waived by SRNB or cured
by NVBancorp prior to expiration of such forty-five
(45) day period).
(xiv) By the Board of Directors of NVBancorp
in the event that SRNB shall fail to deliver or cause
to be delivered to NVBancorp the following signed
documents, in form and substance reasonably acceptable
to NVBancorp and its counsel: (a) the affiliate
agreement to be delivered pursuant to Section 7(n)
hereof; and (b) the shareholder agreements to be
delivered pursuant to Section 7(s) hereof; and (iii)
the form of the following documents, in form and
substance reasonably acceptable to NVBancorp and its
counsel: (a) the officer's certificate to be delivered
pursuant to Section 7(e) hereof; and (b) the opinion of
counsel to SRNB to be delivered pursuant to Section
7(f) hereof.
(xv) By the Board of Directors of SRNB in the
event that NVBancorp shall fail to deliver or cause to
be delivered to SRNB the following signed documents, in
form and substance reasonably acceptable to SRNB and
its counsel: (a) the affiliate agreement to be
delivered pursuant to Section 8(n) hereof; and (b) the
shareholder agreements to be delivered pursuant to
Section 8(s) hereof; and (iii) the form of the
following documents, in form and substance reasonably
acceptable to SRNB and its counsel: (a) the officer's
certificate to be delivered pursuant to Section 8(e)
hereof; and (b) the opinion of counsel to NVBancorp to
be delivered pursuant to Section 8(f) hereof.
(xvi) If the Average Closing Price as of the
Determination Date shall be less than $10.00, by the
Board of Directors of SRNB, within two (2) trading
(business) days after the Determination Date. If SRNB
does not give timely notice of termination, then the
Conversion Ratio shall be 1.450 and this Agreement
shall remain in effect in accordance with its terms.
c. Termination Date. This Agreement shall be
terminated if the Closing shall not have occurred on or before
March 31, 2000 or such other date approved by the Boards of
Directors of NVBancorp, SRNB and the Interim Bank; provided,
however, that if the only conditions to the Closing which remain
unsatisfied at March 31, 2000 are the receipt of the Government
Approvals or the expiration of any waiting periods under
applicable law or regulation, the Closing Date shall be
automatically extended to May 31, 2000, or such other date as the
parties may mutually agree upon (the "Termination Date"), for the
purpose of obtaining such Government Approvals or the expiration
of such waiting periods.
d. Notice. The power of termination hereunder may be
exercised by NVBancorp or SRNB, as the case may be, only by
giving written notice of termination to NVBancorp or SRNB, as
applicable, signed on behalf of each such party by its Chairman
of the Board or President.
e. Effect of Termination; Liquidated Damages.
(i) If this Agreement is terminated for any
reason, the Merger Agreement shall automatically
terminate. Termination of this Agreement shall not
terminate or affect the obligations of the parties to
pay expenses as provided in Section 11, to maintain the
confidentiality of the each party's information
obtained pursuant to this Agreement and the
Confidentiality Agreement between the parties dated
June 22, 1999, or the provisions of this Section 12(e)
or the applicable provisions of Section 14.
(ii) If NVBancorp terminates this Agreement
pursuant to Section 12.b.(vii), or pursuant to Section
12.b.(viii) or Section 12.b.(xiv) as a result of SRNB's
willful or deliberate failure to comply with Section
12.b.(viii) or Section 12.b.(xiv), which compliance was
not beyond the reasonable control of SRNB, SRNB shall
pay to NVBancorp, on demand, the sum of Two Million
Dollars ($2,000,000). In each such case, the amount
indicated shall be deemed liquidated damages for
expenses incurred and the lost opportunity cost for
time devoted to the transactions contemplated by this
Agreement.
(iii) If SRNB terminates this Agreement
pursuant to Section 12.b.(x), or pursuant to Section
12.b.(xiii) or Section 12.b.(xv) as a result of
NVBancorp's willful or deliberate failure to comply
with Section 12.b.(xiii) or Section 12.b.(xv), which
compliance was not beyond the reasonable control of
NVBancorp, then NVBancorp shall pay to SRNB, on
demand, the sum of Two Million Dollars ($2,000,000).
In each such case, the amount indicated shall be deemed
liquidated damages for expenses incurred and the lost
opportunity cost for time devoted to the transactions
contemplated by this Agreement.
13. INDEMNIFICATION.
13.1. By NVBancorp. NVBancorp agrees to defend,
indemnify and hold harmless SRNB, its respective officers and
directors, attorneys, accountants, and each person who controls
SRNB within the meaning of the 1933 Act from and against any
costs, damages, liabilities and expenses of any nature, insofar
as such costs, damages, liabilities and expenses arise out of or
are based upon any untrue statement or alleged untrue statement
of any material fact contained in the NVBancorp Registration
Statement and Joint Proxy Statement/Prospectus or any amendments
or supplements thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that NVBancorp shall
be liable in any such case only to the extent that any such cost,
damage, liability or expense arises out of or is based upon any
untrue statement or alleged untrue statement or omission or
alleged omission made in said Registration Statement and Joint
Proxy Statement/Prospectus or amendments or supplements thereto,
in reliance upon and in conformity with information provided by
and with respect to NVBancorp used in preparing the Registration
Statement. If and to the extent such agreement to indemnify may
be unenforceable for any reason, NVBancorp shall make the maximum
contribution to the payment and satisfaction of each of the
indemnified liabilities which may be permitted under applicable
law.
13.2. By SRNB. SRNB agrees to defend, indemnify and
hold harmless NVBancorp, its officers and directors, attorneys,
accountants, and each person who controls NVBancorp within the
meaning of the 1933 Act from and against any costs, damages,
liabilities and expenses of any nature, insofar as such costs,
damages, liabilities and expenses arise out of or are based upon
any untrue statement or alleged untrue statement of any material
fact contained in the NVBancorp Registration Statement and Joint
Proxy Statement/Prospectus or any amendments or supplements
thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided, however, that SRNB shall be liable in any
such case only to the extent that any such cost, damage,
liability or expense arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged
omission made in said Registration Statement and Joint Proxy
Statement/Prospectus or amendments or supplements thereto, in
reliance upon and in conformity with information provided by and
with respect to SRNB used in preparing the Registration Statement
and Joint Proxy Statement/Prospectus. If and to the extent such
agreement to indemnify may be unenforceable for any reason, SRNB
shall make the maximum contribution to the payment and
satisfaction of each of the indemnified liabilities which may be
permitted under applicable law.
13.3. Notification. Promptly after receipt by any party
to be indemnified pursuant to this sub-article (the "Indemnified
Party") of notice of (i) any claim or (ii) the commencement of
any action or proceeding, the Indemnified Party will give the
other party (the "Indemnifying Party") written notice of such
claim or the commencement of such action or proceeding. The
Indemnifying Party shall have the right, at its option, to
compromise or defend, by its own counsel, any such matter
involving the Indemnified Party's asserted liability. In the
event that the Indemnifying Party shall undertake to compromise
or defend any such asserted liability, it shall promptly notify
the Indemnified Party of its intention to do so, and the
Indemnified Party agrees to cooperate fully with the Indemnifying
Party and its counsel in the compromise of, or defense against,
any such asserted liability. In any event, the Indemnifying
Party shall have the right to participate in the defense of such
asserted liability.
14. MISCELLANEOUS.
a. Notices. Any notice or other communication required or
permitted under this Agreement shall be effective only if it is
in writing and delivered personally, or by Federal Express or
similar overnight courier, or by facsimile or sent by first class
United States mail, postage prepaid, registered or certified
mail, addressed as follows:
To NVBancorp: To SRNB:
North Valley Bancorp Six Rivers National Bank
880 E. Cypress Avenue 402 "F" Street
Redding, California 96002 Eureka, California 95501
Telephone: (530) 221-8400 Telephone: (707) 443-8400
Telecopier:(530) 222-1768 Telecopier: (707) 443-3631
With a copy to: With a copy to:
Coudert Brothers McCutchen,Doyle, Brown & Enersen
303 Almaden Blvd., Fifth Floor Three Embarcadero Center
San Jose, California 95110-2721 San Francisco, California 94111
Telephone: (408) 297-9982 Telephone: (415) 393-2000
Telecopier: (408) 297-3191 Telecopier:(415) 393-2286
or to such other address as either party may designate by notice
to the other, and shall be deemed to have been given upon
receipt.
b. Knowledge. Whenever the term "knowledge" or "to
the best knowledge" or words of similar import are used in this
Agreement in connection with a party's representations and
warranties, it shall mean the actual knowledge of a party after
due inquiry of a party's directors and executive officers.
c. Binding Agreement. This Agreement is binding upon
and is for the benefit of NVBancorp, the Interim Bank and SRNB
and their respective successors and permitted assigns. This
Agreement is not made for the benefit of any person, firm,
corporation or association not a party hereto, and no other
person, firm, corporation or association shall acquire or have
any right under or by virtue of this Agreement. No party may
assign this Agreement or any of its rights, privileges, duties or
obligations hereunder without the prior written consent of the
other party to this Agreement.
d. Material Adverse Effect. As used in this
Agreement, any reference to any event, change or effect being
"material" with respect to any entity means an event, change or
effect which is material in relation to the condition (financial
or otherwise), properties, assets, liabilities, businesses,
results of operations of such entity and its subsidiaries taken
as a whole, and the term "material adverse effect" means, with
respect to any entity, a material adverse effect (whether or not
required to be accrued or disclosed under Statement of Financial
Accounting Standards No. 5 ("SFAS No. 5")) (i) on the condition
(financial or otherwise), properties, assets, liabilities,
businesses, results of operations of such entity and its
subsidiaries taken as a whole (but does not include any such
effect resulting from or attributable to any action or omission
by NVBancorp or SRNB or any subsidiary of either of them taken
with the prior written consent of the other parties hereto, in
contemplation of the transactions contemplated hereby), or (ii)
on the ability of such entity to perform its obligations
hereunder on a timely basis.
e. Survival of Representations and Warranties. No
investigation by NVBancorp or SRNB made before or after the date
of this Agreement shall affect the representations and warranties
which are contained in this Agreement and such representations
and warranties shall survive such investigation, provided that,
except with respect to covenants, agreements and indemnification
to be performed in whole or in part subsequent to the Effective
Time of the Merger (as to which the related representations and
warranties shall survive until their performance) which
covenants, agreements and indemnification shall survive the
Effective Time of the Merger, the representations, warranties,
covenants and agreements of NVBancorp and SRNB contained in this
Agreement shall terminate upon the Effective Time of the Merger.
f. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
California.
g. Attorneys' Fees. In any action at law or suit in
equity in relation to this Agreement, the prevailing party in
such action or suit shall be entitled to receive a reasonable sum
for its attorneys' fees and all other reasonable costs and
expenses incurred in such action or suit.
h. Entire Agreement; Severability. This Agreement
and the documents, certificates, agreements, letters, schedules
and exhibits attached or required to be delivered pursuant hereto
set forth the entire agreement and understandings of the parties
in respect of the transactions contemplated hereby, and supersede
all prior agreements, arrangements and understanding relating to
the subject matter hereof, excluding that certain Confidentiality
Agreement between the parties dated June 22, 1999. Each
provision of this Agreement shall be interpreted in a manner to
be effective and valid under applicable law, but if any provision
hereof shall be prohibited or ruled invalid under applicable law,
the validity, legality and enforceability of the remaining
provisions shall not, except as otherwise required by law, be
affected or impaired as a result of such prohibition or ruling.
i. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, NVBancorp and SRNB have caused this
Agreement and Plan of Reorganization and Merger to be signed by
their duly authorized officers as of the day and year first above
written.
NORTH VALLEY BANCORP SIX RIVERS NATIONAL BANK
By: /s/ Michael J. Cushman By: /s/ Michael W. Martinez
President and President and
Chief Executive Chief Executive
Officer Officer
By: /s/ J. M. Wells, Jr. By: /s/ Margie L. Plum
Secretary Executive Vice
President
and Branch Administrator
L:\JGM\NVB-Six Rivers\Plan of Reorganization (Merger
Agreement)-Final of October 3, 1999.wpd
Len Cereghino & Co. CONTACTS: Six Rivers National Bank
corporate investor relations William Kay, Chairman
2605 Western Avenue, Seattle, WA 98121 (707) 822-2971
(206) 448-1996 Michael Martinez,
President & CEO
(707) 443-8400
NEWS RELEASE North Valley Bancorp
Rudy Balma, Chairman
(530) 221-8400
Michael Cushman,
President & CEO
(530) 221-8400
NORTH VALLEY BANCORP TO ACQUIRE SIX RIVERS NATIONAL BANK;
COMBINED COMPANY WILL HAVE DOMINANT POSITION IN NORTHERN CALIFORNIA
Eureka and Redding, CA - October 14, 1999 - North Valley Bancorp
(Nasdaq: NOVB), parent company of North Valley Bank, and Six Rivers
National Bank (Nasdaq: SIXR), today jointly announced the signing of a
definitive merger agreement for North Valley Bancorp to acquire Eureka-
based Six Rivers. The combined institution company, located throughout
Shasta, Trinity, Humboldt, Del Norte and Medocino counties, will be the
largest bank holding company headquartered in the northern counties of
Shasta, Trinity, Humboldt, Del Norte and Mendocino, California with 20
branch offices and approximately $500 million in total assets.
Headquartered in Redding, California, North Valley Bank operates
twelve banking offices in Shasta and Trinity counties and reported had
approximately $300 million in assets at June 30, 1999. Headquartered in
Eureka, California, Six Rivers is a full service commercial bank with eight
branch offices in Humboldt, Mendocino, Del Norte and Trinity counties with
approximately $200 million in assets.
Highlights of the merger include:
Creation of the largest bank holding company headquartered in the
northern counties of Shasta, Trinity, Humboldt, Del Norte and Mendocino,
California California with 20 branches
Pro Forma balance sheet:
$500 million in total assets
$311 million in total loans
$431 million in total deposits
$50 million in total equity
Transaction accretive to 2001 earnings per share of North Valley after
cost savings
Strong capital ratios and credit quality
Excess capital available to support additional expansion or return to
shareholders (equity/assets ratio of approximately 10%)
Pooling of interests accounting
Annual cost savings of approximately $2.25 million, expected to be
fully phased in by year-end 2000
Under the terms of the agreement, Six Rivers' shareholders will
receive a tax-free exchange of shares of North Valley for each share of Six
Rivers common stock they hold on the record date. The number of shares
exchanged will depend on the average closing price of North Valley stock
for a twenty day period prior to the closing of the transaction, which is
expected late in the first quarter of 2000. If the average North Valley
closing price is between $12.079 and $12.50 the shareholders of Six Rivers
will receive a number of North Valley shares designed to give them a $17.50
value. If North Valley's average closing price is more than $12.50 but
less than or equal to $15.00, shareholders of Six Rivers will receive 1.40
shares of North Valley. Shareholders of Six Rivers will capture 40% of the
appreciation of North Valley above $15.00. If the average closing price of
North Valley is less than $12.079 the shareholders of Six Rivers will
receive 1.45 shares of North Valley for each share of Six Rivers. In the
last twelve months the common stock of North Valley has traded between
$10.00 and $16.00. In the last three months North Valley has traded
between $10.00 and $12.25. On October 1, 1999, NOVB closed the trading day
at $11.06. Using that value as the average closing price for NOVB stock in
the twenty days prior to the closing of the transaction, each share of Six
Rivers stock is worth $16.05 in exchange.
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North Valley Bancorp To Acquire Six Rivers
October 4, 1999
Page Two
The transaction is expected to close in the first quarter half of
2000, following shareholder and regulatory approval. Upon completion of
the transaction Six Rivers National Bank will become a separate subsidiary
of North Valley Bancorp.
"This is a great opportunity for customers and shareholders of both
institutions," said Rudy Balma, North Valley Bancorp Chairman. "Six Rivers
gives us the opportunity to expand our banking reach west into the northern
California coastal counties and the Highway 101 corridor. This acquisition
gives customers of both banks an increased branch network, additional
services and a broader depth of management. It also establishes a solid
platform from which to continue North Valley's expansion into other
attractive Northern California and Southern Oregon markets."
Six Rivers Chairman William Kay added, "Our Board has considered a
number of strategic alternatives in the past year and found a merger with
North Valley to hold the greatest opportunity for our shareholders. We are
very excited about the prospects for the common stock of North Valley,
which we believe to be substantially undervalued in today's market.,"
stated William Kay, Chairman of Six Rivers. "There is no question in our
minds that North Valley and Six Rivers will prove an excellent match for
all parties involved. Our shareholders are getting an attractive premium,
great potential for future appreciation, a strong history of dividends and
significantly increased trading liquidity."
"The combination of Six Rivers and North Valley is a key move in our
company's overall strategic plan," said Michael Cushman, North Valley
President and CEO. "North Valley has positioned itself over the past 18
months to grow through acquisition. We have been looking at opportunities
to better employ our capital and grow our company and this is just the
first step in that process. I have tremendous respect for what the Six
Rivers management has accomplished there in the past year, and I have no
doubt that together we can create Northern California's finest community
bank, and eventually build the valuations that are so important to our
shareholders."
"We are more focused on building shareholder valueequity than at any
time in our history. and tThis acquisition will add shareholder value.
It will be accretive to our 2001 earnings per share, after we bring Six
Rivers to our levels of efficiency by the end of 2000."
Mike Martinez, President and CEO of Six Rivers, will remain in his
current post. "We have worked hard to return Six Rivers to profitability,
and our efforts are being rewarded today," he said. "We have built a
strong franchise here, and this transaction gives us the opportunity to
maintain the strength and identity of Six Rivers, while using the capital
base and banking expertise of North Valley Bancorp to create a platform for
future growth."
The companies will host a joint conference call for investors on
Monday, October 4, 1999 at 811:00 am Pacific Daylight Time. For
information regarding the conference call replay, please visit
www.sixrivers.com or www.northvalleybank.com..
Since its formation in 1989, Six Rivers has concentrated on providing
a high level of personal service and provides traditional deposit products
to local customers and offers primarily commercial, consumer, and real
estate loans. After making significant changes to upper management and
the lending culture, Six Rivers has returned to profitability with a
strengthened balance sheet. Headquartered in Eureka, California, Six Rivers
is a full-service commercial bank with eight branch offices in Northern
California.
North Valley Bancorp is a holding company headquartered in Redding,
California. The Company's principal subsidiary, North Valley Bank,
operates twelve commercial banking offices in Shasta and Trinity Counties
in Northern California including two in-store supermarket branches and a
Business Banking Center. The Bank offers a wide range of consumer and
business banking products and services. In addition to depository services
North Valley Bank engages in a full complement of lending activities,
including consumer, commercial and real estate loans, with particular
emphasis on short and medium term loans. In addition to its direct lending
activities, the Bank processes loans through its Dealer Finance Division
and has SBA Preferred Lender status.
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North Valley Bancorp To Acquire Six Rivers
October 4, 1999
Page Three
This report contains certain forward-looking statements that are subject
to risks and uncertainties and include information about possible or
assumed financial condition, results of operations and business of North
Valley Bancorp and Six Rivers National Bank. We accept no obligation to
update these statements. Many possible events or factors could affect the
future results and performance and cause results or performance to differ
materially and adversely from the statements made here. Our assumptions
and projections are based on anticipation of future events.
Words such as "expects", "anticipates", "believes", "estimates",
variations of such words and other similar expressions are intended to
identify such forward-looking statements. These statements are not
guarantees of future performance.
Risks and uncertainties, which assume the acquisition will be consummated,
include: (a) cost savings and earnings accretion/dilution; (b) revenue
impact;(c) restructuring charges; (d) effective/cost-effective integration
of Six Rivers, (e) retention of key employees, (f) service improvement,
(g) continued growth, expense reduction, profitability improvement, (h)
smooth computer operations in 2000; (i) lower than expected revenues,
increase in competition, interest rate changes reduce margins, economic
conditions are less favorable and deteriorate credit quality or cause
reduce credit demand, and legislative/regulatory changes adversely affect
the business.
Do not rely solely on the forward-looking statements in evaluating an
investment. Consider all uncertainties and risks in our respective OCC,
SEC and FDIC filings. Forms 10-K for the year ended December 31, 1998
discuss a number of factors that may contribute to variances from
expectations.
-0-
NOTE: Transmitted on PR Newswire at 3:00 a.m. PDT, October 4, 1999.
