UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
September 15, 1996
(Date of Report (Date of Earliest Event Reported))
VENTURA COUNTY NATIONAL BANCORP
(Exact name of registrant as specified in its charter)
CALIFORNIA 0-15814 77-00038387
(State or other (Commission File (I.R.S. Employer
jurisdiction Number) Identification
of incorporation Number)
or organization)
500 Esplanade Drive
Ventura, California 93030
(805) 981-2600
(Address, including ZIP code, and telephone number, including area code,
of registrant's principal executive offices)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Not applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Not applicable.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not applicable.
ITEM 4. CHANGES IN BANK'S CERTIFYING ACCOUNTANT.
Not applicable.
ITEM 5. OTHER EVENTS.
(a) On September 15, 1996, Registrant and City National Corporation ("CNC")
entered into an Agreement and Plan of Merger (the "Merger Agreement"). The
Merger Agreement provided for the Merger ("Merger") of Registrant with and into
CNC, subject to, among other customary conditions, regulatory approval and
approval by the shareholders of Registrant.
Pursuant to the Merger Agreement, each outstanding share of Registrant's
common stock, no par value ("VCNB Stock") will be exchanged, at the election of
the shareholder, for (i) shares of CNC common stock, $.01 par value ("CNC
Stock") in an amount (the "Exchange Ratio") equal to the quotient of $5.03
divided by the average of the closing sales prices of CNC Stock as reported on
the New York Stock Exchange, Inc. ("NYSE") Composite Transactions reporting
system during a specified period ending three trading days before the
anticipated effective date of the Merger (the "Final CNC Stock Price"), (ii)
cash in the amount of $5.03, or (iii) a combination of CNC Stock and cash. The
Exchange Ratio will NOT be adjusted to the extent the Final CNC Stock Price is
below $15.65 or above $19.10. The aggregate amount of CNC Stock available to
holders who elect to receive CNC Stock shall equal approximately 55% of the
total consideration paid by CNC to holders of VCNB Stock in the Merger. To the
extent that elections for CNC Stock are made for more or less than such amount,
shares of CNC Stock and the cash consideration will be distributed on a pro rata
basis.
The foregoing description of the Merger Agreement is qualified in its
entirety by reference to the Merger Agreement, which is attached hereto as
Exhibit 2.1 and incorporated herein by reference.
(b) In connection with the execution of the Merger Agreement, the
Registrant and CNC entered into a Stock Option Agreement, dated as of September
15, 1996 (the "Option Agreement"), pursuant to which Registrant granted CNC the
right to purchase up to 19.99% of the shares of VCNB Stock at a price of $3.93
per share upon the occurrence of certain events described therein relating
generally to the acquisition of the Registrant by a third party. The Option
Agreement provides that in no event shall CNC realize a total profit in excess
of $2.0 million from the exercise of the option issued thereunder.
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The foregoing description is qualified in its entirety by reference to the
Stock Option Agreement, a copy of which is attached hereto as Exhibit 99.1 and
is incorporated herein by reference.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
Not applicable.
(b) Pro Forma Financial Statements.
Not applicable.
(c) Exhibits.
2.1 Agreement and Plan of Merger
99.1 Stock Option Agreement
99.2 Press Release dated September 16, 1996
ITEM 8. CHANGE IN FISCAL YEAR.
Not applicable.
SIGNATURES
Under the requirements of the Securities and Exchange Act of 1934, Ventura
County National Bancorp has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Dated: September 23, 1996.
VENTURA COUNTY NATIONAL BANCORP
By /s/ Richard S. Cupp
-------------------------------------
Richard S. Cupp
President and Chief Executive Officer
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of the 15th day of
September, 1996 (the "Agreement"), by and between City National Corporation
("CNC"), a Delaware corporation, and Ventura County National Bancorp, a
California corporation ("VCNB"), is entered into with reference to the
following:
A. CNC and VCNB are bank holding companies registered
under the Bank Holding Company Act of 1956, as amended (the
"BHCA") and subject to regulation and supervision by the
Board of Governors of the Federal Reserve System (the "Board
of Govenors");
B. The Boards of Directors of CNC and VCNB have
determined that it is in the best interests of their
respective companies and shareholders to consummate the
business combination transaction provided for in this
Agreement;
C. The parties hereto desire to effect a business
combination through a merger (the "Merger"), which will be
structured so that VCNB will be merged into CNC and that CNC
will be the surviving corporation in the Merger;
D. As a condition and inducement to CNC's willingness
to enter into this Agreement, VCNB and CNC are entering
into, immediately after the execution and delivery hereof, a
Stock Option Agreement (the "Stock Option Agreement") dated
as of the date hereof, pursuant to which VCNB shall grant to
CNC an option to purchase shares of the common stock, no par
value, of VCNB (the "VCNB Common Stock");
E. The Merger requires certain shareholder and
regulatory approvals and may be effected only after the
necessary approvals have been obtained;
F. For federal income tax purposes, it is intended
that the Merger shall qualify as a "reorganization" within
the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code");
G. The parties desire to make certain
representations, warranties and agreements in connection
with the Merger and also to prescribe certain conditions to
the Merger; and
H. Subject to any specific provisions of this
Agreement, it is the intent of the parties that CNC by
reason of this Agreement shall not (until consummation of
the Merger) control, and shall not be deemed to control VCNB
or any of its subsidiaries, directly or indirectly, and
shall not exercise or be deemed to exercise, directly or
indirectly, a controlling influence over the management or
policies of the VCNB or any of its subsidiaries;
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NOW, THEREFORE, in consideration of the promises and the mutual
agreements contained herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER AND RELATED TRANSACTIONS
SECTION 1.1 STRUCTURE OF THE MERGER. At the effective
time of the Merger, VCNB will merge with and into CNC, with CNC
being the surviving corporation (hereinafter sometimes called the
"Surviving Corporation"), pursuant to the provisions of, and with
the effect provided in, the Delaware General Corporation Law
("DGCL") and shall continue its corporate existence under the
laws of the State of Delaware. The name of the Surviving
Corporation shall be "City National Corporation". Upon
consummation of the Merger, the separate corporate existence of
VCNB shall cease.
SECTION 1.2 CLOSING. The closing of the Merger (the
"Closing") will take place at 6:00 P.M. Pacific time, on the
first Friday (unless such date is a holiday, in which case it
will be the preceding Business Day (as defined in Section 9.1))
that is both (a) after satisfaction of each of the conditions set
forth in Article VII; and (b) no less than four Business Days
after the occurrence of the Election Deadline (as defined in
Section 2.3).
SECTION 1.3 EFFECTIVE TIME. The Merger shall become
effective as set forth in the certificate of merger (the
"Certificate of Merger") which shall be filed with the Secretary
of State of the State of Delaware on the date of Closing. The
term "Effective Time" shall be the date and time when the Merger
becomes effective, as set forth in the Certificate of Merger.
SECTION 1.4 EFFECTS OF THE MERGER.
(a) At the Effective Time, (i) VCNB shall be merged with
and into CNC and the separate existence of VCNB shall cease,
(ii) the Certificate of Incorporation of CNC as in effect
immediately prior to the Effective Time shall be the Certificate
of Incorporation of Surviving Corporation, and (iii) the Bylaws
of CNC as in effect immediately prior to the Effective Time shall
remain the Bylaws of Surviving Corporation.
(b) At and after the Effective Time, the Merger will have
the effects set forth in the DGCL.
SECTION 1.5 THE BANK MERGER. After the Merger, and at
CNC's discretion, Ventura County National Bank ("Ventura Bank")
and/or Frontier Bank, N.A. ("Frontier") (collectively, the
"Banks") shall be merged with or into City National Bank ("CNB"),
a wholly-owned subsidiary of CNC, pursuant to the Bank Merger Act
and other applicable federal and state laws and regulations (the
"Bank Mergers").
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SECTION 1.6 CALIFORNIA REQUIREMENTS. CNC and VCNB shall
each execute, deliver and/or certify each and every document,
certificate or other instrument required under the California
General Corporation Law (the "CGCL") to be filed with the
Secretary of State of the State of California in order for the
effectiveness of the Merger to be recognized in California. CNC
shall file such items no later than three Business Days following
the Effective Time.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS
SECTION 2.1 EFFECT ON CAPITAL STOCK. Subject to the
other provisions of this Article II, at the Effective Time, by
virtue of the Merger and without any action on the part of the
holders of shares of stock of VCNB and CNC:
(a) COMMON STOCK OF CNC. Each share of common stock; $1.00
par value per share of CNC (the "CNC Common Stock") issued and
outstanding immediately prior to the Effective Time shall remain
an issued and outstanding share of common stock of the Surviving
Corporation, and shall not be affected by the Merger;
(b) COMMON STOCK OF VCNB. Each share of common stock, no
par value per share of VCNB ("VCNB Common Stock") issued and
outstanding immediately prior to the Effective Time, shall be
converted into the right to receive CNC Common Stock or cash as
provided in Section 2.2(a);
(c) DISSENTING COMMON STOCK. Each share of VCNB Common
Stock that is a "dissenting share" within the meaning of Chapter
13 of the CGCL ("Dissenting Common Stock") shall not be converted
into or represent a right to receive CNC Common Stock or cash
hereunder unless and until such shares have lost their status as
dissenting shares under Chapter 13 of the CGCL, at which time
such shares shall either be converted into cash or CNC Common
Stock pursuant to Section 2.6.
(d) CANCELLATION OF CERTAIN SHARES. Any shares of VCNB
Common Stock held by CNC (or any of its wholly owned
Subsidiaries) or VCNB (or any of its wholly owned Subsidiaries),
other than those held in a fiduciary capacity or as a result of
debts previously contracted, shall be canceled and retired at the
Effective Time and no consideration shall be issued in exchange
therefor.
SECTION 2.2 CONVERSION OF VCNB COMMON STOCK.
(a) Subject to the other provisions of this Article II,
each share of VCNB Common Stock issued and outstanding
immediately prior to the Effective Time (other than Dissenting
Common Stock and Common Stock described in Section 2.1(d)) shall,
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by virtue of the Merger, be converted into the right to receive,
at the election of the holder thereof as provided in Section 2.3,
either:
(i) a fraction of a share of CNC Common Stock equal to
the quotient (such quotient, the "Exchange Ratio") of (i) $5.03,
divided by (ii) the average of the daily closing prices of a
share of CNC Common Stock on the New York Stock Exchange as
reported in the WALL STREET JOURNAL for the twenty consecutive
trading days ending on the third trading day immediately prior to
the Effective Time (such average, the "Final CNC Stock Price");
provided, in the event that the Final CNC Stock Price shall be
more than $19.10, the Exchange Ratio shall be 0.2634, and in the
event that the Final CNC Stock Price shall be less than $15.65,
the Exchange Ratio shall be 0.3214; or
(ii) cash in the amount of $5.03 (such amount, the
"Per Share Cash Consideration"); or
(iii) a combination of CNC Common Stock and cash
in the amounts as set forth in Subsections 2.2(a)(i) and (a)(ii)
above.
(b) At the Effective Time, the stock transfer books of VCNB
shall be closed as to holders of VCNB Common Stock immediately
prior to the Effective Time and no transfer of VCNB Common Stock
by any such holder shall thereafter be made or recognized. If,
after the Effective Time, certificates are properly presented in
accordance with Article III of this Agreement to the Exchange
Agent (as defined in Section 2.3), such certificates shall be
canceled and exchanged for certificates representing the number
of whole shares of CNC Common Stock, if any, and/or a check
representing the amount of cash, if any, into which the VCNB
Common Stock represented thereby was converted in the Merger,
plus any payment for a fractional share of CNC Common Stock.
SECTION 2.3 ELECTION AND PRORATION PROCEDURES.
(a) ELECTION FORMS AND TYPES OF ELECTIONS. An election
form and other appropriate and customary transmittal materials
(which shall specify that delivery shall be effected, and risk of
loss and title to the certificates theretofore representing
shares of Common Stock shall pass, only upon proper delivery of
such certificates to an exchange agent selected by CNC and
reasonably acceptable to VCNB (the "Exchange Agent")) in such
form as CNC and VCNB shall mutually agree ("Election Form") shall
be mailed no less than thirty-five days prior to the anticipated
Effective Time or on such other date as VCNB and CNC shall
mutually agree ("Mailing Date") to each holder of record of VCNB
Common Stock as of five Business Days prior to the Mailing Date
("Election Form Record Date"). CNC shall make available one or
more Election Forms as may be reasonably requested by all persons
who become holders (or beneficial owners) of VCNB Common Stock
after the Election Form Record Date and prior to the Election
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Deadline (as defined herein), and VCNB shall provide to the
Exchange Agent all information reasonably necessary for it to
perform its obligations as specified herein. Each Election Form
shall permit the holder (or the Beneficial Owner through
appropriate and customary documentation and instructions) to
elect (an "Election") to receive either (i) CNC Common Stock (a
"Stock Election") with respect to all of such holder's VCNB
Common Stock, or (ii) cash (a "Cash Election") with respect to
all of such holder's VCNB Common Stock, or (iii) a specified
number of shares of VCNB Common Stock to receive CNC Common Stock
(a "Combination Stock Election") and a specified number of shares
of VCNB Common Stock to receive cash (a "Combination Cash
Election"). Any VCNB Common Stock (other than Dissenting Common
Stock) with respect to which the holder (or the Beneficial Owner,
as the case may be) shall not have submitted to the Exchange
Agent, an effective, properly completed Election Form received
prior to the Election Deadline shall be deemed to be
"Undesignated Shares" hereunder.
(b) PROPER AND TIMELY ELECTION. Any Election shall have
been properly made and effective only if the Exchange Agent shall
have actually received a properly completed Election Form by 5:00
P.M. on the later of the 30th day following the Mailing Date or
the 31st day following the mailing of any notice required by
Section 1301 of the CGCL (or such other time and date as CNC and VCNB
may mutually agree) (the "Election Deadline"). An Election Form
shall be deemed properly completed only if an Election is
indicated for each share of VCNB Common Stock covered by such
Election Form and if accompanied by one or more certificates (or
customary affidavits and indemnification regarding the loss or
destruction of such certificates or the guaranteed delivery of
such certificates) representing all shares of VCNB Common Stock
covered by such Election Form, together with duly executed
transmittal materials included in or required by the Election
Form. Any Election Form may be revoked or changed by the person
submitting such Election Form at or prior to the Election
Deadline. In the event an Election Form is revoked prior to the
Election Deadline, the shares of VCNB Common Stock represented by
such Election Form shall automatically become Undesignated Shares
unless and until a new Election is properly made with respect to
such shares on or before the Election Deadline, and CNC shall
cause the certificates representing such shares of VCNB Common
Stock to be promptly returned without charge to the person
submitting the revoked Election Form upon written request to that
effect from the holder who submitted such Election Form. Subject
to the terms of this Agreement and of the Election Form, the
Exchange Agent shall have reasonable discretion to determine
whether any election, revocation or change has been properly or
timely made and to disregard immaterial defects in the Election
Forms, and any decisions of CNC and VCNB required by the Exchange
Agent and made in good faith in determining such matters shall be
binding and conclusive. Neither CNC nor the Exchange Agent shall
be under any obligation to notify any person of any defect in an
Election Form.
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(c) PRORATION. As promptly as practicable but not later
than ten calendar days after the Effective Time, CNC shall cause
the Exchange Agent to effect the allocation among the holders of
VCNB Common Stock of rights to receive CNC Common Stock or cash
in the Merger in accordance with the Election Forms as follows:
(i) if the aggregate number of shares of VCNB Common
Stock as to which Stock Elections and Combination Stock
Elections shall have effectively been made exceeds, and is
not approximately equal to, 55% of the issued and
outstanding shares of VCNB Common Stock as of the Effective
Time (the "Stock Amount"), then:
(A) All Undesignated Shares and Dissenting Common
Stock shall be deemed to have made Cash Elections; and
(B) A stock proration factor (the "Stock
Proration Factor") shall be determined by dividing the
Stock Amount by the total number of shares of VCNB
Common Stock with respect to which effective Stock
Elections and Combination Stock Elections were made.
Each holder of VCNB Common Stock who made an effective
Stock Election or Combination Stock Election shall be
entitled to:
(I) the number of shares of CNC Common Stock
equal to the product of (x) the Exchange Ratio,
multiplied by (y) the number of shares of VCNB
Common Stock covered by such Stock Election or
Combination Stock Election, multiplied by (z) the
Stock Proration Factor; and
(II) cash in an amount equal to the product
of (x) the Per Share Cash Consideration,
multiplied by (y) the number of shares of VCNB
Common Stock covered by such Stock Election or
Combination Stock Election, multiplied by (z) one
minus the Stock Proration Factor.
(ii) if the aggregate number of shares of VCNB Common
Stock as to which Stock Elections and Combination Stock
Elections shall have effectively been made shall be less
than, and not approximately equal to, the Stock Amount,
then:
(A) the Exchange Agent shall select by lot such
number of holders of Undesignated Shares to receive CNC
Common Stock as shall be necessary so that the number
of shares for which a Stock Election and Combination
Stock Election has been made or is deemed to be made
shall be approximately equal to the Stock Amount. If
all the Undesignated Shares plus all shares as to which
Stock Elections and Combination Stock Elections have
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been made together are less than, and not approximately
equal to, the Stock Amount, then:
(B) a cash proration factor (the "Cash Proration
Factor") shall be determined by dividing the Stock
Amount (less the (i) shares for which an effective
Stock Election and Combination Stock Election has been
made, and (ii) all the Undesignated Shares) by the sum
of the total number of shares of VCNB Common Stock with
respect to which effective Cash Elections and
Combination Cash Elections were made. Each holder of
VCNB Common Stock who made an effective Cash Election
or Combination Cash Election shall be entitled to:
(I) cash equal to the product of (x) the Per
Share Cash Consideration, multiplied by (y) the
number of shares of VCNB Common Stock covered by
such Cash Election or Combination Cash Election,
multiplied by (z) one minus the Cash Proration
Factor; and
(II) the number of shares of CNC Common Stock
equal to the product of (x) the Exchange Ratio,
multiplied by (y) the number of shares of VCNB
Common Stock covered by such Cash Election or
Combination Cash Election, multiplied by (z) the
Cash Proration Factor.
(d) CALCULATIONS. The calculations required by Section
2.2(a)(i) shall be prepared by CNC prior to the Effective Time
and shall be set forth in a certificate executed by the Chief
Financial Officer of CNC and furnished to VCNB two Business Days
prior to the Effective Time showing the manner of calculation in
reasonable detail. Any calculation of a portion of a share of
CNC Common Stock shall be rounded to the nearest ten-thousandth
of a share, and any cash payment shall be rounded to the nearest
cent. For purposes of this Section 2.3, the shares of VCNB
Common Stock for which CNC Common Stock is to be issued as
consideration in the Merger shall be deemed to be "approximately
equal" to the Stock Amount if such number is within 25,000 shares
(of VCNB Common Stock) of the Stock Amount.
(e) NO FRACTIONAL SHARES. Notwithstanding any other
provisions of this Agreement, each holder of shares of VCNB
Common Stock exchanged pursuant to the Merger who would otherwise
have been entitled to receive a fraction of a share of CNC Common
Stock (after taking into account all certificates delivered by
such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share
of CNC Common Stock multiplied by the Final CNC Stock Price (as
defined in Section 2.2). No holder will be entitled to
dividends, voting rights or any other rights as a stockholder in
respect of any fractional share of CNC Common Stock.
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SECTION 2.4 STOCK OPTIONS. Prior to the Effective Time,
VCNB shall take appropriate action such that each option granted
pursuant to the 1991 Stock Option Plan (the "Option Plan") by
VCNB to purchase shares of the VCNB Common Stock that is
outstanding and unexercised immediately prior to the Effective
Time shall be cancelled by VCNB in consideration of the payment
by VCNB to each holder of such options of an aggregate amount in
cash equal to the positive difference, if any, between (a) the
Per Share Cash Consideration times the number of shares of VCNB
Common Stock as to which such holder has options, and (b) the
aggregate exercise price of such options. At the Effective Time,
each option to purchase a share of Common Stock pursuant to the
Option Plan shall terminate and be of no further force or effect,
and any rights thereunder to purchase shares of VCNB Common Stock
or CNC Common Stock shall also terminate and be of no further
force or effect.
SECTION 2.5 ADJUSTMENTS FOR DILUTION AND OTHER MATTERS.
If prior to the Effective Time, (a) VCNB shall declare a stock
dividend or distribution on the VCNB Common Stock, or subdivide,
split up, reclassify or combine the VCNB Common Stock, or declare
a dividend, or make a distribution, on the VCNB Common Stock, in
any security convertible into Common Stock (provided that no such
action may be taken by VCNB without CNC's prior written consent
as provided in Section 4.2 (b)), or (b) the outstanding shares of
CNC Common Stock shall have been increased, decreased, changed
into or exchanged for a different number or kind of shares or
securities, in each case as a result of a reorganization,
recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar change in CNC's
capitalization, then an appropriate adjustment or adjustments
will be made to the Exchange Ratio (including the Final CNC Stock
Price and the Final CNC Stock Prices below and above which the
Exchange Ratio is a specified amount pursuant to Section 2.2).
SECTION 2.6 CONVERSION OF DISSENTING COMMON STOCK.
(a) VCNB shall give CNC prompt notice upon receipt by VCNB
of any written demands for appraisal rights, withdrawal of such
demands, and any other documents received or instruments served
pursuant to Chapter 13 of the CGCL and shall give CNC the
opportunity to direct all negotiations and proceedings with
respect to such demands. VCNB shall not voluntarily make any
payment with respect to any demands for appraisal rights and
shall not, except with the prior written consent of CNC, settle
or offer to settle such demands. Each holder of Common Stock who
becomes entitled, pursuant to provisions of said Chapter 13 of
the CGCL, to payment for his or her shares of Dissenting Common
Stock under the provisions of said Chapter shall receive payment
therefor from CNC and such shares of Common Stock shall be
canceled.
(b) If prior to the Election Deadline any shareholder of
VCNB shall fail to perfect, or shall effectively withdraw or
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lose, his or her rights under Chapter 13 of the CGCL, the
Dissenting Common Stock of such holder shall be treated for
purposes of this Article II as any other shares of outstanding
Common Stock. If, after the Election Deadline, any holder of
Common Stock shall fail to perfect, or shall effectively withdraw
or lose, his or her right to appraisal of and payment for his or
her Dissenting Common Stock under Chapter 13 of the CGCL, each
share of Dissenting Common Stock of such holder shall be
converted into the right to receive the Per Share Cash
Consideration pursuant to this Article II.
ARTICLE III
EXCHANGE OF SHARES
SECTION 3.1 EXCHANGE PROCEDURES.
(a) EXCHANGE AGENT. No later than the Effective Time, CNC
shall deposit with the Exchange Agent the number of shares of CNC
Common Stock issuable in the Merger and the amount of cash
payable in the Merger. The Exchange Agent shall not be entitled
to vote or exercise any rights of ownership with respect to CNC
Common Stock held by it from time to time hereunder, except that
it shall receive and hold all dividends or other distributions
paid or distributed with respect to such shares for the account
of the persons entitled thereto.
(b) EXCHANGE OF CERTIFICATES AND CASH. After completion
of the allocation procedure set forth in Section 2.3, each holder
of a certificate formerly representing VCNB Common Stock (other
than Dissenting Common Stock) who surrenders or has surrendered
such certificate (or customary affidavits and indemnification
regarding the loss or destruction of such certificate), together
with duly executed transmittal materials included in or required
by the Election Form, to the Exchange Agent shall, upon
acceptance thereof, be entitled to a certificate representing CNC
Common Stock and/or cash into which the shares of Common Stock
shall have been converted pursuant hereto, as well as cash in
lieu of any fractional shares of CNC Common Stock to which such
holder would otherwise be entitled. The Exchange Agent shall
accept such VCNB certificate upon compliance with such reasonable
and customary terms and conditions as the Exchange Agent may
impose to effect an orderly exchange thereof in accordance with
normal practices. Until surrendered as contemplated by this
Section 3.1, each certificate representing VCNB Common Stock
shall be deemed from and after the Effective Time to evidence
only the right to receive cash and/or CNC Common Stock, as the
case may be, upon such surrender. CNC shall not be obligated to
deliver the consideration to which any former holder of Common
Stock is entitled as a result of the Merger until such holder
surrenders his certificate or certificates representing shares of
VCNB Common Stock for exchange as provided in this Article III.
If any certificate for shares of CNC Common Stock, or any check
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representing cash and/or declared but unpaid dividends, is to be
issued in a name other than that in which a certificate
surrendered for exchange is issued, the certificate so
surrendered shall be properly endorsed and otherwise in proper
form for transfer and the person requesting such exchange shall
affix any requisite stock transfer tax stamps to the certificate
surrendered or provide funds for their purchase or establish to
the satisfaction of the Exchange Agent that such taxes are not
payable.
(c) AFFILIATES. Certificates surrendered for exchange by
any person constituting an "affiliate" of VCNB for purposes of
Rule 144(a) under the Securities Act of 1933, as amended (the
"Securities Act"), shall not be exchanged for certificates
representing whole shares of CNC Common Stock until CNC has
received a written agreement from such person as provided in
Section 6.17.
SECTION 3.2 VOTING AND DIVIDENDS. Former shareholders of
record of VCNB shall be entitled to vote after the Effective Time
at any meeting of CNC stockholders the number of whole shares of
CNC Common Stock into which their respective shares of Common
Stock are converted, regardless of whether such holders have
exchanged their certificates representing Common Stock for
certificates representing CNC Common Stock in accordance with the
provisions of this Agreement. Until surrendered for exchange in
accordance with the provisions of Section 3.1 of this Agreement,
each certificate theretofore representing shares of Common Stock
(other than shares to be canceled pursuant to Section 2.1(d) of
this Agreement) shall from and after the Effective Time represent
for all purposes only the right to receive shares of CNC Common
Stock, cash in lieu of fractional shares and/or cash, as set
forth in this Agreement. No dividends or other distributions
declared or made after the Effective Time with respect to CNC
Common Stock with a record date after the Effective Time shall be
paid to the holder of any unsurrendered certificate of Common
Stock with respect to the shares of CNC Common Stock represented
thereby, until the holder of such certificate of Common Stock
shall surrender such certificate. Subject to the effect of
applicable laws, following surrender of any such certificates of
Common Stock for which shares of CNC Common Stock are to be
issued, there shall be paid to the holder of the certificates,
without interest, (i) the amount of any cash payable with respect
to a fractional share of CNC Common Stock to which such holder is
entitled pursuant to Section 2.1(e) and the amount of dividends
or other distributions with a record date after the Effective
Time theretofore paid with respect to such whole shares of CNC
Common Stock, and (ii) at the appropriate payment date, the
amount of dividends or other distributions with a record date
after the Effective Time but prior to surrender and a payment
date subsequent to surrender payable with respect to such whole
shares of CNC Common Stock.
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SECTION 3.3 NO LIABILITY. Neither CNC, VCNB nor the
Exchange Agent shall be liable to any holder of shares of Common
Stock for any shares of CNC Common Stock (or dividends or
distributions with respect thereto) or cash delivered to a public
official pursuant to any applicable abandoned property, escheat
or similar law.
SECTION 3.4 WITHHOLDING RIGHTS. CNC or the Exchange
Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any
holder of shares of Common Stock such amounts as CNC or the
Exchange Agent is required to deduct and withhold with respect to
the making of such payment under the Code, or any provision of
state, local or foreign tax law. To the extent that amounts are
so withheld by CNC or the Exchange Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having
been paid to the holder of the shares of Common Stock in respect
of which such deduction and withholding was made by CNC or the
Exchange Agent.
ARTICLE IV
CONDUCT PENDING THE MERGER
SECTION 4.1 CONDUCT OF VCNB'S AND EACH BANK'S BUSINESS
PRIOR TO THE EFFECTIVE TIME. Except as expressly provided in
this Agreement, during the period from the date of this Agreement
to the Effective Time, VCNB shall, and shall cause each of the
Banks to, (a) conduct its business in the usual, regular and
ordinary course, consistent with past practices and consistent
with prudent banking practices; (b) use its commercially
reasonable efforts to maintain and preserve intact its business
organization, employees and advantageous customer relationships
and to continue to develop such customer relationships and
retain the services of its key officers and key employees; (c)
maintain and keep its properties in as good repair and condition
as at present except for obsolete properties and for
deterioration due to ordinary wear and tear; (d) use its
commercially reasonable efforts to maintain in full force and
effect insurance comparable in amount and scope of coverage to
that now maintained by it; (e) perform in all material respects
all of its obligations under material contracts, leases and
documents relating to and affecting its assets, properties and
businesses except such obligations as it may in good faith
reasonably dispute; (f) charge off all loans receivable and other
assets, or portions thereof, deemed uncollectible in accordance
with GAAP, RAP or applicable law or regulation, classified as
"loss", or as directed by its regulators; (g) maintain the ALLL
in accordance with past practices, GAAP and RAP;
(h) substantially comply with and perform all material
obligations and duties imposed upon it by all federal and state
laws, and rules, regulations and orders imposed by federal, state
and local Governmental Authorities; and (i) take no action which
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would reasonably be expected to adversely affect or delay the
ability of CNC, VCNB or one or both of the Banks to obtain any
necessary approvals, consents or waivers of any Governmental
Authority or other parties required for the Merger or to perform
its covenants or agreements under this Agreement on a timely
basis.
SECTION 4.2 FORBEARANCE BY VCNB AND ITS SUBSIDIARIES.
Except as expressly provided in this Agreement or as set forth on
the Disclosure Schedule, during the period from the date of this
Agreement to the Effective Time, VCNB shall not, and shall cause
Banks and each of its and Banks' Subsidiaries not to, without the
prior written consent of CNC:
(a) incur any indebtedness for borrowed money or assume,
guaranty, endorse or otherwise as an accommodation become
responsible for the obligations of any other person, except for
(i) in connection with banking transactions with banking
customers in the ordinary course of business, or (ii) short-term
borrowings (A) not in excess of the longer of thirty days or
until May 31, 1997, (B) in amounts not greater than $12,500,000
in the aggregate for VCNB and its Subsidiaries and (C) made at
prevailing market rates and terms;
(b) issue any capital stock; adjust, split, combine or
reclassify any capital stock; make, declare or pay any dividend
or make any other distribution on any capital stock; directly or
indirectly, redeem, purchase or otherwise acquire any shares of
its capital stock or any securities or obligations convertible
into or exchangeable for any shares of its capital stock; grant
any stock appreciation rights; grant any person any right to
acquire any shares of its capital stock (whether pursuant to an
option, warrant, right or otherwise); or issue any additional
shares of capital stock; provided, however, that VCNB may make a
cash payment equal to the difference between the Per Share Cash
Consideration and the exercise price of any option granted
pursuant to the Option Plan, issue VCNB Common Stock pursuant to
exercise of an option granted pursuant to the Option Plan, and
receive or redeem shares of VCNB Common Stock pursuant to the
exercise of such an option;
(c) sell, transfer, mortgage, encumber or otherwise dispose
of any of its properties or assets with a book value of $250,000
or more, or cancel, release or assign any indebtedness of any
person or any claim held by any person, except pursuant to
contracts or agreements in full force and effect at the date of
this Agreement or the sale of OREO or similarly held properties
other than at a cash price of at least 80% of book value of such
property at June 30, 1996;
(d) except as permitted under Subsection (l) of this
Section 4.2, make any material investment either by purchase of
stock or securities, contributions to capital, or purchase of any
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properties or assets of any other person, other than
contributions by VCNB to the capital of one or both of the Banks;
(e) enter into, renew or terminate any material contract or
agreement, or make any material change in any of its material
leases or contracts, other than (i) entering into deposit
agreements or loan agreements or (ii) in the ordinary course of
business consistent with past practice with respect to contracts,
agreements or leases terminable on not more than 90 days notice
or involving payment or payments of not more than $50,000 per
annum;
(f) alter its method of establishing interest rates for
deposits;
(g) except as required by applicable law, increase in any
manner the compensation (including, without limitation, bonuses)
or fringe benefits of any of its directors, employees, former
employees or retirees, or pay any pension or retirement
allowance, not required by any existing plan or agreement to any
such directors, employees, former employees or retirees; become a
party to, amend or commit to any pension, retirement, retention,
"golden parachute" or other severance (other than in accordance
with Section 6.5(c)), deferred compensation, profit sharing or
welfare benefit plan or agreement or employment agreement with or
for the benefit of any employee, former employee or retiree other
than annual salary and bonus increases made in the ordinary
course of business not exceeding 2% in the aggregate (based upon
June 30, 1996 aggregate salary figures) or 6% for any employee;
or voluntarily accelerate the vesting of any employee benefits,
except for the acceleration of the vesting of options granted
pursuant to the Option Plan;
(h) settle any claim, action or proceeding involving any
liability for material monetary damages (except to the extent
fully reserved against on its books and records) or enter into
any settlement agreement containing material obligations;
(i) hire additional officers or employees (except that non-
officer employees may be hired to fill vacancies in existing
positions), or enter into new employment arrangements or
relationships with new or existing employees which have the legal
effect of any relationship other than at-will employment;
(j) sell any securities;
(k) sell Small Business Administration Loans for an
aggregate gain in excess of
$1,000,000;
(l) purchase any securities other than United States
Treasury securities or United States government agency
securities, which in either case have maturities of three years
or less;
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(m) engage in trading with respect to any securities issued
by VCNB;
(n) amend its Articles of Incorporation, Articles of
Association or Bylaws, or change in any material way its material
policies and procedures or make any material changes to its tax
or financial accounting policies (except as to changes to its tax
or financial accounting policies as may be required by GAAP or
RAP);
(o) introduce any new service or products, institute any
new advertising campaign, open, or apply to open or close any
branch or facility, or, in general, change in any material
respects its products and services from those in effect at the
date of this Agreement;
(p) (i) renew, extend the maturity of, or materially alter
any of the material terms of, any loan or forbearance agreement
for a period of greater than six months, or (ii) make, acquire a
participation in, or reacquire an interest in a participation
sold of, any loan or forbearance agreement, without regard to the
term thereof, which, in the case of (i) or (ii), when aggregated
with all other loans or extensions of credit to, or forbearance
agreements with, such borrower and its related interests, result
in total obligations that may be outstanding following such
renewal, extension or reacquisition or for which a material term
may be altered in excess of: (A) if any such loans are rated
"substandard" or below, $125,000, or (B) if all such loans are
rated "pass," $750,000 for unsecured obligations or $1,000,000
for secured obligations except for an increase of 10% over the
previously existing commitment for such borrower and related
interests;
(q) make, acquire a participation in, or reacquire an
interest in a participation sold of, any loan that is not in
compliance with its normal credit underwriting standards,
policies and procedures as in effect on June 30, 1996, as
modified, if necessary, to become or remain in accordance with
GAAP or RAP or in conformity with the recommendations of the
Bank's regulators; or renew, extend the maturity of, or alter any
of the material terms of any such loan for a period of greater
than six months;
(r) reallocate or reduce any material accrual or reserve,
except for the reserve reversals listed on the Disclosure
Schedule, including, without limitation, any contingency reserve,
litigation reserve, tax reserve, or the ALLL, by reversal or
booking a negative provision, or generally change the methodology
by which such accounts have been handled in past periods, unless
required to do so by GAAP or RAP;
(s) file a 1996 or 1997 (short year) income tax return on
Form 1120 with the Internal Revenue Service ("IRS") or any state
taxing agency or authority;
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(t) take any action that would reasonably be expected to
adversely affect VCNB's ability to perform its covenants or
agreements made herein on a timely basis;
(u) consummate a foreclosure proceeding with respect to
non-residential land or properties, unless (i) a Phase I
environmental report has been obtained and (ii) CNC consents in
writing, which consent shall not be unreasonably withheld;
(v) sell any charged-off loan or settle any loan with a
contractual balance of $125,000 or more for less than 50% of the
amount of the total obligation;
(w) authorize or permit any of its officers, directors,
employees or agents to directly or indirectly solicit, initiate
or encourage any inquiries relating to, or the making of any
proposal which constitutes a Takeover Proposal (as defined
below), or recommend or endorse any Takeover Proposal, or
participate in any discussions or negotiations, or provide third
parties with any nonpublic information, relating to any such
inquiry or proposal or otherwise facilitate any effort or attempt
to make or implement a Takeover Proposal, PROVIDED, HOWEVER, that
VCNB may, and may authorize and permit its officers, directors,
employees or agents to, provide third parties with nonpublic
information, otherwise facilitate any effort or attempt by any
third party to make or implement a Takeover Proposal, recommend
or endorse any Takeover Proposal with or by any third party, and
participate in discussions and negotiations with any third party
relating to any Takeover Proposal, if its Board of Directors,
after having consulted with and considered the advice of counsel,
has reasonably determined in good faith that the failure to do so
would cause the members of its Board of Directors to breach their
fiduciary duties under applicable laws. VCNB will immediately
cease and cause to be terminated any activities, discussions or
negotiations conducted prior to the date of this Agreement with
any parties other than CNC with respect to any of the foregoing.
VCNB shall immediately advise CNC following the receipt by it of
any Takeover Proposal and the details thereof, and advise CNC of
any developments with respect to such Takeover Proposal
immediately upon the occurrence thereof. As used in this
Agreement, "Takeover Proposal" shall mean, with respect to any
person, any tender or exchange offer, proposal for a merger,
consolidation or other business combination involving VCNB or any
of its Subsidiaries or any proposal or offer to acquire in any
manner a substantial equity interest in, or a substantial portion
of the assets of, VCNB or any of its Subsidiaries other than the
transactions contemplated or permitted by this Agreement;
(x) take any action that would prevent or impede the Merger
from qualifying as a reorganization with the meaning of Section
368(c) of the Code; and
(y) agree to, or make any commitment to, take any of the
actions prohibited by this Section 4.2.
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SECTION 4.3 TIMELINESS OF CNC'S CONSENT. For purposes of
Section 4.2, any consent required from CNC, unless earlier given
or denied, shall be deemed to have been given three Business Days
after the time VCNB or one or both of the Banks shall have
requested such consent in writing, unless during such three-day
period CNC shall have promptly requested further information in
writing reasonably necessary to allow the decision to be made, in
which case such consent, unless earlier given or denied, shall be
deemed to have been given two Business Days after the time such
reasonably requested information has been furnished; provided,
however, with respect to any consent requested pursuant to
Section 4.2(p), CNC shall give or deny such request by the end of
the business day following the business day on which such request
was made by VCNB.
SECTION 4.4 CONDUCT BY CNC PRIOR TO THE EFFECTIVE TIME.
Except as expressly provided in this Agreement, during the period
from the date of this Agreement to the Effective Time, CNC shall
(a) not take any action which would reasonably be expected to
adversely affect or delay the ability of CNC, VCNB or one or both
of the Banks to obtain any necessary approvals, consents or
waivers of any Governmental Authority required for the
transactions contemplated by this Agreement or to perform its
covenants or agreements on a timely basis under this Agreement,
(b) amend its Certificate of Incorporation in any respect that
materially and adversely affects the rights and privileges
attendant to the CNC Common Stock, or (c) agree to, or make any
commitment to, take any of the actions prohibited by this Section
4.4.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1 REPRESENTATIONS AND WARRANTIES OF VCNB AND
THE BANK. VCNB represents and warrants to CNC that, except as
set forth in the Disclosure Schedule;
(a) RECITALS TRUE. The information set forth in the
recitals of this Agreement with respect to VCNB and each Bank is
true and correct.
(b) CAPITAL STOCK. VCNB is authorized to issue 20,000,000
shares of Common Stock, no par value, and is not authorized to
issue any other class or series of capital stock, or any other
securities giving the holder thereof the right to vote on any
matters on which stockholders of the VCNB can vote. As of the
date hereof, 9,228,723 shares of Common Stock are issued (of
which none were held as treasury stock and treated as issued but
not outstanding), and 636,000 shares are reserved for issuance
under the Option Plan. No shares are reserved for issuance
pursuant to any other stock options, restricted stock, stock
appreciation rights, dividend reinvestment or similar plan or
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plans. All outstanding shares of capital stock of VCNB are duly
authorized, validly issued and outstanding, fully paid and,
nonassessable, and are subject to no preemptive rights.
(c) AUTHORITY. Each of VCNB and the Banks has the power
and authority, and is duly qualified in all jurisdictions where
such qualification is required (except for such qualifications
the absence of which, individually or in the aggregate, would not
have a Material Adverse Effect on VCNB or either of the Banks),
to carry on its business as it is now being conducted and to own
all of its material properties and assets. VCNB and each of the
Banks has all federal, state, local and foreign governmental
authorizations necessary for it to own or lease its properties
and assets and to carry on its business as it is now being
conducted, except for such powers and authorizations the absence
of which, either individually or in the aggregate, would not have
a Material Adverse Effect on the VCNB or either of the Banks.
(d) SUBSIDIARIES. VCNB has no Subsidiaries, other than the
Banks, each of which is a wholly-owned subsidiary of VCNB. VCNB
does not own, directly or indirectly, any equity portion or
voting interest in any corporation, partnership or other entity,
except as received in satisfaction of a debt previously
contracted in good faith.
(e) APPROVALS. The execution by VCNB of this Agreement has
been authorized by all necessary corporate action, including, but
not limited to, a vote by its board of directors (which approval
includes a resolution recommending that this Agreement and the
Merger be approved by the stockholders of VCNB) subject to
adoption of this Agreement by the affirmative vote of the holders
of a majority of the outstanding shares of VCNB as required under
the CGCL. Subject to shareholder approval and to receipt of
required approvals, consents or waivers of Governmental
Authorities referred to in Section 7.1 (b), this Agreement is a
valid and binding agreement of VCNB, enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors'
rights, general equitable principles, and the rights of the FDIC.
(f) NO VIOLATIONS. The execution, delivery and performance
of this Agreement by VCNB does not, and the consummation of the
Merger will not, constitute (i) a breach or violation of, or a
default under any applicable law, rule or regulation or any
material judgment, decree, order, governmental permit or license,
or material indenture, agreement or instrument of VCNB, or to
which it (or any of its respective properties) is subject, which
breach, violation or default would have a Material Adverse Effect
on VCNB or would materially hinder or delay the Merger, or (ii) a
breach or violation of, or a default under, its Articles of
Incorporation or Bylaws; and the consummation of the Merger will
not require any approval, consent or waiver under any such law,
any rule, regulation, judgment, decree, order, governmental
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permit or license or the approval, consent or waiver of any other
party to any such agreement, indenture or instrument, other than
(A) the shareholder approval referred to in Section 7.1(a), (B)
the required approvals, consents and waivers of Governmental
Authorities referred to in Section 7.1(b), (C) the approvals,
consents or waivers as are required under the federal and state
securities or Blue Sky laws, (D) any other material approvals or
consents or waivers of third parties as set forth in the
Disclosure Schedule, and (E) any other approvals, consents or
waivers the absence of which, individually or in the aggregate,
would not result in a Material Adverse Effect on VCNB or would
not materially hinder or delay the Merger.
(g) COMMUNITY REINVESTMENT ACT. Each of the Banks received
a rating of "satisfactory" in its most recent examination or
interim review with respect to the Community Reinvestment Act.
VCNB has not been advised of any supervisory concerns regarding
any Bank's compliance with the Community Reinvestment Act.
(h) REPORTS. VCNB and each of the Banks have timely filed
all material reports, registrations and statements, together with
any amendments required to be made with respect thereto, that it
was required to file since January 1, 1991 with (i) the Board of
Governors, (ii) the Office of the Comptroller of the Currency
(the "OCC"), (iii) any state regulatory authority, (iv) the
Securities and Exchange Commission (the "SEC"), (v) the Federal
Deposit Insurance Corporation (the "FDIC") and (vi) any self-
regulatory organization (collectively "Governmental Authorities")
and have paid all fees and assessments due and payable in
connection therewith. Except for normal examinations conducted
by a Governmental Authority in the regular course of the business
of VCNB and the Banks, the Consent Order entered into by Frontier
with the OCC on March 29, 1993 which was terminated by the OCC on
______ __, 199_ the Memorandum of Understanding entered into by
VCNB with the Federal Reserve Bank of San Francisco, the Formal
Agreement entered into by Ventura Bank with the OCC, which Formal
Agreement was terminated by the OCC as of November 30, 1995 or as
set forth in the Disclosure Schedule, (i) no Governmental
Authority has initiated any proceeding or, to the best knowledge
of VCNB, investigation, into the business or operations of VCNB
or either of the Banks since January 1, 1991 and (ii) neither
VCNB nor either of the Banks is a party to any cease and desist
order, written agreement, memorandum of understanding or any
similar regulatory action or order with any Federal or state
governmental authorities, nor a recipient of any extraordinary
supervisory letter from, nor has it adopted any board resolution
at the request of, any of its regulators, nor been advised that
any such issuance or request is contemplated. Except as set
forth in the Disclosure Schedule, there is no material unresolved
violation, criticism or exception by any Governmental Authority
with respect to any report or statement relating to any
examinations of VCNB by any Governmental Authority with respect
to any report or statement relating to any examinations of VCNB
or either of the Banks. The deposits of Frontier and Ventura
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Bank are insured by the FDIC in accordance with the Federal
Deposit Insurance Act, up to applicable limits.
(i) FINANCIAL STATEMENTS. As of their respective dates,
none of VCNB's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 (the "1995 10-K")or Quarterly Report on
Form 10-Q for the quarters ended March 31, 1996 and June 30,
1996, nor any other document filed subsequent to December 31,
1995 under Section 13(a), 13(d), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), each in
the form (including exhibits) filed with the SEC (collectively,
the "VCNB Reports"), contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements made therein, in
light of the circumstances under which they were made, not
misleading. Each of the balance sheets or statements of
condition contained or incorporated by reference in the VCNB
Reports (including any related notes and schedules) fairly
present the financial position of the entity or entities to which
it relates as of its date and each of the statements of
operations and retained earnings and of cash flows or equivalent
statements contained or incorporated by reference in the VCNB
Reports (including any related notes and schedules) fairly
present the results of operations, retained earnings and cash
flows, as the case may be, of the entity or entities to which it
relates for the periods set forth therein (subject, in the case
of unaudited interim statements, to normal year-end audit
adjustments that are not material in amount or effect), in each
case in accordance with the published rules and regulations of
the SEC and generally accepted accounting principles ("GAAP")
consistently applied and applicable to bank holding companies
during the periods involved, except as may be noted therein. The
books and records of VCNB and its Subsidiaries have been, and are
being, maintained in all material respects in accordance with
GAAP and RAP and other applicable legal and accounting
requirements and reflect only actual transactions.
(j) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth in the June 30, 1996 10-Q, since December 31, 1995, there
have not been (i) any changes in the business, assets, financial
condition or results of operations of VCNB and its Subsidiaries
that, individually or in the aggregate, have had a Material
Adverse Effect on VCNB and its Subsidiaries; (ii) any amendments
to the Articles of Incorporation or Bylaws of VCNB; (iii) any
declarations, setting aside or payment of any dividend or any
other distribution in respect of the capital stock of VCNB; or
(iv) any changes by VCNB in accounting principles or methods or
tax methods, except as required or permitted by, the Financial
Accounting Standards Board or by any Governmental Authorities
having jurisdiction over the Bank.
(k) TAXES. Except as prohibited by Section 4.2(s), VCNB
has, or will have, timely filed all Tax Returns required to have
been filed prior to the Effective Time (taking into account valid
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extensions), and all such returns and reports are correct and
complete in all material respects. VCNB has delivered or made
available to CNC true and complete copies of all such Tax Returns
for 1992, 1993 and 1994 and, when available, will deliver to CNC
true and complete copies of such Tax Returns for 1995. The
Disclosure Schedule sets forth those California Tax Returns and
Federal Tax Returns that have been audited, those Tax Returns
that currently are the subject of audit, and those Tax Returns
for which the statute of limitations for the assessment of Taxes
has not run. All Taxes (including, but not limited to, any
interest, penalty or addition thereto) due, or required to be
withheld and paid over as of the date hereof as shown on such
returns have been paid. To VCNB's knowledge, VCNB has not
requested any extension of time within which to file a return or
report that has not since been timely filed. No deficiency in
any Taxes, assessments or governmental charges have been
proposed, asserted or assessed against VCNB that has not been
settled and paid. Except as set forth in the Disclosure
Schedule, no waiver of time to assess any Taxes is in effect and
no request for such waiver is pending. The Disclosure Schedule
identifies the amount and expiration dates for all net operating
loss carryforwards and gross timing differences of VCNB as of
December 31, 1995. VCNB has not undergone an ownership change
within the meaning of Section 382 of the Code. To VCNB's
knowledge, VCNB has no liability for Taxes, including employment
taxes, of any person under Treasury Regulation Section 1.1502-6, as a
transferee or successor, or otherwise. Except as set forth in
the Disclosure Schedule, VCNB has not made, nor is it obligated
to make, nor is it a party to any agreement that could reasonably
be expected to obligate it to make, any payments that are not
deductible pursuant to Code Section 280G. VCNB is not a dealer
within the meaning of Code Section 475 and the applicable
Treasury Regulations.
(l) ABSENCE OF CLAIMS; LITIGATION. No legal,
administrative, arbitration or other proceedings, claims, actions
or governmental or regulatory investigations of any nature are
pending or to its knowledge, threatened against VCNB or either of
the Banks which are reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on VCNB or to
materially hinder or delay consummation of the Merger. Neither
VCNB nor either of the Banks is in default with respect to any
material judgment, order, writ, injunction, decree, regulatory
restriction or award of any court, arbitrator or governmental
agency, authority or instrumentality. The Disclosure Schedule
contains a complete listing of litigation pending or, to VCNB's
knowledge, threatened against VCNB or either of the Banks as of
August 31, 1996, to which VCNB is a party and which names VCNB as
a defendant or cross-defendant and the amount reserved for
litigation matters in the aggregate.
(m) REGULATORY ACTIONS. As of the date hereof and to
VCNB's actual knowledge, neither VCNB nor either of the Banks is
the subject of a referral to either the United States Department
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of Justice or the Department of Housing and Urban Development for
alleged violations of the Fair Lending Acts. Except as set forth
in the Disclosure Schedule, to the knowledge of VCNB, each
material violation, criticism, or exception by any governmental
authority with respect to any examinations of VCNB or either of
the Banks has been resolved or is in the process of resolution.
(n) CERTAIN AGREEMENTS. Neither VCNB nor either of the
Banks is a party to an oral or written (i) consultant agreement,
not terminable on 90 days' or less notice and involving the
payment of more than $50,000 per annum, (ii) agreement with any
executive officer or other key employee, the benefits of which
are contingent, or the terms of which are materially altered,
upon the occurrence of a transaction involving it of the nature
contemplated by this Agreement, (iii) agreement with or with
respect to any executive officer providing any term of employment
or compensation guarantee extending for a period longer than six
months, or (iv) agreement or plan, any of the benefits of which
will be increased, or the vesting of the benefits of which will
be accelerated, by the occurrence of the Merger or the value of
any of the benefits of which will be calculated on the basis of
the Merger. CNC has been provided with a complete and accurate
listing of the names and current annual salary rates of all
persons employed by VCNB and each of its Subsidiaries, showing
for each such person the amounts paid or payable as salary, bonus
payments and any indirect compensation for the year ended
December 31, 1995, the names of all of the directors and officers
of VCNB and each of its Subsidiaries, and the names of all
persons, if any, holding tax or other powers of attorney for the
VCNB and each of its Subsidiaries.
(o) LABOR MATTERS. Neither VCNB nor any of its
Subsidiaries, is party to, or is bound by, any collective
bargaining agreement, contract, or other agreement or
understanding with a labor organization, nor is any of them the
subject of any proceeding asserting that it has committed an
unfair labor practice or seeking to compel it to bargain with any
labor organization as to wages and conditions of employment, nor
is there any strike or labor dispute involving VCNB or any of its
Subsidiaries. VCNB considers its employee relations and those of
each of its Subsidiaries to be satisfactory.
(p) EMPLOYEE BENEFIT PLANS. A list of all Employee Plans
(as hereinafter defined) is set forth in the Disclosure Schedule.
VCNB has delivered or made available to CNC true and complete
copies of the following documents, as they may have been amended
to the date hereof, embodying or relating to Employee Plans:
Each of the Employee Plans, including all amendments thereto, any
related trust agreements, insurance policies or any funding
agreements; the most recent determination letter from the IRS
with respect to each of the Employee Plans; the actuarial
evaluation, if any, for the most recent plan year prepared for
each of the Employee Plans; the current summary plan description
of each of the Employee Plans; and the most recent annual
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return/report on IRS Forms 5500, 5500-C or 5500-R for each of the
Employee Plans for which such report was prepared.
Except as set forth in the Disclosure Schedule:
(i) the written terms of each of the Employee Plans
and, if controlled by VCNB or any of its Subsidiaries, any
related trust agreement, group annuity contract, insurance
policy or other agreement, have been administered in
substantial compliance with the applicable requirements of
the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and the Code;
(ii) each of the Employee Plans for which VCNB has
claimed a deduction under Code Section 404, as if such
Employee Plan were qualified under Code Section 401(a), has
received a favorable determination letter from the IRS as to
the tax qualification of such Employee Plan, and to the
knowledge of VCNB such favorable determination has not been
modified, revoked or limited by failure to satisfy any
condition thereof or by a subsequent amendment to, or
failure to amend, such Employee Plan;
(iii) to VCNB's knowledge, neither VCNB nor any of its
Subsidiaries, nor any other "disqualified person" or "party
in interest" (as defined in Code Section 4975 and Section
3(14) of ERISA, respectively) with respect to an Employee
Plan has engaged in any "prohibited transaction" (as defined
in Code Section 4975 or Sections 406 or 407 of ERISA) that
could reasonably be expected to subject VCNB or any of its
Subsidiaries to any material tax, penalty or liability under
Code Section 4975 or Title I of ERISA;
(iv) no Employee Plan is a Multiple Employer Plan
within the meaning of Code Section 413 or a Multiemployer
Plan within the meaning of Section 3(37) of ERISA;
(v) neither VCNB nor any of its Subsidiaries has
incurred, or has any knowledge of, any pending material tax,
penalty or liability under Code Section 4972 with respect to
any Employee Plan;
(vi) continuation health care coverage requirements and
notice requirements under Code Section 4980B and Sections
601 through 608 of ERISA have been satisfied in all material
respects with respect to all current or prior employees of
VCNB and any Subsidiaries and any "qualified beneficiary" of
any such employees (within the meaning of Code Section
4980B(g)); and
(vii) no Employee Plan provides for retiree medical
benefits.
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For purposes hereof, the term "Employee Plan" means any
"employee benefit plan" (as defined in Section 3(3) of ERISA) as well as
any other material written or formal plan or contract involving
direct or indirect compensation under which VCNB or any
Subsidiary has any present or future obligations or liability on
behalf of its employees or former employees or their dependents
or beneficiaries, including, but not limited to, each retirement,
employee stock ownership, cash or deferred, each other deferred
or incentive compensation, bonus, stock option, employee stock
purchase, "phantom" stock or stock appreciation right plan, each
other program providing payment or reimbursement for or of
medical, dental or visual care, counselling, or vacation, sick,
disability or severance pay and each other "fringe benefit" plan
or arrangement.
(q) INSIDER LOANS; OTHER TRANSACTIONS. VCNB has previously
provided CNC with a listing, current as of June 30, 1996, of all
extensions of credit made to VCNB and each of its Subsidiaries
and each of its and their executive officers and directors and
their related interests (all as defined under Federal Reserve
Board Regulation "O"), all of which have been made in compliance
with Regulation O, which listing is true, correct and complete in
all material respects. Neither VCNB nor any Subsidiary owes any
amount to, or has any contract or lease with or commitment to,
any of the present executive officers or directors of VCNB or any
Subsidiary (other than for compensation for current services not
yet due and payable, and reimbursement of expenses arising in the
ordinary course of business).
(r) TITLE TO ASSETS. VCNB and each of its Subsidiaries has
good and marketable title to all of its material properties and
assets (other than (i) property as to which it is lessee and
(ii) real estate owned as a result of foreclosure, transfer in
lieu of foreclosure or other transfer in satisfaction of a
debtor's obligation previously contracted), including, without
limitation, all personal and intangible properties reflected in
the audited financial statements included in the 1995 10-K or the
June 30, 1996 10-Q, or acquired subsequently thereto, subject to
no liens, mortgages, security interests, encumbrances or charges
of any kind except (1) as noted in the audited financial
statements included in the 1995 10-K or the June 30, 1996 10-Q or
as set forth in the Disclosure Schedule, (2) statutory liens not
yet delinquent which are being contested in good faith by
appropriate proceedings, and liens for Taxes not yet due, (3)
pledges of assets in the ordinary course of business to secure
public deposits, (4) for those assets and properties disposed of
for fair value in the ordinary course of business since the date
of the 1995 10-K or the June 30, 1996 10-Q, (5) defects and
irregularities of title and encumbrances that do not materially
impair the use thereof for the purpose for which they are held,
and (6) any other liens, mortgages, security interests,
encumbrances or charges of any kind, which individually do not
exceed $50,000 in amount. Without limiting the above, VCNB and
each of its Subsidiaries owns or possesses valid and binding
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licenses and other rights to itself use without payment all
material patents, copyrights, trade secrets, trade names, service
marks, logos and trademarks used in its business, and none of
them has received any notice of conflicts with respect thereto
that asserts the rights of others.
(s) KNOWLEDGE AS TO CONDITIONS. VCNB and each of its
Subsidiaries knows of no reason why the approvals, consents and
waivers of Governmental Authorities referred to in Section 7.1
(b) should not be obtained without the imposition of any
condition of the type referred to in the provisos thereto.
(t) COMPLIANCE WITH LAWS. Neither VCNB nor any of its
Subsidiaries is in material violation in respect of any federal,
state or local laws, rules, regulations or orders applicable to
it or by which its properties may be bound, except such
violations as would not have a Material Adverse Effect on VCNB.
Without limiting the scope of the previous sentence, VCNB and
each of its Subsidiaries is not in material violation of
Regulations B, D, E, Z or DD adopted by the Board of Governors;
the Equal Credit Act (15 U.S.C. Section 1691, et seq.), the Fair Housing
Act (420 U.S.C. Section 3601, et seq.), the Bank Secrecy Act (31 U.S.C.
Section 5322, et seq.), the Home Mortgage Disclosure Act (12 U.S.C.
2801, et seq.) (collectively, the "Fair Lending Acts"), or those
provisions of the United States Code providing penalties for the
laundering of monetary instruments (18 U.S.C. Section 1956) or engaging
in monetary transactions in property derived from specified
unlawful activity (18 U.S.C. Section 1957).
(u) FEES. Other than financial advisory services performed
for VCNB by Sandler, O'Neill & Partners, L.P., neither VCNB nor
any of its Subsidiaries nor any of its or their officers,
directors, employees or agents, has employed any broker or finder
or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder's fees in connection with
this Agreement or the transactions contemplated hereby.
(v) ENVIRONMENTAL.
(i) To VCNB's knowledge, all of the properties and
operations of VCNB and each of its Subsidiaries are in
compliance in all material respects with all material
Environmental Laws (as defined below) applicable to such
properties and operations.
(ii) To VCNB's knowledge, VCNB and each of its
Subsidiaries has obtained all material permits, licenses,
and authorizations which are required for VCNB's operations
under Environmental Laws.
(iii) Except as set forth in the Disclosure Schedule,
to VCNB's knowledge, no Hazardous Substances (as defined
below) exist on, about, or within or have been used,
generated, stored, transported, disposed of on, or released
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from, any of the properties of VCNB or any of its
Subsidiaries except in accordance in all material respects
with Environmental Laws. Neither VCNB nor any of its
Subsidiaries has any actual knowledge that any prior owners,
occupants or operators of any such property or any other
property in which it has a security interest, ever
deposited, disposed of, or allowed to be deposited or
disposed of, in, on, or under or handled or processed on, or
released, emitted or discharged from, such properties any
Hazardous Materials except in accordance in all material
respects with Environmental Laws, or that any prior or
present owners, occupants or operators of any properties in
which it holds a security interest, mortgage or other lien
or interest, deposited or disposed of, in, on or under or
handled and/or processed on, or released, emitted or
discharged from, such properties any Hazardous Material
except in accordance in all material respects with
Environmental Laws. The use which VCNB and each of its
Subsidiaries has made, makes and intends to make of its
properties will not result in the use, generation, storage,
transportation, accumulation, disposal or release of any
Hazardous Substance on, in, or from any of such properties
except in accordance in all material respects with
applicable Environmental Laws.
(iv) There is no action, suit, proceeding,
investigation, or inquiry before any court, administrative
agency or other governmental authority pending, or, to the
knowledge of VCNB or any of its Subsidiaries, threatened
against VCNB or any of its Subsidiaries relating in any way
to any material violation of any applicable Environmental
Law. To the knowledge of VCNB, none of VCNB or its
Subsidiaries has any material liability for remedial action
with respect to a violation of an Environmental Law, nor has
it received any written requests for information relating to
any material violations of any Environmental Law from any
governmental authority with respect to the condition, use,
or operation of any of its properties nor has any of them
received any notice from any governmental authority or any
written notice from any other person with respect to any
material violation of or material liability for any remedial
action under any Environmental Law.
(v) As used in this Section, the term "Environmental
Law" means any and all Federal, state and local laws,
regulations, and requirements pertaining to health, safety
and the environment, including, without limitation, the
Comprehensive Environmental Response Compensation and
Liability Act of 1980, 42 U.S.C. Section 9601, et seq. ("CERCLA"),
the Resource Conservation and Recovery Act of 1975, 42
U.S.C. Section 6901, et seq. ("RCRA"), the Occupational Safety and
Health Act, 29 U.S.C. Section 651, et seq. (as it relates to the
use of, or exposure to, Hazardous Substances), the Clean Air
Act, 42 U.S.C. Section 7401, et seq., the Clean Water Act, 33
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U.S.C. Section 1251, et seq., the Toxic Substance Control Act, 15
U.S.C. Section 2601, et seq., the Carpenter-Presley-Tanner
Hazardous Substance Account Act, as amended, Chapter 6.8 of
the California Health and Safety Code, Section 25300, et seq., and
the Hazardous Waste Control Law, Chapter 6.5 of the
California Health and Safety Code, Section 25100, et seq. (the
latter two statutes being referred to herein as the State
Acts), and any and all regulations promulgated thereunder,
and all similar laws, regulations, and requirements of any
governmental authority, agency having jurisdiction over the
environmental activities of VCNB or any of its Subsidiaries,
or of its or their properties, as such laws, regulations,
and requirements may be in effect on the date hereof.
(vi) As used in this Section, the term "properties"
shall include: all real estate property now or previously
owned or leased by VCNB and each of its Subsidiaries,
property as to which VCNB or any of its Subsidiaries holds
any security interest, deed of trust, mortgage or other
lien, and any property to which VCNB or any of its
Subsidiaries could be deemed an "owner" or "operator" under
any applicable Environmental Law.
(vii) As used in this Section, the term "Hazardous
Substance" shall mean (1) any "hazardous waste" as defined
by CERCLA and the State Acts, as such acts are in effect on
the date hereof, and any and all regulations promulgated
thereunder; (2) any "hazardous substance" as such term is
defined by CERCLA; (3) any "regulated substance" as defined
by the State Acts; (4) asbestos requiring abatement, removal
or encapsulation pursuant to the requirements of
governmental authorities; (5) polychlorinated biphenyls;
(6) petroleum products; (7) "hazardous chemicals" or
"extremely hazardous substances" in quantities sufficient to
require reporting, registration, notification and/or
optional treatment or handling under the Emergency Planning
and Community Right to Know Act of 1986; (8) any "hazardous
chemical" in levels that would result in exposure greater
than is allowed by permissible exposure limits established
pursuant to the Occupational Safety and Health Act of 1970;
(9) any substance that requires reporting, registration,
notification, removal, abatement and/or special treatment,
storage, handling or disposal, under Sections 6, 7 and 8 of the
Toxic Substance Control Act (15 U.S.C. Section 2601); (10) any
toxic or hazardous chemical described in 29 C.F.R.
1910.1000-1047 in levels that would result in exposure
greater than those allowed by the permissible exposure
limits pursuant to such regulations; and (11) any (A)
"hazardous waste", (B) "solid waste" capable of causing a
"release or threatened release" that present an "imminent
and substantial endangerment" to the public health and
safety of the environment, (C) "solid waste" that is capable
of causing a "hazardous substance incident" (D) "solid
waste" with respect to which special requirements are
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imposed by applicable governmental authorities upon the
generation, transportation thereof as such terms are defined
and used within the meaning of the State Acts or (E) any
"pollutant" or "toxic pollutant" as such term is defined in
the Federal Clean Water Act, 33 U.S.C. Sections 1251-1376, as
amended, by Public Law 100-4, February 4, 1987, and the
regulations promulgated thereunder, including 40 C.F.R.
Sections 122.1 and 122.26.
(w) ALLOWANCE FOR POSSIBLE LOAN LOSSES. The ALLL for each
of the Banks is adequate in accordance with GAAP and RAP.
(x) PERFORMANCE OF OBLIGATIONS. VCNB and each of its
Subsidiaries has performed in all material respects all of the
obligations required to be performed by it to date, and is not in
default under, or in breach of, any term or provision of any
material contract, lease, indenture or any other material
agreement to which it is a party, is subject or is otherwise
bound and no event has occurred that, with the giving of notice
or the passage of time, or both, would constitute such default or
breach. The Disclosure Schedule contains a list of all contracts
to which VCNB and each of its Subsidiaries is a party, except for
contracts terminable without penalty on not more than 90 days'
notice or involving the payment of not more than $50,000 per
annum, deposit agreements and loan agreements.
(y) INSURANCE. VCNB and each of its Subsidiaries has in
effect policies of insurance with respect to its assets and
business against such casualties and contingencies and in such
types and forms as in the judgment of its management are
appropriate for its business, operations, properties and assets.
VCNB has made available to CNC, copies of all policies of
insurance and bonds carried and owned by VCNB or any of its
Subsidiaries as of the date hereof, which copies are complete and
accurate in all material respects, and which are listed in the
Disclosure Schedule. Neither VCNB nor any of its Subsidiaries is
in default under any such policy of insurance or bond such that
it is reasonably likely to be cancelled. No notice of
cancellation or material amendments has been received with
respect to existing material policies and no coverage thereunder
with respect to any material claims is being disputed.
(z) LISTING OF LOANS. Copies, in writing, have been made
available to CNC of the detailed listing of all loans and notes
receivable of VCNB and each of its Subsidiaries as of June 30,
1996, including participations, with the outstanding principal
balance of each such loan and note receivable, and the past due
status of any loan or note receivable, and such copies reflect
correctly the detail of trial balance totals in all material
respects as of the date of such reports.
(aa) DERIVATIVE TRANSACTIONS. Neither VCNB nor any of its
Subsidiaries is a party to a transaction in or involving
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forwards, futures, options on futures, swaps or other derivative
instruments.
(bb) TRUST ADMINISTRATION. Neither VCNB nor any Subsidiary
presently exercises trust powers, including, but not limited to,
trust administration, and has not exercised such trust powers for
a period of at least 3 years prior to the date hereof. The term
"trusts" as used in this Subsection 5.1(bb) includes (i) any and
all common law or other trusts between an individual, corporation
or other entities and VCNB or any of its Subsidiaries, as trustee
or co-trustee, including, without limitation, pension or other
qualified or nonqualified employee benefit plans, compensation,
testamentary, inter vivos, and charitable trust indentures; (ii)
any and all decedents' estates where VCNB or any of its
Subsidiaries is serving or has served as a co-executor or sole
executor, personal representative or administrator, administrator
de bonis non, administrator de bonis non with will annexed, or in
any similar fiduciary capacity; (iii) any and all guardianships,
conservatorships or similar positions where VCNB or any of its
Subsidiaries is serving or has served as a co-grantor or a sole
grantor or a conservator or a co-conservator of the estate, or
any similar fiduciary capacity, and (iv) any and all agency
and/or custodial accounts and/or similar arrangements, including
plan administrator for employee benefit accounts, under which
VCNB or any of its Subsidiaries is serving or has served as an
agent or custodian for the owner or other party establishing the
account with or without investment authority.
(cc) CONTINGENT LIABILITIES. VCNB has no actual knowledge
of any facts, other than those reflected in the financial
statements included in the VCNB Reports or the contracts,
litigation and other matters listed in the Disclosure Schedules,
that indicate the existence of a contingent liability of VCNB or
any of its Subsidiaries (whether or not disclosure or accrual is
required pursuant to GAAP) as to which there is more than a
remote possibility of a material adverse impact on VCNB.
(dd) STATEMENTS TRUE AND CORRECT. None of the information
supplied or to be supplied by VCNB for inclusion in the S-4 (as
defined in Section 6.1(a)) or the Proxy Statement/Prospectus (as
defined in Section 6.1(a)), or incorporated by reference therein,
or any other document to be filed with any governmental agency or
regulatory authority in connection with the transactions
contemplated hereby will, in the case of the Proxy
Statement/Prospectus, when it is first mailed to the shareholders
of VCNB, contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under
which such statements are made, not misleading or, in the case of
the S-4, when it becomes effective, 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 not misleading,
or, in the case of the Proxy Statement or any amendment thereof
or supplement thereto, at the time of the meeting of shareholder
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of VCNB, be false or misleading with respect to any material fact
or omit to state any material fact necessary to correct any
statement or remedy any omission in any earlier communication
with respect to the solicitation of any proxy of the VCNB
shareholders' meeting.
(ee) TIMELINESS AND COMPLIANCE OF REPORTS AND FILINGS. VCNB
agrees that through the Effective Time of the Merger, each of its
reports, and other filings required to be filed with any
applicable Governmental Authority will be filed on a timely basis
and will comply in all material respects with all of the
applicable statutes, rules and regulations enforced or
promulgated by the Governmental Authority with which it will be
filed and none will contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstances under which they will be made, not misleading.
Any financial statement contained in any such report, or other
filing that is intended to present the financial position of VCNB
and/or any of its Subsidiaries will fairly present the financial
position of such entities or entity and will be prepared in
accordance with generally accepted accounting principles or
applicable banking regulations consistently applied during the
periods involved. Notwithstanding anything to the contrary set
forth in this Section 5(ee), VCNB makes no representation or
warranty with respect to any information supplied by CNC or CNB
or any of CNC's Reports.
SECTION 5.2 REPRESENTATIONS AND WARRANTIES OF CNC. CNC
represents and warrants to VCNB that:
(a) RECITALS TRUE. The information set forth in the
recitals of this Agreement with respect to CNC are true and
correct.
(b) CAPITAL STOCK. CNC is authorized to issue
75,000,000 shares of Common Stock, $1,00 par value, and is not
authorized to issue any other class or series of capital stock,
or any other securities giving the holder thereof the right to
vote on any matters on which stockholders of the CNC can vote.
As of August 31, 1996, 46,088,181 shares of CNC Common Stock were
issued and outstanding, and 2,211,200 shares are held as treasury
stock. All outstanding shares of CNC Common Stock outstanding
are and all shares to be issued pursuant to the Merger will be,
duly authorized, validly issued, fully paid and nonassessable,
and are not, or will not be, subject to no preemptive rights.
CNC has provided VCNB with true and correct copies of its
Certificate of Incorporation and Bylaws.
(c) AUTHORITY. CNC has the power and authority, and is
duly qualified in all jurisdictions where such qualification is
required (except for such qualifications the absence of which,
individually or in the aggregate, would not have a Material
Adverse Effect on CNC), to carry on its business as it is now
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being conducted and to own all of its material properties and
assets. CNC has all federal, state, local and foreign
governmental authorizations necessary for it to own or lease its
properties and assets and to carry on its business as it is now
being conducted, except for such powers and authorizations the
absence of which, either individually or in the aggregate, would
not have a Material Adverse Effect on CNC.
(d) APPROVALS. The execution by CNC of this Agreement has
been authorized by all necessary corporate actions of CNC,
including, but not limited to, a vote by its board of directors.
No vote, consent or approval of the shareholder of CNC or the
shareholders of CNC is required to authorize this Agreement or
the consummation of the Merger. Subject to receipt of the
required approvals, consents or waivers of Governmental
Authorities referred to in Section 7.1(b), this Agreement is a
valid and binding agreement of CNC enforceable against CNC in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditor's
rights, general equity principles, and the rights of the FDIC.
(e) NO VIOLATIONS. The execution, delivery and performance
of this Agreement by CNC does not, and consummation of the Merger
will not, constitute (i) a breach or violation of, or a default
under, any applicable law, rule or regulation or any material
judgment, decree, order, governmental permit or license, or
material indenture, agreement or instrument of CNC, or to which
CNC (or its property) is subject, which breach, violation or
default would have a Material Adverse Effect on CNC or would
materially hinder or delay the Merger or (ii) a breach or
violation of, or a default under, the Certificate of
Incorporation or Bylaws of CNC; and the consummation of the
Merger will not require any approval, consent or waiver under any
such law, rule, regulation, judgment, decree, order, governmental
permit or license or the approval, consent or waiver of any other
party to any such agreement, indenture or instrument, other than
(1) the required approvals, consents and waivers of Governmental
Authorities referred to in Section 7.1 (b); and (2) any other
approvals, consents or waivers, the absence of which,
individually or in the aggregate, would not result in a Material
Adverse Effect on CNC or would not materially hinder or delay the
Merger.
(f) FINANCIAL STATEMENTS. As of their respective dates,
none of CNC's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 or Quarterly Report on Form 10-Q for the
quarters ended March 31, 1996 and June 30, 1996, nor any other
document filed subsequent to December 31, 1993 under Section
13(a), 13(d), 14 or 15(d) of the Exchange Act, each in the form
(including exhibits) filed with the SEC (collectively, the "CNC
Reports"), contained or will contain any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein,
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in light of the circumstances under which they were made, not
misleading. Each of the balance sheets or statements of
condition contained or incorporated by reference in the CNC
Reports (including any related notes and schedules) fairly
present the financial position of the entity or entities to which
it relates as of its date and each of the statements of
operations and retained earnings and of cash flows or equivalent
statements contained or incorporated by reference in the CNC
Reports (including any related notes and schedules) fairly
present the results of operations, retained earnings and cash
flows, as the case may be, of the entity or entities to which it
relates for the periods set forth therein (subject, in the case
of unaudited interim statements, to normal year-end audit
adjustments that are not Material in amount or effect), in each
case in accordance with the published rules and regulations of
the SEC and GAAP consistently applied and applicable to bank
holding companies during the periods involved, except as may be
noted therein. The books and records of CNC have been, and are
being maintained in all material respects in accordance with GAAP
and RAP and other applicable legal and accounting requirements
and reflect only actual transactions.
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth in CNC's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1996, since December 31, 1995, there have not been
any changes in the business, assets, financial condition or
results of operations of CNC and its Subsidiaries that,
individually or in the aggregate, have had a Material Adverse
Effect on CNC.
(h) ABSENCE OF CLAIMS. No litigation, proceeding or
controversy before any court or governmental agency or authority
is pending against CNC or its Subsidiaries which is reasonably
likely, individually or in the aggregate, to have a Material
Adverse Effect on CNC or to materially hinder or delay
consummation of the Merger, and, to its knowledge, no such
litigation, proceeding, controversy, claim or action has been
threatened.
(i) REGULATORY ACTIONS. Neither CNC nor CNB is a party to
any cease and desist order, written agreement, memorandum of
understanding or any similar regulatory action or order with any
Federal or state governmental authorities, nor a recipient of any
extraordinary supervisory letter from, nor has it adopted any
board resolution at the request of any of its regulators, nor
been advised that any such issuance or request is contemplated.
As of the date hereof, and to CNC's actual knowledge, CNC is not
the subject of a referral to either the United States Department
of Justice or the Department of Housing and Urban Development for
alleged violations of the Fair Lending Acts. Each material
violation, criticism, or exception by any governmental authority
with respect to any examinations of CNC has been resolved or is
in the process of resolution.
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(j) KNOWLEDGE AS TO CONDITIONS. CNC knows of no reason why
the approvals, consents and waivers of Governmental Authorities
referred to in Section 7.1(b) should not be obtained without the
imposition of any condition of the type referred to in the
provisos thereto.
(k) COMPLIANCE WITH LAWS. CNC and its Subsidiaries are not
in material violation in any respect of any material Federal,
state or local laws, rules, regulations or orders applicable to
them or by which their properties may be bound, except such
violations as would not have a Material Adverse Effect on CNC.
Without limiting the scope of the previous sentence, neither CNC
nor CNB is in material violation of Regulations B, D, E, Z or DD
adopted by the FRB, the Fair Lending Acts, or those provisions of
the United States Code providing penalties for the laundering of
monetary instruments (18 U.S.C. Section 1956) or engaging in monetary
transactions in property derived from specified unlawful activity
(18 U.S.C. Section 1957).
(l) FEES. Neither CNC, nor any of its officers, directors,
employees or agents, has employed any broker or finder or
incurred any liability for any financial advisory fees, brokerage
fees, commissions or finder's fees in connection with this
Agreement or the transactions contemplated hereby.
(m) COMMUNITY REINVESTMENT ACT. CNB received a rating of
"satisfactory" in its most recent examination or interim review
with respect to the Community Reinvestment Act. CNC has not been
advised of any supervisory concerns regarding CNB' compliance
with the Community Reinvestment Act.
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(n) STATEMENTS TRUE AND CORRECT. None of the information
supplied or to be supplied by CNC for inclusion in the S-4 (as
defined in Section 6.1(a)) or the Proxy Statement/Prospectus, or
incorporated by reference therein, or any other document to be
filed with any governmental agency or regulatory authority in
connection with the transactions contemplated hereby will, in the
case of the Proxy Statement/Prospectus (or incorporated by
reference therein), when it is first mailed to the shareholders
of VCNB, contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under
which such statements are made, not misleading or, in the case of
the S-4, when it becomes effective, 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 not misleading,
or, in the case of the Proxy Statement/Prospectus or any
amendment thereof or supplement thereto, at the time of the
meeting of shareholders of VCNB, be false or misleading with
respect to any material fact or omit to state any material fact
necessary to correct any statement or remedy any omission in any
earlier communication with respect to the solicitation of any
proxy of the VCNB shareholders' meeting.
(o) TIMELINESS AND COMPLIANCE OF REPORTS AND FILINGS. CNC
agrees that through the Effective Time of the Merger, each of its
reports, and other filings required to be filed with any
applicable Governmental Authority will comply in all material
respects with all of the applicable statutes, rules and
regulations enforced or promulgated by the Governmental Authority
with which it will be filed and none will contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they will be
made, not misleading. Any financial statement contained in any
such report, or other filing that is intended to present the
financial position of CNC and its Subsidiaries will fairly
present the financial position of CNC and its Subsidiaries, will
be prepared in accordance with generally accepted accounting
principles or applicable banking regulations consistently applied
during the periods involved. Notwithstanding anything to the
contrary set forth in this Section 5.2(o), CNC makes no
representation or warranty with respect to any information
supplied by VCNB or VCNB's Subsidiaries (or any of the VCNB
Reports).
(p) TAX REPRESENTATION. It is the present intention of CNC
to continue at least one significant historic business line of
each of VCNB, Ventura Bank and Frontier, or to use at least a
significant portion of each of VCNB's, Ventura Bank's and
Frontier's historic business assets in a business, in each case
within the remaining of Treasury Regulation Section 1.368-1(d).
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ARTICLE VI
COVENANTS
SECTION 6.1 REGULATORY MATTERS.
(a) CNC and VCNB shall promptly prepare and file with the
SEC a registration statement on Form S-4, including the
definitive proxy statement and prospectus (the "Proxy
Statement/Prospectus") to be mailed to the VCNB Shareholders to
vote upon the Merger (the "S-4"). CNC shall use all reasonable
efforts to have the S-4 declared effective under the Securities
Act as promptly as practicable after such filing, and VCNB shall
thereafter mail the Proxy Statement/Prospectus to its
shareholders. CNC shall also use all reasonable efforts
to obtain all necessary state securities law or "Blue Sky"
permits and approvals required to carry out the transactions
contemplated by this Agreement, and obtain the approval for
listing on the New York Stock Exchange of the shares of CNC
Common Stock to be issued to holders of Common Stock in the
Merger. VCNB shall furnish all information concerning VCNB and
the holders of VCNB Common Stock as may be reasonably requested
in connection with any such action.
(b) The parties hereto shall cooperate with each other and
use reasonable best efforts to promptly prepare and file all
necessary documentation, to effect all applications, notices,
petitions and filings, to obtain as promptly as practicable all
permits, consents, approvals and authorizations of all third
parties and Governmental Authorities which are necessary or
advisable to consummate the transactions contemplated by this
Agreement (including, without limitation, the Merger and Bank
Mergers), and to comply with the terms and conditions of all such
permits, consents, approval and authorizations to review in
advance, and to the extent practicable each will consult the
other on, in each case subject to applicable laws relating to the
exchange of information, all the information relating to VCNB or
CNC, as the case may be, and any of their respective Subsidiaries
which appear in any filing made with, or written materials
submitted to, any third party or any Governmental Authority in
connection with the transactions contemplated by this Agreement.
In exercising the foregoing right, each of the parties hereto
shall act reasonably and as promptly as practicable. The parties
hereto agree that they will consult with each other with respect
to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Authorities
necessary or advisable to consummate the transactions
contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to completion of the
transactions contemplated herein.
(c) CNC and VCNB shall, upon request, furnish each other
with all information concerning themselves, their Subsidiaries,
directors, officers and stockholders and such other matters as
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may be reasonably necessary or advisable in connection with the
Proxy Statement/Prospectus the S-4 or any other statement,
filing, notice or application made by or on behalf of CNC, VCNB
or any of their respective Subsidiaries to any Governmental
Authority in connection with the transactions contemplated by
this Agreement.
(d) CNC and VCNB shall promptly advise each other upon
receiving any communication from any Governmental Authority whose
consent or approval is required for consummation of the
transactions contemplated by this Agreement which causes such
party to believe that there is a reasonable likelihood that the
approval of any Governmental Authority required pursuant to
Section 7.1(b) will not be obtained or that the receipt of any
such approval will be materially delayed beyond March 31, 1997.
SECTION 6.2 STOCKHOLDERS' APPROVALS. VCNB shall duly
call, give notice of, convene and hold a meeting of its
shareholders to be held as soon as practicable following the date
hereof for the purpose of obtaining the requisite shareholder
approvals required in connection with this Agreement and the
Merger. Subject to the provisions of the next sentence, VCNB
shall, through its Board of Directors, recommend to its
stockholders approval of such matters. VCNB's Board of Directors
may fail to make such recommendation, or withdraw, modify or
change any such recommendation in a manner adverse to CNC if such
Board of Directors, after having consulted with and considered
the advice of counsel, has reasonably determined in good faith
that the making of such recommendation, or the failure to
withdraw, modify or change its recommendation, would constitute a
breach of the fiduciary duties of the members of such Board of
Directors under applicable law.
SECTION 6.3 LEGAL CONDITIONS TO MERGER.
(a) Each of CNC and VCNB shall, and shall cause each of its
Subsidiaries to, use its reasonable best efforts (i) to take, or
cause to be taken, all actions necessary, proper or advisable to
comply promptly with all legal requirements which may be imposed
on such party or its Subsidiaries with respect to the Merger and,
subject to the conditions set forth in Article VII hereof, to
consummate the transactions contemplated by this Agreement and
(ii) to obtain (and to cooperate with the other party to obtain)
any consent, authorization, order or approval of, or any
exemption by, any Governmental Authority and any other third
party which is required to be obtained by VCNB or CNC or any of
their respective Subsidiaries in connection with the Merger and
the other transactions contemplated by this Agreement, and to
comply with the terms and conditions of any such consent,
authorization, order or approval.
(b) Each of CNC and VCNB agrees to use reasonable best
efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable to
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consummate and make effective, as soon as practicable after the
date of this Agreement, the transactions contemplated hereby,
including, without limitation, using reasonable efforts to lift
or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the
transactions contemplated hereby and using reasonable efforts to
defend any litigation seeking to enjoin, prevent or delay the
consummation of the transactions contemplated hereby or seeking
material damages.
SECTION 6.4 INFORMATION.
(a) CNC'S RIGHT TO ACCESS AND INFORMATION. Upon reasonable
notice, VCNB shall, and shall cause each of its Subsidiaries to,
afford to CNC and its representatives (including, without
limitation, directors, officers, and employees, and their
affiliates, and counsel, accountants and other professionals
retained) such reasonable access during normal business hours
throughout the period prior to the Effective Time to the books,
records (including, without limitation, Tax Returns and work
papers of independent auditors), properties, policies, files,
personnel and to such other information as such persons may
reasonably request, permit such persons to inspect and make
copies of all stock records, minute books, books of account,
contracts, commitments and other records, furnish to CNC such
counterpart originals or certified or other copies of such
documents or such information with respect to its businesses and
affairs as CNC may reasonably request and that VCNB and its
Subsidiaries may provide without violation of applicable law or
regulation or jeopardy to any attorney-client or similar
privilege to which the Bank may be entitled as against third
parties other than CNC. Without limiting the foregoing, VCNB
shall promptly provide CNC (i) monthly unaudited balance sheets
and operating statements, loan delinquency reports, investment
reports and such other reports and materials as are normally
prepared and provided to the Board of Directors or senior
management of the VCNB and (ii) each month and on the date that
is five days prior to the Effective Time, a list of loans for
which a Notice of Default has been filed or for which discussions
have commenced that have a reasonable possibility of leading to a
deed in lieu of foreclosure by the obligor thereunder. VCNB
shall provide CNC with as much information concerning any exit
interview or similar meetings held in connection with any
regulatory examinations of VCNB and its Subsidiaries and, with
respect to the examination findings and results, as VCNB can
provide without violation of law. Without limiting the
generality of the foregoing, CNC shall have the right to
(i) conduct a full due diligence review of the operations and
assets of VCNB and its Subsidiaries, (ii) conduct a full credit
review of VCNB and its Subsidiaries and (iii) conduct a specific
credit review of VCNB and its Subsidiaries during the thirty days
prior to the Effective Time.
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(b) VCNB'S RIGHT TO ACCESS AND INFORMATION. Upon
reasonable request by VCNB, CNC shall (i) make its Chief
Financial Officer and Controller available to discuss with VCNB
and its representatives CNC's ongoing diligence and review of
VCNB's operations and (ii) shall provide VCNB with written
information which is (a) similar to the written information that
VCNB reviewed in connection with this Agreement, and (b) related
to CNC's and its Subsidiaries' business condition, operations and
prospects.
(c) CUSTOMER CALLS. Prior to the Effective Time,
representatives of CNC will be permitted to conduct joint calls
upon customers of the Banks, if accompanied by representatives of
the Banks, on a schedule to be agreed upon between the parties;
provided, however, that in the event that either party terminates
this Agreement in accordance with the terms hereof, CNC shall
not, for a period of one (1) year from the date of the
termination of this Agreement contact any customer of the Banks
contacted pursuant to this Section 6.4(c).
(d) CONFIDENTIALITY. Neither party shall, and each shall
cause its representatives not to, use any information obtained
pursuant to this Section 6.4 for any purpose unrelated to the
consummation of the transactions contemplated by this Agreement.
Subject to the requirements of law, each party shall keep
confidential, and shall cause its representatives to keep
confidential, all information, documents and trade secrets
obtained pursuant to this Section 6.4 unless such information (i)
becomes or has become available to such party from other sources
not known by such party to be bound by a confidentiality
obligation, (ii) is disclosed with the prior written approval of
the party to which such information pertains or (iii) is or
becomes readily ascertainable from published information or trade
sources. In the event that this Agreement is terminated or the
Merger shall otherwise fail to be consummated, each party shall
promptly cause all copies of documents or extracts thereof
containing information and data as to another party hereto to be
returned to the party that furnished the same.
SECTION 6.5 EMPLOYEE BENEFITS.
(a) All employees of VCNB continuing in the employ of CNC
shall be entitled to participate in stock plans, bonus plans and
all other benefit plans of CNC on the same basis as other
similarly situated employees of CNC. Each of these employees
will be credited for eligibility, participation, vesting and
accrual purposes (provided that no more than 1,080 hours of sick
leave may be carried over into CNC's sick leave program), with
such employee's respective years of past service with VCNB (or
other prior service so credited by VCNB) as though they had been
employees of CNC.
(b) VCNB and each of its Subsidiaries has furnished to CNC
its severance policies applicable to its employees (other than as
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set forth in the Disclosure Schedule) and a schedule indicating
the amount that would be due as a severance payment to each such
employee if he or she is not offered continued employment in an
equivalent or substantially similar position by CNC following the
Effective Time. To the extent CNC fails to offer an employee
identified on such schedule continued employment in an equivalent
or substantially similar position following the Effective Time,
CNC shall be responsible for paying the severance payments due
such employee as set forth on such schedule.
(c) Provided such agreement is listed on the Disclosure
Schedule and a complete copy of such agreement has been provided
to CNC prior to the date hereof, CNC hereby agrees to honor, in
accordance with their terms, any existing individual employment,
severance, deferred compensation and similar agreements between
VCNB or any of its Subsidiaries and any current or former
officer, director, employee or consultant of VCNB or such
Subsidiary; provided, however at the close of business on the
last day of the month preceding the Effective Time, VCNB and its
Subsidiaries shall have paid or accrued at least $510,000 for
severance benefits payable to employees of VCNB and its
subsidiaries pursuant to this Section 6.5(c). In the event that
payments or accruals made pursuant to this Section exceed
$510,000, such excess shall not be included in determining Book
Value Per Share of VCNB pursuant to Section 7.2(e).
Notwithstanding any other provision of this Agreement, no
employee shall receive duplicative benefits by reason of this
Section.
(d) VCNB shall pay or accrue, up to $100,000 in retention
bonuses or other similar incentives for employees of VCNB or one
of the Banks, the selection of such employees and the amounts of
such payments to be mutually acceptable to the parties. In the
event that payments or accruals are made pursuant to this
Section, such amount shall not be included in determining Book
Value Per Share of VCNB pursuant to Section 7.2(e).
SECTION 6.6 CERTAIN FILINGS, CONSENTS AND ARRANGEMENTS.
CNC, VCNB and each of their respective Subsidiaries shall (a)
promptly make any filings and applications required to be filed
in order to obtain all approvals, consents and waivers of the
Board of Governors, the OCC, the FDIC and any other Governmental
Authorities or government entities necessary or appropriate for
the consummation of the transactions contemplated hereby, (b)
cooperate with one another (i) in promptly determining what
filings are required to be made or approvals, consents or waivers
are required to be obtained under any relevant Federal, state or
foreign law or regulation, (ii) in providing the other a
reasonable opportunity to review and comment upon the publicly
available portions of such filings, and (iii) in promptly making
any such filings, furnishing information required in connection
therewith and seeking timely to obtain any such approvals,
consents or waivers and (c) deliver to the other copies of
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publicly available portions of all such filings and applications
promptly after they are filed.
SECTION 6.7 ADDITIONAL AGREEMENTS; PARTIES. Subject to
the terms and conditions herein provided, each of the parties
hereto agrees to use all commercially reasonable efforts to take
promptly, or cause to be taken promptly, all actions and to do
promptly or cause to be done promptly, all things necessary,
proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by
this Agreement as promptly as practicable, including using
commercially reasonable efforts to obtain all necessary actions
or nonactions, extensions, waivers, consents and approvals from
all applicable Governmental Authorities, affecting all necessary
registrations, applications and filings and obtaining any
required contractual consents (including consent to assignment of
leases where required) and regulatory approvals.
SECTION 6.8 PUBLICITY. The initial press release
announcing this Agreement shall be a joint press release and
thereafter CNC and VCNB shall consult with each other in issuing
any press releases or otherwise making public statements with
respect to the transactions contemplated hereby and in making any
filings with any governmental authority or with any national
securities exchange with respect thereto. If any party hereto,
on the advice of counsel, determines that a disclosure is
required by law, it may make such disclosure without the consent
of the other parties, but only after affording the other parties
a reasonable opportunity to review and comment upon the
disclosure.
SECTION 6.9 NOTIFICATION OF CERTAIN MATTERS. VCNB shall
give CNC, and CNC shall give VCNB, prompt notice of: (a) any
material change in its business, operations, or prospects, (b)
any complaints, investigations or hearings (or communications
indicating that same may be contemplated) of any governmental
agency or Governmental Authority, (c) the institution or the
threat of material litigation, or (d) any event or condition that
constitutes a breach of this Agreement, or that might be
reasonably expected to cause its representations or warranties
set forth herein not to be true and correct in all material
respects as of the Effective Time.
SECTION 6.10 PRE-CLOSING ADJUSTMENTS. At or before the
Closing, VCNB shall make, and shall cause its Subsidiaries to
make, and the Subsidiaries shall make, such accounting entries or
adjustments, including charge-offs of loans, as CNC shall direct
in order to implement its plans for the Subsidiaries following
the Closing or to reflect expenses and costs related to the Bank
Merger; provided, however, that (a) VCNB and its Subsidiaries
shall not be required to take such actions more than one day
prior to the Effective Time or prior to the time CNC agrees in
writing that all of the conditions to its obligation to close as
set forth in Section 7.2 have been satisfied or waived, and (b)
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based upon consultation with counsel and accountants for VCNB and
its Subsidiaries, no such adjustment shall (i) require any filing
with any governmental agency or authority, (ii) violate any law,
rule or regulation applicable to VCNB or its Subsidiaries, or
(iii) otherwise materially disadvantage VCNB or its Subsidiaries
if the Acquisition were not consummated; PROVIDED that in any
event, no accrual or reserve made by VCNB or its Subsidiaries
pursuant to this Section 6.10, or any litigation or regulatory
proceeding arising out of any such accrual or reserve, shall
constitute or be deemed to be a breach, violation of or failure
to satisfy any representation, warranty, covenant, condition or
other provision of this Agreement or otherwise be considered in
determining whether any such breach, violation or failure to
satisfy shall have occurred. The recording of such adjustments
shall not be deemed to imply any misstatement of previously
furnished financial statements or information, shall not be
construed as concurrence of VCNB's or its Subsidiaries'
management with any such adjustments, and shall not affect the
Exchange Ratio or the Per Share Cash Consideration.
SECTION 6.11 DIRECTOR RESIGNATIONS. VCNB and its
Subsidiaries shall use reasonable efforts to cause to be
delivered to CNC at the Closing, the resignations of the members
of the Board of Directors of VCNB and its Subsidiaries.
SECTION 6.12 HUMAN RESOURCES ISSUES. VCNB and each of its
Subsidiaries agree to cooperate with CNC with respect to any
formal meetings or interviews with one or more employees called
or arranged by it and held for the purpose of discussing the
transactions contemplated by this Agreement or their effect on
such employees, with CNC given the opportunity to participate in
such meetings or interviews. This section is not intended to
apply to casual conversations about the transaction or informal
meetings initiated by employees, or to prohibit discussion in
general, but rather to allow CNC a role in the formal
presentation of the transaction to employees, and an opportunity
to participate in the significant, formal meetings at which the
transaction is explained and discussed.
SECTION 6.13 ASSISTANCE WITH THIRD-PARTY AGREEMENTS.
(a) VCNB and its Subsidiaries shall cooperate with and use
all reasonable efforts to assist CNC in (a) gaining access to all
of their third-party vendors, landlords of all of their leased
properties and other parties to material agreements, promptly
after the date of this Agreement, (b) obtaining the cooperation
of such third parties in a smooth transition in accordance with
CNC's timetable at or after the Effective Time.
(b) Without limiting Section 6.13(a), VCNB and its
Subsidiaries shall use all reasonable efforts to provide data
processing and other processing support, including support from
outside contractors, to assist CNC in performing all tasks
reasonably required to result in a successful conversion of their
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data and other files and records to CNC's production environment,
when requested by CNC and sufficient to ensure that a successful
conversion can occur at such time as CNC requests at or after the
Effective Time. Among other things, VCNB and its Subsidiaries
shall:
(i) cooperate with CNC to establish a mutually
agreeable project plan to effectuate the conversion;
(ii) use their commercially reasonable efforts to have
VCNB's and its Subsidiaries' outside contractors continue to
support both the conversion effort and its needs until the
conversion can be established;
(iii) provide, or use its commercially reasonable
efforts to obtain from any outside contractors, all data or
other files and layouts requested by CNC for use in planning
the conversion, as soon as possible;
(iv) provide reasonable access to personnel at
corporate headquarters, data and other processing centers,
all branches and, with the consent of outside contractors,
at outside contractors, to enable the conversion effort to
be completed on schedule; and
(v) to the extent reasonably practicable, give notice
of termination, conditioned upon the completion of the
transactions contemplated hereby, of the contracts of
outside data and other processing contractors or other
third-party vendors when directed to do so by CNC.
Notwithstanding the foregoing, neither VCNB nor the
Banks shall be required to give any notice of termination
required by this Section 6.13 (x) more than thirty days prior to
the Effective Time and (y) unless CNC states in writing that, to
the best of its knowledge, all conditions to Closing set forth in
Article VII have been or will be satisfied or waived; provided,
however, that VCNB and the Banks shall take action as directed by
CNC at any time (1) to terminate any contract other than that
described in clause (2) hereof, if CNC indemnifies VCNB and the
Banks for the incremental costs of obtaining a replacement
contract in the event that the Merger is not consummated other
than due to breaches of this Agreement by VCNB; and (2) to
terminate any of the Bank's outside data processing contracts
(the "DP Contracts") if (A) CNC provides an undertaking to VCNB
and the Banks in form and substance reasonably satisfactory to
VCNB and the Banks to the effect that CNC shall, in the event
that the Merger is not consummated, indemnify VCNB and the Banks
against all losses, claims, damages or liabilities resulting from
such action, and (B) CNC agrees to compensate VCNB or the Banks
for arrangements through a third-party provider reasonably
acceptable to VCNB providing service levels reasonably comparable
to those provided under the DP Contracts under terms no more
burdensome and at a price no higher to VCNB and the Banks than is
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provided in the DP Contracts for their respective needs in the
event such contracts are terminated and the Merger is not
consummated, other than as a result of a failure to consummate
the Merger due to breaches of this Agreement by VCNB and further
provided, that CNC's obligations under the foregoing proviso are
limited to payments for one year in an aggregate amount not
greater than 150% of that paid by VCNB or the Banks pursuant to
the DP Contracts for the last twelve months for which such DP
Contracts were in effect.
(c) CNC agrees that all actions taken pursuant to this
Section 6.13 shall be taken in a manner intended to minimize
disruption to the customary business activities of VCNB and its
Subsidiaries.
SECTION 6.14 NOTICES AND COMMUNICATIONS. VCNB and its
Subsidiaries shall, if requested to do so by CNC (a) cooperate
with CNC by sending necessary or appropriate customer
notifications and communications as drafted by CNC to advise such
customers of the impending transaction and of CNC's plans
following the Effective Time, and (b) take or cause to be taken
at the direction of and as agent for CNC, following the receipt
of all approvals of Governmental Authorities pursuant to
Section 7.1(b) all actions necessary to comply with the
provisions of the Worker Adjustment and Retraining Notification
Act, as amended (12 U.S.C Section 2101, et seq.), with respect to all
employees of VCNB and its Subsidiaries covered by such act who
are to be terminated by CNC within sixty days following the
effective time, including the issuance of notices to such
employees.
SECTION 6.15 INSURANCE POLICIES ASSIGNMENT. VCNB and its
Subsidiaries agree to make commercially reasonable efforts to
obtain consent to partial or complete assignments of any of their
insurance policies if requested to do so by CNC, to the extent
necessary to maintain the benefits to CNC of such policies as
they apply to VCNB and its Subsidiaries. VCNB and its
Subsidiaries shall also inform CNC no later than the Effective
Time of any material unfiled insurance claims of which they have
knowledge and for which they believe coverage exists.
SECTION 6.16 ADDITIONAL AGREEMENTS; OFFICERS AND
DIRECTORS. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the
purposes of this Agreement or to vest CNB with full title to all
properties, assets, rights, approvals, immunities and franchises
of either CNC or VCNB, the proper officers and directors of each
party to this Agreement shall take all necessary or appropriate
action.
SECTION 6.17 AFFILIATES AND FIVE PERCENT SHAREHOLDERS.
(a) At least 40 days prior to the Effective Time, VCNB
shall deliver to CNC a letter identifying all persons who are, at
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the time this Agreement is submitted for approval to the
stockholders of VCNB, "affiliates" of VCNB for purposes of Rule
145 under the Securities Act. VCNB shall use commercially
reasonable efforts to cause each such affiliate to deliver to CNC
prior to the Effective Time a written "Affiliates" agreement, in
customary form, providing that such person shall dispose of the
CNC Common Stock to be received by such person in the Merger only
in accordance with applicable law.
(b) Prior to the Effective Time, VCNB shall use
commercially reasonable efforts to cause each person or group of
persons who holds more than five percent (5%) of VCNB's Common
Stock (regardless of whether such person is an "affiliate") to
deliver to the law firm delivering the opinion pursuant to
Section 7.3(d) a letter stating that such stockholder(s) have no
present intention to dispose of the CNC Common Stock he or she or
they will receive in the Merger, and committing that he, she or
they will not dispose of such CNC Common Stock in such a manner
as to cause a violation of the "continuity of shareholder
interest" requirements of Treasury Regulation 1.368-1.
SECTION 6.18 COOPERATION. VCNB shall and shall cause the
Banks to cooperate with CNC and CNB in all reasonable respects in
accomplishing the Bank Mergers.
SECTION 6.19 INDEMNIFICATION AND DIRECTORS AND OFFICERS.
CNC agrees that all rights to indemnification or exculpation now
existing in favor of the directors, officers, employees and
agents of VCNB and its Subsidiaries as provided in their
respective articles of incorporation, bylaws, indemnification
agreements or otherwise in effect as of the date hereof with
respect to matters occurring prior to the Effective Time, shall
survive the Merger and Bank Mergers and shall continue in full
force and effect. CNC further agrees that, following
consummation of the Merger and Bank Mergers: to the greatest
extent permitted by Delaware law, and the organizational
documents or bylaws of CNC as in effect of the date hereof, it
shall indemnify, defend and hold harmless individuals who were
officers and directors of VCNB and its Subsidiaries as of the
date hereof or immediately prior to the Effective Time for any
claim or loss arising out of their actions while a director or
officer, including any acts relating to this Agreement, and shall
pay the expenses, including attorneys' fees, of such individual
in advance of the final resolution of any claim, provided such
individuals shall first execute an undertaking acceptable to the
Bank to return such advances in the event it has finally
concluded such indemnification is not allowed under applicable
law.
SECTION 6.20 SHAREHOLDERS' AGREEMENT. VCNB will use all
reasonable efforts to cause the directors of VCNB, to execute and
deliver to CNC one or more shareholders' agreements substantially
in the form of Exhibit 6.20 hereto, committing such persons,
among other things, to vote their shares of VCNB Common Stock in
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favor of the Merger at the shareholders' meeting held for that
purpose, granting a proxy for such shares to CNC, and to certain
representations concerning the ownership of VCNB Common Stock and
the CNC Common Stock to be received in the Merger, within five
(5) days after the date of this Agreement.
ARTICLE VII
CONDITIONS TO CONSUMMATION
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The
respective obligations of CNC on the one hand, and of VCNB on the
other hand, to close the Merger shall be subject to the
satisfaction or waiver by both parties prior to the Effective
Time of the following conditions:
(a) The Agreement and the Merger shall have been approved
by VCNB and CNC in accordance with applicable law, including the
approval and adoption by the requisite affirmative votes of the
holders of VCNB Common Stock entitled to vote thereon.
(b) CNC shall have procured, as necessary, the required
approval, consent or waiver with respect to the Agreement and the
Merger by the Board of Governors, the OCC, and the FDIC and, in
all such cases, all applicable statutory waiting periods shall
have expired; the parties shall have procured all other
regulatory approvals, consents or waivers of Governmental
Authorities that are necessary or appropriate to the consummation
of the Merger; and no approval, consent or waiver referred to in
this Section 7.1(b) shall be deemed to have been received if it
shall include any condition or requirement that would, in the
good faith determination of CNC, be a Burdensome Condition on
CNC.
(c) No party hereto shall be subject to any order, decree
or injunction or a court or agency of competent jurisdiction
which enjoins or prohibits the consummation of the Merger, the
Bank Mergers or any other transactions contemplated by this
Agreement.
(d) No statute, rule, regulation, order, injunction or
decree shall have been enacted, entered, promulgated or enforced
by any Governmental Authority which prohibits, restricts or makes
illegal consummation of the Merger, the Bank Mergers or any other
transactions contemplated by this Agreement.
(e) The Form S-4 covering all of the shares of CNC Common
Stock to be issued in the Merger shall have become effective
under the Securities Act and no stop order suspending the
effectiveness of such Form S-4 shall have been issued and no
proceedings for that purpose shall have been initiated.
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(f) The shares of CNC Common Stock to be issued in the
Merger shall be approved for listing on the New York Stock
Exchange, subject to notice of issuance.
SECTION 7.2 CONDITIONS TO OBLIGATIONS OF CNC. The
obligations of CNC to close the Merger shall be subject to the
satisfaction or waiver prior to the Effective Time of the
following additional conditions:
(a) Each of the representations and warranties of VCNB
contained in this Agreement shall, in all material respects, be
true at the Effective Time as if made on such date (or on the
date when made in the case of any representation or warranty
which relates to an earlier date). The Disclosure Schedule shall
be updated and made current to such date as close to the
Effective Time as is reasonable for each type of disclosure and
as are agreed upon by the parties hereto no later than thirty
(30) days prior to the Effective Time; such update of the
Disclosure Schedule shall not in any way affect the
representations and warranties set forth in Section 5.1. VCNB
shall have performed, in all material respects, each of its
covenants and agreements contained in this Agreement and CNC
shall have received a certificate signed by the Chief Executive
Officer and the Chief Financial Officer of VCNB, at the Effective
Time, to the foregoing effect.
(b) No litigation or proceeding shall be pending against
VCNB or any of its Subsidiaries, brought by any Governmental
Authority seeking to prevent consummation of the transactions
contemplated hereby.
(c) CNC shall have received the opinion of Manatt, Phelps &
Phillips, LLP, special counsel to VCNB, in form and substance
reasonably satisfactory to CNC, to the effect that this Agreement
has been duly authorized, executed and delivered by VCNB, and
constitutes the valid and legally binding obligation of VCNB
enforceable in accordance with its terms, subject to customary
exceptions.
(d) At least two days prior to the Effective Time, all
attorneys, accountants, investment bankers and other advisors and
agents for VCNB and its Subsidiaries shall have submitted to VCNB
(with a copy to CNC) estimates of their fees and expenses for all
services rendered in any respect in connection with the
transactions contemplated hereby to the extent not already paid,
and based on such estimates, VCNB shall have prepared and
submitted to CNC a summary of such fees and expenses for the
transaction. At the Effective Time (i) such advisors shall have
submitted their final bills for such fees and expenses to VCNB
and its Subsidiaries for services rendered, with a copy to be
delivered to CNC, and based on such summary, VCNB shall have
prepared and submitted to CNC a final calculation of such fees
and expenses (ii) VCNB shall have accrued and paid, and have
caused its Subsidiaries to have accrued and paid, the amount of
45
<PAGE>
such fees and expenses as calculated above, after CNC has been
given an opportunity to review all such bills and calculation of
such fees and expenses, and (iii) such advisors shall have
released CNC from liability for any fees and expenses. CNC shall
not be liable for any such fees and expenses.
(e) At least five Business Days prior to the Effective
Time, VCNB shall provide CNC with VCNB's financial statements as
of the close of business on the last day of the month prior to
the Effective Time. Such financial statements shall have been
prepared in all material respects in accordance with GAAP and RAP
and other applicable legal and accounting requirements, and
reflect all period-end accruals and other adjustments. At the
close of business on the last day of the month preceding the
Effective Time, the Book Value Per Share of VCNB shall be not
less than $3.12. "Book Value Per Share", for purposes of this
Section 7.2(e) shall mean Adjusted Stockholders' Equity, divided
by the number of shares of VCNB Common Stock outstanding on the
date of calculation. Adjusted Stockholders' Equity shall mean
the stockholders' equity of VCNB as reflected on the financial
statement delivered pursuant to this Section 7.2(e) plus the sum
of (a)(i) all severance benefits paid or accrued pursuant to
Section 6.5(b), (ii) any severance benefits in excess of $510,000
paid or accrued pursuant to Section 6.5(c), (iii) all amounts
paid or accrued pursuant to Section 6.5(d); (iv) all amounts paid
or accrued in connection with the cancellation of options granted
pursuant to the Option Plan as permitted by Sections 2.4
and 4.2(b), (v) all amounts paid or accrued in connection with
taking any actions pursuant to Section 6.13, and (vi) all amounts
paid or accrued in connection with the cold comfort letter
provided for in Section 7.2(h), in each case, net of applicable
taxes, and (b) as adjusted to eliminate any amount related to
unrealized loss (gain) on securities, available for sale, net of
tax as reflected on the financial statements delivered pursuant
to this Section 7.2(e) and including instead on such financial
statements the amount of VCNB's unrealized loss on securities,
available for sale, net of tax as of June 30, 1996.
(f) At the close of business on the last day of the month
preceding the Effective Time, total deposits of VCNB and its
Subsidiaries, calculated pursuant to RAP and GAAP, shall be not
less than eighty-five percent (85%) of the average of total
deposits for VCNB and its Subsidiaries for the six month period
ending on the last day of the same month in the preceding year.
(g) Between the date of this Agreement and the Effective
Time, there shall not have occurred any event related to the
business condition (financial or otherwise), prospects,
operations or properties of VCNB and its Subsidiaries that has
had a Material Adverse Effect on VCNB.
(h) CNC and its directors and officers who sign the S-4
shall have received from VCNB's independent certified public
accountants "cold comfort" letters, dated (i) the date of the
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mailing of the Proxy Statement/Prospectus to VCNB's shareholders,
and (ii) shortly prior to the Effective Time, with respect to
certain financial information regarding VCNB in the form
customarily issued by such accountants at such times in
transactions of this type.
(i) CNC shall have received shareholders' agreements
executed and delivered by each of the directors as contemplated
by Section 6.20.
SECTION 7.3 CONDITIONS TO OBLIGATIONS OF VCNB. The
obligations of VCNB hereunder shall be subject to the
satisfaction or waiver prior to the Effective Time of the
following additional conditions:
(a) Each of the representations, warranties and covenants
of CNC contained in this Agreement shall, in all material
respects, be true at the Effective Time as if made on such date
(or on the date when made in the case of any representation or
warranty which specifically relates to an earlier date); CNC
shall have performed, in all material respects, each of its
covenants and agreements contained in this Agreement; and VCNB
shall have received certificates signed by the Chief Financial
Officer or other authorized senior officers of CNC at the
Effective Time, to the foregoing effect.
(b) No litigation or proceeding shall be pending against
CNC or any of its Subsidiaries brought by any Governmental
Authority seeking to prevent consummation of the transactions
contemplated thereby.
(c) VCNB shall have received the opinion of Richard H.
Sheehan, Jr., General Counsel to CNC, in form and substance
reasonably satisfactory to VCNB, to the effect that (i)this
Agreement has been duly authorized, executed and delivered by CNC
and constitutes the valid and legally binding obligation of CNC
enforceable in accordance with its terms, subject to customary
exceptions and (ii) the shares of CNC Common Stock issued as
consideration in the Merger have been duly authorized, validly
issued, fully paid and non-assessable.
(d) VCNB shall have received the opinion of Manatt, Phelps
& Phillips, LLP, special counsel to VCNB, no later than thirty
(30) days from the date hereof, in form and substance reasonably
satisfactory to VCNB, and confirmed immediately prior to the
Effective Time by such counsel (or, if such counsel cannot give
such opinion or confirmation, by other tax counsel of a prominent
law firm designated by CNC and acceptable to VCNB), substantially
to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion, which are consistent with
the state of facts existing at the Effective Time, that the state
of facts existing at the Effective Time, that the Merger will
qualify as a reorganization under Section 368 of the Code;
provided, that this condition shall be deemed to have been met if
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such opinion (or confirmation) cannot be given due to the
inability of the directors of VCNB to make or deliver to such
counsel representations or agreements reasonably required by such
counsel in order to deliver such opinion (or confirmation).
(e) VCNB shall have received an updated fairness opinion of
Sandler O'Neill & Partners L.P. within five (5) days prior to the
mailing of the Proxy Statement/Prospectus to the shareholders of
VCNB confirming that the consideration to be paid to the VCNB
shareholders in the Merger is fair from a financial point of view
to such shareholders.
(f) Between the date of this Agreement and the Effective
Time there shall not have occurred any event related to the
business condition (financial or otherwise), prospects,
operations or properties of CNC and its Subsidiaries that has had
a Material Adverse Effect on CNC.
ARTICLE VIII
TERMINATION
SECTION 8.1 TERMINATION. This Agreement may be
terminated, and the Merger abandoned, prior to the Effective
Time:
(a) by the mutual agreement of VCNB and CNC, if the board
of the directors, or duly authorized committee thereof, or duly
authorized officers, of each so determines;
(b) by CNC or VCNB in the event of a material breach by the
other party hereto of any representation, warranty, covenant or
agreement contained herein, which is not cured within 30 days
after written notice of such breach is given to the party
committing such breach by the other party;
(c) by CNC or VCNB by written notice to the other party if
either (i) any approval, consent or waiver of a Governmental
Authority required to permit consummation of the Merger shall
have been denied or (ii) any Governmental Authority or court
shall have issued a final, non-appealable order enjoining or
otherwise prohibiting consummation of the Merger;
(d) by CNC or VCNB in the event that the Merger is not
consummated by May 31, 1997, unless the failure to so consummate
by such time is due to the breach of any covenant or obligation
contained in this Agreement by the party seeking to terminate;
(e) by CNC or VCNB if any approval of the stockholders of
VCNB contemplated by this Agreement shall not have been obtained
by reason of the failure to obtain the required vote at a duly
held meeting of stockholders or any adjournments or postponement
thereof;
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(f) by CNC if the Board of Directors of VCNB shall have
withdrawn, modified or changed in a manner adverse to CNC its
approval or recommendation of this Agreement and the Merger;
(g) by VCNB, if the Final CNC Stock Price is less than
$13.90;
(h) by CNC, if (i) VCNB shall have exercised a right
specified in the proviso set forth in Section 4.2(w) with respect
to any Takeover Proposal and shall, directly or through agents or
representatives, continue discussions with any third party
concerning such Takeover Proposal for more than 10 Business Days
after the date of receipt of such Takeover Proposal; or (ii) a
Takeover Proposal that is publicly disclosed shall have been
commenced, publicly proposed or communicated to VCNB which
contains a proposal as to price (without regard to the
specificity of such price proposal) and VCNB shall not have
rejected such proposal within 10 Business Days of its receipt or
the date its existence first becomes publicly disclosed, if
earlier; or
(i) by VCNB if a Takeover Proposal exists and the Board of
Directors of VCNB, after having consulted with and considered the
advice of outside legal counsel, reasonably determine in good
faith that such action is necessary in the exercise of its
fiduciary duties under applicable law.
SECTION 8.2 EFFECT OF TERMINATION. In the event of the
termination of this Agreement by either CNC or VCNB, as provided
above, this Agreement shall thereafter become void and there
shall be no liability on the part of any party hereto or their
respective officers or directors, except that any such
termination shall (i) be without prejudice to the rights of any
party hereto arising out of the willful breach by any party of
any covenant or willful misrepresentation contained in this
Agreement (ii) not affect Sections 6.4(d), 6.13 and 9.12 hereof
which shall survive such termination and (iii) not affect any
provision of this Agreement which expressly survives the
termination of this Agreement. The Stock Option Agreement shall
be governed by its own terms as to termination.
ARTICLE IX
OTHER MATTERS
SECTION 9.1 CERTAIN DEFINITIONS; INTERPRETATIONS. As
used in this Agreement, the following terms shall have the
meanings indicated:
"ACTUAL KNOWLEDGE" shall mean facts and other information
which as of the date of this Agreement any executive vice
president, chief financial officer, controller (and, after the
date of this Agreement, shall also include any Senior Vice
49
<PAGE>
President), and any officer senior to any of the foregoing of a
party actually knows.
"ALLL" shall mean the allowance for loan and lease losses,
as determined in accordance with GAAP and RAP.
"BURDENSOME CONDITION" shall mean any condition or
requirement included in any required regulatory approval, consent
or waivers of Government Authorities which imposes (a) any
condition or restriction on CNC or CNB, including without
limitation, requirements relating to the raising of additional
capital or the disposition of assets, which in the good faith
judgment of CNC would be materially burdensome in the context of
the transactions contemplated by this Agreement, or (b) the
Memorandum of Understanding between the Federal Reserve Bank of
San Francisco and VCNB on CNC.
"BUSINESS DAY" shall mean any day other than a Saturday,
Sunday, national holiday or any other day on which national banks
operating in California are permitted or required to close.
"CONTROL" shall have the meaning ascribed thereto in Section
2(a) of the Bank Holding Company Act of 1956, as amended.
"KNOWLEDGE" or "BEST KNOWLEDGE" shall mean facts and other
information which as of the date of this Agreement any executive
vice president, chief financial officer, superior officer,
controller (and, after the date of this Agreement, shall also
include any Senior Vice President), and any officer superior to
any of the foregoing of a party knows as a result of the
performance of his or her duties, or that a senior executive
officer of a bank or bank holding company similar to such party
with similar duties reasonably should know in the normal course
of his or her duties, and includes such diligent inquiry as is
reasonable under the circumstances.
"MATERIAL" means material to CNC or VCNB (as the case may
be) and its respective Subsidiaries, taken as a whole.
"MATERIAL ADVERSE EFFECT", with respect to a person, means a
material adverse effect upon (A) business, financial condition,
operations, or prospects of such person and its Subsidiaries,
taken as a whole, or (B) the ability of such person to timely
perform its obligations under, and to timely consummate the
Merger provided, however, that in determining whether a Material
Adverse Effect has occurred there shall be excluded any effect on
the referenced party the cause of which is (i) any change in
banking or similar laws, rules or regulations of general
applicability or interpretations thereof by courts or
governmental authorities, (ii) any change in GAAP or RAP
applicable to banks or their holding companies generally, (iii)
any action or omission of CNC or VCNB or any subsidiary of either
of them taken with the prior written consent of CNC or VCNB, as
applicable or permitted by this Agreement, and (iv) any changes
50
<PAGE>
in general economic conditions affecting banks or their holding
companies generally.
"PERSON" includes an individual, corporation, partnership,
association, trust, limited liability company or partnership or
unincorporated organization.
"RAP" shall mean regulatory accounting principles, if any,
applicable to a particular person.
"SUBSIDIARY", with respect to a person, means any other
person the stock or equity of which is more than 50% owned by
such person.
"TAXES" shall mean any federal, state, local, or foreign
income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Code Section 59A), customs
duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property,
personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other taxes,
or assessments in the nature of taxes, of any kind whatsoever,
including any interest, penalty, or addition thereto, whether
disputed or not.
"TAX RETURN" shall mean any return, declaration, report,
claim for refund, or information return or statement relating to
Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
The table of contents and headings contained in this
Agreement offer ease of reference only and shall not affect the
meaning or interpretation of this Agreement. Whenever the words
"include", "includes", or "including" are used in this Agreement,
they shall be deemed followed by the words "without limitation".
Any singular term in this Agreement shall be deemed to include
the plural, and any plural term, the singular.
SECTION 9.2 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES
AND COVENANTS. Except for Articles II and III and Sections
6.4(d), 6.5, 6.18, and 6.19, none of the respective
representations, warranties, obligations, covenants, and
agreements of the parties shall survive the Effective Time.
SECTION 9.3 WAIVER AND MODIFICATION. Prior to the
Effective Time, any provision of this Agreement may be (a) waived
by the party benefited by the provision or by both parties or (b)
amended or modified at any time (including the structure of the
transaction) by an agreement in writing between the parties
hereto, approved by their respective boards of directors,
PROVIDED HOWEVER, that any amendment which reduces the amount or
changes the form of the consideration to be delivered to the VCNB
Shareholders in the Merger shall not be valid after the Agreement
51
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is approved by the stockholders of VCNB without any subsequent
approval by the stockholders of VCNB.
SECTION 9.4 COUNTERPARTS. This Agreement may be executed
in counterparts each of which shall be deemed to constitute an
original, but all of which together shall constitute one and the
same instrument.
SECTION 9.5 GOVERNING LAW, JURISDICTION AND VENUE. This
Agreement shall be governed by, and interpreted in accordance
with, the laws of the State of Delaware (however, not to the
exclusion of any applicable Federal law), without regard to
Delaware statutes or judicial decisions regarding choice of law
questions. The prevailing party shall be entitled to recover all
reasonable costs and expenses, including attorneys' fees, or
charges and disbursements incurred in connection with such suit.
SECTION 9.6 NOTICES. All notices, requests,
acknowledgements and other communications hereunder
(collectively, "Notices") to a party shall be in writing and
delivered by hand, federal express (or other reputable overnight
delivery service), telecopy, registered mail or certified mail to
such party at its address set forth below or to such other
address as such party may specify by notice to the other party
hereto. All Notices given by telecopy shall be deemed to have
been given upon receipt of confirmation by the sender of such
Notice; all other Notices shall be deemed to have been given when
received. If to VCNB to:
Ventura County National Bancorporation
500 Esplanade Drive
Oxnard, California 93030
Telecopy: (805) 981-2786
Attention: Richard S. Cupp
with a copy to:
Manatt, Phelps & Phillips
11355 West Olympic Boulevard
Los Angeles, California 90064
Telecopy: (310) 312-4224
Attention: William T. Quicksilver
If to CNC, to:
City National Corporation
400 North Roxbury Drive
Beverly Hills, California 90210-5021
Telecopy: (310) 888-6704
Attention: Mr. Frank P. Pekny
52
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with a copy to:
City National Corporation
400 North Roxbury Drive
Beverly Hills, California 90210-5021
Telecopy: (310) 888-6232
Attention: Richard H. Sheehan
SECTION 9.7 ENTIRE AGREEMENT. Except for the agreements
entered into as of this date or contemplated by this Agreement,
the Stock Option Agreement, the Shareholders' Agreement and the
Confidentiality Agreements between CNC and VCNB dated April 22,
1996 and September 4, 1996, this Agreement (including the
Disclosure Schedule attached hereto and incorporated herein)
represents the entire understanding of the parties hereto with
respect to the transactions contemplated hereby and supersedes
any and all other oral or written agreements heretofore made;
SECTION 9.8 BINDING EFFECT; ASSIGNMENT. This Agreement
shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns;
PROVIDED, HOWEVER, this Agreement may not be assigned by either
party hereto without the written consent of the other party.
SECTION 9.9 SEVERABILITY. If any provision of this
Agreement or the application of any such provision to any person
or circumstance shall be held invalid, illegal or unenforceable
in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any
other provision hereof.
SECTION 9.10 NO THIRD PARTY BENEFICIARIES. Except with
respect to Sections 6.5 and 6.19 which are intended to benefit
the officers and employees of VCNB and its Subsidiaries, this
Agreement is made solely for the benefit of the parties to this
Agreement and their respective successors and permitted assigns,
and no other person or entity shall have or acquire any right by
virtue of this Agreement.
SECTION 9.11 SPECIFIC PERFORMANCE. The parties hereto
agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in
any court of the U.S. or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled
at law or in equity.
SECTION 9.12 EXPENSES. Subject to Section 7.2(d) hereof,
each party hereto shall pay its own costs and expenses incurred
in connection with the Merger, including, without limitation,
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attorneys' fees, charges and disbursements and filing or other
fees payable in connection with all applications, notifications
and report forms and notices to be filed with any Governmental
Authority pursuant to the terms of this Agreement; provided,
however, that the costs and expenses of printing and mailing the
S-4 and the Proxy Statement/Prospectus shall be borne by CNC,
unless the Merger does not occur (other than due to a termination
of this Agreement pursuant to Section 8.1(b)), in which event
such costs and expenses shall be borne equally by the parties
hereto. All filing and other fees paid to the SEC in connection
with the Merger shall be borne by CNC.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers as of
the day and year first above written.
VENTURA COUNTY NATIONAL CITY NATIONAL CORPORATION
BANCORP
By:/s/ Richard S. Cupp By: /s/ Russell Goldsmith
- -------------------------- -----------------------------
Richard S. Cupp Russell Goldsmith
President and Chief Vice Chairman and Chief
Executive Officer Executive Officer
54
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AGREEMENT AND PLAN OF MERGER
between
CITY NATIONAL CORPORATION
and
VENTURA COUNTY NATIONAL BANCORP
September 15, 1996
55
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I - THE MERGER AND RELATED TRANSACTIONS......................2
1.1 STRUCTURE OF THE MERGER............................2
1.2 CLOSING............................................2
1.3 EFFECTIVE TIME.....................................2
1.4 EFFECTS OF THE MERGER..............................2
1.5 THE BANK MERGER....................................2
1.6 CALIFORNIA REQUIREMENTS............................3
ARTICLE II - EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS..........................3
2.1 EFFECT ON CAPITAL STOCK............................3
2.2 CONVERSION OF VCNB COMMON STOCK....................3
2.3 ELECTION AND PRORATION PROCEDURES..................4
2.4 STOCK OPTIONS......................................8
2.5 ADJUSTMENTS FOR DILUTION AND OTHER MATTERS.........8
2.6 CONVERSION OF DISSENTING COMMON STOCK..............8
ARTICLE III - EXCHANGE OF SHARES.....................................9
3.1 EXCHANGE PROCEDURES................................9
3.2 VOTING AND DIVIDENDS...............................10
3.3 NO LIABILITY.......................................11
3.4 WITHHOLDING RIGHTS.................................11
ARTICLE IV - CONDUCT PENDING THE MERGER..............................11
4.1 CONDUCT OF VCNB'S AND EACH BANK'S BUSINESS PRIOR
TO THE EFFECTIVE TIME..............................11
4.2 FORBEARANCE BY VCNB AND ITS SUBSIDIARIES...........12
4.3 TIMELINESS OF CNC'S CONSENT........................16
4.4 CONDUCT BY CNC PRIOR TO THE EFFECTIVE TIME.........16
ARTICLE V - REPRESENTATIONS AND WARRANTIES...........................16
5.1 REPRESENTATIONS AND WARRANTIES OF VCNB AND THE
BANK...............................................16
(a) RECITALS TRUE.............................16
(b) CAPITAL STOCK.............................16
(c) AUTHORITY.................................17
(d) SUBSIDIARIES..............................17
(e) APPROVALS.................................17
(f) NO VIOLATIONS.............................17
(g) COMMUNITY REINVESTMENT ACT................18
(h) REPORTS...................................18
(i) FINANCIAL STATEMENTS......................19
(j) ABSENCE OF CERTAIN CHANGES OR EVENTS......19
(k) TAXES.....................................19
(l) ABSENCE OF CLAIMS; LITIGATION.............20
(m) REGULATORY ACTIONS........................20
(n) CERTAIN AGREEMENTS........................21
(o) LABOR MATTERS.............................21
(p) EMPLOYEE BENEFIT PLANS....................21
(q) INSIDER LOANS; OTHER TRANSACTIONS.........23
(r) TITLE TO ASSETS...........................23
(i)
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(s) KNOWLEDGE AS TO CONDITIONS................24
(t) COMPLIANCE WITH LAWS......................24
(u) FEES......................................24
(v) ENVIRONMENTAL.............................24
(w) ALLOWANCE FOR POSSIBLE LOAN LOSSES........27
(x) PERFORMANCE OF OBLIGATIONS................27
(y) INSURANCE. ..............................27
(z) LISTING OF LOANS. .......................27
(aa) DERIVATIVE TRANSACTIONS. .................27
(bb) TRUST ADMINISTRATION......................28
(cc) CONTINGENT LIABILITIES....................28
(dd) STATEMENTS TRUE AND CORRECT...............28
(ee) TIMELINESS AND COMPLIANCE OF REPORTS AND
FILINGS...................................29
5.2 REPRESENTATIONS AND WARRANTIES OF CNC..............29
(a) RECITALS TRUE.............................29
(b) CAPITAL STOCK.............................29
(c) AUTHORITY.................................29
(d) APPROVALS.................................30
(e) NO VIOLATIONS.............................30
(f) FINANCIAL STATEMENTS......................30
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS......31
(h) ABSENCE OF CLAIMS.........................31
(i) REGULATORY ACTIONS........................31
(j) KNOWLEDGE AS TO CONDITIONS................32
(k) COMPLIANCE WITH LAWS......................32
(l) FEES......................................32
(m) COMMUNITY REINVESTMENT ACT................32
(n) STATEMENTS TRUE AND CORRECT...............33
(o) TIMELINESS AND COMPLIANCE OF REPORTS AND
FILINGS...................................33
(p) TAX REPRESENTATION........................33
ARTICLE VI - COVENANTS...............................................34
6.1 REGULATORY MATTERS.................................34
6.2 STOCKHOLDERS' APPROVALS............................35
6.3 LEGAL CONDITIONS TO MERGER.........................35
6.4 INFORMATION........................................36
6.5 EMPLOYEE BENEFITS..................................37
6.6 CERTAIN FILINGS, CONSENTS AND ARRANGEMENTS.........38
6.7 ADDITIONAL AGREEMENTS; PARTIES.....................39
6.8 PUBLICITY..........................................39
6.9 NOTIFICATION OF CERTAIN MATTERS....................39
6.10 PRE-CLOSING ADJUSTMENTS............................39
6.11 DIRECTOR RESIGNATIONS..............................40
6.12 HUMAN RESOURCES ISSUES.............................40
6.13 ASSISTANCE WITH THIRD-PARTY AGREEMENTS.............40
6.14 NOTICES AND COMMUNICATIONS.........................42
6.15 INSURANCE POLICIES ASSIGNMENT......................42
6.16 ADDITIONAL AGREEMENTS; OFFICERS AND DIRECTORS......42
6.17 AFFILIATES AND FIVE PERCENT SHAREHOLDERS...........42
6.18 COOPERATION........................................43
6.19 INDEMNIFICATION AND DIRECTORS AND OFFICERS.........43
6.20 SHAREHOLDERS' AGREEMENT............................43
(ii)
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ARTICLE VII - CONDITIONS TO CONSUMMATION.............................44
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS.............44
7.2 CONDITIONS TO OBLIGATIONS OF CNC...................45
7.3 CONDITIONS TO OBLIGATIONS OF VCNB..................47
ARTICLE VIII - TERMINATION...........................................48
8.1 TERMINATION........................................48
8.2 EFFECT OF TERMINATION..............................49
ARTICLE IX - OTHER MATTERS...........................................49
9.1 CERTAIN DEFINITIONS; INTERPRETATIONS...............49
9.2 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS..........................................51
9.3 WAIVER AND MODIFICATION............................51
9.4 COUNTERPARTS.......................................52
9.5 GOVERNING LAW, JURISDICTION AND VENUE..............52
9.6 NOTICES............................................52
9.7 ENTIRE AGREEMENT...................................53
9.8 BINDING EFFECT; ASSIGNMENT.........................53
9.9 SEVERABILITY.......................................53
9.10 NO THIRD PARTY BENEFICIARIES.......................53
9.11 SPECIFIC PERFORMANCE...............................53
9.12 EXPENSES...........................................53
(iii)
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT, dated as of September 15,
1996 (the "Agreement"), is made and entered into by and between
City National Corporation, a Delaware corporation ("CNC"), and
Ventura County National Bancorp, a California corporation
("VCNB").
WHEREAS, CNC and VCNB are concurrently herewith
entering into an Agreement and Plan of Merger with respect to a
business combination of CNC and VCNB (the "Merger Agreement");
and
WHEREAS, as a condition to its willingness to enter
into the Merger Agreement, CNC has requested that VCNB agree, and
in order to induce CNC to enter into the Merger Agreement, VCNB
has agreed, to grant an option to CNC to purchase certain shares
of common stock, no par value, of VCNB (the "VCNB Common Stock");
NOW, THEREFORE, in consideration of the foregoing, and
the representations, warranties, covenants and agreements set
forth herein and in the Merger Agreement, and intending to be
legally bound, the parties hereto agree as follows:
1. GRANT OF OPTION. VCNB hereby grants to CNC an
irrevocable option (the "Option") to purchase, subject to the
terms hereof, up to 1,836,516 fully paid and nonassessable shares
(the "Option Shares") of VCNB Common Stock, exercisable as set
forth herein by payment of the Option Price, as defined in
Section 4 hereof. The number of shares of VCNB Common Stock that
may be received upon the exercise of the Option and the Option
Price are subject to adjustment as set forth herein.
2. EXERCISE OF OPTION.
(a) CNC may, subject to the provisions of this Section
2 and subject to the conditions of exercise contained in Section
3 hereof, exercise the Option, in whole or in part, at any time
following the occurrence of an Exercise Event, but prior to the
Expiration Date (as defined in Section 3 hereof).
(b) Notwithstanding any other provision of this
Agreement to the contrary, in no event shall CNC purchase under
the terms of this Agreement that number of Option Shares which
have a Spread Value in excess of $2,000,000. In the event the
Spread Value exceeds $2,000,000 the number of Option Shares which
CNC is entitled to purchase at the Closing Date shall be reduced
to the extent required such that the Spread Value following such
reduction is equal to or less than $2,000,000.
3. CONDITIONS OF EXERCISE; EXPIRATION.
(a) It shall be a condition to CNC's exercise of the
Option that, at the time of such exercise (i) CNC is not in
breach in any material respect of any covenant or obligation set
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forth in the Merger Agreement and (ii) there is not in effect any
preliminary or permanent injunction or other order by any court
of competent jurisdiction which prevents or restrains the
issuance and delivery of the Option Shares.
(b) The right to exercise any part of the Option not
previously exercised shall expire, terminate and be of no further
force and effect upon the earliest to occur of (such earliest
date, the "Expiration Date") (i) the Effective Time of the
Merger, (ii) the date the Merger Agreement is terminated pursuant
to Sections 8.1(a) or (g); (iii) the date the Merger Agreement is
terminated by VCNB or CNC pursuant to Sections 8.1(b), (c), (d),
(e) or (f) if such date is prior to the occurrence of an Exercise
Event or Preliminary Acquisition Transaction; or (iv) 18 months
following the earliest to occur of (A) the date of any
termination of the Merger Agreement other than as described in
clauses (ii) and (iii) of this sentence or (B) the date of the
first occurrence of an Exercise Event.
4. MANNER OF EXERCISE.
(a) In the event that CNC wishes to exercise the
Option, in whole or in part, CNC shall send a written notice (the
date of which being herein referred to as the "Notice Date") to
VCNB, specifying the number of Option Shares to be purchased and
a place and date not earlier than two nor later than ten business
days following any such Notice Date for the closing of such
purchase (the "Closing"); provided that if prior notification to
or approval of the Federal Reserve Board, the Office of the
Comptroller of the Currency (the "OCC") or any other regulatory
agency is required in connection with such purchase, each party
shall cooperate with the other in the filing of the required
notice or application for approval and shall expeditiously
process the same and use its reasonable best efforts, in good
faith, to obtain any required approval; and the period of time
that otherwise would run pursuant to this sentence shall run
instead from the date on which any required notification periods
have expired or been terminated or such approvals have been
obtained and any requisite waiting period or periods shall have
passed.
(b) At any Closing, CNC will make payment to VCNB for
the Option Shares so purchased at such date by delivery of
immediately available funds to VCNB of $3.93 per Option Share
(the "Option Price"). If the Option is exercised in part only,
CNC shall also deliver this Agreement to VCNB at the Closing in
exchange for a new agreement duly authorized and executed by VCNB
identical to this Agreement evidencing the right to purchase the
remaining balance of the Option Shares.
(c) Upon payment of the Option Price, VCNB will
immediately deliver to CNC a certificate or certificates
representing such Option Shares registered in the name of CNC or
its assignee or designee.
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(d) Certificates for Option Shares delivered at a
Closing hereunder may be endorsed with a restrictive legend that
shall read substantially as follows:
"The transfer of the shares represented
by this certificate is subject to
certain provisions of an agreement
between the registered holder hereof and
the issuer and to resale restrictions
arising under the Securities Act of
1933, as amended. A copy of such
agreement is on file at the principal
office of the issuer and will be
provided to the holder hereof without
charge upon receipt by Issuer of a
written request therefor."
It is understood and agreed that: (i) the reference to
the resale restrictions of the Securities Act of 1933, as amended
(the "Securities Act"), in the above legend shall be removed by
delivery of substitute certificate(s) without such reference if
CNC shall have delivered to VCNB a copy of a letter from the
staff of the Securities and Exchange Commission ("SEC"), or an
opinion of counsel, in form and substance reasonably satisfactory
to VCNB, to the effect that such legend is not required for
purposes of the Securities Act; (ii) the reference to the
provisions of this Agreement in the above legend shall be removed
by delivery of substitute certificate(s) without such reference
if the shares have been sold or transferred in compliance with
the provisions of this Agreement and under circumstances that do
not require the retention of such reference; and (iii) the legend
shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition,
such certificates shall bear any other legend as may be required
by law.
5. REGISTRATION OF SHARES.
(a) In the event that the Option has become
exercisable in accordance with Section 2 hereof, then, as
promptly as practicable upon CNC's request, but, in any event,
within six months from the date of CNC's request, VCNB agrees to
prepare and file a registration statement ("Registration Event")
under the Securities Act, and any applicable state securities
laws, with respect to any proposed disposition by CNC of any or
all of the Option Shares and to use its best efforts to cause
such registration statement to become effective as expeditiously
as possible and to keep such registration effective for a period
of not less than ninety days, unless, in the written opinion of
counsel to VCNB, addressed to CNC and which shall be satisfactory
in form and substance to CNC and its counsel, registration is not
required for such proposed disposition of the Option Shares.
Notwithstanding the foregoing, VCNB shall have the right to delay
(the "Delay Right") a Registration Event for a period of up to
sixty (60) days in the event it receives a request from CNC to
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effect a Registration Event if VCNB (i) is involved in a material
transaction, or (ii) determines, in the good faith exercise of
its reasonable business judgment, that such registration and
offering could adversely effect or interfere with bona fide
material financing plans of VCNB or would require disclosure of
information, the premature disclosure of which could materially
adversely affect VCNB or any transaction under active
consideration by VCNB. For purposes of this Agreement, the term
"material transaction" shall mean a transaction which would
require VCNB to file a current report on Form 8-K with the SEC.
VCNB shall have the right to exercise two (2) Delay Rights in any
twelve (12) month period. All fees, expenses and charges of any
kind or nature whatsoever incurred in connection with the
registration of the Option Shares pursuant to this Section 5
shall be borne and paid by VCNB. VCNB shall indemnify and hold
harmless CNC, its affiliates and its officers, directors,
attorneys and agents from and against any and all losses, claims,
damages, liabilities and expenses (including, without limitation,
all out-of-pocket expenses, investigation expenses, expenses
incurred with respect to any judgment and fees, charges and
disbursements of counsel and accountants) arising out of or based
upon any statements contained in, or omissions or alleged
omissions from, each registration statement (and related
prospectus) required to be filed pursuant to this Section 5.
(b) CNC shall be limited to the benefit of two effective
demand registrations as described in Section 5(a) to be requested
during the three (3) years following the date of the first
Exercise Event, but shall have an unlimited number of so-called
"piggyback" registration rights. VCNB agrees to enter into a
Registration Rights agreement with CNC containing customary
terms, including appropriate indemnities, which shall only allow
underwriters the ability to cut back the number of shares CNC
seeks to have registered on pro rata basis.
6. REPRESENTATIONS AND WARRANTIES OF VCNB. VCNB hereby
represents and warrants to, and agrees with, CNC as follows:
(a) AUTHORITY RELATIVE TO THIS AGREEMENT. VCNB has
full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of VCNB and no other
corporate proceedings on the part of VCNB are necessary to
authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed
and delivered by VCNB and, assuming that this Agreement has been
duly and validly authorized, executed and delivered by CNC, this
Agreement constitutes a valid and binding agreement of VCNB,
enforceable against VCNB in accordance with its terms.
(b) OPTION SHARES. VCNB has taken all necessary
corporate action to authorize and reserve and to permit it to
issue, and at all times from the date hereof through the
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Expiration Date will have reserved for issuance upon exercise of
the Option, 1,836,516 shares of Common Stock, each of which, upon
delivery pursuant hereto, shall be duly authorized, validly
issued, fully paid and nonassessable, and shall be delivered free
and clear of all claims, liens, encumbrances and security
interests and not be subject to any preemptive rights. VCNB will
take all necessary corporate action to authorize and reserve for
issuance upon exercise of the Option such additional shares as
may be required pursuant to Section 9 hereof. VCNB will not
take, and will refrain from taking, any action which could have
the effect of preventing or disabling VCNB from (i) delivery of
the Option Shares to CNC upon exercise of the Option or (ii) from
otherwise performing its obligations under this Agreement.
(c) CONFLICTING INSTRUMENTS; CONSENTS. Neither the
execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby will violate or result in
any violation of or be in conflict with or constitute a default
under any term of the Articles of Incorporation or Bylaws of
VCNB, or of any material agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to
VCNB. No consent or approval by any governmental authority,
other than compliance with applicable federal and state
securities and banking laws, and regulations of the Federal
Reserve Board and the OCC, is required of VCNB in connection with
the execution and delivery by VCNB of this Agreement or the
consummation by VCNB of the transactions contemplated hereby.
(d) NOTICE. VCNB shall give notice to CNC promptly,
but in any event within 10 days of VCNB's first obtaining
knowledge of any Exercise Event or Repurchase Event.
7. REPRESENTATIONS AND WARRANTIES OF CNC. CNC hereby
represents and warrants to VCNB as follows:
(a) AUTHORITY RELATIVE TO THIS AGREEMENT. CNC has
full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of CNC and no other
corporate proceedings on the part of CNC are necessary to
authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed
and delivered by CNC and, assuming this Agreement has been duly
and validly authorized, executed and delivered by VCNB, this
Agreement constitutes a valid and binding agreement of CNC,
enforceable against CNC in accordance with its terms.
(b) NO DISTRIBUTION. CNC will acquire the Option
Shares issued upon exercise of the Option for its own account,
without a view toward the distribution thereof, and will not sell
such Option Shares unless such sale is registered under the
Securities Act or unless an exemption from such registration is
available.
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8. NOTIFICATION OF RECORD DATE; POSTPONEMENT OF MEETING.
At any time during the period that this Option may become
exercisable by CNC, VCNB shall give CNC thirty business days'
prior written notice of any record date, for determining the
holders of record of VCNB Common Stock entitled to vote on any
matter, to receive any dividend or distribution, or to receive
any other benefit or right, or for any other purpose that a
record date is taken or declared with respect to the VCNB Common
Stock. In the event that CNC, in accordance with this Agreement,
elects to exercise the Option granted hereunder by delivery of
the notice required pursuant to Section 4 after the record date
set by VCNB for any shareholders' meeting, then VCNB shall, upon
request by CNC, cancel the scheduled meeting and its related
record date and reschedule it for a later date; provided,
however, that the record date for such rescheduled meeting shall
be a date that is not fewer than ten nor more than thirty
business days after the cancellation of the originally scheduled
shareholders' meeting.
9. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.
(a) In the event of any dividend, stock split, split-
up, recapitalization, reclassification, combination, exchange of
shares or similar transaction or event with respect to the VCNB
Common Stock, the type and number of shares or securities subject
to the Option, and the Option Price therefor, shall be adjusted
appropriately, and proper provision shall be made in the
agreements governing such transaction so that CNC shall receive,
upon exercise of the Option, the number and class of shares or
other securities or property that CNC would have received in
respect of VCNB Common Stock if the Option had been exercised
immediately prior to such event, or the record date therefor, as
applicable. If any shares of VCNB Common Stock are issued after
the date of this Agreement (other than pursuant to an event
described in the first sentence of this Section 9(a)), the number
of shares of VCNB Common Stock subject to the Option shall be
adjusted so that, after such issuance, it, together with any
shares of VCNB Common Stock previously issued to CNC pursuant
hereto, equals 19.9% of the number of shares of VCNB Common Stock
then issued and outstanding, without giving effect to any shares
subject to or issued pursuant to this Option.
(b) In the event that VCNB shall, prior to the
Expiration Date, enter in an agreement: (i) to consolidate with
or merge into any person, other than CNC or one of its
Subsidiaries, and shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any
person, other than CNC or one of its Subsidiaries, to merge into
VCNB and VCNB shall be the continuing or surviving corporation,
but, in connection with such merger, the then outstanding shares
of VCNB Common Stock shall be changed into or exchanged for stock
or other securities of VCNB or any other person or cash or any
other property or the outstanding shares of VCNB Common Stock
immediately prior to such merger shall after such merger
represent less than 50% of the outstanding shares and share
equivalents of the merged company; or (iii) to sell or otherwise
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transfer all or substantially all of its assets to any person,
other than CNC or one of its Subsidiaries, then, and in each such
case, the agreement governing such transaction shall make proper
provisions so that the Option shall, upon the consummation of any
such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the
"Substitute Option"), at the election of CNC, of either (x) the
Acquiring Corporation (as defined below), (y) any person that
controls the Acquiring Corporation, or (z) in the case of a
merger described in clause (ii), VCNB (in each case, such person
being referred to as the "Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as
the Option, PROVIDED that, if the terms of the Substitute Option
cannot, for legal reasons, be the same as the Option, such terms
shall be as similar as possible and in no event less advantageous
to CNC. The Substitute Option Issuer shall also enter into an
agreement with the then-holder or holders of the Substitute
Option in substantially the same form as this Agreement, which
shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for
such number of shares of the Substitute Common Stock (as
hereinafter defined) as is equal to the Assigned Value (as
hereinafter defined) multiplied by the number of shares of the
VCNB Common Stock for which the Option was theretofore
exercisable, divided by the Average Price (as hereinafter
defined). The exercise price of the Substitute Option per share
of the Substitute Common Stock (the "Substitute Option Price")
shall then be equal to the Option Price multiplied by a fraction
in which the numerator is the number of shares of the VCNB Common
Stock for which the Option was theretofore exercisable and the
denominator is the number of shares for which the Substitute
Option is exercisable.
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (x) the
continuing or surviving corporation of a consolidation or
merger with VCNB (if other than VCNB), (y) VCNB in a merger
in which VCNB is the continuing or surviving person, and (z)
the transferee of all or any substantial part of the VCNB's
assets (or the assets of its Subsidiaries).
(ii) "Substitute Common Stock" shall mean the
common stock issued by the Substitute Option Issuer upon
exercise of the Substitute Option.
(iii) "Assigned Value" shall mean the highest of
(x) the price per share of the VCNB Common Stock at which a
Tender Offer or Exchange Offer therefor has been made by any
person (other than CNC or its Subsidiaries), (y) the price
per share of the VCNB Common Stock to be paid by any person
(other than CNC or its Subsidiaries) pursuant to an
agreement with VCNB, and (z) the highest closing sales price
per share of VCNB Common Stock quoted on the Nasdaq National
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Market (or if VCNB Common Stock is not quoted on the Nasdaq
National Market, the highest bid price per share on any day
as quoted on the principal trading market or securities
exchange on which such shares are traded as reported by a
recognized source chosen by CNC) within the six-month period
immediately preceding the agreement; PROVIDED, that in the
event of a sale of less than all of VCNB's assets, the
Assigned Value shall be the sum of the price paid in such
sale for such assets and the current market value of the
remaining assets of VCNB as determined by a nationally
recognized investment banking firm selected by CNC and
reasonably acceptable to VCNB, divided by the number of
shares of the VCNB Common Stock outstanding at the time of
such sale. In the event that an Exchange Offer is made for
the VCNB Common Stock or an agreement is entered into for a
merger or consolidation involving consideration other than
cash, the value of the securities or other property issuable
or deliverable in exchange for the VCNB Common Stock shall
be determined by a nationally recognized investment banking
firm mutually selected by CNC and VCNB (or if applicable,
Acquiring Corporation), provided that if a mutual selection
cannot be made as to such investment banking firm, it shall
be selected by CNC.
(iv) "Average Price" shall mean the average
closing price of a share of the Substitute Common Stock for
the one year immediately preceding the consolidation, merger
or sale in question, but in no event higher than the closing
price of the shares of the Substitute Common Stock on the
day preceding such consolidation, merger or sale, PROVIDED
that if VCNB is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of
common stock issued by VCNB, the person merging into VCNB or
by any company which controls or is controlled by such
merging person, as CNC may elect.
(f) In no event pursuant to any of the foregoing
paragraphs shall the Substitute Option be exercisable for more
than 19.9% of the aggregate of the shares of the Substitute
Common Stock outstanding prior to exercise of the Substitute
Option. In the event that the Substitute Option would be
exercisable for more than 19.9% of the aggregate of the shares of
Substitute Common Stock but for this clause (f), the Substitute
Option Issuer shall make a cash payment to CNC equal to the
excess of (i) the value of the Substitute Option without giving
effect to the limitation in this clause (f) over (ii) the value
of the Substitute Option after giving effect to the limitation in
this clause (f). This difference in value shall be determined by
a nationally recognized investment banking firm selected by CNC.
(g) VCNB shall not enter into any transaction
described in subsection (b) of this Section 9 unless the
Acquiring Corporation and any person that controls the Acquiring
Corporation assume in writing all the obligations of VCNB
hereunder and take all other actions that may be necessary so
that the provisions of this Section 9 are given full force and
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effect (including, without limitation, any action that may be
necessary so that the shares of Substitute Common Stock are in no
way distinguishable from or have lesser economic value than other
shares of common stock issued by the Substitute Option Issuer).
10. REPURCHASE AT THE OPTION OF CNC.
(a) At the written request of CNC at any time
commencing upon the first occurrence of a Repurchase Event (as
defined in Section 10(d)), VCNB shall repurchase from CNC the
Option and, to the extent permitted by the California General
Corporation Law, all shares of VCNB Common Stock purchased by CNC
pursuant hereto with respect to which CNC then has Beneficial
Ownership. The date on which CNC exercises its rights under this
Section 10 is referred to as the "Request Date", and the Request
Date must be no later than 12 months after the first occurrence
of a Repurchase Event. Such repurchase shall be at an aggregate
price (the "Repurchase Consideration") equal to the sum of:
(i) the aggregate Option Price paid by CNC for
any shares of VCNB Common Stock acquired pursuant to the
Option with respect to which CNC then has Beneficial
Ownership;
(ii) the excess, if any, of (x) the Applicable
Price (as defined below) for each share of VCNB Common Stock
over (y) the Option Price (subject to adjustment pursuant to
Section 9), multiplied by the number of shares of VCNB
Common Stock with respect to which the Option has not been
exercised; and
(iii) the excess, if any, of the Applicable Price
over the Option Price (subject to adjustment pursuant to
Section 9) paid (or, in the case of Option Shares with
respect to which the Option has been exercised but the
Closing Date has not occurred, payable) by CNC for each
share of VCNB Common Stock with respect to which the Option
has been exercised and with respect to which CNC then has
Beneficial Ownership, multiplied by the number of such
shares; provided, that the amount calculated pursuant to
clause (ii) and (iii) of this Section 10(a) shall not exceed
$2,000,000.
(b) If CNC exercises its rights under this Section 10,
VCNB shall, within ten business days after the Request Date, pay
the Repurchase Consideration to CNC in immediately available
funds, and contemporaneously with such payment CNC shall
surrender to VCNB the Option and the certificates evidencing the
shares of VCNB Common Stock purchased thereunder with respect to
which CNC then has Beneficial Ownership, and CNC shall warrant
that it has sole record and Beneficial Ownership of such shares
and that the same are then free and clear of all liens, claims,
charges and encumbrances of any kind whatsoever. Notwithstanding
the foregoing, to the extent that prior notification to or
approval of the Federal Reserve Board, the OCC or other
regulatory authority is required in connection with the payment
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of all or any portion of the Repurchase Consideration, CNC shall
have the ongoing option to revoke its request for repurchase
pursuant to this Section 10, in whole or in part, or to require
that VCNB deliver from time to time that portion of the
Repurchase Consideration that it is not then so prohibited from
paying and promptly file the required notice or application for
approval and expeditiously process the same (and each party shall
cooperate with the other in the filing of any such notice or
applicable and the obtaining of any such approval). If the
Federal Reserve Board, the OCC or any other regulatory authority
disapproves of any part of VCNB's proposed repurchase pursuant to
this Section 10, VCNB shall promptly give notice of such fact to
CNC. If the Federal Reserve Board, the OCC or other regulatory
agency prohibits the repurchase in part but not in whole, then
CNC shall have the right (i) to revoke the repurchase request or
(ii) to the extent permitted by the Federal Reserve Board, the
OCC or other regulatory agency, determine whether the repurchase
should apply to the Option and/or Option Shares and to what
extent to each, and CNC shall thereupon have the right to
exercise the Option as to the number of Option Shares for which
the Option was exercisable at the Request Date less the sum of
the number of shares covered by the Option in respect of which
payment has been made pursuant to Section 10(a)(ii) and the
number of shares covered by the portion of the Option (if any)
that has previously been repurchased. CNC shall notify VCNB of
its determination under the preceding sentence within five
business days of receipt of notice of disapproval of the
repurchase.
Notwithstanding anything herein to the contrary, all of
CNC's rights with respect to any unexercised Options under this
Section 10 shall terminate on the Expiration Date.
(c) For purposes of this Agreement, the "Applicable
Price" means the highest of (i) the highest price per share of
VCNB Common Stock paid for any such share by the person or groups
described in Section 10(d)(i), (ii) the price per share of VCNB
Common Stock received by holders of VCNB Common Stock in
connection with any merger or other business combination
transaction described in Section 9(b)(i), 9(b)(ii) or 9(b)(iii),
or (iii) the highest closing sales price per share of VCNB Common
Stock quoted on the Nasdaq National Market (or if VCNB Common
Stock is not quoted on the Nasdaq National Market, the highest
bid price per share as quoted on the principal trading market or
securities exchange on which such shares are traded as reported
by a recognized source chosen by CNC) during the 60 business days
preceding the Request Date; PROVIDED, HOWEVER, that in the event
of a sale of less than all of VCNB's assets, the Applicable Price
shall be the sum of the price paid in such sale for such assets
and the current market value of the remaining assets of VCNB as
determined by an independent national recognized investment
banking firm selected by CNC and reasonably acceptable to VCNB
(which determination shall be conclusive for all purposes of this
Agreement), divided by the number of shares of the VCNB Common
Stock outstanding at the time of such sale. If the consideration
to be offered, paid or received pursuant to either of the
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foregoing clauses (i) or (ii) shall be other than in cash, the
value of such consideration shall be determined in good faith by
an independent nationally recognized investment banking firm
selected by CNC and reasonably acceptable to VCNB, which
determination shall be conclusive for all purposes of this
Agreement.
(d) As used herein, "Repurchase Event" shall occur if
(i) any person (other than CNC or any subsidiary of CNC) shall
have acquired Beneficial Ownership, or the right to acquire
Beneficial Ownership, or any "group" (as such term is defined
under the Exchange Act) shall have been formed which Beneficially
Owns or has the right to acquire Beneficial Ownership, of 50% or
more of the then-outstanding shares of VCNB Common Stock, (ii)
any of the transactions described in Section 9(b)(i), 9(b)(ii) or
9(b)(iii) shall be consummated, or (iii) following an Exercise
Event, CNC receives official notice that an approval of the
Federal Reserve Board or any other regulatory authority required
for the exercise of the Option and purchase of the Option Shares
will not be issued or granted.
11. DEFINITIONAL MATTERS.
(a) Capitalized terms used but not defined herein
shall have the meanings ascribed thereto in the Merger Agreement.
(b) The following definitions shall have the meanings
set forth herein.
"Acquisition Transaction" shall mean:
(i) a merger, consolidation or similar transaction
involving VCNB or any of its Subsidiaries (other than
internal transactions solely involving VCNB and any of its
wholly-owned Subsidiaries);
(ii) except as expressly permitted by the Merger
Agreement, the disposition, by sale, lease, exchange or
otherwise, of assets of VCNB or any of its Subsidiaries
representing 50% or more of the consolidated assets of VCNB
and its Subsidiaries;
(iii) the issuance, sale or other disposition of
(including by way of merger, consolidation, share exchange
or any similar transaction) securities representing 20% or
more of the voting power of VCNB or any of its Subsidiaries;
or
(iv) the acquisition by any person or group of persons
(other than CNC) of Beneficial Ownership of, or the right to
acquire beneficial ownership of, 20% or more of the then-
outstanding shares of VCNB Common Stock.
"Preliminary Acquisition Transaction" shall mean:
11
<PAGE>
(i) the commencement (as such term is defined in Rule
14d-2 promulgated under the Exchange Act) by any person
(other than CNC or any Subsidiary of CNC) of, or the filing
by any person (other than CNC or any Subsidiary of CNC) of a
registration statement under the Securities Act with respect
to, a tender offer or exchange offer to purchase shares of
VCNB Common Stock such that, upon consummation of such
offer, such person would own or control 20% or more of the
then-outstanding shares of VCNB Common Stock (such an offer
being referred to herein as a "Tender Offer" or an "Exchange
Offer," respectively); or
(ii) the shareholders of VCNB shall have voted and
failed to approve the Merger and the Merger Agreement at any
meeting of such shareholders which has been held for that
purpose or any adjournment or postponement thereof, the
failure of such a shareholder meeting to occur prior to
termination of the Merger Agreement, or the withdrawal or
modification of the recommendation of VCNB's Board of
Directors of the Merger and/or the Merger Agreement that the
shareholders of VCNB approve the Merger and Merger
Agreement, in each case, after there shall have been a
public announcement that any person (other than CNC or any
Subsidiary of CNC) shall have (A) made, or disclosed an
intention to make, a proposal to engage in an Acquisition
Transaction, (B) commenced a Tender Offer or filed a
registration statement under the Securities Act with respect
to an Exchange Offer, or (C) filed an application (or given
a notice), whether in draft or final form, under the Bank
Holding Company Act of 1956, as amended, the Bank Merger
Act, the Change in Bank Control Act of 1978, or any other
federal or state banking law or regulation, for approval to
engage in an Acquisition Transaction.
"Beneficial Ownership" or "Beneficially Owns" shall be
defined by, or have the meaning set forth in Rule 13d-3
promulgated under the Exchange Act.
"Exercise Event" means the (i) occurrence of an Acquisition
Transaction; (ii) the public authorization, recommendation or
endorsement by VCNB of an Acquisition Transaction; (iii) a public
announcement by VCNB to of an intention to authorize, recommend
or announce an Acquisition Transaction described in paragraphs
(i) (ii) or (iii) of the definition of Acquisition Transaction;
(iv) the entering into by VCNB of any agreement with any person
or group of persons to effect an Acquisition Transaction; or (v)
the termination by VCNB of the Merger Agreement pursuant to
Section 8.1(i) thereof.
"person" shall have the meaning specified in Sections
3(a)(9) and 13(d)(3) of the Exchange Act.
"Spread Value" shall mean the difference between (i) the
product of (1) the sum of the total number of Option Shares CNC
(x) intends to purchase at a Closing pursuant to the exercise of
the Option and (y) previously purchased pursuant to the prior
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<PAGE>
exercise of the Option, and (2) the closing price of VCNB Common
Stock as quoted on the Nasdaq National Market on the last trading
day immediately preceding the Closing Date, and (ii) the product
of (1) the total number of Option Shares CNC (x) intends to
purchase at the Closing Date pursuant to the exercise of the
Option and (y) previously purchased pursuant to the prior
exercise of the Option and (2) the applicable Option Price of
such Option Shares.
12. CONSENTS. Each of the parties hereto will use its best
efforts to consummate and make effective the transactions
contemplated by this Agreement.
13. FURTHER ASSURANCES. VCNB and CNC will execute and
deliver all such further documents and instruments and take all
such further action as may be necessary in order to consummate
the transactions contemplated hereby.
14. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement and the
Merger Agreement (a) constitute the entire agreement between the
parties with respect to the subject matter hereof and supersede
all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter
hereof, (b) shall not be amended, altered or modified in any
manner whatsoever, except by a written instrument executed by the
parties hereto and (c) shall not, without the express written
consent of the other party hereto, be assigned by operation of
law or otherwise; provided, however, that CNC may assign its
rights and obligations to any wholly owned Subsidiary of CNC, but
such assignment shall not relieve CNC of its obligations
hereunder if such assignee does not perform such obligations.
15. VALIDITY. The invalidity or unenforceability of any
provision of this Agreement or of any provision of the Merger
Agreement shall not affect the validity or enforceability of any
other provisions of this Agreement, each of which shall remain in
full force and effect.
16. NOTICES. Any notices or other communications required
or permitted hereunder shall be in writing and shall be deemed
duly given upon (a) transmitter's confirmation of a receipt of a
facsimile transmission, (b) confirmed delivery by a standard
overnight carrier or (c) the expiration of five business days
after the day when mailed by certified or registered mail,
postage prepaid, addressed at the following addresses (or at such
other address as the parties hereto shall specify by like
notice):
If to CNC:
City National Corporation
400 North Roxbury Drive
Beverly Hills, California 90210
Telecopy No. (310) 888-6704
Attention: Frank P. Pekny
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<PAGE>
with copy to:
City National Corporation
400 North Roxbury Drive
Beverly Hills, California 90210
Telecopy No. (310) 888-6232
Attention: Richard H. Sheehan, Jr.
If to VCNB:
Ventura County National Bancorp
500 Esplanade Drive
Oxnard, California 93031
Telecopy No. (805) 981-2740
Attention: Richard S. Cupp
14
<PAGE>
With a copy to:
Manatt, Phelps & Phillips, LLP
11355 W. Olympic Boulevard
Los Angeles, California 90064
Telecopy No. (310) 312-4224
Attention: William T. Quicksilver
or to such other address as the person to whom notice is given
may have previously furnished to the others in writing in the
manner set forth above.
17. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware,
regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
18. DESCRIPTIVE HEADINGS. The descriptive headings herein
are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation
of this Agreement.
19. PARTIES IN INTEREST. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and
nothing in this Agreement, express or implied, is intended to
confer upon any other person or any rights or remedies of any
nature whatsoever under or by reason of this Agreement.
20. COUNTERPARTS. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an
original, but all of which shall constitute one and the same
agreement.
21. EXPENSES. Except as set forth in Section 5 hereof, all
costs and expenses incurred in connection with the transactions
contemplated by this Agreement shall be paid by the party
incurring such expenses.
15
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto
duly authorized, all as of the day and year first written above.
CITY NATIONAL CORPORATION
a Delaware corporation
By: /s/ Russell Goldsmith
---------------------
Russell Goldsmith
Vice Chairman and Chief
Executive Officer
VENTURA COUNTY NATIONAL BANCORP
a California corporation
By: /s/ Richard S. Cupp
--------------------
Richard S. Cupp
President and Chief
Executive Officer
16
FOR IMMEDIATE RELEASE: SEPTEMBER 16, 1996
CONTACT: Financial: Media:
Frank Pekny J.A. Dunnigan
City National Bank City National Bank
(310) 888-6700 (310) 888-6636
Richard S. Cupp Melissa Robinson
Ventura County National Bank Golin/Harris
(805) 981-2740 (213) 623-4200
CITY NATIONAL CORPORATION AND VENTURA COUNTY NATIONAL
BANCORP AGREE TO MERGER
---------------------------------------------
Move Broadens City National's Reach in Ventura, Los Angeles
and Orange Counties
=================================================================
BEVERLY HILLS, CALIFORNIA -- City National Corporation,
parent company of City National Bank, and Ventura County National
Bancorp (VCNB), today announced that they have signed a
definitive agreement in which VCNB will be merged into City
National Corporation in a transaction totaling $47 million. VCNB
shareholders will receive, at their election, cash, stock or a
combination thereof valued at $5.03 per share, with a maximum of
55 percent stock in the aggregate. The purchase price of $5.03
represents a multiple of 1.6 times VCNB's June 30, 1996 book
value. The transaction is expected to be immediately accretive
to City National's 1997 earnings.
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<PAGE>
CITY NATIONAL
2 - 2 - 2 - 2
VCNB is the holding company for Ventura County National
Bank, the largest independent bank headquartered in Ventura
County, and Frontier Bank N.A. headquartered in Orange County.
VCNB has six branches with 129 employees and approximately $274
million in assets as of June 30, 1996.
This agreement represents a geographic expansion for
City National and reinforces its current position as the largest
independent bank headquartered in Southern California. City
National will expand into Ventura County for the first time
through four Ventura County National Bank locations in Ventura,
Oxnard, Camarillo and Westlake Village, which focus on mid-size
businesses and professionals. City National will also increase
its presence in Los Angeles and Orange counties via one Frontier
Bank N.A. location in La Palma, which concentrates on Small
Business Administration (SBA) loans, and one in Wilmington. City
National plans to keep all six VCNB branch locations open
following completion of the transaction, which is expected to be
during the first quarter of 1997. The merger is subject to
approval by regulatory authorities and the shareholders of VCNB.
"This merger unites Ventura's leading independent,
Ventura County National Bank, and Southern California's leading
independent bank -- City National," said Russell Goldsmith, chief
executive officer of City National. "Both institutions are
relationship driven -- committed to delivering personalized
banking to successful businesses and individuals through
outstanding financial products and services. With VCNB, we will
expand our ability to serve the growing agriculture, technology
and small to mid-size business sectors in Southern California."
"For City National, this transaction establishes us as
the leading independent in Ventura County, enhances our presence
in Los Angeles and Orange counties, enlarges our customer base in
all three areas and enables us to better serve the expanding
corridor of business stretching from the
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<PAGE>
CITY NATIONAL
3-3-3-3 ,
West San Fernando Valley into Ventura County. We believe this
will be very good for the customers, employees and shareholders
of both companies," he added.
"We welcome City National and its commitment to
relationship banking," said Richard S. Cupp, president and chief
executive officer of VCNB. "The board of directors believes this
transaction is not only in the best interests of our
shareholders, but that our customers will also benefit from
greater lending capacity as well as having access to a
significantly enhanced branch system, a full range of
international services, and trust and investment products."
Ventura County National Bancorp is a multi-bank holding
company and sole shareholder of two community banks -- Ventura
County National Bank, headquartered in Ventura County, and
Frontier Bank N.A., which is headquartered in La Palma and serves
Orange and Los Angeles Counties. The company's stock is traded
on the NASDAQ system under the symbol VCNB.
City National Corporation's (NYSE:CYN) principal
subsidiary is City National Bank, the largest independent bank
headquartered in Southern California. A federally chartered,
$3.9 billion commercial bank based in Beverly Hills, City
National currently has 23 offices throughout Los Angeles, Orange
and San Diego Counties. For more information about City
National, please call our Fax-On-Demand Information Service. The
24-hour toll-free number is 1-800-873-5293.
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