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: December 19, 1996
(Date of earliest event reported: December 11, 1996)
SANTA BARBARA BANCORP
(Exact Name of Registrant as specified in its charter)
California
(State or other jurisdiction of incorporation)
0-1113 95-3673456
(Commissioner File Number) (IRS Employer Identification No.)
1021 Anacapa Street, Santa Barbara, California 93101
(Address of principal executive offices)
(805) 966-9176
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
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ITEM 5. Acquisition or Disposition of Assets
On December 11, 1996, Registrant entered into an Agreement and Plan of
Reorganization (the "Plan of Reorganization") with First Valley Bank, a
California banking association with its principal offices in Lompoc, California
(the "Bank"), pursuant to which Registrant would acquire all of the issued and
outstanding capital stock of the Bank through the merger of a newly-formed
wholly owned subsidiary of Registrant into the Bank. As of December 11, 1996,
the Bank had issued and outstanding 450,000 shares of capital stock. In the
merger, Registrant would pay a cash consideration of $58 per share, for an
aggregate consideration of $26,100,000. The amount of the cash consideration per
share payable by Registrant will increase by the amount of $.011 per day if the
merger is not effected on or before March 31, 1997.
The consummation of the merger is subject to the satisfaction of
various customary conditions, including, but not limited to, the approval of the
merger by the Bank's shareholders, and Registrant and the Bank obtaining all
required governmental approvals of the merger, including approvals from the
Federal Reserve Board, the Federal Deposit Insurance Corporation and the
California Superintendent of Banking. In addition, it is a condition to the
merger that no more than 10% of the issued and outstanding shares of capital
stock of the Bank have demanded or are entitled to demand the payment of the
fair market value of their shares as dissenting shareholders.
Registrant shall have a period of 30 calendar days after December 11,
1996 in which to conduct a due diligence review to assess the condition and
results of operations of the Bank. If the condition, financial or otherwise, of
the Bank is not satisfactory to Registrant, Registrant may terminate the Plan of
Reorganization on the 35th calendar day after December 11, 1996 or such later
date as is mutually agreed upon by Registrant and the Bank. Either party may
terminate the Plan of Reorganization if the merger has not occurred by July 31,
1997, or such other date as the parties may agree.
The Bank has agreed that, until the earlier of the effective date of
the merger and the termination of the Plan of Reorganization, it shall not (i)
solicit or initiate discussions with, or (ii) except upon the advise of counsel
to the extent required to fulfill the fiduciary duties owed to the Bank's
shareholders, discuss or negotiate with any person or entity other than
Registrant concerning any merger, tender or other takeover offer, sale of
substantial assets, sale of shares of capital stock or similar transaction
involving the Bank.
The Plan of Reorganization provides that a termination fee of
$1,305,000 shall be paid in the event the Plan of Reorganization is terminated
on the occurrence of certain events. The Bank shall be
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obligated to pay such termination fee to Registrant if (a) Registrant terminates
the Plan of Reorganization because (i) the Bank had knowledge of an untrue or
inaccurate representation or warranty when made or (ii) the Bank intentionally
failed to satisfy or fulfill any covenant or agreement that it could reasonably
fulfill, or (b) the Bank terminates the Plan of Reorganization because it has
received a proposal for a transaction with another party and the Board of
Directors of the Bank has determined that such termination is required to comply
with its fiduciary duties or that the Board has determined to alter its
recommendation of approval of the Plan of Reorganization to the Bank's
shareholders or shall have failed to proceed to hold a special meeting of the
shareholders of the Bank. Registrant shall be obligated to pay such termination
fee to the Bank if (a) the Bank terminates the Plan of Reorganization because
(i) Registrant had knowledge of an untrue or inaccurate representation or
warranty when made, or (ii) Registrant intentionally failed to satisfy or
fulfill any covenant or agreement that it could reasonably fulfill, or (b)
Registrant is unable to obtain all necessary regulatory approvals and such
failure is not due to the condition or results of operations of the Bank, or (c)
the results of Registrant's due diligence review are not acceptable to
Registrant and Registrant terminates the Plan of Reorganization during the
35-day period described above.
The discussion of the Plan of Reorganization and the merger set forth
above are qualified by the terms of the Agreement and Plan of Reorganization, a
copy of which is attached as an Exhibit to this Report.
ITEM 7. Exhibits
2.1 Agreement and Plan of Reorganization dated as of December 11, 1996,
by and between Santa Barbara Bancorp, a California corporation and registered
bank holding company, and First Valley Bank, a California banking association,
without Schedules and Exhibits. Registrant will furnish supplementally a copy of
any omitted Schedule or Exhibit that the Commission may request.
2.2 Agreement and Plan of Merger as included as Exhibit A to the
Agreement and Plan of Reorganization.
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.
SANTA BARBARA BANCORP
a California corporation
Date: By
David W. Spainhour, President
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AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
SANTA BARBARA BANCORP
AND
FIRST VALLEY BANK
EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
SANTA BARBARA BANCORP,
SANTA BARBARA, CALIFORNIA
AND
FIRST VALLEY BANK,
LOMPOC, CALIFORNIA
Dated as of December 11, 1996
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TABLE OF CONTENTS
ARTICLE I.
ACQUISITION OF THE BANK BY PURCHASER........................................1
SECTION 1.01 Merger of the Newco with and into the Bank....................1
SECTION 1.02 Effects of the Merger.........................................2
SECTION 1.03 Articles and Bylaws...........................................2
SECTION 1.04 Directors and Officers........................................2
SECTION 1.05 Conversion of the Bank Stock..................................2
SECTION 1.06 Shareholders' Meeting.........................................3
SECTION 1.07 Delivery of Consideration.....................................3
SECTION 1.08 Access; Due Diligence..........................................4
ARTICLE II.
THE CLOSING, THE CLOSING DATE AND THE EFFECTIVE DATE........................4
SECTION 2.01 Time and Place of the Closing and Closing Date................4
SECTION 2.02 Actions to be Taken at the Closing by the Bank................5
SECTION 2.03 Actions to be Taken at the Closing by Purchaser...............6
SECTION 2.04 Further Assurances...........................................7
SECTION 2.05 Effective Date................................................7
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE BANK..................................8
SECTION 3.01 Organization and Qualification................................8
SECTION 3.02 Execution and Delivery........................................8
SECTION 3.03 Capitalization................................................8
SECTION 3.04 Compliance with Laws, Permits and Instruments.................9
SECTION 3.05 Financial Statements..........................................9
SECTION 3.06 Undisclosed Liabilities......................................10
SECTION 3.07 Litigation...................................................10
SECTION 3.08 Consents and Approvals.......................................10
SECTION 3.09 Title to Assets..............................................11
SECTION 3.10 Absence of Certain Changes or Events.........................11
SECTION 3.11 Leases, Contracts and Agreements.............................13
SECTION 3.12 Taxes........................................................14
SECTION 3.13 Insurance....................................................15
SECTION 3.14 No Adverse Change............................................15
SECTION 3.15 Patents, Trademarks and Copyrights...........................15
SECTION 3.16 Transactions with Certain Persons and Entities...............15
SECTION 3.17 Evidences of Indebtedness....................................16
SECTION 3.18 Condition of Assets..........................................16
SECTION 3.19 Environmental Compliance.....................................16
SECTION 3.20 Regulatory Compliance........................................17
SECTION 3.21 Absence of Certain Business Practices........................17
SECTION 3.22 Proxy Statement..............................................17
SECTION 3.23 Dissenting Shareholders......................................18
SECTION 3.24 Books and Records............................................18
SECTION 3.25 Forms of Instruments, Etc....................................18
SECTION 3.26 Fiduciary Responsibilities...................................18
SECTION 3.27 Guaranties...................................................18
SECTION 3.28 Voting Trust or Buy-Sell Agreements..........................18
SECTION 3.29 Employee Relationships.......................................18
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SECTION 3.30 Employee Benefit Plans.......................................19
SECTION 3.32 Representations Not Misleading...............................20
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER................................21
SECTION 4.01 Organization and Qualification...............................21
SECTION 4.02 Execution and Delivery.......................................21
SECTION 4.03 Compliance with Laws, Permits and Instruments................21
SECTION 4.04 Litigation...................................................21
SECTION 4.05 Consents and Approvals.......................................22
SECTION 4.06 Proxy Statement..............................................22
SECTION 4.07 Mitchell Litigation...........................................22
SECTION 4.08 Representations Not Misleading...............................22
ARTICLE V.
COVENANTS OF THE BANK......................................................23
SECTION 5.01 Best Efforts.................................................23
SECTION 5.02 Merger Agreement.............................................23
SECTION 5.03 Affiliate Merger.............................................23
SECTION 5.04 Information for Applications.................................23
SECTION 5.05 Required Acts of the Bank. .................................23
SECTION 5.06 Prohibited Acts of the Bank. ...............................25
SECTION 5.07 Access; Pre-Closing Investigation............................27
SECTION 5.08 Invitations to and Attendance at Directors' and
Committee Meetings........................................28
SECTION 5.09 Additional Financial Statements. ...........................28
SECTION 5.10 Untrue Representations.......................................28
SECTION 5.11 Litigation and Claims........................................28
SECTION 5.12 Adverse Changes..............................................28
SECTION 5.13 No Negotiation with Others...................................29
SECTION 5.14 Consents and Approvals.......................................29
SECTION 5.15 Environmental Investigation; Right to Terminate Agreement....29
SECTION 5.16 Proxies......................................................30
ARTICLE VI.
COVENANTS OF PURCHASER.....................................................30
SECTION 6.01 Best Efforts.................................................31
SECTION 6.02 Incorporation and Organization of Newco......................31
SECTION 6.03 Merger Agreement.............................................31
SECTION 6.04 Information for Applications.................................31
SECTION 6.05 Acts of Newco................................................31
SECTION 6.06 Untrue Representations.......................................31
SECTION 6.07 Litigation and Claims........................................31
SECTION 6.08 Regulatory and Other Approvals...............................32
SECTION 6.09 Adverse Change...............................................32
ARTICLE VII.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BANK........................32
SECTION 7.01 Compliance with Representations, Warranties and Agreements...32
SECTION 7.02 Shareholder Approvals........................................32
SECTION 7.03 Government and Other Approvals...............................32
SECTION 7.04 No Litigation................................................33
SECTION 7.05 Opinion of Legal Counsel to Purchaser........................33
ARTICLE VIII.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER.......................33
SECTION 8.01 Compliance with Representations, Warranties and Agreements...33
SECTION 8.02 Shareholder Approvals........................................34
SECTION 8.03 Government and Other Approvals...............................34
SECTION 8.04 No Litigation................................................34
SECTION 8.05 Opinion of Legal Counsel to the Bank.........................35
SECTION 8.06 Dissenting Shareholders......................................35
SECTION 8.07 Accounting Treatment.........................................35
SECTION 8.08 Releases and Resignations....................................35
SECTION 8.09 Employment Arrangements.......................................35
SECTION 8.10 No Material Adverse Change....................................35
ARTICLE IX.
EXPENSES, TERMINATION AND ABANDONMENT......................................35
SECTION 9.01 Expenses......................................................35
SECTION 9.02 Termination..................................................36
SECTION 9.03 Notice of Termination........................................37
SECTION 9.04 Effect of Termination........................................37
ARTICLE X.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES.................................38
SECTION 10.01 Survival of Representations and Warranties..................38
ARTICLE XI.
CONFIDENTIAL INFORMATION...................................................38
SECTION 11.01 Definition of "Recipient," "Disclosing Party,"
"Representative" and "Person"...............................38
SECTION 11.02 Definition of "Subject Information".........................38
SECTION 11.03 Confidentiality.............................................38
SECTION 11.04 Securities Law Concerns.....................................39
SECTION 11.05 Return of Subject Information...............................39
SECTION 11.06 Specific Performance/Injunctive Relief......................39
ARTICLE XII.
MISCELLANEOUS..............................................................39
SECTION 12.01 Brokerage Fees and Commissions..............................39
SECTION 12.02 Entire Agreement............................................40
SECTION 12.03 Further Cooperation.........................................40
SECTION 12.04 Severability................................................40
SECTION 12.05 Notices.....................................................40
SECTION 12.06 GOVERNING LAW...............................................42
SECTION 12.07 Multiple Counterparts.......................................42
SECTION 12.08 Certain Definitions.........................................42
SECTION 12.09 Specific Performance........................................44
SECTION 12.10 Attorneys' Fees and Costs...................................44
SECTION 12.11 Rules of Construction.......................................44
SECTION 12.12 Binding Effect; Assignment..................................44
SECTION 12.13 Public Disclosure...........................................45
SECTION 12.14 Extension; Waiver...........................................45
SECTION 12.15 Amendments..................................................45
EXHIBITS
Exhibit "A" - Merger Agreement
Exhibit "B" - Voting Agreement and Irrevocable Proxy
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Exhibit "C" - Opinion of Counsel to Purchaser
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Exhibit "D" - Opinion of Counsel to the Bank
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Exhibit "E" - Form of Release to Be Executed By Directors
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Exhibit "F" - Form of Release to Be Executed By Officers
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SCHEDULES
Schedule 3.06 - Undisclosed Liabilities
Schedule 3.07 - Litigation
Schedule 3.09 - Liens, Mortgages, Security Interests
and Encumbrances
Schedule 3.10 - Certain Changes or Events
Schedule 3.11 - Contracts
Schedule 3.12 - Tax Matters
Schedule 3.13 - Insurance Matters
Schedule 3.16 - Transactions With Insiders
Schedule 3.17 - Credit Information
Schedule 3.20 - Regulatory Compliance
Schedule 3.21 - Certain Business Practices
Schedule 3.26 - Fiduciary Responsibilities
Schedule 3.30 - Employee Benefit Plans
Schedule 3.31 - Derivatives
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made
and entered into as of the 11th day of December 1996, by and between Santa
Barbara Bancorp, a California corporation and registered bank holding company
with its principal offices in Santa Barbara, California ("Purchaser"), and First
Valley Bank, a California banking association with its principal offices in
Lompoc, California (the "Bank").
W I T N E S S E T H:
WHEREAS, the Bank is a California banking corporation duly organized
and existing under the laws of the State of California and has, and will have as
of the Effective Date (as defined herein), 450,000 shares of common stock, par
value $1.00 per share ("Bank Stock") issued and outstanding.
WHEREAS, this Agreement provides for the incorporation of a new
corporation ("Newco") as a wholly-owned subsidiary of Purchaser in order for
Purchaser to acquire 100% of the Bank Stock through the merger of the Newco with
and into the Bank (the "Merger");
WHEREAS, Purchaser and the Bank believe that the Merger, as provided
for, and subject to the terms and conditions set forth in this Agreement and all
exhibits, schedules and supplements hereto, is in the best interests of
Purchaser and the Bank and their respective shareholders;
WHEREAS, Purchaser and the Bank desire to set forth certain
representations, warranties and covenants made by each to the other as an
inducement to the execution and delivery of this Agreement and certain
additional agreements related to the transactions contemplated hereby; and
WHEREAS, the respective boards of directors of Purchaser and the Bank
have approved this Agreement and the proposed transactions substantially on the
terms and conditions set forth in this Agreement and the schedules and exhibits
hereto and have authorized the execution thereof.
NOW, THEREFORE, for and in consideration of the foregoing and of the
mutual representations, warranties, covenants and agreements contained in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and subject to the conditions set
forth below, the parties hereto undertake, promise, covenant and agree with each
other as follows:
ARTICLE I.
ACQUISITION OF THE BANK BY PURCHASER
SECTION 1.01 Merger of the Newco with and into the Bank. Subject to the
terms and conditions of this Agreement and the Agreement and Plan of Merger
between the Bank and the Newco (the "Merger Agreement"), attached hereto as
Exhibit "A", Purchaser and the Bank shall
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cause the Newco to be merged with and into the Bank pursuant to the provisions
of Section 1107 of the California General Corporation Law ("Section 1107").
SECTION 1.02 Effects of the Merger. The Merger shall have the effects
set forth in Section 1107. The bank resulting from the Merger (the "Resulting
Bank") shall be deemed to be a continuation in entity and identity of each of
the Bank and the Newco; shall be subject to all the liabilities, obligations,
duties and relations of each merging party, and shall without the necessity of
any conveyance, assignment or transfer, become the owner of all of the assets of
every kind and character formerly belonging to the Bank and Newco. If, on the
Effective Date, the Bank is acting as trustee, guardian, executor, administrator
or in any other fiduciary capacity, the Resulting Bank shall, without the
necessity of any judicial action or action by the creator of such trust,
continue such office, trust or fiduciary relationship and shall perform all of
the duties and obligations and exercise all of the powers and authority
connected with or incidental to such fiduciary relationship in the same manner
as though the Resulting Bank had been originally named or designated as such
fiduciary. The naming or designating by a testator, or the creator of a living
trust, of the Bank to act as trustee, guardian, executor or in any other
fiduciary capacity shall be considered the naming or designating of the
Resulting Bank. The name of the Resulting Bank shall be "First Valley Bank." The
existing office and facilities of the Bank shall be the principal office and
facilities of the Resulting Bank following the Merger.
SECTION 1.03 Articles and Bylaws. The Articles and Bylaws,
respectively, of the Resulting Bank shall be as set forth in the Merger
Agreement attached hereto as Exhibit "A".
SECTION 1.04 Directors and Officers. The directors, advisory directors
and officers of the Resulting Bank at the Effective Date shall be as set forth
in the Merger Agreement attached hereto as Exhibit "A".
SECTION 1.05 Conversion of the Bank Stock.
A. At the Effective Date by virtue of this Agreement and without any
further action on the part of any holder, all holders of the Bank Stock (the
"Shareholders") shall be entitled to receive from Purchaser, as of the Effective
Date, $58.00 in cash (the "Merger Consideration") for each share of Bank Stock
owned by such holder at the Effective Date; provided, however, that in the event
the Effective Date does not occur on or prior to March 31, 1997, the Merger
Consideration per share shall increase by $.011 per day commencing April 1, 1997
and continuing through the Effective Date.
B. The number of shares of common stock of Newco (the "Newco Stock")
outstanding at the Effective Date shall, at the Effective Date and by virtue of
the Merger and without any action on the part of Purchaser or any other party as
holder thereof, be converted into a like number of shares of common stock of the
Resulting Bank with a par value of $1.00 per share, with the effect that the
number of shares of the common stock of the Resulting Bank outstanding
immediately after the Effective Date shall be equal to the aggregate number of
shares of Bank Stock issued and outstanding immediately before the Effective
Date.
C. The shares of the Bank Stock issued and outstanding at the Effective
Date shall, by operation of law and without any action on the part of the holder
thereof, unless dissenters' rights under applicable law are preferred with
respect thereto, be converted into the right to receive the consideration set
forth in Section 1.05(A).
D. On or following the Effective Date, each holder of the Bank Stock
shall be required to surrender his shares of Bank Stock to Santa Barbara Bank &
Trust ("the Exchange Agent") and, upon such surrender, each such holder shall be
entitled to receive from Purchaser an amount of cash as determined pursuant to
Section 1.05(A). Until so surrendered, each such outstanding certificate
representing shares of Bank Stock shall be deemed for all purposes, subject only
to dissenters' rights under applicable law, to evidence solely the right to
receive such consideration from Purchaser as described in Section 1.05(A).
SECTION 1.06 Shareholders' Meeting. The Bank, acting through its Board
of Directors, in accordance with applicable law, shall:
A. Duly call, give notice of, convene and hold a meeting of its
shareholders (the "Shareholders' Meeting") as soon as practicable for the
purpose of approving and adopting the Merger and the Merger Agreement and the
transactions contemplated hereby and thereby;
B. Require the holders of no more than the minimum required percentage of
each class of the Bank Stock entitled to vote on the Merger and the Merger
Agreement to approve the Merger and the Merger Agreement;
C. Subject to its fiduciary duties to the shareholders of the Bank, include
in the Proxy Statement (defined in Section 1.06(D)) the recommendation of its
Board of Directors that the shareholders of the Bank vote in favor of the
approval and adoption of the Merger and the Merger Agreement and the
transactions contemplated hereby and thereby; and
D. Cause the Proxy Statement to be mailed to the shareholders of the Bank
as soon as practicable, and use its best efforts to obtain the approval and
adoption of the Merger and the Merger Agreement by the holders of at least the
minimum required percentage of each class of the Bank Stock entitled to vote on
the Merger and the Merger Agreement. The letter to shareholders, notice of
meeting, proxy statement and form of proxy to be distributed to shareholders in
connection with the Merger and the Merger Agreement shall be in form and
substance satisfactory to Purchaser and are collectively referred to herein as
the "Proxy Statement."
SECTION 1.07 Delivery of Consideration. At the Closing, the Bank shall
provide the Exchange Agent with a shareholder list, which list shall be
certified by the Bank's Cashier. Provided that all necessary shareholder and
regulatory approvals have been obtained, The Exchange Agent shall forward
letters of transmittal for use in exchanging such holder's certificates for the
Merger Consideration to all of the shareholders on the certified shareholder
list as promptly as possible, but in no event later than three (3) business days
after the Effective Date. Promptly after receipt of such certificates and
letters of transmittal, the Exchange Agent shall review the executed letters of
transmittal in order to verify proper execution. Provided that a letter of
transmittal is properly completed, accompanied by all of the appropriate stock
certificates and made available for review by the Exchange Agent, the Exchange
Agent shall pay to such shareholder the consideration set forth in Section
1.05(A), with respect to shares of the Bank Stock. Shareholders who do not
provide properly completed letters of transmittal and all appropriate stock
certificates to the Exchange Agent shall receive their consideration promptly
following receipt of those documents by the Exchange Agent. In the event that a
letter of transmittal contains an error, is incomplete or is not accompanied by
all appropriate stock certificates, then the Exchange Agent will notify the
shareholder promptly of the need for further information. If any record
shareholder of the Bank is unable to locate any certificate evidencing the Bank
Stock, such shareholder shall submit an indemnity agreement to the Exchange
Agent in a form acceptable to the Exchange Agent in lieu of such certificate.
Notwithstanding the foregoing, neither the Exchange Agent nor any other party to
this Agreement shall be liable to any holder of certificates representing the
Bank Stock for any amount paid to a public official pursuant to any applicable
abandoned property, escheat or similar law. No interest shall be payable with
respect to the payment of the Merger Consideration.
SECTION 1.08 Access; Due Diligence. Subject to the confidentiality
provisions of Article XI, the Bank shall, for a period of thirty (30) calendar
days following the date of this Agreement, afford the officers, directors,
employees, attorneys, accountants, investment bankers and authorized
representatives of Purchaser full access to the properties, books, contracts and
records of the Bank in order to conduct due diligence of the Bank to assess the
condition and results of operations of the Bank. If the condition, financial or
otherwise, of the Bank is not satisfactory to Purchaser, Purchaser shall have
the right to terminate this Agreement by giving written notice pursuant to
Section 12.05 of this Agreement to the Bank by 5:00 p.m. on the thirty-fifth
(35th) calendar day following the date of this Agreement or by such later date
as is mutually agreed upon by the Bank and the Purchaser.
ARTICLE II.
THE CLOSING, THE CLOSING DATE AND THE EFFECTIVE DATE
SECTION 2.01 Time and Place of the Closing and Closing Date. On a date
mutually agreeable to Purchaser and the Bank after the receipt of all necessary
regulatory, corporate and other approvals and the expiration of any mandatory
waiting periods (herein called the "Closing Date"), a meeting (the "Closing")
will take place at which the parties to this Agreement will exchange
certificates, opinions, letters and other documents in order to determine
whether all of the conditions set forth in Articles VII and VIII of this
Agreement have been satisfied or waived or whether any condition exists that
would permit a party to this Agreement to terminate this Agreement. If no such
condition then exists or if no party elects to exercise any right it may have to
terminate this Agreement, then and thereupon the appropriate parties shall
execute suchdocuments and instruments as may be necessary or appropriate in
order to effect the transactions contemplated by this Agreement.
The Closing shall take place at the offices of Santa Barbara Bank &
Trust, 1021 Anacapa Street, Santa Barbara, California 93101-2036 on the Closing
Date, or at such other place to which the parties may agree.
SECTION 2.02 Actions to be Taken at the Closing by the Bank. At the
Closing, the Bank shall execute and acknowledge (where appropriate) and deliver
to Purchaser such documents and certificates necessary to carry out the terms
and provisions of this Agreement, including without limitation, the following
(all of such actions constituting conditions precedent to Purchaser's
obligations to close hereunder):
A. True, correct and complete copies of the Articles of Incorporation of
the Bank and all amendments thereto, and true, correct and complete copies of
the Bylaws of the Bank and all amendments thereto, as approved by the
Superintendent of Banks of the State Banking Department of California
("California Superintendent").
B. A certificate of existence, dated as of a recent date, issued by the
California Superintendent, duly certifying as to the existence of the Bank under
the laws of the State of California.
C. A certificate of good standing, dated as of a recent date, issued by the
California Franchise Tax Board, duly certifying as to the good standing of the
Bank in the State of California.
D. A certificate, dated as of a recent date, issued by the Federal Deposit
Insurance Corporation (the "FDIC"), duly certifying that the deposits of the
Bank are insured by the FDIC pursuant to the Federal Deposit Insurance Act (the
"FDIA").
E. A certificate, dated as of the Closing Date, executed by the President
or other appropriate executive officer of the Bank, pursuant to which such
officer shall certify (a) the due adoption by the Board of Directors of the Bank
of corporate resolutions attached to such certificate authorizing the execution
and delivery of this Agreement and the other agreements and documents
contemplated hereby, including, but not limited to, the Merger Agreement, and
the taking of all actions contemplated hereby and thereby; (b) the due adoption
by the shareholders of the Bank of resolutions authorizing the Merger and the
execution and delivery of the Merger Agreement and the other agreements and
documents contemplated hereby and the taking of all actions contemplated hereby
and thereby; and (c) the incumbency and true signatures of those officers of the
Bank duly authorized to act on its behalf in connection with the transactions
contemplated by this Agreement and to execute and deliver this Agreement and
other agreements and documents contemplated hereby and the taking of all actions
contemplated hereby and thereby on behalf of the Bank.
F. A certificate, dated as of the Closing Date, executed by the chief
executive officer of the Bank, pursuant to which the Bank shall certify, to the
best knowledge of such officer, that all of the representations and warranties
made in Article III of this Agreement are true and correct in all material
respects on and as of the date of such certificate as if made on such date and
that except as expressly permitted by this Agreement there shall have been no
Material Adverse Change (as defined in Section 12.08(c)) since December 31,
1995.
G. All consents required to be obtained by the Bank from third parties to
consummate the transactions contemplated by this Agreement.
H. An opinion of counsel to the Bank substantially in the form of Exhibit
"D" attached hereto.
I. All other documents required to be delivered to Purchaser by the Bank
under the provisions of this Agreement, and all other documents, certificates
and instruments as are reasonably requested by Purchaser or its counsel.
SECTION 2.03 Actions to be Taken at the Closing by Purchaser. At the
Closing, Purchaser shall execute and acknowledge (where appropriate) and deliver
to the Bank such documents and certificates necessary to carry out the terms and
provisions of this Agreement, including without limitation, the following (all
of such actions constituting conditions precedent to the Bank's obligations to
close hereunder):
A. True, correct and complete copies of Purchaser's Articles of
Incorporation and all amendments thereto, duly certified as of a recent date by
the Secretary of State of the State of California.
B. True, correct and complete copies of the Articles of Incorporation and
all amendments thereto, of Newco, duly certified as of a recent date by the
Secretary of State of the State of California.
C. Good standing and existence certificates for Purchaser, dated as of a
recent date, issued by the appropriate state officials, duly certifying as to
the existence and good standing of Purchaser in the State of California.
D. A certificate, dated as of the Closing Date, executed by the Secretary
or an Assistant Secretary of Purchaser pursuant to which such officer shall
certify (a) the due adoption by the Board of Directors of Purchaser of corporate
resolutions attached to such certificate authorizing the execution and delivery
of this Agreement and the other agreements and documents contemplated hereby and
the taking of all actions contemplated hereby and thereby; (b) the incumbency
and true signatures of those officers of Purchaser duly authorized to act on its
behalf in connection with the transactions contemplated by this Agreement and to
execute and deliver this Agreement and other agreements and documents
contemplated hereby and the taking of all actions contemplated hereby and
thereby on behalf of Purchaser, and (c) that the copy of the Bylaws of Purchaser
attached to such certificate is true and correct and such Bylaws have not been
amended except as reflected in such copy.
E. A certificate, dated as of the Closing Date, executed by the Secretary
or an Assistant Secretary of Newco, pursuant to which such officer shall certify
(a) the due adoption by the Board of Directors of Newco of corporate resolutions
attached to such certificate authorizing the execution and delivery of the
Merger Agreement and the taking of all actions contemplated thereby; (b) the due
adoption by the sole shareholder of the Newco of resolutions authorizing the
Merger and the execution and delivery of the Merger Agreement and the other
agreements and documents contemplated hereby and the taking of all actions
contemplated hereby and thereby; and (c) the incumbency and true signatures of
those officers of Newco duly authorized to act on its behalf in connection with
the transactions contemplated by the Merger Agreement and to execute and deliver
the Merger Agreement and the taking of all actions contemplated thereby on
behalf of Newco; and (d) that the copy of the Bylaws of Newco attached to such
certificate is true and correct and such Bylaws have not been amended except as
reflected in such copy.
F. A certificate, dated as of the Closing Date, executed by a duly
authorized officer of Purchaser, pursuant to which Purchaser shall certify, to
the best knowledge of such officer, that all of the representations and
warranties made in Article IV of this Agreement are true and correct in all
material respects on and as of the date of such certificate as if made on such
date.
G. All consents required to be obtained by Purchaser or Newco from third
parties to consummate the transactions contemplated by this Agreement.
H. An opinion of counsel to Purchaser substantially in the form of Exhibit
"C" attached hereto.
I. All other documents required to be delivered to the Bank by Purchaser
under the provisions of this Agreement, and all other documents, certificates
and instruments as are reasonably requested by the Bank or its counsel.
SECTION 2.04 Further Assurances. At any time and from time to time after
the Closing, at the request of any party to this Agreement and without further
consideration, any party so requested will execute and deliver such other
instruments and take such other action as the requesting party may reasonably
deem necessary or desirable in order to effectuate the transactions contemplated
hereby. In case at any time after the Closing any further action is necessary or
desirable to carry out the purposes of this Agreement, each party hereto shall
take or cause to be taken all such action.
SECTION 2.05 Effective Date. The "Effective Date" as that term is used in
this Agreement means the effective date of the Merger under the Merger
Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE BANK
The Bank hereby makes the representations and warranties set forth in
this Article III to Purchaser. The Bank agrees at the Closing to provide
Purchaser with supplemental schedules reflecting any material changes thereto
between the date of this Agreement and the Closing Date.
SECTION 3.01 Organization and Qualification. The Bank is a California
banking corporation duly organized, validly existing and in good standing under
all laws, rules and regulations of the State of California. The Bank has all
requisite corporate power and authority (including all licenses, franchises,
permits and other governmental authorizations as are legally required) to carry
on its business as now being conducted, to own, lease and operate its properties
and assets, including, but not limited to, as now owned, leased or operated and
to enter into and carry out its obligations under this Agreement. True and
complete copies of the Articles and Bylaws of the Bank, as amended to date,
certified by the President of the Bank, have been delivered to Purchaser. The
Bank is an insured bank as defined in the FDIA. The Bank does not own or control
any Affiliate (as defined in Section 12.08(A)) or Subsidiary (as defined in
Section 12.08(B)). The nature of the business of the Bank does not require it to
be qualified to do business in any jurisdiction other than the State of
California. The Bank has no equity interest, direct or indirect, in any other
bank or corporation or in any partnership, joint venture or other business
enterprise or entity, except as acquired through settlement of indebtedness,
foreclosure, the exercise of creditors' remedies or in a fiduciary capacity, and
the business carried on by the Bank has not been conducted through any other
direct or indirect Subsidiary or Affiliate of the Bank.
SECTION 3.02 Execution and Delivery. The Bank has taken all corporate
action necessary to authorize the execution, delivery and (provided the required
regulatory and shareholder approvals are obtained) performance of this Agreement
and the other agreements and documents contemplated hereby to which it is a
party, including, but not limited to, the Merger Agreement. This Agreement has
been, and the other agreements and documents contemplated hereby, including, but
not limited to, the Merger Agreement, have been or at Closing will be, duly
executed by the Bank and each constitutes the legal, valid and binding
obligation of the Bank, enforceable in accordance with its respective terms and
conditions, except as enforceability may be limited by bankruptcy,
conservatorship, insolvency, moratorium, reorganization, receivership or similar
laws and judicial decisions affecting the rights of creditors of California
banks generally and by general principles of equity (whether applied in a
proceeding at law or in equity).
SECTION 3.03 Capitalization. The entire authorized capital stock of the
Bank consists of 500,000 shares of Bank Stock, par value $1.00 per share,
450,000 of which are issued and outstanding. There are no (i) other outstanding
equity securities of any kind or character, including but not limited to
preferred stock, (ii) outstanding subscriptions, options, convertible
securities, rights, warrants, calls or other agreements or commitments of any
kind issued or granted by, or binding upon, the Bank to purchase or otherwise
acquire any security of or equity interest in the Bank or (iii) outstanding
subscriptions, options, rights, warrants, calls, convertible securities,
irrevocable proxies or other agreements or commitments obligating the Bank to
issue any shares of, restricting the transfer of or otherwise relating to shares
of its capital stock of any class. All of the issued and outstanding shares of
the Bank Stock have been duly authorized, validly issued and are fully paid and
nonassessable, and have not been issued in violation of the preemptive rights of
any person. Such shares of the Bank Stock have been issued in full compliance
with applicable law. There are no restrictions applicable to the payment of
dividends on the shares of the Bank Stock except pursuant to applicable laws and
regulations, and all dividends declared prior to the date of this Agreement have
been paid.
SECTION 3.04 Compliance with Laws, Permits and Instruments. The Bank is
in compliance with, and is not in default (or with the giving of notice or the
passage of time will be in default) under, or in violation of, (i) any provision
of the Articles or Bylaws of the Bank, (ii) any material provision of any
mortgage, indenture, lease, contract, agreement or other instrument applicable
to the Bank or its assets, operations, properties or businesses now conducted or
heretofore conducted or (iii) any permit, concession, grant, franchise, license,
authorization, judgment, writ, injunction, order, decree, award, statute,
federal, state or local law, ordinance, rule or regulation of any court,
arbitrator or any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality applicable to the Bank or
its assets, operations, properties or businesses now conducted or heretofore
conducted, which noncompliance or violation would, individually or in the
aggregate, reasonably be anticipated to result in a Material Adverse Change.
The execution, delivery and (provided the required regulatory and
shareholder approvals are obtained) performance of this Agreement and the other
agreements contemplated hereby, including, but not limited to the Merger
Agreement, and the consummation of the transactions contemplated hereby and
thereby will not conflict with, or result, by itself or with the giving of
notice or the passage of time, in any violation of or default or loss of a
benefit under, (i) any provision of the Articles or Bylaws of the Bank, (ii) any
mortgage, indenture, lease, contract, agreement or other instrument applicable
to the Bank or its assets, operations, properties or businesses or (iii) any
permit, concession, grant, franchise, license, authorization, judgment, writ,
injunction, order, decree, statute, law, ordinance, rule or regulation
applicable to the Bank or its assets, operations, properties or businesses.
SECTION 3.05 Financial Statements. The Bank has furnished to Purchaser true
and complete copies of (i) the audited balance sheets of the Bank as of December
31, 1993, 1994 and 1995, and the related audited consolidated statements of
income, stockholders' equity and cash flows for the years ended December 31,
1993, 1994 and 1995, (ii) unaudited balance sheet of the Bank as of September
30, 1996, and the related unaudited statement of income for the nine-month
period ended September 30, 1996 and (iii) Statements of Condition and Income
("Call Reports") of the Bank for the periods ended December 31, 1995, March 31,
1996, June 30, 1996 and September 30, 1996 (such balance sheets and the related
statements of income, stockholders' equity and cash flows and the Call Reports
are collectively referred to herein as the "Financial Statements"). Except as
described in the notes to the Financial Statements, the Financial Statements
fairly present, in all material respects, the financial position of the Bank as
of the respective dates thereof and the results of operations and changes in
financial position of the Bank for the periods then ended, in conformity with
generally accepted accounting principles ("GAAP"), unless otherwise instructed
by the Instructions to the Call Reports, which instructions represent regulatory
accounting principles ("RAP"), in which instance such information is presented
in conformity with RAP, applied on a basis consistent with prior periods
(subject, in the case of the unaudited interim financial statements, to normal
year-end adjustments and the fact that they do not contain all of the footnote
disclosures required by GAAP), except as otherwise noted therein, and the
accounting records underlying the Financial Statements accurately and fairly
reflect in all material respects the transactions of the Bank. The Financial
Statements do not contain any items of extraordinary or nonrecurring income or
any other income not earned in the ordinary course of business except as
expressly specified therein.
The Bank has calculated its allowance for loan losses in accordance
with RAP as applied to banking institutions and in accordance with all
applicable rules and regulations. To the best knowledge of the Bank, the
allowance for loan losses account for the Bank is, and as of the Clos ing Date
will be, adequate in all material respects to provide for all losses, net of
recoveries relating to loans previously charged off, on all outstanding loans of
the Bank.
SECTION 3.06 Undisclosed Liabilities. The Bank does not have any
material liability or obligation, accrued, absolute, contingent or otherwise and
whether due or to become due (including, without limitation, unfunded
obligations under any Employee Benefit Plan (as defined in Section 3.30) or
material liabilities for federal, state or local taxes or assessments or
material liabilities under any agreement that are not reflected in or disclosed
in the Financial Statements, except (i) those liabilities and expenses incurred
in the ordinary course of business and consistent with prudent business
practices since the date of the Financial Statements or (ii) as disclosed on
Schedule 3.06.
SECTION 3.07 Litigation. Except as set forth on Schedule 3.07 and
except for the litigation described in Section 4.07, there are no actions,
claims, suits, investigations, reviews or other legal, quasi-judicial or
administrative proceedings of any kind or nature now pending or threatened
against or affecting the Bank at law or in equity, or by or before any federal,
state or municipal court or other governmental or administrative department,
commission, board, bureau, agency or instrumentality, domestic or foreign, that
in any manner involves the Bank or any of its properties or capital stock that
would reasonably be anticipated to result in a Material Adverse Change or
materially and adversely affect the transactions contemplated by this Agreement,
and the Bank does not know or have any reason to be aware of any basis for the
same. No legal action, suit or proceeding or judicial, administrative or
governmental investigation is pending or, to the knowledge of the Bank,
threatened against the Bank that questions the validity of this Agreement or the
agreements contemplated hereby, including, but not limited to, the Merger
Agreement, or any actions taken or to be taken by the Bank pursuant hereto or
thereto or seeks to enjoin or otherwise restrain the transactions contemplated
hereby or thereby.
SECTION 3.08 Consents and Approvals. The Bank's Board of Directors (at a
meeting called and duly held) has resolved, subject to its fiduciary duties to
the shareholders of the Bank, to recommend approval and adoption by the Bank's
shareholders of the Merger and the Merger Agreement. Except as disclosed in
Schedule 3.08, no approval, consent, order or authorization of, or registration,
declaration or filing with, any governmental authority or other third party
isrequired on the part of the Bank in connection with the execution, delivery or
performance of this Agreement or the agreements contemplated hereby, including,
but not limited to, the Merger Agreement or the consummation by the Bank of the
transactions contemplated hereby or thereby.
SECTION 3.09 Title to Assets. True and complete copies of all existing
deeds, leases and title insurance policies for all real property owned or leased
by the Bank and all mortgages, deeds of trust, security agreements and other
documents describing encumbrances to which such property is subject have been
made available to Purchaser. The Bank has good and indefeasible title to all of
its assets and properties including, without limitation, all personal and
intangible properties reflected in the Financial Statements or acquired
subsequent thereto, subject to no liens, mortgages, security interests,
encumbrances or charges of any kind except (i) as described in Schedule 3.09,
(ii) as noted in the Financial Statements, or as set forth in the documents
delivered to Purchaser pursuant to this Section 3.09, (iii) statutory liens not
yet delinquent, (iv) consensual landlord liens (v) minor defects and
irregularities in title and encumbrances that do not materially impair the use
thereof for the purpose for which they are held, (vi) pledges of assets in the
ordinary course of business to secure public funds deposits, and (vii) those
assets and properties disposed of for fair value in the ordinary course of
business since the dates of the Financial Statements.
SECTION 3.10 Absence of Certain Changes or Events. Except as disclosed
on Schedule 3.10 since December 31, 1995, the Bank has conducted its business
only in the ordinary course and has not, other than in the ordinary course of
business and consistent with past practices and safe and sound banking
practices:
A. Incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, which
individually or in the aggregate, has resulted in a Material Adverse
Change, except for expenses related to this transaction, deposits taken
and federal funds purchased and current liabilities for trade or
business obligations;
B. Discharged or satisfied any lien, charge or encumbrance or paid any
obligation or liability, whether absolute or contingent, due or to become due;
C. Declared or made any payment of dividends or other distribution to its
shareholders, (other than regular semi-annual dividends of $.50 per share) or
purchased, retired or redeemed, or obligated itself to purchase, retire or
redeem, any of its shares of capital stock or other securities;
D. Issued, reserved for issuance, granted, sold or authorized the issuance
of any shares of its capital stock or other securities or subscriptions,
options, warrants, calls, rights or commitments of any kind relating to the
issuance thereto;
E. Acquired any capital stock or other equity securities or acquired any
equity or ownership interest in any bank, corporation, partnership or other
entity (except (i) through settlement of indebtedness, foreclosure, or the
exercise of creditors' remedies or (ii) in a fiduciary capacity, the ownership
of which does not expose it to any liability from the business, operations or
liabilities of such person);
F. Mortgaged, pledged or subjected to lien, charge, security interest or
any other encumbrance or restriction any of its property, business or assets,
tangible or intangible except (i) as described in Schedule 3.09, (ii) statutory
liens not yet delinquent, (iii) consensual landlord liens, (iv) minor defects
and irregularities in title and encumbrances that do not materially impair the
use thereof for the purpose for which they are held, (v) pledges of assets to
secure public funds deposits, and (vi) for those assets and properties disposed
of for fair value since the dates of the Financial Statements.
G. Sold, transferred, leased to others or otherwise disposed of any of its
assets or canceled or compromised any debt or claim, or waived or released any
right or claim (except pursuant to the settlement of litigation described in
Section 3.10(L)) of material value;
H. Terminated, canceled or surrendered, or received any notice of or threat
of termination or cancellation of any contract, lease or other agreement or
suffered any damage, destruction or loss (whether or not covered by insurance),
which, in any case or in the aggregate, would result in a Material Adverse
Change;
I. Disposed of, permitted to lapse, transferred or granted any rights
under, or entered into any settlement regarding the breach or infringement of,
any United States or foreign license or Proprietary Right (as defined in Section
3.15) or modified any existing rights with respect thereto;
J. Except for periodic increases consistent with past practices and with
the Bank's 1996 budget, made any change in the rate of compensation, commission,
bonus or other direct or indirect remuneration payable, or paid or agreed or
orally promised to pay, conditionally or otherwise, any bonus, extra
compensation, pension or severance or vacation pay, to or for the benefit of any
of its shareholders, directors, officers, employees or agents, or entered into
any employment or consulting contract or other agreement with any director,
officer or employee or adopted, amended in any material respect or terminated
any pension, employee welfare, retirement, stock purchase, stock option, stock
appreciation rights, termination, severance, income protection, golden
parachute, savings or profit-sharing plan (including trust agreements and
insurance contracts embodying such plans), any deferred compensation, or
collective bargaining agreement, any group insurance contract or any other
incentive, welfare or employee benefit plan or agreement maintained by it for
the benefit of its directors, employees or former employees;
K. Except for improvements or betterments relating to Properties (as
defined in Section 3.19), made any capital expenditures or capital additions or
betterments in excess of an aggregate of $75,000;
L. Instituted, had instituted against it, settled or agreed to settle any
litigation, action or proceeding before any court or governmental body relating
to its property other than routine collection suits instituted by it to collect
amounts owed or suits in which the amount in controversy is less than $75,000;
M. Permitted any change, event or condition that, in any case or in the
aggregate, has caused or may result in a Material Adverse Change, or any
Material Adverse Change in earnings or costs or relations with its employees,
agents, depositors, loan customers, correspondent banks or suppliers;
N. Except for the transactions contemplated by this Agreement or as
otherwise permitted hereunder, entered into any transaction, or entered into,
modified or amended any contract or commitment;
O. Entered into or given any promise, assurance or guarantee of the
payment, discharge or fulfillment of any undertaking or promise made by any
person, firm or corporation other than letters of credit issued in the ordinary
course of business;
P. Sold, or knowingly disposed of, or otherwise divested itself of the
ownership, possession, custody or control, of any corporate books or records of
any nature that, in accordance with sound business practice, normally are
retained for a period of time after their use, creation or receipt, except at
the end of the normal retention period;
Q. Made any, or acquiesced with any, change in any accounting methods,
principles or material practices except as required by GAAP or RAP;
R. Sold (provided, however, that payment at maturity is not deemed a sale),
any investment securities in a single transaction involving a book gain or loss
of more than $25,000 on such sale or purchased any investment securities other
than purchases of U.S. Treasury securities with a maturity of less than two
years;
S. Made, renewed, extended the maturity of, or altered any of the material
terms of any criticized loan to any single borrower and his related interests
without regard to whether such transaction was in the ordinary course of
business or whether it was consistent with past or safe and sound banking
practices; or
T. Entered into any agreement or made any commitment whether in writing or
otherwise to take any of the types of action described in subsections A. through
S. above.
SECTION 3.11 Leases, Contracts and Agreements. Schedule 3.11 sets forth an
accurate and complete description of all leases, subleases, licenses, contracts
and agreements to which the Bank is a party (the "Contracts"), and which
involved payments to or by the Bank in excess of $75,000 during the term of such
Contracts. The Bank has delivered to Purchaser true and correct copies of all
Contracts. For the purposes of this Agreement, the Contracts shall be deemed not
to include loans made by, repurchase agreements made by, spot foreign exchange
transactions of, bankers acceptances of or deposits by the Bank, but does
include unfunded loan commitments and letters of credit issued by the Bank where
the borrowers' total direct and indirect indebtedness to the Bank is in excess
of $500,000. Except as set forth in Schedule 3.11, no participations or loans
have been sold which have buy back, recourse or guaranty provisions which create
contingent or direct liabilities of the Bank. To the knowledge of the Bank, all
of the Contracts are legal, valid and binding obligations of the parties to the
Contracts enforceable in accordance with their terms, subject to the effects of
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights generally and to general equitable principles, and
are in full force and effect. Except as described in Schedule 3.11, all rent and
other payments by the Bank under the Contracts are current, there are no
existing defaults by the Bank under the Contracts and no termination, condition
or other event has occurred which (whether with or without notice, lapse of time
or the happening or occurrence of any other event) would constitute a default.
The Bank has a good and indefeasible leasehold interest in each parcel of real
property leased by it free and clear of all mortgages, pledges, liens,
encumbrances and security interests.
SECTION 3.12 Taxes. The Bank has duly and timely filed with the
appropriate Federal, state and local governmental agencies all tax returns and
reports required to be filed, including, without limitation, income, excise,
property, sales, use, franchise, value added, unemployment, employees' income
withholding and social security taxes, imposed by the United States or by any
foreign country or by any state, municipality, subdivision or instrumentality of
the United States or of any foreign country, or by any other taxing authority,
and has paid, or has established adequate reserves for the payment of, all taxes
and assessments that are or are claimed to be due, payable or owed by the Bank,
or for which the Bank may have liability, whether as a result of its own
activities or by virtue of its affiliation with other entities and all interest
and penalties thereon, whether disputed or not. All such tax returns and reports
are accurately prepared and all deposits required by law to be made by the Bank
with respect to employees' withholding taxes have been duly made. The Bank is
not and has not been delinquent in the payment of any foreign or domestic tax,
assessment or governmental charge or deposit and has no tax deficiency or claim
outstanding, proposed or assessed against it, and there is no basis for any such
deficiency or claim. Except as set forth in Schedule 3.12, within the last six
(6) years, the Bank's Federal income tax return has not been audited or examined
and no such audit is currently pending or threatened. The Bank has not been
granted any extension of time with respect to the date on which any tax return
not yet filed was or is due to be filed by or with respect to the Bank or any
waiver or agreement by the Bank for the extension of time for the assessment or
collection of any tax. Except as set forth in Schedule 3.12, the Bank (i) within
the past six (6) years, has not committed any violation of any applicable
Federal, state, local or foreign tax laws and (ii) with respect to all prior
years, has not committed any violation of any applicable Federal, state, local
or foreign tax laws that is likely to result in a Material Adverse Change.
The amounts set up as provisions for current or deferred taxes on the
Financial Statements are sufficient for the payment of all unpaid Federal,
state, county, local, foreign or other taxes (including any interest or
penalties) of or on behalf of the Bank applicable to the periods covered by the
Financial Statements, and all years and periods prior thereto. True and complete
copies of the Federal income tax returns of the Bank as filed with the Internal
Revenue Service (the "IRS") for the years ended December 31, 1993, 1994, and
1995, have been delivered to Purchaser.
SECTION 3.13 Insurance. Schedule 3.13 contains an accurate and complete
list and brief description of all policies of insurance, including fidelity and
bond insurance, of the Bank. All such policies (a) are sufficient for compliance
by the Bank with all requirements of insurance law and all applicable agreements
to which the Bank is a party, (b) are valid, outstanding and enforceable except
as enforceability may be limited by bankruptcy, conservatorship, insolvency,
moratorium, reorganization, receivership, or similar laws and judicial decisions
affecting the rights of creditors generally and by general principles of equity
(whether applied in a proceeding at law or equity), (c) will not in any
significant respect be affected by, and will not terminate or lapse by reason
of, the transactions contemplated by this Agreement, and (d) are presently in
full force and effect, no notice has been received of the cancellation, or
threatened or proposed cancellation, of any such policy and there are no unpaid
premiums due thereon. The Bank is not in default with respect to the provisions
of any such policy and has not failed to give any notice or present any claim
thereunder in a due and timely fashion. Except as set forth on Schedule 3.13,
the Bank has not been refused any insurance with respect to its assets or
operations, nor has its insurance been limited by any insurance carrier to which
the Bank has applied for any such insurance within the last two (2) years. Each
property of the Bank is insured for the benefit of the Bank in amounts deemed
adequate by the Bank's management against risks customarily insured against.
There have been no claims under any fidelity bonds of the Bank within the last
three (3) years, and the Bank is not aware of any facts that would form the
basis of a claim under such bonds.
SECTION 3.14 No Adverse Change. Except as disclosed in the
representations and warranties made in this Article III, there has not been any
Material Adverse Change since December 31, 1995, nor has any event or condition
occurred that has resulted in, or has a reasonable possibility of resulting in
the future, in a Material Adverse Change.
SECTION 3.15 Patents, Trademarks and Copyrights. The Bank does not own
or require the use of any patent, patent application, patent right, invention,
process, trademark (whether registered or unregistered), trademark application,
trademark right, trade name, service name, service mark, copyright or any trade
secret ("Proprietary Rights") for the business or operations of the Bank, except
for licensed computer software. The Bank is not infringing upon or otherwise
acting adversely to any Proprietary Right owned by any other person or persons.
There is no claim or action by any such person pending, or, to the knowledge of
the Bank, threatened, with respect thereto.
SECTION 3.16 Transactions with Certain Persons and Entities. Except as
disclosed in Schedule 3.16, the Bank does not owe any amount to (excluding
deposit liabilities), or have any loan, contract, lease, commitment or other
obligation from or to any of the present or former directors or officers (other
than compensation for current services not yet due and payable and reimbursement
of expenses arising in the ordinary course of business) of the Bank, and none of
such persons owes any amount to the Bank. Except as set forth in Schedule 3.16,
there are no agreements, instruments, commitments, extensions of credit, tax
sharing or allocation agreements or other contractual agreements of any kind
between or among the Bank, whether on its own behalf or in its capacity as
trustee or custodian for the funds of any employee benefit plan (as defined in
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), and
any present or former officers or directors of the Bank.
SECTION 3.17 Evidences of Indebtedness. All evidences of indebtedness
and leases that are reflected as assets of the Bank are, to the Bank's best
knowledge, legal, valid and binding obligations of the respective obligors
thereof, enforceable in accordance with their respective terms (except as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors generally and the availability of injunctive
relief, specific performance and other equitable remedies) and are not subject
to any known or threatened defenses, offsets or counterclaims that may be
asserted against the Bank or the present holder thereof, except as disclosed in
Schedule 3.17. The credit files of the Bank contain all material information
(excluding general, local or national industry, economic or similar conditions)
known to the Bank that is reasonably required to evaluate in accordance with
generally prevailing practices in the banking industry the collectibility of the
loan portfolio of the Bank (including loans that will be outstanding if any of
them advances funds they are obligated to advance). The Bank has disclosed all
of the substandard, doubtful, loss, nonperforming or loans identified by the
Bank as problem loans on the internal watch list of the Bank, a copy of which as
of November 8, 1996, has been provided to Purchaser.
SECTION 3.18 Condition of Assets. All tangible assets used by the Bank
are in good operating condition, ordinary wear and tear excepted, and conform
with all applicable ordinances, regulations, zoning and other laws, whether
Federal, state or local. None of the Bank's premises or equipment are in need of
maintenance or repairs other than ordinary routine maintenance and repairs that
are not material in nature or cost.
SECTION 3.19 Environmental Compliance.
A. The Bank and all of the Properties and the Bank's operations are in
compliance in all material respects with all Environmental Laws (as defined in
Section 12.08(D)). The Bank is not aware of, nor has the Bank received notice
of, any past or present conditions, events, activities, practices or incidents
that may interfere with or prevent the Bank's continued compliance in all
respects with all Environmental Laws.
B. The Bank has obtained all permits, licenses and authorizations that are
required under any Environmental Laws.
C. To the Bank's knowledge, no Hazardous Materials (as defined in Section
12.08(C)) exist on, about, or within any of the Properties, nor, to the Bank's
knowledge, have any Hazardous Materials previously existed on, about or within
or been used, generated, stored, transported, disposed of, on or released from
any of the Properties. The use that the Bank makes and intends to make of the
Properties will not result in the use, generation, storage, transportation,
accumulation, disposal or release of any Hazardous Material on, in or from any
of the Properties.
D. There is no action, suit, proceeding, investigation or inquiry before
any court, administrative agency or other governmental authority pending or
threatened against the Bank relating in any way to any Environmental Law. To the
best of the Bank's knowledge, the Bank has no liability for remedial action
under any Environmental Law. The Bank has not received any request for
information by any governmental authority with respect to the condition, use or
operation of any of the Properties nor has the Bank received any notice of any
kind from any governmental authority or other person with respect to any
violation of or claimed or potential liability of any kind under any
Environmental Law (including, without limitation, any letter, notice or inquiry
from any person or governmental entity informing the Bank that it is or may be
liable in any way under any Environmental Law or requesting information to
enable such a determination to be made).
E. As used in this Section 3.19, the term "Property" or "Properties" shall
include all real property owned or leased by the Bank, including, but not
limited to, properties that the Bank has foreclosed on as well as the Bank's
respective banking premises and all improvements and fixtures thereon.
SECTION 3.20 Regulatory Compliance. All reports, records,
registrations, statements, notices and other documents or information required
to be filed by the Bank during the last two (2) years with any federal or state
regulatory authority including, without limitation, the California
Superintendent, the FDIC, the Board of Governors of the Federal Reserve System
("Federal Reserve") and the IRS have been duly and timely filed and all
information and data contained in such reports, records or other documents are
true, accurate, correct and complete. Except as disclosed on Schedule 3.20, the
Bank is not now nor has been, within the past five (5) years subject to any
memorandum of understanding, cease and desist order, written agreement or other
formal or informal administrative action with any such regulatory bodies. The
Bank does not believe any such regulatory bodies have any present intent to
place the Bank under any new administrative action. Except as set forth on
Schedule 3.20, there are no actions or proceedings pending or threatened against
the Bank by or before any such regulatory bodies or any other nation, state or
subdivision thereof, or any other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
SECTION 3.21 Absence of Certain Business Practices. Except as set forth
on Schedule 3.21, neither the Bank nor any officer, employee or agent of the
Bank nor any other person acting on their behalf, has, directly or indirectly,
within the past five (5) years, given or agreed to give any gift or similar
benefit to any customer, supplier, governmental employee or other person who is
or may be in a position to help or hinder the business of the Bank (or assist
the Bank in connection with any actual or proposed transaction) that (i) would
subject the Bank to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not given in the past, would have resulted in
a Material Adverse Change or (iii) if not continued in the future would result
in a Material Adverse Change or would subject the Bank to suit or penalty in any
private or governmental litigation or proceeding.
SECTION 3.22 Proxy Statement. None of the information supplied or to be
supplied by the Bank or any of its directors, officers, employees or agents for
inclusion in the Bank's Proxy Statement, or any amendment thereof or supplement
thereto, will be false or misleading with respect to any material fact, or omit
to state any material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, or at the
time of the Shareholders' Meeting, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for the Shareholders' Meeting. All documents that the Bank is responsible
for filing with any regulatory or governmental agency in connection with the
Merger will comply in all material respects with the provisions of applicable
law.
SECTION 3.23 Dissenting Shareholders. The Bank has no knowledge of any
plan or intention on the part of any of the shareholders of the Bank to make
written demand for payment of the fair value of their shares of Bank Stock in
the manner provided by applicable law.
SECTION 3.24 Books and Records. The minute books, stock certificate
books and stock transfer ledgers of the Bank (i) have been kept accurately in
the ordinary course of business, (ii) are complete and correct in all material
respects, (iii) the transactions entered therein represent bona fide
transactions, and (iv) there have been no transactions involving the business of
the Bank that were required to have been set forth therein and that have not
been accurately so set forth.
SECTION 3.25 Forms of Instruments, Etc. The Bank has made, and will
make, available to Purchaser copies of all standard forms of notes, mortgages,
deeds of trust and other routine documents of a like nature used on a regular
and recurring basis by the Bank in the ordinary course of its business.
SECTION 3.26 Fiduciary Responsibilities. Except as disclosed in
Schedule 3.26, the Bank has performed in all material respects all of its duties
as a trustee, custodian, guardian or as an escrow agent in a manner that
complies in all material respects with all applicable laws, regulations, orders,
agreements, instruments and common law standards.
SECTION 3.27 Guaranties. None of the obligations or liabilities of the
Bank are guaranteed by any other person, firm or corporation, nor is any
outstanding obligation or liability of any other person, firm or corporation
guaranteed by the Bank, except in the ordinary course of business, according to
prudent business practices and in compliance with applicable law.
SECTION 3.28 Voting Trust or Buy-Sell Agreements. The Bank is not aware
of any agreement between any of its shareholders relating to a right of first
refusal with respect to the purchase or sale by any such shareholder of capital
stock of the Bank or any voting agreement or voting trust with respect to shares
of capital stock of the Bank (other than those entered into pursuant to Section
5.16 of this Agreement).
SECTION 3.29 Employee Relationships. The Bank has complied in all material
respects with all applicable laws relating to its relationships with its
employees, and the Bank believes that the relationships between the Bank and its
employees are good. To the knowledge of the Bank, no key executive officer or
manager of any of the operations operated by the Bank or any group of employees
of the Bank have any present plans to terminate their employment with the Bank.
The Bank is not a party to any oral or written contracts or agreements granting
benefits or rights to employees or any collective bargaining agreement or to any
conciliation agreement with the Department of Labor, the Equal Employment
Opportunity Commission or any federal, state or local agency that requires equal
employment opportunities or affirmative action in employment. There are no
unfair labor practice complaints pending against the Bank before the National
Labor Relations Board and no similar claims pending before any similar state,
local or foreign agency. There is no activity or proceeding of any labor
organization (or representative thereof) or employee group to organize any
employees of the Bank, nor of any strikes, slowdowns, work stoppages, lockouts
or threats thereof, by or with respect to any such employees. The Bank is in
compliance in all material respects with all applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and the Bank is not engaged in any unfair labor practice.
SECTION 3.30 Employee Benefit Plans. Set forth on Schedule 3.30 is a
complete and correct list of all "employee benefit plans" (as defined in ERISA),
all specified fringe benefit plans as defined in Section 6039D of the Internal
Revenue Code of 1986, as amended (the "Code"), and all other bonus, incentive,
compensation, deferred compensation, profit sharing, stock option, stock
appreciation right, stock bonus, stock purchase, employee stock ownership,
savings, severance, supplemental unemployment, layoff, salary continuation,
retirement, pension, health, life insurance, disability, group insurance,
vacation, holiday, sick leave, fringe benefit or welfare plan or any other
similar plan, agreement, policy or understanding (whether written or oral,
qualified or nonqualified, currently effective or terminated), and any trust,
escrow or other agreement related thereto, which (a) is maintained or
contributed to by the Bank, or with respect to which the Bank has any liability,
and (b) provides benefits, or describes policies or procedures applicable to any
officer, employee, service provider, former officer or former employee of the
Bank, or the dependents of any thereof, regardless of whether funded (the
"Employee Plans").
No Employee Plan is a defined benefit plan within the meaning of section
3(35) of ERISA. The Bank has delivered or made available to Purchaser true,
accurate and complete copies of the documents comprising each Employee Plan, and
such other documents, records or other materials related thereto reasonably
requested by Purchaser. To the best knowledge of the Bank, there have been no
prohibited transactions, breaches of fiduciary duty or any other breaches or
violations of any law applicable to the Employee Plans that would subject
Purchaser or the Bank to any liabilities. Each Employee Plan intended to be
qualified under section 401(a) of the Code has a current favorable determination
letter and, to the best knowledge of the Bank, has been operated in compliance
with applicable law and in accordance with its terms. There are no pending
claims, lawsuits or actions relating to any Employee Plan (other than ordinary
course claims for benefits) and, to the best knowledge of the Bank, none are
threatened. No written or oral representations have been made to any employee or
former employee of the Bank promising or guaranteeing any employer payment or
funding for the continuation of medical, dental, life or disability coverage for
any period of time beyond the end of the current plan year (except to the extent
of coverage required under section 4980B of the Code). Compliance with FAS 106
will not create any material change to the Bank's financial statements. Except
as required in connection with qualified plan amendments required by tax law
changes, the consummation of the transactions contemplated by this Agreement
will not accelerate the time of payment or vesting, or increase the amount, of
compensation due to any employee, officer, former employee or former officer of
the Bank.
With respect to each "employee benefit plan" (as defined in ERISA)
maintained or contributed to or required to be contributed to, currently or in
the past, by any trade or business with which the Bank is required by any of the
rules contained in the Code or ERISA to be treated as a single employer (the
"Controlled Group Plans"):
A. To the knowledge of the Bank, all Controlled Group Plans that are "group
health plans" (as defined in the Code and ERISA) have been operated to the
Closing in a manner so as to not subject the Bank to any material liability
under Section 4980B of the Code; and
B. There is no Controlled Group Plan that is a defined benefit plan (as
defined in Section 3(35) of ERISA), nor has there been in the last five calendar
years.
C. There is no Controlled Group Plan that is a "multiple employer plan" or
"multiemployer plan" (as either such term is defined in ERISA), nor has there
been in the last five (5) calendar years.
SECTION 3.31 Derivatives. Except as disclosed on Schedule 3.31, the
Bank has not purchased, invested in, created, renewed or held any Derivatives
(as defined in Section 12.08(F)).
SECTION 3.32 Representations Not Misleading. To the Bank's knowledge,
all material facts relating to the business operations, properties, assets,
liabilities (contingent or otherwise) and financial condition of the Bank have
been disclosed to Purchaser in or in connection with this Agreement. No
representation or warranty by the Bank contained in this Agreement, nor any
statement, exhibit or schedule furnished to Purchaser by the Bank under and
pursuant to, or in anticipation of or in connection with, this Agreement,
contains or will contain on the Closing Date any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make the
statements contained herein or therein, in light of the circumstances under
which it was or will be made, not misleading and such representations and
warranties would continue to be true and correct following disclosure to any
governmental authority having jurisdiction over the Bank or its properties of
the facts and circumstances upon which they were based. Except as disclosed
herein, there is no matter that materially adversely affects the Bank or the
Bank's ability to perform the transactions contemplated by this Agreement or the
other agreements contemplated hereby, or to the knowledge of the Bank, will in
the future result in a Material Adverse Change, other than general economic
conditions. No information material to the Merger and that is necessary to make
the representations and warranties herein contained not misleading, has been
withheld by the Bank.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby makes the representations and warranties set forth in
this Article IV to the Bank.
SECTION 4.01 Organization and Qualification. Purchaser is a
corporation, duly organized, validly existing under the laws of the State of
California, and in good standing under all laws, rules, and regulations
applicable to corporations located in the State of California. Purchaser has all
requisite corporate power and authority (including all licenses, franchises,
permits and other governmental authorizations as are legally required) to carry
on its business as now being conducted, to own, lease and operate its properties
and assets as now owned, leased or operated and to enter into and carry out its
obligations under this Agreement.
SECTION 4.02 Execution and Delivery. Purchaser has taken all corporate
action necessary to authorize the execution, delivery and (provided the required
regulatory approvals are obtained) performance of this Agreement and the other
agreements and documents contemplated hereby to which it is a party, including,
but not limited to, the Merger Agreement. This Agreement has been, and the other
agreements and documents contemplated hereby, including, but not limited to, the
Merger Agreement, have been or at Closing will be, duly executed by Purchaser
and each constitutes the valid and binding obligation of Purchaser, enforceable
in accordance with its respective terms and conditions, except as enforceability
may be limited by bankruptcy, conservatorship, insolvency, moratorium,
reorganization, receivership or similar laws and judicial decisions affecting
the rights of creditors generally and by general principles of equity (whether
applied in a proceeding at law or in equity).
SECTION 4.03 Compliance with Laws, Permits and Instruments. The
execution, delivery and (provided the required regulatory approvals are
obtained) performance of this Agreement and the other agreements contemplated
hereby, including but not limited to the Merger Agreement, and the consummation
of the transactions contemplated hereby and thereby, will not conflict with, or
result, by itself or with the giving of notice or the passage of time, in any
violation of or default or loss of a benefit under, (i) any provision of the
Articles of Incorporation or Bylaws of Purchaser, (ii) any material provision of
any mortgage, indenture, lease, contract, agreement or other instrument
applicable to Purchaser or its assets, operations, properties or businesses now
conducted or heretofore conducted or (iii) any statute, law, ordinance, rule or
regulation applicable to Purchaser.
SECTION 4.04 Litigation. No legal action, suit or proceeding or
judicial, administrative or governmental investigation is pending or, to the
knowledge of Purchaser, threatened against Purchaser that questions or might
question the validity of this Agreement or the agreements contemplated hereby,
including, but not limited to, the Merger Agreement, or any actions taken or to
be taken by Purchaser pursuant hereto or thereto or seeks to enjoin or otherwise
restrain the transactions contemplated hereby or thereby.
SECTION 4.05 Consents and Approvals. Except for shareholder and
regulatory approvals, no approval, consent, order or authorization of, or
registration, declaration or filing with, any governmental authority or other
third party is required on the part of Purchaser in connection with the
execution, delivery or performance of this Agreement or the agreements
contemplated hereby, including, but not limited to, the Merger Agreement or the
consummation by Purchaser of the transactions contemplated hereby or thereby.
SECTION 4.06 Proxy Statement. None of the information supplied or to be
supplied to the Bank by Purchaser or any of its directors, officers, employees
or agents for inclusion in the Proxy Statement, or any amendment thereof or
supplement thereto, will be false or misleading with respect to any material
fact, or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or at the time of the Shareholders' Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Shareholders' Meeting. All documents that
Purchaser is responsible for filing with any regulatory or governmental agency
in connection with the Merger will comply in all material respects with the
provisions of applicable law.
SECTION 4.07 Mitchell Litigation. Purchaser has had the opportunity to
review the Bank's files and the court records with respect to the litigation
styled Alison Mitchell v. First Valley Bank, et al. Notwithstanding anything
else contained in this Agreement, the existence and final resolution of such
litigation shall not be deemed a violation of the Bank's representations and
warranties hereunder, a violation of the Bank's covenants hereunder or a
Material Adverse Change under the terms of this Agreement.
SECTION 4.08 Representations Not Misleading. No representation or
warranty by Purchaser contained in this Agreement, nor any statement, exhibit or
schedule furnished to the Bank by Purchaser under and pursuant to, or in
anticipation of this Agreement, contains or will contain on the Closing Date any
untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances under which it was or will be made, not misleading and such
representations and warranties would continue to be true and correct following
disclosure to any governmental authority having jurisdiction over Purchaser of
the facts and circumstances upon which they were based.
ARTICLE V.
COVENANTS OF THE BANK
The Bank hereby makes the covenants set forth in this Article V to
Purchaser.
SECTION 5.01 Best Efforts. The Bank will use its best efforts to cause
the consummation of the transactions contemplated hereby in accordance with the
terms and conditions of this Agreement.
SECTION 5.02 Merger Agreement. The Bank will, as soon as practicable
after the execution of this Agreement, duly authorize and enter into the Merger
Agreement, the form of which is attached hereto as Exhibit "A", and perform all
of its obligations thereunder.
SECTION 5.03 Affiliate Merger. At the option of Purchaser, the Bank
will cooperate with Purchaser and its Subsidiaries to cause the Bank to merge
(the "Affiliate Merger") with, or cause the Bank to merge into, Santa Barbara
Bank & Trust immediately after the Effective Date, and the Bank agrees to
cooperate and join in with Purchaser and its Subsidiaries in the preparation,
execution and processing of all applications and all director, shareholder and
regulatory approvals of Purchaser, its Subsidiaries or the Bank necessary or
appropriate to obtain regulatory, corporate and other approvals of the Affiliate
Merger in a timely manner.
SECTION 5.04 Information for Applications and Statements. The Bank will
promptly, but in no event later than ten (10) business days after receipt of a
request by Purchaser, furnish to Purchaser all information concerning the Bank,
including, but not limited to, financial statements, required for inclusion in
any application or statement to be made by Purchaser to or filed by Purchaser
with any governmental body in connection with the transactions contemplated by
this Agreement (including pursuant to Section 5.03), or in connection with any
other transactions during the pendency of this Agreement, and the Bank
represents and warrants that all information so furnished for such statements
and applications shall be true and correct in all material respects and shall
not omit any material fact required to be stated therein or necessary to make
the statements made, in light of the circumstances under which they were made,
not misleading. The Bank shall otherwise fully cooperate with Purchaser in the
filing of any applications or other documents necessary to consummate the
transactions contemplated by this Agreement, including the Merger.
SECTION 5.05 Required Acts of the Bank. Prior to the Closing, the Bank
shall, unless otherwise permitted in writing by Purchaser:
A. Operate only in the ordinary course of business and consistent with
prudent banking practices;
B. Except as required by prudent business practices, use all reasonable
efforts to preserve its business organization intact and to retain its present
customers, depositors, suppliers, correspondent banks, officers, directors,
employees and agents;
C. Act in a manner intended to preserve or attempt to preserve its
goodwill;
D. Perform all of its obligations under contracts, leases and documents
relating to or affecting its assets, properties and business except such
obligations as the Bank may in good faith reasonably dispute;
E. Except as required by prudent business practices, maintain all offices,
machinery, equipment, materials, supplies, inventories, vehicles and other
properties owned, leased or used by it (whether under its control or the control
of others), in good operating condition and repair, ordinary wear and tear
excepted;
F. Maintain in full force and effect all insurance policies now in effect
or renewals thereof and, except as required by prudent business practices that
do not jeopardize insurance coverage, give all notices and present all claims
under all insurance policies in due and timely fashion;
G. File all reports required to be filed with governmental authorities and
observe and conform, in all material respects, to all applicable laws, rules,
regulations, ordinances, codes, orders, licenses and permits, except those being
contested in good faith by appropriate proceedings;
H. Timely file all tax returns required to be filed by it and promptly pay
all taxes, assessments, governmental charges, duties, penalties, interest and
fines that become due and payable, except those being contested in good faith by
appropriate proceedings;
I. Withhold from each payment made to each of its employees the amount of
all taxes (including, but not limited to, federal income taxes, FICA taxes and
state and local income and wage taxes) required to be withheld therefrom and pay
the same to the proper tax receiving officers;
J. Continue to follow and implement policies, procedures and practices
regarding the identification, monitoring, classification and treatment of all
assets in substantially the same manner as it has in the past; and
K. Account for all transactions of the Bank in accordance with GAAP (unless
otherwise instructed by RAP in which instance account for such transaction in
accordance with RAP), and maintain the allowance for loan losses account for the
Bank in an adequate amount to provide for all losses, net of recoveries relating
to loans previously charged off, on all outstanding loans of the Bank.
SECTION 5.06 Prohibited Acts of the Bank. Prior to the Closing, the
Bank shall not, without the prior written consent of Purchaser:
A. Introduce any new material method of management or operation;
B. Take any action that would reasonably be anticipated to result in a
Material Adverse Change;
C. Take or fail to take any action that would cause or permit the
representations and warranties made in Article III hereof to be inaccurate at
the time of the Closing or preclude the Bank from making such representations
and warranties at the time of the Closing;
D. Cause or allow the loss of insurance coverage, unless replaced with
coverage that is substantially similar (in amount and insurer) to that now in
effect;
E. Change its Articles of Incorporation or Bylaws or its authorized capital
stock;
F. Enter into any transaction other than in the ordinary course of
business;
G. Except as explicitly permitted hereunder or in accordance with
applicable law, engage in any transaction with any affiliated person or allow
such persons to acquire any assets from the Bank except in the form of wages,
salaries, fees for legal services and reimbursement of expenses and by loans
secured by liquid collateral having a fair market value at least equal to the
principal balance due on such loan to its officers, directors and employees in
the ordinary course of business;
H. Voluntarily incur any obligation or liability, absolute, accrued,
contingent or otherwise, except in the ordinary course of business consistent
with prudent banking practices;
I. Discharge or satisfy any lien, charge or encumbrance or pay any
obligation or liability (other than settling or reserving for the litigation
styled Alison Mitchell v. First Valley Bank, et. al.) whether absolute or
contingent, due or to become due, except in the ordinary course of business
consistent with prudent banking practices and except for liabilities incurred in
connection with the transactions contemplated hereby;
J. Declare or make any payment of dividends or other distributions to its
shareholders (other than its normal semi-annual cash dividend not to exceed $.50
per share payable during the first calendar quarter of 1997), or purchase,
retire or redeem, or obligate itself to purchase, retire or redeem, any of its
shares of capital stock or other securities;
K. Issue, reserve for issuance, grant, sell or authorize the issuance of
any shares of its capital stock or other securities or subscriptions, options,
warrants, calls, rights or commitments of any kind relating to the issuance
thereto;
L. Acquire any capital stock or other equity securities or acquire any
equity or ownership interest in any bank, corporation, partnership or other
entity (except (i) through settlement of indebtedness, foreclosure, or the
exercise of creditors' remedies or (ii) in a fiduciary capacity, the ownership
of which does not expose it to any liability from the business, operations or
liabilities of such person);
M. Mortgage, pledge or subject to lien, charge, security interest or any
other encumbrance or restriction any of its property, business or assets,
tangible or intangible except in the ordinary course of business and consistent
with prudent banking practices;
N. Sell, transfer, lease to others or otherwise dispose of any of its
assets or cancel or compromise any debt or claim, or waive or release any right
or claim of material value, except in the ordinary course of business and
consistent with past practices and safe and sound banking principles;
O. Terminate, cancel or surrender any contract, lease or other agreement or
suffer any damage, destruction or loss (whether or not covered by insurance),
which, in any case or in the aggregate, would result in a Material Adverse
Change;
P. Dispose of, permit to lapse, transfer or grant any rights under, or
breach or infringe upon, any United States or foreign license or Proprietary
Right or modify any existing rights with respect thereto, except in the ordinary
course of business and consistent with past practices and safe and sound banking
principles;
Q. Make any change in the rate of compensation, commission, bonus or other
direct or indirect remuneration payable, or pay or agree or orally promise to
pay, conditionally or otherwise, any bonus, extra compensation, pension or
severance or vacation pay, to or for the benefit of any of its shareholders,
directors, officers, employees or agents, or enter into any employment or
consulting contract (other than as contemplated by this Agreement) or other
agreement with any director, officer or employee or adopt, amend in any material
respect or terminate any pension, employee welfare, retirement, stock purchase,
stock option, stock appreciation rights, termination, severance, income
protection, golden parachute, savings or profit-sharing plan (including trust
agreements and insurance contracts embodying such plans), any deferred
compensation, or collective bargaining agreement, any group insurance contract
or any other incentive, welfare or employee benefit plan or agreement maintained
by it for the benefit of its directors, employees or former employees, except in
the ordinary course of business and consistent with past practices and safe and
sound banking principles;
R. Except for improvements or betterments relating to Properties, make any
capital expenditures or capital additions or betterments in excess of an
aggregate of $75,000;
S. Hire or employ any person as a replacement for an existing position with
an annual salary equal to or greater than $30,000 or hire or employ any person
for any newly created position;
T. Enter into or give any promise, assurance or guarantee of the payment,
discharge or fulfillment of any undertaking or promise made by any other person,
firm or corporation;
U. Sell or knowingly dispose of, or otherwise divest itself of the
ownership, possession, custody or control, of any corporate books or records of
any nature that, in accordance with sound business practice, normally are
retained for a period of time after their use, creation or receipt, except at
the end of the normal retention period;
V. Make any, or acquiesce with any, change in any accounting methods,
principles or material practices;
W. Sell any investment securities in a transaction involving a book gain or
loss of more than $25,000 on such sale or purchase any investment securities
other than purchases of U.S. Treasury securities with a maturity of less than
two years (and only after giving notice to Purchaser of any purchases in excess
of $2,000,000);
X. Purchase, invest in, create, review or hold any Derivatives (as defined
in Section 12.08(F); or
Y. Make, renew, extend the maturity of, or alter any of the material terms
of any loan, other than classified loans, to any single borrower and his related
interests in excess of the principal amount of $1,500,000, provided, however,
that Purchaser shall be deemed to have given its consent under this Section
5.06(Y) unless Purchaser objects to such transaction no later than 48 hours
(weekends and bank holidays shall not count) after actual receipt by Purchaser
of all information relating to the making, renewal or alteration of such loan.
Z. Make, renew, extend the maturity of, or alter any of the material terms
of any classified loan to any single borrower and his related interests,
provided, however, that Purchaser shall be deemed to have given its consent
under this Section 5.06(Z) unless Purchaser objects to such transaction no later
than 48 hours (weekends and bank holidays shall not count) after actual receipt
by Purchaser of all information relating to the making, renewal or alteration of
such loan.
SECTION 5.07 Access; Pre-Closing Investigation. Subject to the provisions
of Article XI, the Bank shall afford the officers, directors, employees,
attorneys, accountants, investment bankers and authorized representatives of
Purchaser full access to the properties, books, contracts and records of the
Bank, permit Purchaser to make such inspections (including without limitation
with regard to such properties physical inspection of the surface and subsurface
thereof and any structure thereon pursuant to Section 5.15) as they may require
and furnish to Purchaser during such period all such information concerning the
Bank and its affairs as Purchaser may reasonably request, in order that
Purchaser may have full opportunity to make such reasonable investigation as it
shall desire to make of the affairs of the Bank, including, without limitation,
access sufficient to verify the calculation of the Merger Consideration, the
value of the assets and the liabilities of the Bank and the satisfaction of the
conditions precedent to Purchaser's obligations described in Article VIII of
this Agreement. Purchaser shall use its best efforts not to disrupt the normal
business operations of the Bank. The Bank agrees at any time, and from time to
time, to furnish to Purchaser as soon as practicable, any additional information
that Purchaser may reasonably request.
SECTION 5.08 Invitations to and Attendance at Directors' and Committee
Meetings. The Bank shall give notice to two (2) designees of Purchaser and shall
invite such persons to attend all regular and special meetings of the board of
directors of the Bank and all regular and special meetings of any board or
senior management committee of the Bank. The invitees for all board of directors
meetings shall be Mr. David W. Spainhour and Mr. William S. Thomas, Jr. Invitees
for management committee meetings shall be designated by Purchaser subject to
the consent of the Bank, which consent shall not be unreasonably withheld.
SECTION 5.09 Additional Financial Statements. The Bank shall promptly
furnish Purchaser with true and complete copies of (i) each Call Report of the
Bank prepared after the date of this Agreement as soon as such reports are made
available to the FDIC, (ii) directors' report (iii) unaudited month-end
financial statements and (iv) the Bank's audited financial statements for
calendar year 1996 as soon as available.
SECTION 5.10 Untrue Representations. The Bank shall promptly notify
Purchaser in writing if the Bank becomes aware of any fact or condition that
makes untrue, or shows to have been untrue, in any material respect, any
schedule or any other information furnished to Purchaser or any representation
or warranty made in or pursuant to this Agreement or that results in the Bank's
failure to comply with any covenant, condition or agreement contained in this
Agreement.
SECTION 5.11 Litigation and Claims. The Bank shall promptly notify
Purchaser in writing of any litigation, or of any claim, controversy or
contingent liability that is expected to become the subject of litigation,
against the Bank or affecting any of its properties if such litigation or
potential litigation would, in the event of an unfavorable outcome, result in a
Material Adverse Change, and the Bank shall promptly notify Purchaser of any
legal action, suit or proceeding or judicial, administrative or governmental
investigation, pending or, to the knowledge of the Bank, threatened against the
Bank that questions or is likely to question the validity of this Agreement or
the agreements contemplated hereby, including, but not limited to, the Merger
Agreement or any actions taken or to be taken by the Bank pursuant hereto or
thereto or seeks to enjoin or otherwise restrain the transactions contemplated
hereby or thereby.
SECTION 5.12 Adverse Changes. The Bank shall promptly notify Purchaser
in writing if any change shall have occurred or been threatened (or any
development shall have occurred or been threatened involving a prospective
change) in the business, financial condition, operations or prospects of the
Bank that has or may reasonably be expected to have or lead to a Material
Adverse Change. Notwithstanding the disclosure to Purchaser of any such change,
the Bank shall not be relieved of any liability to Purchaser pursuant to this
Agreement for, nor shall the providing of such information by the Bank to
Purchaser be deemed a waiver by Purchaser of, the breach of any representation
or warranty of the Bank contained in this Agreement.
SECTION 5.13 No Negotiation with Others. Until the Effective Date or
the termination of this Agreement, the Bank shall not, directly or indirectly,
nor shall it permit any of its officers, directors, employees, representatives
or agents to, directly or indirectly (i) encourage, solicit or initiate
discussions or negotiations with, or (ii) except upon advice of counsel to the
extent required to fulfill the fiduciary duties owed to the shareholders of the
Bank, entertain, discuss or negotiate with, or provide any information to, or
cooperate with, any corporation, partnership, person or other entity or group
(other than Purchaser or its Affiliates or associates or officers, partners,
employees or other authorized representatives of Purchaser or such Affiliates or
associates) concerning any merger, tender offer or other takeover offer, sale of
substantial assets, sale of shares of capital stock or similar transaction
involving the Bank. As soon as practicable following receipt of any unsolicited
written offer, the Bank will communicate to Purchaser the terms of any proposal
or request for information and the identity of the parties involved.
SECTION 5.14 Consents and Approvals. The Bank shall use its best
efforts to obtain all consents and approvals from third parties at the earliest
practicable time.
SECTION 5.15 Environmental Investigation; Right to Terminate Agreement.
A. Purchaser and its consultants, agents and representatives shall have the
right to the same extent that the Bank has such right, but not the obligation or
responsibility, to inspect any Property, including, without limitation,
conducting asbestos surveys and sampling, environmental assessments and
investigation, and other environmental surveys and analyses including soil and
ground sampling ("Environmental Inspections") at any time on or prior to January
15, 1997. Purchaser shall notify the Bank prior to any physical inspections of
the Property, and the Bank may place reasonable restrictions on the time of such
inspections. If, as a result of any such Environmental Inspection, further
investigation ("secondary investigation") including, without limitation, test
borings, soil, water and other sampling is deemed desirable by Purchaser,
Purchaser shall (i) notify the Bank of any Property for which it intends to
conduct such a secondary investigation and the reasons for such secondary
investigation, and (ii) commence such secondary investigation, on or prior to
January 31, 1997. Purchaser shall give reasonable notice to the Bank of such
secondary investigations, and the Bank may place reasonable time and place
restrictions on such secondary investigations.
B. Purchaser shall have the right to terminate this Agreement if (i) the
factual substance of any warranty or representation set forth in Section 3.19 is
not true and accurate; (ii) the results of such Environmental Inspection,
secondary investigation or other environmental survey are disapproved by
Purchaser because the environmental inspection, secondary investigation or other
environmental survey identifies violations or potential violations of
Environmental Laws; (iii) the Bank has refused to allow Purchaser to conduct an
Environmental Inspection or secondary investigation in a manner that Purchaser
reasonably considers necessary; (iv) the Environmental Inspection, secondary
investigation or other environmental survey identifies any past or present
event, condition or circumstance that would or potentially would require
remedial or cleanup action or result in a Material Adverse Change; (v) the
Environmental Inspection, secondary investigation or other environmental survey
identifies the presence of any underground or above ground storage tank in, on
or under any Property that is not shown to be in compliance with all
Environmental Laws applicable to the tank either now or at a future time
certain, or that has had a release of petroleum or some other Hazardous Material
that has not been cleaned up to the satisfaction of the relevant governmental
authority or any other party with a legal right to compel cleanup; or (vi) the
Environmental Inspection, secondary investigation or other environmental survey
identifies the presence of any asbestos-containing material in, on or under any
Property, the removal of which would result in a Material Adverse Change. On or
prior to February 28, 1997, Purchaser shall advise the Bank in writing as to
whether Purchaser intends to terminate this Agreement because Purchaser
disapproves of the results of the Environmental Inspection, secondary
investigation or other environmental survey. The Bank shall have the opportunity
to correct any objected to violations or conditions to Purchaser's reasonable
satisfaction prior to March 20, 1997. In the event that the Bank fails to
demonstrate its satisfactory correction of the violations or conditions to
Purchaser, Purchaser may terminate the Agreement on or before March 31, 1997.
C. The Bank agrees to make available to Purchaser and its consultants,
agents and representatives all documents and other material relating to
environmental conditions of any Property including, without limitation, the
results of other environmental inspections and surveys. The Bank also agrees
that all engineers and consultants who prepared or furnished such reports may
discuss such reports and information with Purchaser and shall be entitled to
certify the same in favor of Purchaser and its consultants, agents and
representatives and make all other data available to Purchaser and its
consultants, agents and representatives.
D. For purposes of this Section, the term "Property" or "Properties" shall
have the same meaning given in Section 3.19(E).
SECTION 5.16 Proxies. All of the members of the Board of Directors of
the Bank shall execute the Voting Agreement and Irrevocable Proxy in the form of
Exhibit "B" attached hereto. Such persons shall vote the shares of Bank Stock
owned by them in favor of the Merger Agreement and the Merger and the
transactions contemplated hereby and thereby.
ARTICLE VI.
COVENANTS OF PURCHASER
Purchaser hereby makes the covenants set forth in this Article VI to
the Bank.
SECTION 6.01 Best Efforts. Purchaser agrees to use its best efforts to
cause the consummation of the transactions contemplated hereby in accordance
with the terms and conditions of this Agreement.
SECTION 6.02 Incorporation and Organization of Newco. Purchaser will
incorporate Newco under the laws of the State of California.
SECTION 6.03 Merger Agreement. Purchaser will, and will cause Newco to,
as soon as practicable after the execution of this Agreement, enter into the
Merger Agreement, a form of which is attached hereto as Exhibit "A", and
Purchaser shall perform, and shall cause Newco to perform, all of their
respective obligations thereunder.
SECTION 6.04 Information for Applications and Statements. Purchaser
will promptly, but in no event later than ten (10) business days after receipt
of a request by the Bank, furnish to the Bank all information concerning
Purchaser and Newco, including, but not limited to, financial statements,
required for inclusion in (i) any proxy statement or offering document to be
used by the Bank in connection with the approval of the shareholders of the Bank
of the transactions contemplated hereby and the exchange of the Bank Stock for
cash pursuant to the Merger and (ii) any application or statement to be made by
the Bank to or filed by the Bank with any governmental body in connection with
the transactions contemplated by this Agreement, or in connection with any
unrelated transactions during the pendency of this Agreement, and Purchaser
represents and warrants that all information so furnished for such statements
and applications shall be true and correct in all material respects and shall
not omit any material fact required to be stated therein or necessary to make
the statements made, in light of the circumstances under which they were made,
not misleading. Purchaser shall otherwise fully cooperate with the Bank in the
filing of any applications or other documents necessary to consummate the
transactions contemplated by this Agreement, including the Merger.
SECTION 6.05 Acts of Newco. Prior to the Closing, Purchaser shall not
cause Newco to take any action or execute any agreement, document or certificate
except as contemplated by this Agreement and the other agreements contemplated
hereby, including, but not limited to, the Merger Agreement.
SECTION 6.06 Untrue Representations. Purchaser shall promptly notify
the Bank in writing if Purchaser becomes aware of any fact or condition that
makes untrue, or shows to have been untrue, in any material respect, any
schedule or any other information furnished to the Bank or any representation or
warranty made in or pursuant to this Agreement or that results in Purchaser's
failure to comply with any covenant, condition or agreement contained in this
Agreement.
SECTION 6.07 Litigation and Claims. Purchaser shall promptly notify the
Bank of any legal action, suit or proceeding or judicial, administrative or
governmental investigation, pending or, to the knowledge of Purchaser,
threatened against Purchaser or Newco that questions or might question the
validity of this Agreement or the agreements contemplated hereby, including, but
not limited to, the Merger Agreement, or any actions taken or to be taken by
Purchaser or Newco pursuant hereto or thereto or seeks to enjoin or otherwise
restrain the transactions contemplated hereby or thereby.
SECTION 6.08 Regulatory and Other Approvals. Purchaser shall file or
cause to be filed no later than forty-five (45) calendar days from the date of
this Agreement applications for all regulatory approvals required to be obtained
by Purchaser or Newco in connection with this Agreement and the other agreements
contemplated hereby. Purchaser shall promptly furnish the Bank and its counsel
with copies of all such regulatory filings and all correspondence for which
confidential treatment has not been requested. Purchaser shall use its best
efforts to obtain all such regulatory approvals and any other approvals from
third parties at the earliest practicable time.
SECTION 6.09 Adverse Change. Purchaser shall promptly notify the Bank
in writing if any change or development shall have occurred or been threatened
that would adversely affect, prevent or delay the obtaining of any regulatory
approval for the consummation of the transactions contemplated by this Agreement
or the other agreements contemplated hereby.
ARTICLE VII.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BANK
All obligations of the Bank under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions,
any or all of which may be waived in whole or in part by the Bank:
SECTION 7.01 Compliance with Representations, Warranties and
Agreements. All representations and warranties made by Purchaser in this
Agreement or in any document or schedule delivered to the Bank pursuant hereto
shall have been true and correct in all material respects when made and shall be
true and correct in all material respects as of the Closing with the same force
and effect as if such representations and warranties were made at and as of the
Closing, except with respect to those representations and warranties
specifically made as of an earlier date (in which case such representations and
warranties shall be true as of such earlier date). Purchaser shall have
performed or complied in all material respects with all agreements, terms,
covenants and conditions required by this Agreement to be performed or complied
with by Purchaser prior to or at the Closing.
SECTION 7.02 Shareholder Approvals. The holders of at least the minimum
required percentage of each class of Bank Stock entitled to vote on the Merger
and the Merger Agreement shall have approved the Merger and the Merger
Agreement.
SECTION 7.03 Government and Other Approvals. Purchaser and the Bank
shall have received approvals, acquiescence or consents, all on terms and
conditions reasonably acceptable to Purchaser in its sole discretion, of the
transactions contemplated by this Agreement, and the Merger Agreement, from all
necessary governmental agencies and authorities and other third parties,
including but not limited to the Federal Reserve, the FDIC and the California
Superintendent, and all applicable waiting periods shall have expired, and the
approvals and consents of all third parties required to consummate this
Agreement and the other agreements contemplated hereby, including, but not
limited to, the Merger Agreement and the transactions contemplated hereby and
thereby. Such approvals and the transactions contemplated hereby shall not have
been contested or threatened to be contested by any Federal or state
governmental authority or by any other third party by formal proceedings.
SECTION 7.04 No Litigation. No action shall have been taken, and no
statute, rule, regulation or order shall have been promulgated, enacted,
entered, enforced or deemed applicable to the acquisition by any Federal, state
or foreign government or governmental authority or by any court, domestic or
foreign, including the entry of a preliminary or permanent injunction, that
would (a) make the Agreement or any other agreement contemplated hereby,
including, but not limited to, the Merger Agreement, or the transactions
contemplated hereby or thereby illegal, invalid or unenforceable, (b) impose
material limits in the ability of any party to this Agreement to consummate the
Agreement or any other agreement contemplated hereby, including, but not limited
to, the Merger Agreement, or the transactions contemplated hereby or thereby, or
(c) if the Agreement or any other agreement contemplated hereby, including, but
not limited to, the Merger Agreement, or the transactions contemplated hereby or
thereby are consummated, subject the Bank or subject any officer, director,
shareholder or employee of the Bank to criminal or civil liability. No action or
proceeding before any court or governmental authority, domestic or foreign, by
any government or governmental authority or by any other person, domestic or
foreign, shall be threatened, instituted or pending that would reasonably be
expected to result in any of the consequences referred to in clauses (a) through
(c) above.
SECTION 7.05 Opinion of Legal Counsel to Purchaser. The Bank shall have
received an opinion of counsel to Purchaser in connection with the transactions
contemplated by this Agreement, dated as of the Closing Date and addressed to
the Bank, substantially as described in Exhibit "C".
ARTICLE VIII.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER
All obligations of Purchaser under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions,
any or all of which may be waived in whole or in part by Purchaser.
SECTION 8.01 Compliance with Representations, Warranties and Agreements.
All representations and warranties made by the Bank in this Agreement or in any
document or schedule delivered to Purchaser pursuant hereto shall have been true
and correct in all material respects when made and shall be true and correct in
all material respects as of the Closing with the same force and effect as if
such representations and warranties were made at and as of the Closing, except
with respect to those representations and warranties specifically made as of an
earlier date (in which case such representations and warranties shall be true as
of such earlier date). The Bank shall have performed or complied in all material
respects with all agreements, terms, covenants and conditions required by this
Agreement to be performed or complied with by the Bank prior to or at the
Closing.
SECTION 8.02 Shareholder Approvals. The holders of at least the minimum
required percentage of each class of Bank Stock entitled to vote on the Merger
and the Merger Agreement shall have approved the Merger and the Merger
Agreement.
SECTION 8.03 Government and Other Approvals. Purchaser and the Bank
shall have received approvals, acquiescence or consents (including any
approvals, acquiescence or consents that may be required in order to fulfill the
transactions contemplated by Section 5.03), all on terms and conditions
acceptable to Purchaser in its sole discretion, of the transactions contemplated
by this Agreement and the Merger Agreement from all necessary governmental
agencies and authorities, including but not limited to the Federal Reserve, the
FDIC and the California Superintendent, and all applicable waiting periods shall
have expired, and Purchaser or the Bank shall have received the approvals and
consents of all third parties required to consummate this Agreement and the
other agreements contemplated hereby, including, but not limited to, the Merger
Agreement and the transactions contemplated hereby and thereby. Such approvals
and the transactions contemplated hereby shall not have been contested or
threatened to be contested by any Federal or state governmental authority or by
any other third party (except shareholders asserting statutory dissenters'
appraisal rights) by formal proceedings. It is understood that, if such contest
is brought by formal proceedings, Purchaser may, but shall not be obligated to,
answer and defend such contest or otherwise pursue this transaction over such
objection.
SECTION 8.04 No Litigation. No action shall have been taken, and no
statute, rule, regulation or order shall have been promulgated, enacted,
entered, enforced or deemed applicable to this Agreement, the Merger, or the
transactions contemplated hereby or thereby by any Federal, state or foreign
government or governmental authority or by any court, domestic or foreign,
including the entry of a preliminary or permanent injunction, that would (a)
make this Agreement or any other agreement contemplated hereby, including, but
not limited to, the Merger Agreement, or the transactions contemplated hereby or
thereby illegal, invalid or unenforceable, (b) require the divestiture of a
material portion of the assets of the Bank, (c) impose material limits in the
ability of any party to this Agreement to consummate the Agreement or any other
agreement contemplated hereby, including, but not limited to, the Merger
Agreement, or the transactions contemplated hereby or thereby, (d) otherwise
result in a Material Adverse Change or (e) if this Agreement or any other
agreement contemplated hereby, including, but not limited to, the Merger
Agreement, or the transactions contemplated hereby or thereby are consummated,
subject Purchaser or the Newco or subject any officer, director, shareholder or
employee of Purchaser or the Newco to criminal or civil liability. No action or
proceeding before any court or governmental authority, domestic or foreign, by
any government or governmental authority or by any other person, domestic or
foreign, shall be threatened, instituted or pending that would reasonably be
expected to result in any of the consequences referred to in clauses (a) through
(e) above.
SECTION 8.05 Opinion of Legal Counsel to the Bank. Purchaser shall have
received an opinion of counsel to the Bank in connection with the transactions
contemplated by this Agreement, dated the Closing Date and addressed to
Purchaser, substantially as described in Exhibit "D".
SECTION 8.06 Dissenting Shareholders. No more than ten percent (10%) of
the issued and outstanding shares of Bank Stock shall have demanded or be
entitled to demand payment of the fair value of their shares as dissenting
shareholders.
SECTION 8.07 Accounting Treatment. All accounting and tax treatment,
entries and adjustments in connection with the transactions contemplated by this
Agreement and the other agreements contemplated hereby shall be reasonably
satisfactory to Purchaser, Purchaser shall not have received notification from
any proper regulatory authority that Purchaser's accounting and tax treatment,
entries and adjustments used in connection with the Merger are improper, and
Purchaser shall not have been required by any such regulatory authority to make
any accounting or tax adjustments that would constitute a Material Adverse
Change.
SECTION 8.08 Releases and Resignations. Purchaser shall have received
from each of the directors of the Bank an instrument dated the Closing Date
releasing the Bank from certain claims of such directors, the form of which is
attached as Exhibit "E." Purchaser shall have received from each of the
executive officers of the Bank an instrument dated the Closing Date releasing
the Bank from certain claims of such officers, the form of which is attached as
Exhibit "F." Each of the directors of the Bank shall have delivered to
Purchaser, if requested, their resignations as directors of the Bank, effective
as of the Closing Date.
SECTION 8.09 Employment Arrangements. Purchaser or its subsidiary bank
shall have been able to enter into mutually acceptable arrangements with senior
management of the Bank regarding their continued service with Purchaser or its
subsidiary bank following the Closing.
SECTION 8.10 No Material Adverse Change. There shall have been no
Material Adverse Change since December 31, 1995.
ARTICLE IX.
EXPENSES, TERMINATION AND ABANDONMENT
SECTION 9.01 Expenses. Each of the parties hereto shall bear its
respective costs and expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement; provided, however, in the event
that:
(a) (i) if this Agreement is terminated by Purchaser pursuant to Section
9.02(d) or Section 9.02(e) because the Bank had knowledge of an untrue or
inaccurate representation or warranty when made, or the Bank intentionally
failed to satisfy or fulfill a covenant or agreement that the Bank could
reasonably satisfy or fulfill, or by the Bank pursuant to Section 9.02(h), the
Bank shall pay to Purchaser a termination fee of $1,305,000 (being 5% of the
Merger Consideration) within ten (10) business days after such termination;
(ii) if this Agreement is terminated by Purchaser pursuant to Section
9.02(d) or Section 9.02(e) but either the Bank did not have knowledge of an
untrue or inaccurate representation or warranty when made, or the Bank did not
intentionally fail to satisfy or fulfill a covenant or agreement, then the Bank
shall pay to Purchaser an amount equal to all of Purchaser's out-of-pocket
expenses incurred in connection with the transactions contemplated by this
Agreement, which payment shall be made within ten (10) business days after such
termination;
(b) (i) if this Agreement is terminated by the Bank pursuant to Section
9.02(d) or Section 9.02(e) because the Purchaser had knowledge of an untrue or
inaccurate representation or warranty when made, or the Purchaser intentionally
failed to satisfy or fulfill a covenant or agreement that the Bank could
reasonably satisfy or fulfill, Purchaser shall pay to the Bank a termination fee
of $1,305,000 (being 5% of the Merger Consideration) within ten (10) business
days after such termination;
(ii) if this Agreement is terminated by Bank pursuant to Section 9.02(d) or
Section 9.02(e) but either the Purchaser did not have knowledge of an untrue or
inaccurate representation or warranty when made, or the Purchaser did not
intentionally fail to satisfy or fulfill a covenant or agreement, then the
Purchaser shall pay to the Bank an amount equal to all of the Bank's
out-of-pocket expenses incurred in connection with the transactions contemplated
by this Agreement, which payment shall be made within ten (10) business days
after such termination;
(c) if this Agreement is terminated because Purchaser is unable to obtain
all necessary regulatory approvals (Section 9.02(f)), Purchaser shall pay to the
Bank a termination fee of $1,305,000 (being 5% of the Merger Consideration)
within ten (10) business days after such termination, unless such failure to
obtain all necessary regulatory approvals is due to the condition or results of
operations of the Bank in which case no termination fee shall be payable; and
(d) if this Agreement is terminated by Purchaser because the results of its
due diligence are unsatisfactory (Section 9.02(i)), Purchaser shall pay to the
Bank a termination fee of $1,305,000 (being 5% of the Merger Consideration)
within ten (10) business days after such termination, unless the results of
Purchaser's due diligence reveal that the condition and results of operations of
the Bank are not materially as represented to Purchaser in information provided
to Purchaser by the Bank for the purposes of Purchaser's due diligence.
SECTION 9.02 Termination. This Agreement may be terminated:
(a) at any time by written agreement between Purchaser and the Bank;
(b) by either Purchaser or the Bank if the Closing has not occurred by July
31, 1997, or such later date as may be agreed to by Purchaser and the Bank;
(c) by Purchaser, if there has been a Material Adverse Change;
(d) by either Purchaser or the Bank by written notice to the other, if the
other has breached any of its covenants in Article V or Article VI of this
Agreement in any material respect and has failed to correct or cure any such
breach within twenty (20) business days after notice thereof is given by the
nonbreaching party;
(e) by either Purchaser or the Bank by written notice to the other, if any
representation or warranty given or made by such other party in this Agreement
or in any schedule or other document delivered by such other party in accordance
with the terms of this Agreement, is or becomes untrue or incorrect in any
material respect and is not corrected within twenty (20) business days after
written notice thereof is given by the party terminating this Agreement to the
party giving or making such representation or warranty, provided that any such
notice shall be delivered promptly upon discovery of the breach;
(f) by either Purchaser or the Bank, if (i) any of the transactions
contemplated by this Agreement or the Merger Agreement are disapproved by any
regulatory authority whose approval is required to consummate such transactions,
(ii) any court of competent jurisdiction in the United States or other United
States (federal or state) governmental body shall have issued an order, decree
or ruling or taken any other action restraining, enjoining, invalidating or
otherwise prohibiting the Agreement or the transactions contemplated hereby and
such order, decree, ruling or other action shall have been final and
nonappealable, or (iii) Purchaser reasonably determines, in good faith and after
consulting with counsel, there is substantial likelihood that any necessary
regulatory approval will not be obtained or will be obtained only upon a
condition or conditions that make it inadvisable to proceed with the
transactions contemplated by this Agreement;
(g) by Purchaser or the Bank if the Agreement is not approved by the
required vote of shareholders of the Bank;
(h) by Bank by written notice to Purchaser, if (i) a proposal for a Third
Party Transaction (as defined below) involving the Bank has been made or
received and the Board of Directors of Bank determines, in the exercise of its
good faith judgment (based on an opinion of independent legal counsel) that such
termination is required in order for the Bank's Board of Directors to comply
with its fiduciary duties to Bank's shareholders, or (ii) following receipt by
Bank of a proposal for a Third Party Transaction, the Board of Bank shall have
altered its determination to recommend that the shareholders of Bank approve
this Agreement or shall have failed to proceed to hold the special Shareholders'
Meeting of Bank to approve this Agreement, in either case of which Bank shall
give Purchaser prompt written notice of its election to terminate this Agreement
pursuant to this Section 9.02 (h).
For purposes of this Section 9.02 (h), a "Third Party Transaction" shall
include (i) any successful tender offer for more than 50% of the outstanding
shares of Bank, (ii) any merger or consolidation of Bank with or into any entity
other than Bank or an affiliate of Bank, (iii) any sale of all or substantially
all of the assets of Bank (iv) any reorganization of Bank or other transaction
that results or when completed would result in a disposition of substantially
all of the assets of Bank, or (v) a change in ownership of more than 50% of the
outstanding common stock of Bank; and
(i) by Purchaser pursuant to the terms of Section 1.08 hereof.
SECTION 9.03 Notice of Termination. The power of termination provided
for by Section 9.02 hereof may be exercised only by a notice given in writing,
as provided in Section 12.06 of this Agreement.
SECTION 9.04 Effect of Termination. Without limiting any other relief
to which either party hereto may be entitled for breach of this Agreement, in
the event of the termination and abandonment of this Agreement pursuant to the
provisions of Section 9.02 hereof, no party to this Agreement shall have any
further liability or obligation in respect of this Agreement, except for (a)
liability of a party for expenses pursuant to Section 9.01 hereof, and (b) the
provisions of Article XI hereof shall remain applicable.
ARTICLE X.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
SECTION 10.01 Survival of Representations and Warranties. The parties
hereto agree that all of their respective representations and warranties
contained in this Agreement shall not survive Closing.
ARTICLE XI.
CONFIDENTIAL INFORMATION
SECTION 11.01 Definition of "Recipient," "Disclosing Party,"
"Representative" and "Person". For purposes of this Article XI, the term
"Recipient" shall mean the party receiving the Subject Information (as defined
in Section 11.02) and the term "Disclosing Party" shall mean the party
furnishing the Subject Information. The terms "Recipient" or "Disclosing Party",
as used herein, include: (1) all persons and entities related to or affiliated
in any way with the Recipient or the Disclosing Party, as the case may be, and
(2) any person or entity controlling, controlled by or under common control with
the Recipient or the Disclosing Party, as the case may be. The term
"Representative" as used herein, shall include all directors, officers,
shareholders, employees, representatives, advisors, attorneys, accountants and
agents of any of the foregoing. The term "person" as used in this Article XI
shall be broadly interpreted to include, without limitation, any corporation,
company, group, partnership, governmental agency or individual.
SECTION 11.02 Definition of "Subject Information". For purposes of this
Article XI, the term "Subject Information" shall mean all information furnished
to the Recipient or its Representatives (whether prepared by the Disclosing
Party, its Representatives or otherwise and whether or not identified as being
nonpublic, confidential or proprietary) by or on behalf of the Disclosing Party
or its Representatives relating to or involving the business, operations or
affairs of the Disclosing Party or otherwise in possession of the Disclosing
Party. The term "Subject Information" shall not include information that (i) was
already in the Recipient's possession at the time it was first furnished to
Recipient by or on behalf of Disclosing Party, provided that such information is
not known by the Recipient to be subject to another confidentiality agreement
with or other obligation of secrecy to the Disclosing Party, its Subsidiaries or
another party, or (ii) becomes generally available to the public other than as a
result of a disclosure by the Recipient or its Representatives, or (iii) becomes
available to the Recipient on a non-confidential basis from a source other than
the Disclosing Party, its Representative or otherwise, provided that such source
is not known by the Recipient to be bound by a confidentiality agreement with or
other obligation of secrecy to the Disclosing Party, its Representative or
another party.
SECTION 11.03 Confidentiality. Each Recipient hereby agrees that the
Subject Information will be used solely for the purpose of reviewing and
evaluating the transactions contemplated by this Agreement and the other
agreements contemplated hereby, including the Merger Agreement, and that the
Subject Information will be kept confidential by the Recipient and the
Recipient's Representatives; provided, however, that (i) any of such Subject
Information may be disclosed to the Recipient's Representatives (including, but
not limited to, the Recipient's accountants and attorneys) who need to know such
information for the purpose of evaluating any such possible transaction between
the Disclosing Party and the Recipient (it being understood that such
Representatives shall be informed by the Recipient of the confidential nature of
such information and that the Recipient shall direct and cause such persons to
treat such information confidentially); and (ii) any disclosure of such Subject
Information may be made to which the Disclosing Party consents in writing prior
to any such disclosure by Recipient.
SECTION 11.04 Securities Law Concerns. Each Recipient hereby
acknowledges that the Recipient is aware, and the Recipient will advise the
Recipient's Representatives who are informed as to the matters that are the
subject of this Agreement, that the United States securities laws prohibit any
person who has received material, non-public information from an issuer of
securities from purchasing or selling securities of such issuer or from
communicating such information to any other person under circumstances in which
it is reasonably foreseeable that such person is likely to purchase or sell such
securities.
SECTION 11.05 Return of Subject Information. In the event of
termination of this Agreement or the Merger Agreement, for any reason, the
Recipient shall promptly return to the Disclosing Party all written material
containing or reflecting any of the Subject Information other than information
contained in any application, notice or other document filed with any
governmental agency and not returned to the Recipient by such governmental
agency. In making any such filing, the Recipient will request confidential
treatment of such Subject Information included in any application, notice or
other document filed with any governmental agency.
SECTION 11.06 Specific Performance/Injunctive Relief. Each Recipient
acknowledges that the Subject Information constitutes valuable, special and
unique property of the Disclosing Party critical to its business and that any
breach of Article XI of this Agreement by it will give rise to irreparable
injury to the Disclosing Party that is not compensable in damages. Accordingly,
each Recipient agrees that the Disclosing Party shall be entitled to obtain
specific performance and/or injunctive relief against the breach or threatened
breach of Article XI of this Agreement by the Recipient or its Representatives.
Each Recipient further agrees to waive, and use its reasonable efforts to cause
its Representatives to waive, any requirement for the securing or posting of any
bond in connection with such remedies. Such remedies shall not be deemed the
exclusive remedies for a breach of Article XI of this Agreement, but shall be in
addition to all other remedies available at law or in equity to the Disclosing
Party.
ARTICLE XII.
MISCELLANEOUS
SECTION 12.01 Brokerage Fees and Commissions. Purchaser hereby
represents to the Bank that no agent, representative or broker has represented
Purchaser in connection with the transactions described in this Agreement. The
Bank shall not have any responsibility or liability for any fees, expenses or
commissions payable to any agent, representative or broker of Purchaser, and
Purchaser hereby agrees to indemnify and hold the Bank harmless for any amounts
owed to any agent, representative or broker of Purchaser. The Bank hereby
represents to Purchaser that no agent, representative or broker has represented
the Bank or any or all of the shareholders in connection with the transactions
described in this Agreement. Purchaser shall have no responsibility or liability
for any fees, expenses or commissions payable to any agent, representative or
broker of the Bank or any shareholder of the Bank, and Purchaser shall be
indemnified and held harmless for any amounts owed to any agent, representative
or broker of the Bank or any shareholder of the Bank.
SECTION 12.02 Entire Agreement. This Agreement and the other
agreements, documents, schedules and instruments executed and delivered by the
parties to each other at the Closing constitute the full understanding of the
parties, a complete allocation of risks between them and a complete and
exclusive statement of the terms and conditions of their agreement relating to
the subject matter hereof and supersede any and all prior agreements, whether
written or oral, that may exist between the parties with respect thereto. Except
as otherwise specifically provided in this Agreement, no conditions, usage of
trade, course of dealing or performance, understanding or agreement purporting
to modify, vary, explain or supplement the terms or conditions of this Agreement
shall be binding unless hereafter or contemporaneously herewith made in writing
and signed by the party to be bound, and no modification shall be effected by
the acknowledgment or acceptance of documents containing terms or conditions at
variance with or in addition to those set forth in this Agreement.
SECTION 12.03 Further Cooperation. The parties agree that they will, at any
time and from time to time after the Closing, upon request by the other and
without further consideration, do, perform, execute, acknowledge and deliver all
such further acts, deeds, assignments, assumptions, transfers, conveyances,
powers of attorney, certificates and assurances as may be reasonably required in
order to fully consummate the transactions contemplated hereby in accordance
with this Agreement or to carry out and perform any undertaking made by the
parties hereunder.
SECTION 12.04 Severability. In the event that any provision of this
Agreement is held to be illegal, invalid or unenforceable under present or
future laws, then (a) such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision were not a part hereof; (b) the remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected by such illegal,
invalid or unenforceable provision or by its severance from this Agreement; and
(c) there shall be added automatically as a part of this Agreement a provision
as similar in terms to such illegal, invalid or unenforceable provision as may
be possible and still be legal, valid and enforceable.
SECTION 12.05 Notices. Any and all payments (other than payments at the
Closing), notices, requests, instructions and other communications required or
permitted to be given under this Agreement after the date hereof by any party
hereto to any other party may be delivered personally or by nationally
recognized overnight courier service or sent by mail or (except in the case of
payments) by telex or facsimile transmission, at the respective addresses or
transmission numbers set forth below and shall be effective (a) in the case of
personal delivery, telex or facsimile transmission, when received; (b) in the
case of mail, upon the earlier of actual receipt or five (5) business days after
deposit in the United States Postal Service, first class certified or registered
mail, postage prepaid, return receipt requested; and (c) in the case of
nationally-recognized overnight courier service, one (1) business day after
delivery to such courier service together with all appropriate fees or charges
and instructions for such overnight delivery. The parties may change their
respective addresses and transmission numbers by written notice to all other
parties, sent as provided in this Section 12.05. All communications must be in
writing and addressed as follows:
IF TO THE BANK:
First Valley Bank
200 North "H" Street
Lompoc, California 93436-6095
Telecopy: (805) 736-2449
Attention: Mr. Terrill F. Cox,
Chairman of the Board
WITH A COPY TO:
Mr. Marvin L. Holen
Van Petten & Holen
Suite 1100, Omni Centre
FINIDAL:48103.6 29490-00005
41
<PAGE>
900 Wilshire Boulevard
Los Angeles, California 90017-4712
Telecopy: (213) 489-4750
IF TO PURCHASER:
Santa Barbara Bancorp
1021 Anacapa Street
Santa Barbara, California 93101-2036
Telecopy: (804) 564-6293
Attention: Mr. David W. Spainhour,
President and Chief Executive Officer
WITH A COPY TO:
Mr. Charles E. Greef
Mr. Peter G. Weinstock
Jenkens & Gilchrist,
a Professional Corporation
1445 Ross Avenue, Suite 3200
Dallas, Texas 75202-2799
Telecopy: (214) 855-4300
SECTION 12.06 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA (INCLUDING
THOSE LAWS RELATING TO CHOICE OF LAW) APPLYING TO CONTRACTS ENTERED INTO AND TO
BE PERFORMED WITHIN THE STATE OF CALIFORNIA, WITHOUT REGARD FOR THE PROVISIONS
THEREOF REGARDING CHOICE OF LAW. VENUE FOR ANY CAUSE OF ACTION ARISING FROM THIS
AGREEMENT SHALL LIE IN SANTA BARBARA, CALIFORNIA.
SECTION 12.07 Multiple Counterparts. For the convenience of the parties
hereto, this Agreement may be executed in multiple counterparts, each of which
shall be deemed an original, and all counterparts hereof so executed by the
parties hereto, whether or not such counterpart shall bear the execution of each
of the parties hereto, shall be deemed to be, and shall be construed as, one and
the same Agreement. A telecopy or facsimile transmission of a signed counterpart
of this Agreement shall be sufficient to bind the party or parties whose
signature(s) appear thereon.
SECTION 12.08 Certain Definitions.
A. "Affiliate" means, with respect to any person or entity, any person or
entity that, directly or indirectly, controls, is controlled by, or is under
common control with, such person or entity in question. For the purposes of this
definition, "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with") as used with respect to any
person or entity, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
person or entity, whether through the ownership of voting securities or by
contract or otherwise.
B. "Subsidiary" means, when used with reference to an entity, any
corporation, a majority of the outstanding voting securities of which are owned
directly or indirectly by such entity or any partnership, joint venture or other
enterprise in which any entity has, directly or indirectly, any equity interest.
C. "Material Adverse Change" means any material adverse change (excluding
the occurrence of expenses in connection with the Merger) since December 31,
1995 in the financial condition, assets, properties, liabilities (absolute,
accrued, contingent or otherwise), reserves, business or results of operations
of the Bank and specifically includes, without limitation, any change that
reduces the shareholders' equity of the Bank below $14,900,000. Notwithstanding
the foregoing, Material Adverse Change will not include depreciation in the
investment securities portfolio of the Bank unless such depreciation (i) has
occurred and is continuing after the date of this Agreement and (ii) on the
Closing Date, equals or exceeds 7.5% of the fair market value of the Bank's
investment portfolio, as reflected on the Bank's September 30, 1996 Call Report.
D. "Environmental Laws" mean all federal, state and local laws,
regulations, statutes, ordinances, codes, rules, decisions, orders or decrees
relating or pertaining to the public health and safety or the environment, or
otherwise governing the generation, use, handling, collection, treatment,
storage, transportation, recovery, recycling, removal, discharge or disposal of
Hazardous Materials, including, without limitation, the Solid Waste Disposal
Act, 42 U.S.C. 6901 et seq., as amended ("SWDA," also known as "RCRA" for a
subsequent amending act), (b) the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss.9601 et seq., as amended
("CERCLA"), (c) the Clean Water Act, 33 U.S.C. ss.1251 et seq., as amended
("CWA"), (d) the Clean Air Act, 42 U.S.C. ss.7401 et seq., as amended ("CAA"),
(e) the Toxic Substances Control Act, 15 U.S.C. ss.2601 et seq., as amended
("TSCA"), (f) the Emergency Planning and Community Right to Know Act, 15 U.S.C.
ss.2601 et seq., as amended ("EPCRKA"), and (g) the Occupational Safety and
Health Act, 29 U.S.C. ss. 651 et seq., as amended.
E. "Hazardous Material" means, without limitation, (a) any "hazardous
wastes" as defined under RCRA, (b) any "hazardous substances" as defined under
CERCLA, (c) any toxic pollutants as defined under CWA, (d) any hazardous air
pollutants as defined under CAA, (e) any hazardous chemicals as defined under
TSCA, (f) any hazardous substances or extremely hazardous substances as defined
under EPCRKA, (g) asbestos, (h) polychlorinated biphenyls, (i) underground
storage tanks, whether empty, filled or partially filled with any substance, (j)
any substance the presence of which on the property in question is prohibited
under any Environmental Law, and (k) any other substance which under any
Environmental Law requires special handling or notification of or reporting to
any federal, state or local governmental entity in its generation, use,
handling, collection, treatment, storage, re-cycling, treatment, transportation,
recovery, removal, discharge or disposal. Notwithstanding the foregoing,
"Hazardous Material" shall not include materials employed in normal consumer or
office uses, such as gasoline, lubricants, printing materials, cleaners,
disinfectants, pesticides, building materials, fluorescent lights and ballasts,
batteries and refrigerants, as long as such materials are used and stored only
in quantities typical of consumer and office uses.
F. "Derivatives" shall mean financial contracts the value, purpose, or
terms of which are derived from the performance of assets, interest rates,
currency exchange rates, or indexes, including, by way of illustration and
without limitation, structured debt obligations and deposits, swaps, futures,
options, caps, floors, collars, forwards and various combinations thereof.
SECTION 12.09 Specific Performance. Each of the parties hereto
acknowledges that the other parties would be irreparably damaged and would not
have an adequate remedy at law for money damages in the event that any of the
covenants contained in this Agreement were not performed in accordance with its
terms or otherwise were materially breached. Each of the parties hereto
therefore agrees that, without the necessity of proving actual damages or
posting bond or other security, the other party shall be entitled to temporary
and/or permanent injunction or injunctions to prevent breaches of such
performance and to specific enforcement of such covenants in addition to any
other remedy to which they may be entitled, at law or in equity.
SECTION 12.10 Attorneys' Fees and Costs. In the event attorneys' fees
or other costs are incurred to secure performance of any of the obligations
herein provided for, or to establish damages for the breach thereof, or to
obtain any other appropriate relief, whether by way of prosecution or defense,
the prevailing party shall be entitled to recover reasonable attorneys' fees and
costs incurred therein.
SECTION 12.11 Rules of Construction. Each use herein of the masculine,
neuter or feminine gender shall be deemed to include the other genders. Each use
herein of the plural shall include the singular and vice versa, in each case as
the context requires or as it is otherwise appropriate. The word "or" is used in
the inclusive sense. All articles and sections referred to herein are articles
and sections, respectively, of this Agreement and all exhibits and schedules
referred to herein are exhibits and schedules, respectively, attached to this
Agreement. Descriptive headings as to the contents of particular sections are
for convenience only and shall not control or affect the meaning, construction
or interpretation of any provision of this Agreement. Any and all schedules,
exhibits, annexes, statements, reports, certificates or other documents or
instruments referred to herein or attached hereto are and shall be incorporated
herein by reference hereto as though fully set forth herein verbatim.
SECTION 12.12 Binding Effect; Assignment. All of the terms, covenants,
representations, warranties and conditions of this Agreement shall be binding
upon, and inure to the benefit of and be enforceable by, the parties hereto and
their respective successors, representatives and permitted assigns. Nothing
expressed or referred to herein is intended or shall be construed to give any
person other than the parties hereto any legal or equitable right, remedy or
claim under or in respect of this Agreement, or any provision herein contained,
it being the intention of the parties hereto that this Agreement, the assumption
of obligations and statements of responsibilities hereunder, and all other
conditions and provisions hereof are for the sole benefit of the parties to this
Agreement and for the benefit of no other person. Nothing in this Agreement
shall act to relieve or discharge the obligation or liability of any third party
to any party to this Agreement, nor shall any provision give any third party any
right of subrogation or action over or against any party to this Agreement. No
party to this Agreement shall assign this Agreement, by operation of law or
otherwise, in whole or in part, without the prior written consent of the other
parties. Any assignment made or attempted in violation of this Section 12.12
shall be void and of no effect.
SECTION 12.13 Public Disclosure. Neither Purchaser nor the Bank will
make, issue or release any announcement, statement, press release,
acknowledgment or other public disclosure of the existence of, or reveal the
terms, conditions or the status of, this Agreement or the transactions
contemplated hereby without the prior written consent of the other parties to
this Agreement; provided, however, that notwithstanding the foregoing, Purchaser
and the Bank will be permitted to make any public disclosures or governmental
filings as legal counsel may deem necessary to maintain compliance with or to
prevent violations of applicable federal or state laws or regulations or which
may be necessary to obtain regulatory approval for the transactions contemplated
hereby.
SECTION 12.14 Extension; Waiver. At any time prior to the Closing Date,
the parties may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document, certificate or writing delivered pursuant hereto, or (iii) waive
compliance with any of the agreements or conditions contained herein. Such
action shall be evidenced by a signed written notice given in the manner
provided in Section 12.05 hereof. No party to this Agreement shall by any act
(except by a written instrument given pursuant to Section 12.05 hereof) be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising any right, power or privilege hereunder by any party
hereto shall operate as a waiver thereof. No single or partial exercise of any
right, power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. A waiver of any
party of any right or remedy on any one occasion shall not be construed as a bar
to any right or remedy that such party would otherwise have on any future
occasion or to any right or remedy that any other party may have hereunder.
SECTION 12.15 Amendments. To the extent permitted by applicable law,
this Agreement may be amended by action taken by or on behalf of the Board of
Directors of Purchaser and the Bank at any time before or after adoption of this
Agreement by the shareholders of the Bank but, after any submission of this
Agreement to such shareholders for approval, no amendment shall be made that
decreases the Merger Consideration to be paid for the Bank Stock as set forth in
Section 1.05 or that materially and adversely affects the rights of the
shareholders of the Bank hereunder without the requisite approval of such
shareholders. This Agreement may be amended, modified or supplemented only by an
instrument in writing executed by the party against which enforcement of the
amendment, modification or supplement is sought.
IN WITNESS WHEREOF, Purchaser and the Bank have caused this Agreement
to be executed by their duly authorized officers as of the date first above
written.
SANTA BARBARA BANCORP
David W. Spainhour, President and
Chief Executive Officer
and
Jay D. Smith, Secretary
FIRST VALLEY BANK
Terrill F. Cox, Chairman of the Board
and
John P. Lizarraga, Secretary
EXHIBIT "A"
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Merger Agreement"), is made
this 11th day of December, 1996, by and between FIRST VALLEY BANK, LOMPOC,
CALIFORNIA (the "Existing Bank") and NEW LOMPOC, INC. ("Newco"), and joined in
by SANTA BARBARA BANCORP, a California corporation ("BHC").
W I T N E S S E T H:
A. The Existing Bank is a California banking corporation duly organized
and existing under the laws of the State of California having its principal
office in the City of Lompoc, State of California, with authorized capital stock
of 500,000 shares of common stock, $1.00 par value ("Existing Bank Common
Stock"), 450,000 of which are validly issued and outstanding.
B. Newco is an interim California corporation duly organized and
existing under the laws of the State of California, having its principal office
in the City of Lompoc, State of California, with authorized capital stock
consisting of 1,000 shares of common stock, par value $1.00 per share (the
"Newco Stock"), all of which are issued and outstanding.
C. A majority of the Boards of Directors of each of the Existing Bank
and Newco, pursuant to the authority given by and in accordance with the
provisions of the California General Corporation Law (the "California Code"), as
amended, has approved this Merger Agreement under which Newco shall be merged
with and into the Existing Bank (the "Merger") and have authorized the execution
hereof; and the Board of Directors of the BHC has approved this Merger
Agreement, authorized BHC to join in and be bound by this Merger Agreement, and
authorized the undertakings herein made by BHC.
D. As and when required by the provisions of this Merger Agreement, all
such action as may be necessary or appropriate shall be taken by Newco, the
Existing Bank and BHC in order to consummate the Merger.
NOW, THEREFORE, in consideration of the foregoing premises, the
Existing Bank and Newco, joined by BHC, hereby agree that Newco shall be merged
with and into the Existing Bank on the following terms and conditions:
1. Merger of Newco and the Existing Bank. At the Effective Date (as
defined in Section 13), Newco shall be merged with and into the Existing Bank
pursuant to the provisions of Section 1107 of the California Code ("Section
1107") as amended. The current Articles of Incorporation of the Existing Bank
shall constitute the Articles of Incorporation of the bank resulting from the
Merger (the "Resulting Bank") until the same shall be amended and changed as
provided by law.
2. Effects of the Merger. The Merger shall have the effects set forth
in Section 1107. The Resulting Bank shall be deemed to be a continuation in
entity and identity of each of the Existing Bank and Newco; shall be subject to
all the liabilities, obligations, duties and relations of each merging bank, and
shall without the necessity of any conveyance, assignment or transfer, become
the owner of all of the assets of every kind and character formerly belonging to
the Existing Bank and Newco.
3. Name and Offices of the Resulting Bank. The name of the Resulting
Bank shall be "First Valley Bank." The existing office and facilities of the
Existing Bank shall be the principal office and facilities of the Resulting Bank
following the Merger.
4. Directors and Officers. The directors, advisory directors and
officers of the Resulting Bank at the Effective Date shall be as set forth on
Schedule One to this Agreement and each of such persons shall hold office from
the Effective Date until their respective successors are duly elected or
appointed and qualified in the manner provided in the Articles of Incorporation
and Bylaws of the Resulting Bank or as otherwise provided by law.
5. Exchange of the Existing Bank Stock.
A. At the Effective Date (as defined below) by virtue of this Agreement and
without any further action on the part of any holder, all holders of the
Existing Bank Stock (the "Shareholders") shall be entitled to receive from BHC,
as of the Effective Date, $58.00 in cash (the "Merger Consideration") for each
share of Existing Bank Stock owned by such holder at the Effective Date;
provided, however, that in the event the Effective Date does not occur on or
prior to March 31, 1997, the Merger Consideration per share shall increase by
$.011 per day commencing April 1, 1997 and continuing through the Effective
Date.
B. The number of shares of Newco Stock outstanding at the Effective Date
shall, at the Effective Date and by virtue of the Merger and without any action
on the part of BHC or any other party as holder thereof, be converted into a
like number of shares of common stock of the Resulting Bank with a par value of
$1.00 per share, with the effect that the number of shares of the common stock
of the Resulting Bank outstanding immediately after the Effective Date shall be
equal to the aggregate number of shares of Existing Bank Stock issued and
outstanding immediately before the Effective Date.
C. The shares of Existing Bank Stock issued and outstanding at the
Effective Date shall, by operation of law and without any action on the part of
the holder thereof, unless dissenters' rights under applicable law are preferred
with respect thereto, be converted into the right to receive the consideration
set forth in Section 5.A.
D. On or following the Effective Date, each holder of Existing Bank Stock
shall be required to surrender his shares of Existing Bank Stock to Santa
Barbara Bank & Trust (the "Exchange Agent") and, upon such surrender, each such
holder shall be entitled to receive from Purchaser an amount of cash as
determined pursuant to Section 5.A. Until so surrendered, each such outstanding
certificate representing shares of Existing Bank Stock shall be deemed for all
purposes, subject only to dissenters' rights under applicable law, to evidence
solely the right to receive such consideration from Purchaser as described in
Section 5.A.
6. Stock Transfer Books. The stock transfer books of Newco shall be closed
as of the close of business at the Effective Date, and no transfer of record of
any of the shares of the Newco Stock shall take place thereafter.
7. The Existing Bank Shareholders' Meeting. This Merger Agreement shall be
submitted to the shareholders of the Existing Bank at a meeting called to be
held as promptly as practicable and to the sole shareholder of Newco by written
consent of the sole shareholder. Upon approval by the requisite vote of the
shareholders of the Existing Bank and the approval of the sole shareholder of
Newco, this Merger Agreement shall be made effective as soon as practicable
thereafter in the manner provided in Section 13 hereof.
8. Dissenters' Rights. Any shareholder of the Existing Bank who perfects
his dissenter's rights in accordance with the provisions of Chapter 13 of the
California Code shall be governed by such provisions of law.
9. Conditions to Consummation of the Merger. Consummation of the Merger as
provided herein shall be conditioned upon the receipt of all consents, orders
and approvals and satisfaction of all other requirements prescribed by law which
are necessary for the consummation of the Merger, including without limitation,
the approvals of the FDIC, the Board of Governors of the Federal Reserve System
and the Superintendent of Banks of the State of California.
10. Termination. This Merger Agreement may be terminated and abandoned at
any time prior to or on the Closing Date, whether before or after action thereon
by the shareholders of the Existing Bank, by mutual consent of the Boards of
Directors of both Newco and the Existing Bank.
11. Effect of Termination. In the event of the termination and abandonment
of this Merger Agreement pursuant to the provisions of Section 10 hereof, the
same shall be of no further force or effect and there shall be no liability by
reason of this Merger Agreement or the termination thereof on the part of either
Existing Bank, Newco, BHC or the directors, officers, employees, agents or
stockholders of any of them.
12. Waiver, Amendment and Modification. Any of the terms or conditions of
this Merger Agreement may be waived at any time, whether before or after action
thereon by the shareholders of the Existing Bank by the party that is entitled
to the benefits thereof. This Merger Agreement may be modified or amended at any
time, whether before or after action thereon by the shareholders of the Existing
Bank, by BHC and the Existing Bank; provided, however, that in no event may any
amendment hereto be made after action by the shareholders of the Existing Bank
that affects the value of the consideration to be received by the shareholders
of the Existing Bank specified in Section 5 of this Merger Agreement or that
materially and adversely affects the rights of the Existing Bank's shareholders
hereunder without the requisite approval of such shareholders. Any waiver,
modification or amendment of this Merger Agreement shall be in writing.
13. Effective Date. Subject to the terms, and upon satisfaction on or
before the Closing Date of all requirements of law, and the conditions specified
in this Merger Agreement, the Merger shall become effective at the opening of
business on the date specified in the Certificate of Merger to be issued by the
Secretary of State of the State of California under the seal of his office
authorizing the Resulting Bank to conduct the business of banking, such time
being herein called the "Effective Date."
14. Multiple Counterparts. For the convenience of the parties hereto, this
Merger Agreement may be executed in multiple counterparts, each of which shall
be deemed an original, and all counterparts hereof so executed by the parties
hereto, whether or not such counterpart shall bear the execution of each of the
parties hereto, shall be deemed to be, and shall be construed as, one and the
same Merger Agreement. A telecopy or facsimile transmission of a signed
counterpart of this Merger Agreement shall be sufficient to bind the party or
parties whose signature(s) appear thereon.
15. Governing Law. THIS MERGER AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA.
16. Further Assurances. Each party hereto agrees from time to time, as and
when requested by the other party hereto, or by its successors or assigns, to
execute and deliver, or cause to be executed and delivered, all such deeds and
instruments and to take or cause to be taken such further or other acts, either
before or after the Effective Date, as may be deemed necessary or desirable in
order to vest in and confirm to the Resulting Bank title to and possession of
any assets of Newco or the Existing Bank acquired or to be acquired by reason of
or as a result of the Merger and otherwise to carry out the intent and purposes
hereof, and the officers and directors of the parties hereto are fully
authorized in the name of their respective corporate names to take any and all
such actions.
17. Assignment. This Merger Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns,
but no party to this Merger Agreement shall assign this Merger Agreement, by
operation of law or otherwise, in whole or in part, without the prior written
consent of the other parties. Any assignment made or attempted in violation of
this Section 17 shall be void and of no effect.
18. Severability. In the event that any provision of this Merger Agreement
is held to be illegal, invalid or unenforceable under present or future laws,
then (a) such provision shall be fully severable and this Merger Agreement shall
be construed and enforced as if such illegal, invalid or unenforceable provision
were not a part hereof; (b) the remaining provisions of this Merger Agreement
shall remain in full force and effect and shall not be affected by such illegal,
invalid or unenforceable provision or by its severance from this Merger
Agreement; and (c) there shall be added automatically as a part of this Merger
Agreement a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and still be legal, valid and
enforceable.
19. Specific Performance. Each of the parties hereto acknowledges that the
other parties would be irreparably damaged and would not have an adequate remedy
at law for money damages in the event that any of the covenants contained in
this Merger Agreement were not performed in accordance with its terms or
otherwise were materially breached. Each of the parties hereto therefore agrees
that, without the necessity of proving actual damages or posting bond or other
security, the other party shall be entitled to temporary and/or permanent
injunction or injunctions to prevent breaches of such performance and to
specific enforcement of such covenants in addition to any other remedy to which
they may be entitled, at law or in equity.
20. Rules of Construction. Descriptive headings as to the contents of
particular sections are for convenience only and shall not control or affect the
meaning, construction or interpretation of any provision of this Merger
Agreement. Each use herein of the masculine, neuter or feminine gender shall be
deemed to include the other genders. Each use herein of the plural shall include
the singular and vice versa, in each case as the context requires or as it is
otherwise appropriate. The word "or" is used in the inclusive sense.
21. Articles, Sections, Exhibits and Schedules. Unless otherwise indicated,
all articles and sections referred to herein are articles and sections,
respectively, of this Merger Agreement and all exhibits referred to herein are
exhibits attached to this Merger Agreement. Any and all schedules, exhibits,
annexes, statements, reports, certificates or other documents or instruments
referred to herein or attached hereto are and shall be incorporated herein by
reference hereto as though fully set forth herein verbatim.
22. Binding Effect. All of the terms, covenants, representations,
warranties and conditions of this Merger Agreement shall be binding upon, and
inure to the benefit of and be enforceable by, the parties hereto and their
respective successors, representatives and permitted assigns. Nothing expressed
or referred to herein is intended or shall be construed to give any person other
than the parties hereto any legal or equitable right, remedy or claim under or
in respect of this Merger Agreement, or any provision herein contained, it being
the intention of the parties hereto that this Merger Agreement, the assumption
of obligations and statements of responsibilities hereunder, and all other
conditions and provisions hereof are for the sole benefit of the parties to this
Merger Agreement and for the benefit of no other person. Nothing in this Merger
Agreement shall act to relieve or discharge the obligation or liability of any
third party to any party to this Merger Agreement, nor shall any provision give
any third party any right of subrogation or action over or against any party to
this Merger Agreement.
[Signature pages on following page]
IN WITNESS WHEREOF, the Existing Bank and Newco have caused this Merger
Agreement to be executed in counterparts by their duly authorized officers and
their corporate seals to be hereunto affixed as of the date first above written,
and the directors constituting a majority of the Board of Directors of such bank
and corporation have hereunto subscribed their names.
FIRST VALLEY BANK,
Lompoc, California
Terrill F. Cox, Chairman of the Board
and
John F. Lizarraga, Secretary
A Majority of the Directors of
FIRST VALLEY BANK
Lompoc, California
NEW LOMPOC, INC.
By:
Name:
Its:
ATTEST:
________________, Secretary
A Majority of the Directors of
NEW LOMPOC, INC.
BHC hereby joins in the foregoing Merger Agreement, and undertakes that
it will be bound thereby and will do and perform all acts and things therein
referred to or provided to be done by it.
IN WITNESS WHEREOF, BHC has caused this undertaking to be made in
counterparts by its duly authorized officers and its corporate seal to be
hereunto affixed as of the date first above written.
SANTA BARBARA BANCORP
[ seal ]
David W. Spainhour,
President and Chief Executive Officer
and
Jay D. Smith, Secretary
SCHEDULE ONE
DIRECTORS AND OFFICERS OF THE RESULTING BANK
DIRECTORS David A. Abts
Don Lafler
John J. McGrath
Jay D. Smith
David W. Spainhour
William S. Thomas, Jr.
Kent M. Vining
OFFICERS David W. Spainhour - Chairman of the Board
Chief Executive Officer
Dean E. Minor - President
John P. Lizarraga - Secretary
Kent M. Vining - Assistant Secretary
Jan Van Bergen - Sr. Vice President
A.R. Ayala - Sr. Vice President
Raymond F. Down - Vice President
John A. Riedel - Vice President
EXHIBIT "B"
VOTING AGREEMENT AND IRREVOCABLE PROXY
This VOTING AGREEMENT AND IRREVOCABLE PROXY (this "Agreement") dated as
of December 11, 1996 is executed by and among First Valley Bank, Lompoc,
California, a California banking association (the "Bank"), Santa Barbara
Bancorp, a California corporation ("Santa Barbara"), Terrill Cox ("Cox"), as a
proxy, David W. Spainhour ("Spainhour") as a substitute proxy, and the director
shareholders of the Bank listed on the signature page to this Agreement who are
all directors of the Bank (together with Cox referred to herein individually as
a "Shareholder" and collectively as the "Shareholders").
WHEREAS, the Bank and Santa Barbara have executed that certain
Agreement and Plan of Reorganization, dated as of December 11, 1996 (the
"Reorganization Agreement"), providing for the merger of an interim California
corporation ("Newco") with the Bank (the "Merger").
WHEREAS, Section 5.16 of the Reorganization Agreement requires that the
Bank deliver to Santa Barbara the irrevocable proxies of the Shareholders; and
WHEREAS, the Bank and Santa Barbara are relying on the irrevocable
proxies in incurring expenses in reviewing the Bank's business, in preparing a
proxy statement, in proceeding with the filing of applications for regulatory
approvals, and in undertaking other actions necessary for the consummation of
the Merger.
NOW, THEREFORE, for and in consideration of the foregoing and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Santa Barbara, the Bank and the Shareholders undertake, promise,
covenant and agree with each other as follows:
1. The Shareholders, being the holders of the shares of common stock of
the Bank (the "Bank Stock") set forth below their names on the signature pages
hereto, hereby agree to vote at the shareholders' meeting referred to in Section
1.06 of the Reorganization Agreement (the "Meeting") such shares of Bank Stock
and all shares of Bank Stock the Shareholders own of record as of the date of
the Meeting and to direct the vote of all shares of Bank Stock that the
Shareholders own beneficially and have the power and authority to direct the
voting thereof as of the date of the Meeting (the "Shares") in favor of approval
of the Merger and the Agreement and Plan of Merger by and between the Bank and
Newco (the "Merger Agreement") and all of the agreements and transactions
contemplated by the Reorganization Agreement and the Merger Agreement.
2. In order to better effect the provisions of Section 1, each
Shareholder hereby revokes any previously executed proxies and hereby
constitutes and appoints Cox, with full power of substitution, his or her true
and lawful proxy and attorney-in-fact (the "Proxy Holder") to vote at the
Meeting all of such Shareholder's Shares in favor of the approval of the Merger
and the Merger Agreement and the transactions contemplated by the Reorganization
Agreement and the Merger Agreement, with such modifications to the Merger and
the Merger Agreement as the parties thereto may make; provided, however, that
this proxy shall not apply with respect to any vote on the Merger or the Merger
Agreement if the Reorganization Agreement or the Merger Agreement is modified so
as to reduce the amount of consideration to be received by the Shareholders
under the Merger Agreement in its present form.
3. Cox, by his execution below, hereby appoints Spainhour as substitute
proxy to act as the Proxy Holder under this Agreement; provided, however, that
such appointment of Spainhour as Proxy Holder is subject to revocation by Cox at
any time upon notice to the Bank. Spainhour, by his execution below as
substitute Proxy Holder, agrees to vote all of the Shareholders' Shares at the
Meeting in favor of the approval of the Merger and the Merger Agreement and the
transactions contemplated by the Reorganization Agreement and the Merger
Agreement, with such modifications to the Merger and the Merger Agreement as the
parties may make; provided, however, that this proxy shall not apply with
respect to any vote on the Merger or the Merger Agreement if the Reorganization
Agreement or the Merger Agreement is modified so as to reduce the amount of
consideration to be received by the Shareholders under the Merger Agreement in
its present form.
4. Each Shareholder hereby covenants and agrees that until this
Agreement is terminated in accordance with its terms, each Shareholder will not,
and will not agree to, without the consent of Santa Barbara, directly or
indirectly, sell, transfer, assign, pledge, hypothecate, cause to be redeemed or
otherwise dispose of any of the Shares or grant any proxy or interest in or with
respect to any such Shares or deposit such shares into a voting trust or enter
into another voting agreement or arrangement with respect to such Shares except
as contemplated by this Agreement, unless the Shareholder causes the transferee
of such Shares, or another holder of Bank Stock in the amount of such Shares, to
deliver to Santa Barbara an amendment to this Agreement whereby such transferee
becomes bound by the terms of this Agreement.
5. This proxy shall be limited strictly to the power to vote the Shares
in the manner set forth in Section 2 and shall not extend to any other matters.
6. The Shareholders acknowledge that the Bank and Santa Barbara are
relying on this Agreement in incurring expenses in reviewing the Bank's
business, in preparing a proxy statement, in proceeding with the filing of
applications for regulatory approvals, and in undertaking other actions
necessary for the consummation of the Merger and that THE PROXY GRANTED HEREBY
IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE TO THE FULL EXTENT PERMITTED BY
APPLICABLE LAW. The Shareholders and the Bank acknowledge that the performance
of this Agreement is intended to benefit Santa Barbara.
7. The irrevocable proxy granted pursuant hereto shall continue in
effect until the earlier to occur of (i) the termination of the Reorganization
Agreement, as it may be amended or extended from time to time, or (ii) the
consummation of the transactions contemplated by the Reorganization Agreement
and the Merger Agreement.
8. The vote of the Proxy Holder shall control in any conflict between
his vote of the Shares and a vote by the Shareholders of the Shares, and the
Bank agrees to recognize the vote of the Proxy Holder instead of the vote of the
Shareholders in the event the Shareholders do not vote in favor of the approval
of the Merger and the Merger Agreement as set forth in Section 1 hereof.
9. This Agreement may not be modified, amended, altered or
supplemented with respect to a particular Shareholder except upon the execution
and delivery of a written agreement executed by the Bank, Santa Barbara and such
Shareholder.
10. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument. A telecopy or facsimile transmission of
a signed counterpart of this Agreement shall be sufficient to bind the party or
parties whose signature(s) appear thereon.
11. This Agreement, together with the Reorganization Agreement and the
agreements contemplated thereby, embody the entire agreement and understanding
of the parties hereto in respect to the subject matter contained herein. This
Agreement supersedes all prior agreements and understandings among the parties
with respect to such subject matter contained herein.
12. All notices, requests, demands and other communications required or
permitted hereby shall be in writing and shall be deemed to have been duly given
if delivered by hand or mail, certified or registered mail (return receipt
requested) with postage prepaid to the addresses of the parties hereto set forth
on below their signature on the signature pages hereof or to such other address
as any party may have furnished to the others in writing in accordance herewith.
13. THIS AGREEMENT AND THE RELATIONS AMONG THE PARTIES HERETO ARISING
FROM THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF CALIFORNIA.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date above written.
FIRST VALLEY BANK, LOMPOC, CALIFORNIA
Terrill F. Cox, Chairman of the Board
John F. Lizarraga, Secretary
Address for the Bank:
First Valley Bank
200 North "H" Street
Lompoc, California 93436-609
SANTA BARBARA BANCORP
David W. Spainhour,
President and Chief Executive Officer
and
Jay D. Smith, Secretary
Address for Santa Barbara:
Santa Barbara Bancorp
1021 Anacapa Street
Santa Barbara, California 93101-2036
PROXY HOLDER:
Terrill F. Cox
Address for the Proxy Holder:
First Valley Bank
200 North "H" Street
Lompoc, California 93436-609
SUBSTITUTE PROXY HOLDER:
David W. Spainhour
Address for the Substitute Proxy Holder:
Santa Barbara Bancorp
1021 Anacapa Street
Santa Barbara, California 93101-2036
SHAREHOLDERS:
Name:
Number of Shares Owned:
Address:
Name:
Number of Shares Owned:
Address:
Name:
Number of Shares Owned:
Address:
Name:
Number of Shares Owned:
Address:
Name:
Number of Shares Owned:
Address:
Name:
Number of Shares Owned:
Address:
Name:
Number of Shares Owned:
Address:
EXHIBIT "C"
OPINION OF COUNSEL TO PURCHASER
1. Purchaser is a corporation validly existing and in good standing under
the laws of the State of California and has the power and authority to own its
property and carry on its business as now conducted.
2. Newco is a corporation duly organized under the laws of the State of
California.
3. This Agreement has been duly authorized by all necessary corporate
action on the part of Purchaser, has been executed and delivered by Purchaser,
and constitutes the valid and legally binding obligation of Purchaser,
enforceable in accordance with its terms.
4. The Merger Agreement has been duly authorized by all necessary corporate
action on the part of Newco and Purchaser, has been executed and delivered by
Newco and Purchaser, and constitutes the valid and legally binding obligation of
Newco and Purchaser, enforceable in accordance with its terms.
5. The execution, delivery and performance by Purchaser of this Agreement
will not violate any covenants or conditions of the Articles of Incorporation or
Bylaws of Purchaser and will not violate any provision of law nor any order of
any court or governmental agency.
6. The execution, delivery and performance by Purchaser and Newco of the
Merger Agreement will not violate any covenants or conditions of the Articles of
Incorporation or Bylaws of Purchaser or Newco and will not violate any provision
of law nor any order of any court or governmental agency.
7. All necessary regulatory approvals and consents for Purchaser and Newco
to consummate the transactions contemplated by this Agreement and the Merger
Agreement have been obtained;
8. Purchaser owns all of the outstanding securities of Newco, free and
clear of any and all liens, pledges, security interests, encumbrances, buy-sell
agreements, preemptive rights and adverse claims of every kind or character; and
9. Such other matters as counsel for the Bank may reasonably request.
In giving the foregoing opinions, such counsel may rely upon the opinion of
other legal counsel satisfactory to the Bank and upon certificates of public
officials and officers and directors of Purchaser and Newco. Such opinions may
be based on such assumptions and subject to such qualifications and limitations
as are usual in legal opinions in similar situations.
EXHIBIT "D"
OPINION OF COUNSEL TO THE BANK
1. The Bank is a California banking corporation, duly organized, validly
existing and in good standing under the laws of the State of California and has
the power and authority to own its property and carry on its business as now
conducted.
2. Each of this Agreement and the Merger Agreement has been duly authorized
by all necessary corporate action on the part of the Bank, has been executed and
delivered by the Bank, and constitutes the valid and legally binding obligation
of the Bank, enforceable in accordance with its terms.
3. The execution, delivery and performance by the Bank of this Agreement
and the Merger Agreement will not violate any covenants or conditions of the
Articles or Bylaws of the Bank and will not violate any provision of law, any
order of any court or governmental agency or result in the creation or
imposition of any lien, charge or encumbrance upon the assets of the Bank
pursuant to the provisions of any indenture, mortgage, trust, franchise, permit,
license, note or other agreement or instrument known to such counsel to which
the Bank is a party.
4. To the best knowledge of such counsel, there are no actions, suits or
proceedings pending or threatened against or affecting the Bank, at law or in
equity or before or by any governmental department, commission, board, bureau
agency or instrumentality, domestic or foreign, which are likely to result in a
Material Adverse Change other than that certain case styled Alison Mitchell v.
First Valley Bank, et. al.
5. The entire authorized capital stock of the Bank consists of 500,000
shares of common stock, par value $1.00 per share, 450,000 of which are issued
and outstanding, and that there are no (i) other outstanding equity securities
of any kind or character, including but not limited to preferred stock, (ii)
outstanding subscriptions, options, convertible securities, rights, warrants,
calls or other agreements or commitments of any kind issued or granted by, or
binding upon, the Bank to purchase or otherwise acquire any security of or
equity interest in the Bank or (iii) outstanding subscriptions, options, rights,
warrants, calls, convertible securities, irrevocable proxies or other agreements
or commitments obligating the Bank to issue any shares of, restricting the
transfer of or otherwise relating to shares of its capital stock of any class.
6. All necessary regulatory approvals and consents, and, to the best
knowledge of such counsel, all other approvals and consents, for the Bank to
consummate the transactions contemplated by this Agreement and the Merger
Agreement have been obtained.
7. Such other matters as counsel for Purchaser may reasonably request.
In giving the foregoing opinions, such counsel may rely upon the opinion of
other legal counsel satisfactory to Purchaser and upon certificates of public
officials and officers and directors of the Bank. Such opinions may be based on
such assumptions and subject to such qualifications and limitations and in such
form as are usual in legal opinions in similar situations.
EXHIBIT "E"
RELEASE
(Director)
This Release (the "Release"), dated as of ________ ___, 1997, is made
by ____________________________ (the "Director"), in favor of First Valley Bank,
Lompoc, California, a California banking association (the "Bank").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Agreement and Plan of Reorganization
(the "Reorganization Agreement"), dated as of December 11, 1996, by and between
the Bank and Santa Barbara Bancorp, it is a condition to the consummation of the
transactions contemplated by the Reorganization Agreement that the Director
shall have executed and delivered to the Bank an instrument releasing the Bank
from any and all claims of such Director;
WHEREAS, the purpose of this Release is to serve as the instrument
referred to in Section 8.08 of the Reorganization Agreement as discussed above;
WHEREAS, the Director desires to enter into this Release in consideration
of the matters set forth herein;
NOW, THEREFORE, for and in consideration of $1.00 and other good and
valuable consideration, the receipt and sufficiency of which is hereby expressly
acknowledged, the Director agrees as follows:
1. The Director acknowledges that, to the best of his knowledge, there are
no existing claims or defenses, personal or otherwise, or rights of setoff
whatsoever against the Bank, except as a result of the Director's capacity as a
depositor with the Bank. The Director for himself and on behalf of his heirs and
assigns (the "Director Releasing Parties") releases, acquits and forever
discharges the Bank, its predecessors, successors, assigns, officers, directors,
employees, agents and servants, and all persons, natural or corporate, in
privity with them or any of them, from any and all claims or causes of action of
any kind whatsoever, at common law, statutory or otherwise, which the Director
Releasing Parties, or any of them, has now or might have in the future, known or
unknown, now existing or that might arise hereafter, except such claims or
causes of action as may exist as a result of or may arise out of (i) the
Director's capacity as a depositor with the Bank, (ii) any claim for unpaid
directors' fees, or (ii) any claim for indemnification by the Bank the Director
may have in the future pursuant to the Articles of Incorporation of the Bank (an
"Article Indemnification"). It is intended that this Release shall release all
claims of any kind or nature that any of the Director Releasing Parties might
have against those hereby released whether asserted or not and except as may
exist as a result of or may arise out of (i) the Director's capacity as a
depositor with the Bank or (ii) Article Indemnifications. The Director
specifically waives the provisions of California Civil Code Section 1542
providing that a general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of executing the
release, which if known to him must have materially affected his settlement with
the debtor.
2. It is expressly understood and agreed that the terms hereof are
contractual and not merely recitals, and that the agreements herein contained
and the consideration herein transferred is to compromise doubtful and disputed
claims, and that no releases made or other consideration given hereby or in
connection herewith shall be construed as an admission of liability, all
liability being expressly denied by the Bank. The Director hereby represents and
warrants that the consideration hereby acknowledged for entering into this
Release and the transactions contemplated hereby is greater than the value of
all claims, demands, actions and causes of action herein relinquished, released,
renounced, abandoned, acquitted, waived and/or discharged, and that this Release
is in full settlement, satisfaction and discharge of any and all such claims,
demands, actions, and causes of action that the Director may have or be entitled
to against the Bank, and its predecessors, assigns, legal representatives,
officers, directors, employees, attorneys and agents.
3. The Director represents and warrants that he has full power and
authority to enter into, execute and deliver this Release, all proceedings
required to be taken to authorize the execution, delivery and performance of
this Release and the agreements and undertakings relating hereto and the
transactions contemplated hereby have been validly and properly taken and this
Release constitutes a valid and binding obligation of the Director in the
capacity in which executed. The Director further represents and warrants that he
has entered into this Release freely of his own accord and without reliance on
any representations of any kind of character not set forth herein. The Director
has been encouraged to retain and consult with separate legal counsel from that
of the Bank prior to entering into this release.
4. This Release shall be construed and enforced in accordance with the laws
of the State of California, and to the extent applicable, the laws of the United
States. If any provision of this Release or the application thereof to any
person or circumstance shall be determined to be invalid or unenforceable to any
extent, such provision shall be deemed severable, the remainder of this Release
and the application of all other provisions shall not be affected thereby and
shall be enforced to the greatest extent permitted by law, consistent with the
intent of the parties hereto to enter into a mutual release. This Release is
executed as of the date first above written. As used herein, the singular
includes the plural, the masculine includes the feminine and neuter, and vice
versa.
THE DIRECTOR:
Print Name:
STATE OF CALIFORNIA ss.
ss.
COUNTY OF ___________ ss.
This instrument was acknowledged before me on
___________________________, 199__, by _____________________________________,
Individually.
Notary Public in and for the State of California
Printed Name:
My Commission Expires:
EXHIBIT "F"
RELEASE
(Officer)
This Release (the "Release"), dated as of ______ ___, 1997, is made by
______________________________ (the "Officer"), in favor of First Valley Bank,
Lompoc, California, California banking association (the "Bank").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Agreement and Plan of Reorganization
(the "Reorganization Agreement"), dated as of December 11, 1996, by and between
the Bank and Santa Barbara Bancorp, it is a condition to the consummation of the
transactions contemplated by the Reorganization Agreement that the Officer shall
have executed and delivered to the Bank an instrument releasing the Bank from
any and all claims of such Officer;
WHEREAS, the purpose of this Release is to serve as the instrument
referred to in Section 8.08 of the Reorganization Agreement as discussed above;
WHEREAS, the Officer desires to enter into this Release in consideration of
the matters set forth herein;
NOW, THEREFORE, for and in consideration of $1.00 and other good and
valuable consideration, the receipt and sufficiency of which is hereby expressly
acknowledged, the Officer agrees as follows:
1. The Officer acknowledges that, to the best of his or her knowledge,
there are no existing claims or defenses, personal or otherwise, or rights of
setoff whatsoever against the Bank, except as a result of the Officer's capacity
as a depositor with the Bank, or for salary or bonus due to such Officer in the
ordinary course of business. The Officer for himself or herself and on behalf of
his or her heirs and assigns (the "Officer Releasing Parties") releases, acquits
and forever discharges the Bank, its predecessors, successors, assigns,
officers, directors, employees, agents and servants, and all persons, natural or
corporate, in privity with them or any of them, from any and all claims or
causes of action of any kind whatsoever, at common law, statutory or otherwise,
which the Officer Releasing Parties, or any of them, has now or might have in
the future, known or unknown, now existing or that might arise hereafter, except
such claims or causes of action as may exist as a result of or may arise out of
(i) the Officer's capacity as a depositor with the Bank, (ii) for salary, bonus
and other compensation and benefits due to such Officer in the ordinary course
of business, or (iii) any claim for indemnification by the Bank the Officer may
have under the articles of Incorporation of the Bank (an "Article
Indemnification"). It is intended that this Release shall release all claims of
any kind or nature that any of the Officer Releasing Parties might have against
those hereby released whether asserted or not and except as may exist as a
result of or may arise out of (i) the Officer's capacity as a depositor with the
Bank, (ii) for salary, bonus and other compensation and benefits due to such
Officer in the ordinary course of business or (iii) for Article
Indemnifications. The Officer specifically waives the provisions of California
Civil Code Section 1542 providing that a general release does not extend to
claims which the creditor does not know or suspect to exist in his favor at the
time of executing the release, which if known to him must have materially
affected his settlement with the debtor.
2. It is expressly understood and agreed that the terms hereof are
contractual and not merely recitals, and that the agreements herein contained
and the consideration herein transferred is to compromise doubtful and disputed
claims, and that no releases made or other consideration given hereby or in
connection herewith shall be construed as an admission of liability, all
liability being expressly denied by the Bank. The Officer hereby represents and
warrants that the consideration hereby acknowledged for entering into this
Release and the transactions contemplated hereby is greater than the value of
all claims, demands, actions and causes of action herein relinquished, released,
renounced, abandoned, acquitted, waived and/or discharged, and that this Release
is in full settlement, satisfaction and discharge of any and all such claims,
demands, actions, and causes of action that the Officer may have or be entitled
to against the Bank, and its predecessors, assigns, legal representatives,
officers, directors, employees, attorneys and agents.
3. The Officer represents and warrants that he or she has full power and
authority to enter into, execute and deliver this Release, all proceedings
required to be taken to authorize the execution, delivery and performance of
this Release and the agreements and undertakings relating hereto and the
transactions contemplated hereby have been validly and properly taken and this
Release constitutes a valid and binding obligation of the Officer in the
capacity in which executed. The Officer further represents and warrants that he
or she has entered into this Release freely of his or her own accord and without
reliance on any representations of any kind of character not set forth herein.
The Officer has been encouraged to retain and consult with separate legal
counsel from that of the Bank prior to entering into this release.
4. This Release shall be construed and enforced in accordance with the laws
of the State of California, and to the extent applicable, the laws of the United
States. If any provision of this Release or the application thereof to any
person or circumstance shall be determined to be invalid or unenforceable to any
extent, such provision shall be deemed severable, the remainder of this Release
and the application of all other provisions shall not be affected thereby and
shall be enforced to the greatest extent permitted by law, consistent with the
intent of the parties hereto to enter into a mutual release. This Release is
executed as of the date first above written. As used herein, the singular
includes the plural, the masculine includes the feminine and neuter, and vice
versa.
THE OFFICER:
Print Name:
STATE OF CALIFORNIA ss.
ss.
COUNTY OF ___________ ss.
This instrument was acknowledged before me on
___________________________, 199__, by _____________________________________,
Individually.
Notary Public in and for the State of California
Printed Name:
My Commission Expires:
