EXHIBIT 10.10
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER dated as of September 15, 2003 between and
among Mid Valley Bank, a California chartered commercial bank ("MVB"),
PremierWest Bancorp, an Oregon corporation and a registered financial services
holding company (the "Company"), and PremierWest Bank, an Oregon chartered stock
bank and a wholly owned subsidiary of the Company (the "Bank"). Capitalized
terms not otherwise defined in this Agreement shall have the meanings ascribed
in Section 8.3.
RECITALS
A. The respective boards of directors of MVB, the Bank and the Company
have determined that a business combination among MVB, the Bank and the
Company, on the terms described herein, is in the best interests of
their respective companies and shareholders. Accordingly, the
respective boards of directors of MVB, the Bank and the Company have
approved this Agreement and deem it advisable and in the best interests
of their respective shareholders to approve the merger of MVB with and
into the Bank upon the terms and subject to the conditions set forth in
this Agreement.
B. MVB, the Bank and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger (as
defined below), and to prescribe various conditions to the Merger.
C. The directors, officers, and certain other affiliates of MVB are
entering into certain agreements as contemplated hereby, and without
such agreements the Company and the Bank would not have entered into
this Agreement.
D. For federal income tax purposes, it is intended that the Merger qualify
as a reorganization within the meaning of Section 368(a) of the Code
and the rules and regulations promulgated thereunder, and that this
Agreement constitute a plan of reorganization.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I.
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the Oregon Bank Act, ORS
Chapters 707 through 711, and Division 1 of the California Financial Code, MVB
shall be merged (the "Merger") with and into the Bank at the Effective Time.
From and after the Effective Time, the Bank shall be the resulting bank (in such
capacity, the "Resulting Bank") and shall succeed to and assume all of the
rights and obligations of MVB in accordance with the California Financial Code
and the Oregon Bank Act.
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Section 1.2 Closing. The closing of the Merger (the "Closing") will
take place on a date and time to be specified by the parties which shall be on
or after the close of business on December 31, 2003 (the "Closing Date"), and in
any case no later than the third Business Day after satisfaction or waiver of
the conditions set forth in Article VI (other than those conditions that by
their nature are to be satisfied at the Closing, but subject to the satisfaction
or waiver of those conditions), unless another time or date is agreed to by the
parties. The Closing will be held at the offices of the Company, 000 Xxxxxxx
Xxxx, Xxxxxxx, Xxxxxx, or at such other location as the parties may agree.
Section 1.3 Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, the parties
shall file with the Oregon Director a plan of merger in the form of Exhibit A
together with such other evidence as the Oregon Director may require (all such
documents collectively, the "Plan of Merger") in accordance with ORS
711.145(1)(a) and shall make all other filings or recordings required under the
Oregon Bank Act. The parties shall also file with the California Commissioner
the Plan of Merger in accordance with Chapter 21.5 of the California Financial
Code. The Merger shall become effective on such date and time as the Plan of
Merger is duly filed with both the Oregon Director and the California
Commissioner, or at such later time as MVB and the Company shall agree and
specify in the Plan of Merger (the time the Merger becomes effective is
hereinafter referred to as the "Effective Time").
Section 1.4 Effects of the Merger. The Merger shall have the effects
set forth in ss.1108 of the California Corporations Code, ORS 711.190 and as
further set forth in Article II below.
ARTICLE II.
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
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CONSTITUENT ENTITIES; EXCHANGE OF CERTIFICATES
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Section 2.1 Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of any shareholder of
the Company, MVB or the Bank, the Merger shall be effected in accordance with
the following terms:
(a) Conversion of Shares. Each share of MVB Common Stock
issued and outstanding immediately before the Merger shall be converted into the
right to receive the Merger Consideration as provided below, without interest
thereon.
(b) Effect of Merger upon MVB Common Stock. Each share of MVB
Common Stock issued and outstanding immediately before the Effective Time shall
be converted into the right to receive the Merger Consideration. Immediately
following the Effective Time, no shares of MVB Common Stock shall be
outstanding; all shares of MVB Common Stock shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate representing
any such share shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration upon surrender of such certificate in
accordance with Section 2.2.
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(c) Effect on Bank and Company Capital Stock. Each share of
the capital stock of the Company and the Bank issued and outstanding immediately
before the Effective Time shall be and remain issued and outstanding at and
after the Effective Time.
(d) Stock Options. Immediately prior to the Effective Time,
MVB shall terminate or pay cash in discharge of each outstanding MVB Option and
shall take such actions as may be necessary to terminate the MVB Options. Each
option shall be cashed out in the amount of the Per-Share Consideration less the
exercise price of the option.
(e) Anti-Dilution Provisions. In the event MVB or the Company
changes (or establishes a record date for changing) the number of shares of MVB
Common Stock or Company Common Stock, as applicable, issued and outstanding
prior to the Closing Date as a result of a stock split, reverse stock split,
stock dividend, recapitalization or other similar event ("Recapitalization
Event") and the record date therefor shall be prior to the Effective Date, the
Merger Consideration shall be proportionately adjusted to reflect such
Recapitalization Event.
Section 2.2 Merger Consideration.
(a) Amount of Merger Consideration; Components. For purposes
of this Agreement and subject to adjustment as provided below, the consideration
to be paid to the shareholders of MVB shall be an amount per share equal to the
quotient of (x) the sum of (A) the product of 1,715,000 multiplied by the
Weighted Average Closing Price, plus (B) the total Cash Component computed
pursuant to Section 2.2(c) below, divided by (y) the total number of shares of
MVB Common Stock outstanding as of the Effective Time. The aggregate
consideration to be paid to the holders of all MVB Shares (the "Merger
Consideration") shall be equal to the total of the value of the Merger Shares
and the Cash Component.
(b) Merger Shares. The total number of shares of Company
Common Stock to be issued as a part of the Merger Consideration shall be one
million seven hundred fifteen thousand (1,715,000) shares of Company Common
Stock, subject to adjustment as provided in Section 2.2(d) below (such shares,
the "Merger Shares"). No fractional shares of Company Common Stock shall be
issued as part of the Merger Shares, and in lieu thereof the Company shall pay
to the holder of each fractional share cash based on the amount of such
fractional share multiplied by the Weighted Average Closing Price.
(c) Cash Component. The aggregate cash component of the Merger
Consideration shall be nine million eight hundred eleven thousand dollars
($9,811,000), subject to adjustment as provided in Section 2.2(d) below (as so
adjusted, the "Cash Component").
(d) Adjustments to Consideration. It is the intention of the
parties that the Merger Consideration shall be adjusted based upon the Weighted
Average Closing Price such that the value of the Merger Consideration will not
be less than twenty-three million one hundred eighty-eight thousand dollars
($23,188,000) or more than twenty-six million six hundred eighteen thousand
dollars ($26,618,000). To that end, the following provisions shall apply, and
the result of such provisions shall be the "Adjusted Merger Consideration":
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(i) if the Weighted Average Closing Price is less than $7.80
per share, then the Company may either (A) increase the Cash
Component by an amount equal to (x) $23,188,000 minus (y) the
sum of (I) the aggregate value of the Merger Shares (computed
by multiplying the Weighted Average Closing Price by 1,715,000
shares) plus (II) the Cash Component, or (B) increase the
number of Merger Shares by an amount equal to difference
between (x) the quotient of $13,377,000 divided by the
Weighted Average Closing Price minus (y) 1,715,000. The
maximum amount of the Cash Component in the event of an
election under clause (A) above shall be $11,811,000 and the
maximum number of Merger Shares to be issued in the event of
an election under clause (B) above shall be 2,017,647.
(ii) if the Weighted Average Closing Price is greater than
$9.80 per share, then the Company may either (A) reduce the
Cash Component by (x) the sum of (I) the aggregate value of
the Merger Shares (computed by multiplying the Weighted
Average Closing Price by 1,715,000 shares) plus (II) the Cash
Component, minus (y) $26,618,000, or (B) reduce the number of
Merger Shares by an amount equal to the difference between (x)
1,715,000 minus (y) the quotient of $16,807,000 divided by the
Weighted Average Closing Price. The minimum amount of the Cash
Component in the event of an election under clause (A) above
shall be $7,811,000 and the minimum number of Merger Shares to
be issued in the event of an election under clause (B) above
shall be 1,532,087.
Section 2.3 Conversion Election Procedures and Allocation.
(a) Election Options. Subject to the election and allocation
procedures set forth in this Section 2.3, each record holder of MVB Common Stock
at the Effective Time will be entitled to elect to receive (i) a portion of the
Cash Component for all or a portion of the holder's shares of MVB Common Stock
for which the holder elects to receive a portion of the Cash Component (such MVB
shares, the "Cash Election Shares"), and (ii) a portion of the Merger Shares for
all or a portion of the holder's shares of MVB Common Stock for which the holder
elects to receive a portion of the Merger Shares (such MVB shares, the "Stock
Election Shares"). All such elections shall be made on a form mutually agreed to
by Company and MVB for that purpose (the "Form of Election"). The Company and
MVB will mail the Form of Election at least 25 days prior to the Election
Deadline to all persons who are record holders of MVB Common Stock on the fifth
(5th) day prior to the date of the mailing of the Form of Election, and will use
commercially reasonable efforts to make the Form of Election available to all
persons who become holders of MVB Common Stock subsequent to such date and no
later than the close of business on the Business Day immediately prior to the
Election Deadline.
(b) Effective Election. Any election for the purposes of this
Section 2.3 will be effective only if the Exchange Agent has received a properly
completed and signed Form of Election with the associated certificate(s)
representing shares of MVB Common Stock at or prior to the Election Deadline. A
Form of Election may be revoked or changed by the person
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submitting such Form of Election or any other person to whom the subject shares
are subsequently transferred by written notice by such person to the Exchange
Agent at or prior to the Election Deadline. All Forms of Election will be deemed
to be revoked if the Exchange Agent is notified in writing by either the Company
or MVB that this Agreement has been terminated in accordance with its terms, and
the Company and MVB shall direct the Exchange Agent promptly to return
certificates representing shares of MVB Common Stock to those persons who
submitted such certificates to the Exchange Agent.
(c) Non-Election; Discretion of Exchange Agent. Any holder of
MVB Common Stock who does not submit a properly completed and signed Form of
Election (along with all associated MVB Certificates) that is received by the
Exchange Agent at or prior to the Election Deadline, and any holder who has
failed to perfect or has effectively withdrawn or lost the right to payment for
Dissenting Shares, will be deemed to hold "Non-Election Shares" for the purposes
of this Section 2.3. The Company shall have the discretion, which it may
delegate in whole or in part to the Exchange Agent, to determine whether Forms
of Election have been properly completed and signed, and to determine the
materiality of defects and disregard immaterial defects in Forms of Election. If
the Company or the Exchange Agent determines that any purported election for
Cash Election Shares or Stock Election Shares was not properly made, such
purported election will be deemed to be of no force and effect and the holder
making such election will be deemed to have Non-Election Shares. The decision of
the Company or the Exchange Agent as to such matters shall be conclusive and
binding. Neither the Company nor the Exchange Agent will be under any obligation
to notify any holder of any defect in a Form of Election submitted to the
Exchange Agent.
(d) Treatment of Elections. If the Cash Election Shares
require the payment of up to the aggregate Cash Component, each Cash Election
Share at the Effective Time shall be exchanged for a portion of the Cash
Component equal to the aggregate Cash Component divided by the total number of
Cash Election Shares. If the Stock Election Shares require the exchange of the
total number of Merger Shares, each Stock Election Share shall be exchanged for
a number of Merger Shares equal to the total number of Merger Shares divided by
the number of Stock Election Shares. (e) Excess Cash or Stock Elections. As soon
as practicable after the Effective Time, the Company will cause the Exchange
Agent to allocate among the holders of MVB Common Stock the rights to receive
the Cash Component and the Merger Shares as set forth in the respective Forms of
Election; provided, however, that if and to the extent the application of
Section 2.3(a) would exceed either the aggregate Merger Shares or the aggregate
Cash Component, then the Cash Component and Merger Shares shall be allocated as
follows:
(i) Excess Cash Election Shares. If the product of (x) the
number of Cash Election Shares multiplied by (y) the quotient
of the Adjusted Merger Consideration divided by the total
number of shares of MVB Common Stock as of the Effective Time,
exceeds the amount of the Cash Component (adjusted in
accordance with Section 2.2(d)), then:
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(A) Each Stock Election Share and each Non-Election Share
will be converted into the right to receive a number of
shares equal to the quotient of (x) the total number of
Merger Shares (adjusted in accordance with Section
2.2(d)) divided by (y) the sum of (I) the total number of
Stock Election Shares, plus (II) the total number of
Non-Election Shares, plus (III) the difference between
(1) the number of Cash Election Shares minus (2) the
quotient of the Cash Component divided by the amount of
the Per-Share Consideration.
(B) The Exchange Agent will reallocate the portion of the
Adjusted Merger Consideration payable to each holder of
Cash Election Shares such that each Cash Election Share
will receive (x) a cash payment equal to the aggregate
Cash Component (adjusted in accordance with Section
2.2(d)) divided by the total number of Cash Election
Shares, and (y) a proportion of the Merger Shares
(adjusted in accordance with Section 2.2(d)) remaining
after the application of clause (A) above equal to the
number of remaining Merger Shares, divided by the total
number of Cash Election Shares.
(C) If and to the extent this Section 2.3(e)(i) would
require the issuance of fractional shares, the Exchange
Agent shall instead provide for the payment of such share
in cash based upon the Weighted Average Closing Price.
Cash paid in lieu of fractional shares shall be excluded
from the application of the adjustment provisions of
Section 2.2(d).
(ii) Excess Stock Election Shares. If (x) the quotient of the
number of Merger Shares divided by the number of Stock
Election Shares is less than (y) the quotient of the Per-Share
Consideration divided by the Weighted Average Closing Price,
then:
(A) Each Cash Election Share and each Non-Election Share
will be converted into the right to receive an amount of
the Cash Component equal to the quotient of (x) the
aggregate Cash Component (adjusted in accordance with
Section 2.2(d)) divided by (y) the sum of (I) the total
number of Cash Election Shares, plus (II) the total
number of Non-Election Shares, plus (III) the difference
between (1) the number of Stock Election Shares minus (2)
the quotient of (a) the product of the number of Merger
Shares multiplied by the Weighted Average Closing Price,
divided by (b) the amount of the Per-Share Consideration.
(B) The Exchange Agent will reallocate the Merger
Consideration (adjusted in accordance with Section
2.2(d)) payable to each holder of Stock Election Shares
such that each Stock
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Election Share will receive: (x) a number of shares equal
to the total number of Merger Shares (adjusted in
accordance with Section 2.2(d)) divided by the total
number of Stock Election Shares, and (y) a cash payment
equal to the total amount of the Cash Component remaining
after the application of clause (A) above divided by the
total number of Stock Election Shares.
(C) If and to the extent the application of this Section
2.3(e)(ii) would result in the issuance of fractional
shares, the Exchange Agent shall instead provide for the
payment of such share in cash based upon the Weighted
Average Closing Price. Cash paid in lieu of fractional
shares shall be excluded from the application of the
adjustment provisions of Section 2.2(d).
(iii) No Excess. If neither of Sections 2.3(e)(i) or
2.3(e)(ii) above is applicable, all Cash Election Shares will
be converted into the right to receive the Cash Component, all
Stock Election Shares will be converted into the right to
receive the Merger Shares, and the Non-Election Shares will be
converted into the right to receive the Cash Component and/or
the Merger Shares as follows:
(A) Non-Election Shares shall first be converted to a
right to receive a portion of the Cash Component until
the aggregate of the Non-Election Shares and Cash
Election Shares equals the total Cash Component.
(B) Any excess Non-Election Shares shall then be
converted to a right to receive the Merger Shares.
(C) All allocations pursuant to this Section 2.3(e)(iii)
shall be made on a pro rata basis, if applicable.
(iv) Pro Rata Computations. The pro rata computations
performed by the Exchange Agent pursuant to this Section
2.3(b)(iv) shall be binding and conclusive as to the
allocation of the Merger Consideration among the holders of
MVB Common Stock.
Section 2.4 Exchange of Certificates.
(a) Deposit of Merger Consideration. At or prior to the
Effective Time, the Company shall deposit, or shall cause to be deposited, with
a bank or trust company of recognized standing, or the Company's transfer agent
(such Person, including any substitution therefor, the "Exchange Agent"), for
the benefit of the MVB shareholders, for exchange in accordance with Section
2.4, cash in an amount equal to the aggregate Cash Component of the Merger
Consideration, together with a number of shares of Company Common Stock equal to
the total number of Merger Shares.
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(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, the Company shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of MVB Common Stock (each a "Certificate" and
collectively the "Certificates") whose shares were converted into the right to
receive the Merger Consideration pursuant to Section 2.1(a): (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Company and shall be in such form and have such other
provisions as the Company may reasonably specify), in a form acceptable to the
Company, and (ii) instructions for use in surrendering the Certificates in
exchange for the Merger Consideration. Upon surrender of a Certificate to the
Company, duly endorsed for transfer or cancellation, together with such letter
of transmittal, duly executed, and such other documents as may reasonably be
required by the Company, the holder of such Certificate shall be entitled to
receive in exchange therefor: (i) a certificate representing the Merger Shares
that such holder has the right to receive pursuant to the provisions of this
Article II, (ii) cash in an amount equal to the Cash Component that such holder
has a right to receive pursuant to the provisions of this Article II, (iii) cash
in lieu of any fractional shares resulting from or offered for exchange in the
Merger, and (iv) certain dividends and other distributions in accordance with
Section 2.4(c); and the Certificate so surrendered shall then immediately be
marked as canceled. In the event of a transfer of ownership of MVB Common Stock
that is not registered in the transfer records of MVB, a certificate
representing the Merger Shares, together with the proper amount of the Cash
Component and any cash to be paid in lieu of any fractional shares, may be
issued to a Person other than the Person in whose name the surrendered
Certificate is registered if such Certificate has been properly endorsed and
otherwise is in proper form for transfer, and if the Person requesting such
issuance shall pay any transfer or other taxes required by reason of payment of
the Merger Consideration to a Person other than the registered holder of such
Certificate (or shall establish to the satisfaction of the Company that such tax
has been paid or is not applicable). Until surrender as contemplated by this
Section 2.4(b), each Certificate shall be deemed at any time after the Effective
Time to represent and entitle the holder only to the right to receive upon such
surrender the Merger Consideration. A lost stock certificate affidavit, together
with either an insurance bond or indemnification agreement running to the
benefit of the Company, as determined by the Company in its sole discretion, may
be submitted in lieu of a Certificate.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to Company Common Stock with a
record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate until the holder of record of such Certificate shall
surrender such Certificate in accordance with Section 2.5(b). Subject to the
effect of applicable escheat or similar laws, following surrender of any such
Certificate there shall be paid to Person receiving Merger Shares in exchange
therefor, without interest: (i) at the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such Merger Shares; 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 such surrender and with a payment date
subsequent to such surrender payable with respect to such Merger Shares.
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(d) No Further Ownership Rights in MVB Common Stock. The
Merger Consideration shall be deemed to have been issued in full satisfaction of
all rights pertaining to the shares of MVB Common Stock previously represented
by such Certificates, and there shall be no further registration of transfers on
the stock transfer books of the Resulting Bank of the shares of MVB Common Stock
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Company or the Resulting Bank
for any reason, they shall be canceled and exchanged as provided in this Article
II, except as contemplated by Section 2.6 below or as otherwise provided by law.
(e) Termination. Any holders of the Certificates who have not
complied with this Article II shall thereafter look only to the Company for
payment of their claims for Merger Consideration and any dividends or
distributions with respect to MVB Common Stock.
(f) No Liability. None of MVB, the Company nor the Bank shall
be liable to any Person in respect of any shares of Company Common Stock, any
dividends or distributions with respect thereto, in each case delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificate shall not have been surrendered on or before the
second anniversary of the Effective Time (or immediately prior to such earlier
date on which any Merger Consideration, any dividends or distributions payable
to the holder of such Certificate or any cash payable to the holder of such
Certificate pursuant to this Article II, would otherwise escheat to or become
the property of any Governmental Entity), any such Merger Consideration,
dividends or distributions in respect of such Certificate or such cash shall, to
the extent permitted by applicable law, become the property of the Resulting
Bank, free and clear of all claims or interest of any Person previously entitled
thereto.
(g) Stock Transfer Books. The stock transfer books of MVB
shall be closed as of the Closing Date. After the Closing Date, there shall be
no further registration of transfers on the stock transfer books of MVB or the
Resulting Bank of shares of the MVB Common Stock which were outstanding
immediately prior to the Merger.
Section 2.5 Charter, Articles and Bylaws.
(a) The charter and articles of incorporation of the Bank
existing as of the Effective Time shall be the charter and articles of
incorporation of the Resulting Bank until thereafter changed or amended as
provided therein or by applicable law; provided, however, that at or before the
Effective Time the Company shall take such steps as may be required to provide
that Xxxx Xxxxxxxxx shall be a director of the Company.
(b) The bylaws of the Bank existing as of the Effective Time
shall be the bylaws of the Resulting Bank until thereafter changed or amended as
provided therein or by applicable law; provided, however, that at or before the
Effective Time the Bank shall take such steps as may be required to provided
that the Bank's board of directors shall have composition identical to that of
the Company.
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Section 2.6 Dissenting Shares.
(a) Notwithstanding any contrary provision of this Agreement,
those shares of MVB Common Stock in which appraisal rights are perfected
pursuant to Chapter 13 of the California Corporations Code ("Dissenting Shares")
shall not be converted into or represent a right to receive Merger Consideration
pursuant to Section 2.1, but the holder thereof shall be entitled to only such
rights as are granted by Chapter 13 of the California Corporations Code.
(b) Notwithstanding the provisions of Section 2.6(a) above, if
any shareholder who demands appraisal rights of such shareholder's shares of MVB
Common Stock under Chapter 13 of the California Corporations Code effectively
withdraws or loses (through failure to perfect or otherwise) his or her right to
appraisal, then as of the Effective Time or the occurrence of such event,
whichever occurs later, such shareholder's shares of MVB Common Stock shall
automatically be converted into and represent only the right to receive Merger
Consideration as provided in Section 2.1.
(c) MVB shall give the Company prompt notice of any written
notices of exercise of dissenters' rights or demands for appraisal or payment of
the fair value of any shares of MVB Common Stock, withdrawals of such notices or
demands, and any other instruments served on MVB pursuant to Chapter 13 of the
California Corporations Code. Except with the prior written consent of the
Company, which the Company may grant or withhold in its sole discretion, MVB
shall not voluntarily make or offer to make any payment with respect to any
dissenters' rights or demands for appraisal, nor shall MVB settle or offer to
settle any such demands.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
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Section 3.1 Representations and Warranties of the Company and the Bank.
Except as set forth on the disclosure schedule delivered by the Company to MVB
(the "Company Disclosure Schedule") and making reference to the particular
subsection of this Agreement requiring such disclosure or to which exception is
being taken, the Company and the Bank represent and warrant to MVB that the
following statements are true and correct as of the date of this Agreement:
(a) Organization, Standing and Corporate Power. The Company is
a corporation duly organized and validly existing under the laws of the state of
Oregon. The Bank is duly organized, validly existing and in good standing as a
stock bank chartered under the laws of the State of Oregon. Each of the Company
and the Bank has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted. The
Company and the Bank are duly qualified or licensed to do business and are in
good standing in each jurisdiction in which either of them currently conducts
its business, except for those jurisdictions in which the failure to be so
qualified or in good standing would not have a Material Adverse Effect on the
Company. The Company has delivered to MVB prior to the execution of this
Agreement complete and correct copies of the Articles of Incorporation of the
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Company and the Charter of the Bank, and the Bylaws of each of them, in each
case as currently in effect.
(b) Subsidiaries. Section 3.1(b) of the Company Disclosure
Schedule sets forth the name, form of entity, and jurisdiction of formation of
each of the Company's Subsidiaries. To the Company's Knowledge: (i) each of the
Company's Subsidiaries is duly organized and validly existing, and, with respect
to the Bank, in good standing, in the jurisdiction of its formation, (ii) each
material Subsidiary of the Company has all requisite power and authority to own
or lease and operate its assets and carry on its business as presently conducted
or proposed to be conducted, (iii) each Subsidiary is duly qualified to do
business and is in good standing in each jurisdiction in which it currently
conducts its business, except for those jurisdictions in which the failure to be
so qualified or in good standing would not have a Material Adverse Effect, and
(iv) all the outstanding shares of capital stock of, or other equity interests
in, each Subsidiary of the Company have been validly issued and are fully paid
and nonassessable and are owned directly or indirectly by the Company, free and
clear of all pledges, claims, liens, charges, encumbrances and security
interests of any kind or nature whatsoever (collectively, "Liens") and free of
any restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests. Except for the capital stock or other
ownership interests of its Subsidiaries or as disclosed in the Company
Securities Filings, the Company does not beneficially own any capital stock,
membership interest, partnership interest, joint venture interest or other
equity interest in any Person.
(c) Capital Structure.
(i) The authorized capital stock of the Company consists
of 21,000,000 shares of which 20,000,000 are common
stock, no par value (the "Company Common Stock") of which
12,160,816 shares are outstanding and 1,000,000 shares of
preferred stock, no par value of which none are
outstanding. No class of capital stock of the Company is
entitled to preemptive rights. Each share of Company
Common Stock that is issued and outstanding as of the
date hereof is duly authorized, validly issued, fully
paid and non-assessable.
(ii) There are issued and outstanding: (A) no warrants to
purchase shares of Company Common Stock; (B) Company
Options convertible into or exchangeable for 516,720
shares of Company Common Stock (of which Company Options
convertible into or exchangeable for 290,443 shares of
Company Common Stock are currently exercisable). All
outstanding shares of Company Common Stock, and all
shares that may be issued pursuant to any outstanding
Company Option will be, when issued in accordance with
the respective terms thereof, duly authorized, validly
issued, fully paid and non-assessable. No class of
capital stock of the Company, other than the Company
Preferred Stock, is entitled to preemptive rights. The
Company Preferred Stock is not entitled to preemptive
rights in connection with the issuance of the Merger
Shares.
Page 11 - AGREEMENT OF MERGER
(iii) Except as provided above in this Section 3.1(c) or
the Company Disclosure Schedule, there are (A) no other
shares of capital stock, Company Options or other voting
securities of the Company issued, reserved for issuance
or outstanding, (B) no rights to receive shares of
Company Common Stock on a deferred basis granted under
the Company Stock Plans or otherwise; (C) no stock
appreciation rights; (D) no securities of the Company (or
any of its Subsidiaries) convertible into or exchangeable
for shares of capital stock, ownership interests, or
voting securities of the Company (or its Subsidiaries);
(E) no warrants, calls, options or other rights to
acquire from the Company (or its Subsidiaries), and no
obligation of the Company or any Subsidiary to issue,
capital stock, voting securities or other ownership
interests in or any securities convertible into or
exchangeable for capital stock or voting securities of
the Company or any Subsidiary of the Company.
(iv) Except for Company Options described or disclosed in
the Company Securities Filings, the Company has delivered
to MVB a complete and correct list of the exercise price
for each Company Option outstanding as of the date of
this Agreement.
(v) No bonds, debentures, notes or other indebtedness of
the Company or any of its Subsidiaries having the right
to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on
which shareholders of the Company or any of its
Subsidiaries may vote, are issued or outstanding.
(vi) There are no outstanding obligations of the Company
or any Subsidiary of the Company to repurchase, redeem or
otherwise acquire any outstanding securities of the
Company or its Subsidiaries or to issue, deliver or sell,
or cause to be issued, delivered or sold, any such
securities. The Company is not a party to any voting
agreement with respect to the voting of its securities or
any securities of any other Person.
(vii) As of the date hereof, the Company is, and as of
the Effective Time, the Company will be, the record and
beneficial owner of 100% of the issued and outstanding
capital stock of the Bank consisting of 4,857,540 shares
of common stock, par value $5.00.
(d) Authority; Noncontravention. Each of the Company and the
Bank has all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by the Company and the Bank, and the
consummation by each of them of the transactions contemplated by this Agreement,
have been duly authorized by all necessary corporate action on the part of the
Company and the Bank. This Agreement has been duly executed and delivered by the
Company and the Bank, and, assuming the due authorization, execution and
delivery by each of the other parties hereto, constitutes the legal, valid and
binding obligation of each of them,
Page 12 - AGREEMENT OF MERGER
enforceable against each of them in accordance with its terms. The execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions hereof will
not conflict with, result in any violation of or default (with or without notice
or lapse of time, or both) under, give rise to a right of termination,
cancellation or acceleration of any obligation or loss of a benefit under, or
result in the creation of any Lien upon any of the properties or assets of the
Company or the Bank under: (i) the Articles of Incorporation or Bylaws of the
Company, the Charter of the Bank or the comparable organizational documents of
any of the Company's other Subsidiaries; (ii) any material loan or credit
agreement, note, bond, mortgage, indenture, lease or other obligation, permit,
concession, franchise, license or similar authorization applicable to the
Company or the Bank or their respective properties or assets or by which the
Company or the Bank is bound; or (iii) subject to the governmental filings and
other matters referred to in Section 4.4, any judgment, order, decree, statute,
law, ordinance, rule or regulation of any Governmental Entity applicable to the
Company or the Bank, or their respective properties or assets, other than, in
the case of clauses (ii) and (iii), any such conflicts, violations, defaults,
rights, losses or Liens that individually or in the aggregate are not reasonably
likely to (x) have a Material Adverse Effect on the Company; (y) materially
impair the Company's or the Bank's ability to perform their respective
obligations under this Agreement; or (z) prevent or delay the consummation of
any of the transactions contemplated by this Agreement.
(e) Regulatory Approvals Required. Other than as contemplated
by Section 4.4 below, the nature of the business and operations of the Company
and the Bank does not require any approval, authorization, consent, license,
clearance or order of, any declaration or notification to, or any filing or
registration with, any governmental or regulatory authority in order to permit
the Company and the Bank to perform their respective obligations under this
Agreement, or to prevent the termination of any material right, privilege,
license or agreement of the Company or the Bank, or any material loss or
disadvantage to its business, upon consummation of the Plan of Merger.
(f) Public Reports. The Company has timely filed all Company
Securities Filings, and the financial information included in the Company
Securities Filings has been prepared in accordance with GAAP and present fairly
the financial position and results of operation of the Company and its
Subsidiaries on the dates and for the periods covered thereby. As of the date
filed, each of the Company Securities Filings has been and, as to those reports
to be filed on or after the date of this Agreement and the Closing, will be
accurate and complete in all material respects as of the date filed, and each
complies or will comply in all material respects with all requirements
applicable to such filing.
(g) Compliance with Lending Laws and Regulations. Except as
disclosed in the Company Disclosure Schedule and except for such errors or
oversights the financial effect of which are adequately reserved against:
(i) The conduct by each of the Company and the Bank of
its respective business and the operation of the
properties or other assets owned or leased by it does not
violate or infringe any domestic laws, statutes,
ordinances, rules or regulations or, to the Knowledge of
the
Page 13 - AGREEMENT OF MERGER
Company and the Bank, any foreign laws, statutes,
ordinances, rules or regulations, the enforcement of
which, individually or in the aggregate, would have a
Material Adverse Effect on the Company, its business,
properties or financial condition. Specifically, but
without limitations each of the Company and the Bank is
in compliance in all material respects with every local,
state or federal law or ordinance, and any regulation or
order issued thereunder, now in effect and applicable to
it governing or pertaining to fair housing, anti
redlining, equal credit opportunity, truth in lending,
real estate settlement procedures, fair credit reporting
and every other prohibition against unlawful
discrimination in residential lending, or governing
consumer credit, including, but not limited to, the
Community Reinvestment Act, the Consumer Credit
Protection Act, Truth in Lending Act, and Regulation Z
promulgated by the FRB, and the Real Estate Settlement
Procedures Act of 1974. All loans, leases, contracts and
accounts receivable (billed and unbilled), security
agreements, guarantees and recourse agreements, of either
the Company or the Bank, as held in its portfolios, or as
sold with recourse into the secondary market represent
and are valid and binding obligations of their respective
parties and debtors, enforceable in accordance with their
respective terms; each of them is based on a valid,
binding and enforceable contract or commitment, each of
which has been executed and delivered in material
compliance, in form and substance, with any and all
federal, state or local laws applicable to the Company or
the Bank, as the case may be, and to the other party or
parties to the contract(s) or commitment(s), including
without limitation the Truth in Lending Act, Regulations
Z and U of the FRB, laws and regulations providing for
nondiscriminatory practices in the granting of loans or
credit, applicable usury laws, and laws imposing lending
limits; and all such contracts or commitments have been
administered in material compliance with all applicable
federal, state or local laws or regulations.
(ii) All loan files of the Bank are complete and accurate
in all material respects and have been maintained in
accordance with good banking practice.
(iii) All notices of default, foreclosure proceedings or
repossession proceedings against any real or personal
property collateral have been issued, initiated and
conducted by the Company or the Bank in material formal
and substantive compliance with all applicable federal,
state or local laws and regulations, and no material loss
or impairment of any security interest, or material
exposure to meritorious lawsuits or other proceedings
against the Company or the Bank has been or will be
suffered or incurred by the Company or the Bank, in
excess of such amounts as have been recognized in the
financial statements contained in the Company Securities
Filings.
Page 14 - AGREEMENT OF MERGER
(iv) Neither the Company nor the Bank is in material
violation of any applicable servicer or any other
requirements of the FHA, VA, FNMA, GNMA, FHLMC, SBA or
any private mortgage insurer which insured or guaranteed
any loans owned by the Company or the Bank or as to which
either has sold to other investors, the effect of which
violation would constitute a Material Adverse Effect on
the business, assets, earnings, operation or condition
(financial or otherwise) of the Company, and with respect
to such loans the Company or the Bank has not done or
failed to do, or caused to be done or omitted to be done,
any act the effect of which act or omission impairs or
invalidates (i) any FHA insurance or commitments of the
FHA to insure, (ii) any VA guarantee or commitment of the
VA to guarantee, (iii) any SBA guarantees or commitments
of the SBA to guarantee, (iv) any private mortgage
insurance or commitment of any private mortgage insurer
to insure, (v) any title insurance policy, (vi) any
hazard insurance policy, or (vii) any flood insurance
policy required by the National Flood Insurance Act of
1968, as amended, which would constitute a Material
Adverse Effect on the business, assets, earnings,
operation or condition (financial or otherwise) of the
Company or the Bank.
(v) Neither the Company nor the Bank have knowingly
engaged principally, or as one of its important
activities, in the business of extending credit for the
purpose of purchasing or carrying any margin stock.
(h) Absence of Certain Changes or Events. Except for
liabilities incurred in connection with this Agreement and except as disclosed
in the Company Disclosure Schedule, since June 30, 2003, the Company and its
Subsidiaries have conducted their business only in the ordinary course
consistent with past practice, and there has not been (1) any Material Adverse
Change in the Company; (2) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with respect
to any of the Company Common Stock; (3) any split, combination or
reclassification of any of the Company Common Stock, or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of the Company Common Stock; (4) (A) any granting
by the Company or any of its Subsidiaries to any current or former director,
executive officer or other employee of the Company or its Subsidiaries of any
increase in compensation, bonus or other benefits, except for normal increases
in cash compensation in the ordinary course of business or as required under any
employment agreements in effect as of the date of the most recent audited
financial statements; (B) any granting by the Company or any of its Subsidiaries
to any such current or former director, executive officer or employee of any
increase in severance or termination pay, except as was required under any
employment, severance or termination agreements in effect as of June 30, 2003;
(C) any entry by the Company or any of its Subsidiaries into, or any amendments
of, any employment, deferred compensation, consulting, severance, termination or
indemnification agreement with any such current or former director, executive
officer or employee; or (D) any amendment to, or modification of, any Company
Options; (5) any damage, destruction or loss, whether or not covered by
insurance, that
Page 15 - AGREEMENT OF MERGER
individually or in the aggregate is reasonably likely to have a Material Adverse
Effect on the Company; (6) except insofar as may have been required by a change
in GAAP, any change in accounting methods, principles or practices by the
Company materially affecting its reported financial condition or results of
operation; or (7) any tax election by the Company or any of its Subsidiaries
that individually or in the aggregate is reasonably likely to have a Material
Adverse Effect on the tax liability or tax attributes of the Company or any
settlement or compromise of any material tax liability.
(i) Taxes.
(i) The Company has filed all material Returns required
to be filed by it, or requests for extensions to file
have been granted and have not expired, and all such
Returns are complete and correct in all material
respects. The Company has paid or caused to be paid all
Taxes shown as due on such Returns or on subsequent
assessments with respect thereto, and no other material
Taxes are payable by the Company with respect to items or
periods covered by such Returns (whether or not shown on
or reportable on such Returns) for which the applicable
statute of limitations has not expired, except for Taxes
for which an adequate reserve has been established
therefor. The Company has withheld and paid over all
Taxes required to have been withheld and paid over, and
has complied with all information reporting and backup
withholding requirements, including maintenance of
required records with respect thereto, in connection with
amounts paid or owing to any employee, creditor,
independent contractor, or other third party, except for
any failure that would not reasonably be expected to have
a Material Adverse Effect on the Company. There are no
Liens on any of the assets of the Company with respect to
Taxes, other than Liens for Taxes not yet due and payable
or for Taxes that the Company is contesting in good faith
through appropriate proceedings and for which appropriate
reserves have been established.
(ii) No material Returns of the Company are under audit
by a government or taxing authority. No deficiencies for
any Taxes have been proposed, asserted or assessed, in
each case in writing, against the Company that are not
adequately reserved for, except for deficiencies that
individually or in the aggregate are not reasonably
likely to have a Material Adverse Effect on the Company.
No waiver or extension of any statute of limitations is
in effect with respect to material Taxes or Returns of
the Company.
(iii) The Company has not taken or agreed to take any
action and has no Knowledge of any fact, agreement or
plan that would prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of
the Code.
Page 16 - AGREEMENT OF MERGER
(iv) The Company has not constituted either a
"distributing corporation" or a "controlled corporation"
in a distribution of stock qualifying for tax-free
treatment under Section 355 of the Code (x) in the two
years prior to the date of this Agreement; or (y) in a
distribution which could otherwise constitute part of a
"plan" or "series of related transactions" (within the
meaning of Section 355(e) of the Code) in conjunction
with the Merger.
(j) Schedules to this Agreement. The information contained in
each schedule to this Agreement prepared by or on behalf of the Company and the
Bank constitutes additional representations and warranties made by the Company
hereunder and is incorporated herein by reference. The copies of documents
furnished as part of these schedules are true, correct and complete copies and
include all amendments, supplements, and modifications thereto and all express
waivers applicable thereunder.
(k) Brokers; Professional Fees. Other than fees for fairness
opinions payable to X.X. Xxxxxxxx & Co., no broker, investment banker, financial
advisor or other Person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company or the Bank.
Section 3.2 Representations and Warranties of MVB. Except as set forth
on the disclosure schedule delivered by MVB to the Company (the "MVB Disclosure
Schedule") and making reference to the particular subsection of this Agreement
requiring such disclosure or to which exception is being taken, MVB represents
and warrants to the Company that the following statements are true and correct
as of the date of this Agreement:
(a) Organization, Standing and Corporate Power. MVB is a state
chartered stock bank, duly organized, validly existing and in good standing
under the laws of the state of California, and has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. MVB is duly qualified or licensed to do
business and is in good standing, as applicable, in each jurisdiction in which
it currently conducts its business, except for those jurisdictions in which the
failure to be so qualified or in good standing would not have a Material Adverse
Effect on MVB. MVB has delivered to the Company prior to the execution of this
Agreement complete and correct copies of its Charter and Bylaws, as each is
currently in effect.
(b) Subsidiaries. MVB does not beneficially own directly or
indirectly any capital stock, membership interest, partnership interest, joint
venture interest or other equity interest in any Person.
(c) Capital Structure.
(i) The authorized capital stock of MVB consists of
2,000,000 shares of common stock, no par value ("MVB
Common Stock"), of which 1,188,524 shares are issued and
outstanding. No class of capital stock of
Page 17 - AGREEMENT OF MERGER
MVB is entitled to preemptive rights. Each share of MVB
Common Stock that is issued and outstanding as of the
date hereof is duly authorized, validly issued, fully
paid and non-assessable.
(ii) There are issued and outstanding 54,176 MVB Options
and pending incentive stock grants, of which (0) options
will be exercisable at the Closing Date. No securities
other than MVB Options are convertible into or
exchangeable for MVB Common Stock. All outstanding shares
of MVB Common Stock, and all shares that may be issued
pursuant to any MVB Option will be, when issued in
accordance with the respective terms thereof, duly
authorized, validly issued, fully paid and
non-assessable.
(iii) Except as provided above in this Section 3.2(c) or
in the MVB Disclosure Schedule, there are (A) no other
shares of capital stock, MVB Options or other voting
securities of MVB issued, reserved for issuance or
outstanding, (B) no rights to receive shares of MVB
Common Stock on a deferred basis granted under MVB Stock
Plans or otherwise; (C) no stock appreciation rights; (D)
no securities of MVB convertible into or exchangeable for
shares of capital stock, ownership interests, or voting
securities of MVB; (E) no warrants, calls, options or
other rights to acquire from MVB, and no obligation of
MVB to issue, capital stock, voting securities or other
ownership interests in or any securities convertible into
or exchangeable for capital stock or voting securities of
MVB.
(iv) The MVB Disclosure Schedule provides a complete and
correct list of the holder, exercise period and exercise
price for each MVB Option outstanding as of the date of
this Agreement.
(v) No bonds, debentures, notes or other indebtedness of
MVB or any of MVB's Subsidiaries, having the right to
vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on
which shareholders of MVB or any of MVB's Subsidiaries
may vote, are issued or outstanding.
(vi) There are no outstanding obligations of MVB or any
Subsidiary of MVB to repurchase, redeem or otherwise
acquire any outstanding securities of MVB or its
Subsidiaries or to issue, deliver or sell, or cause to be
issued, delivered or sold, any such securities. MVB is
not a party to any voting agreement with respect to the
voting of its securities or any securities of any other
Person.
(d) Authority; Noncontravention. MVB has all requisite
corporate power and authority to enter into this Agreement and, subject to
receipt of MVB shareholder approval as provided in Section 5.1, to consummate
the transactions contemplated by this Agreement. The execution and delivery of
this Agreement by MVB and the consummation by MVB of the
Page 18 - AGREEMENT OF MERGER
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of MVB, subject to MVB shareholder
approval. This Agreement has been duly executed and delivered by MVB and,
assuming the due authorization, execution and delivery by each of the parties
hereto, constitutes a legal, valid and binding obligation of MVB, enforceable
against MVB in accordance with its terms. The execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated by
this Agreement and compliance with the provisions hereof will not, conflict
with, result in any violation of or default (with or without notice or lapse of
time, or both) under, give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a benefit under, or result in the
creation of any Lien upon any of the properties or assets of MVB under: (i) the
Charter or Bylaws of MVB; (ii) any MVB Material Contract, permit, concession,
franchise, license or similar authorization applicable to MVB or its properties
or assets; or (iii) subject to the governmental filings and other matters
referred to in Section 4.4, any judgment, order, decree, statute, law,
ordinance, rule or regulation of any Governmental Entity applicable to MVB or
its properties or assets, other than, in the case of clauses (ii) and (iii), any
such conflicts, violations, defaults, rights, losses or Liens that individually
or in the aggregate are not reasonably likely to (x) have a Material Adverse
Effect on MVB, (y) materially impair the ability of MVB to perform its
obligations under this Agreement, or (z) prevent or delay the consummation of
the transactions contemplated by this Agreement.
(e) Regulatory Approvals Required. Other than as contemplated
by Section 4.4 below, the nature of the business and operations of MVB does not
require any approval, authorization, consent, license, clearance or order of,
any declaration or notification to, or any filing or registration with, any
governmental or regulatory authority in order to permit MVB to perform its
obligations under this Agreement, or to prevent the termination of any material
right, privilege, license or agreement of MVB, or any material loss or
disadvantage to its business, upon consummation of the Plan of Merger.
(f) Absence of Undisclosed Liabilities. The audited financial
statements of MVB as of and for the fiscal years ended December 31, 2002 and
2001, and the unaudited financial statements as of and for the six-month periods
ended June 30, 2003 and 2002, have been delivered to the Company, and all such
financial statements (i) comply as to form, as of their respective dates, in all
material respects with applicable accounting requirements of the Financial
Accounting Standards Board with respect thereto; (ii) have been prepared in
accordance with GAAP (except, in the case of unaudited statements, as to the
absence of footnotes and except for normal and non-material year-end adjustments
and other non-material adjustments permitted by GAAP) applied on a consistent
basis during the periods involved; and (iii) present fairly in all material
respects the financial position of MVB as of the dates thereof and the results
of their respective operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal recurring year-end
audit adjustments, none of which would be material in amount or scope). There
are no liabilities or obligations of MVB of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, and there
is no existing condition, situation or set of circumstances that could or
reasonably expected to result in such liability or obligation other than: (x)
liabilities or obligations disclosed and provided for in the balance sheet of
MVB as of June 30, 2003 (the "MVB Balance Sheet"), and the notes thereto; (y)
liabilities or obligations incurred in the
Page 19 - AGREEMENT OF MERGER
ordinary course of business consistent with past practices since June 30, 2003;
or (z) as of the date hereof, any liabilities or obligations that, individually
or in the aggregate, exceed $25,000 (excluding amounts owed to MVB's attorneys,
accountants and auditors). Since June 30, 2003, there has been no material
change in MVB's financial condition or results of operations, nor has there been
any material increase in MVB's liabilities, since June 30, 2003.
(g) Regulatory Orders. Except as disclosed in the MVB
Disclosure Schedule, MVB is not subject to any cease-and-desist or other order
issued by, nor is it a party to, any written agreement, consent agreement or
memorandum of understanding with, or is a party to any commitment letter or
similar undertaking to, nor is it subject to, any order or directive by, or has
adopted any board resolutions at the request of (each, whether or not set forth
in the MVB Disclosure Schedule, a "Regulatory Order"), any Governmental Entity
that restricts the conduct of its business or that in any manner relates to its
capital adequacy, its credit policies, its management or its business, nor has
MVB been advised by any Governmental Entity that it is considering issuing or
requesting any Regulatory Order.
(h) Compliance with Lending Laws and Regulations. Except as
disclosed in the MVB Disclosure Schedule and except for such errors or
oversights the financial effect of which are adequately reserved against:
(i) The conduct by MVB of its business and the operation
of the properties or other assets owned or leased by it
does not violate or infringe any domestic laws, statutes,
ordinances, rules or regulations or, to the Knowledge of
MVB, any foreign laws, statutes, ordinances, rules or
regulations, the enforcement of which, individually or in
the aggregate, would have a Material Adverse Effect on
MVB, its business, properties or financial condition.
Specifically, but without limitations, MVB is in
compliance in all material respects with every local,
state or federal law or ordinance, and any regulation or
order issued thereunder, now in effect and applicable to
it governing or pertaining to fair housing, anti
redlining, equal credit opportunity, truth in lending,
real estate settlement procedures, fair credit reporting
and every other prohibition against unlawful
discrimination in residential lending, or governing
consumer credit, including, but not limited to, the
Community Reinvestment Act, the Consumer Credit
Protection Act, Truth in Lending Act, and Regulation Z
promulgated by the FRB, and the Real Estate Settlement
Procedures Act of 1974. All loans, leases, contracts and
accounts receivable (billed and unbilled), security
agreements, guarantees and recourse agreements, of MVB,
as held in its portfolios, or as sold with recourse into
the secondary market represent and are valid and binding
obligations of their respective parties and debtors,
enforceable in accordance with their respective terms;
each of them is based on a valid, binding and enforceable
contract or commitment, each of which has been executed
and delivered in material compliance, in form and
substance, with any and all federal, state or local laws
applicable to MVB, or to the other party or parties to
the contract(s) or commitment(s), including without
limitation the Truth in Lending Act,
Page 20 - AGREEMENT OF MERGER
Regulations Z and U of the FRB, laws and regulations
providing for nondiscriminatory practices in the granting
of loans or credit, applicable usury laws, and laws
imposing lending limits; and all such contracts or
commitments have been administered in material compliance
with all applicable federal, state or local laws or
regulations. All Uniform Commercial Code filings, filings
of trust deeds, and filings of liens or other security
interest documentation that are required by any
applicable federal, state or local government laws and
regulations to perfect the security interests referred to
in any and all of such documents or other security
agreements have been made, and all security interests
under such deeds, documents or security agreements have
been perfected, and all contracts have been entered into
or assumed in material compliance with all applicable
material legal or regulatory requirements.
(ii) All loan files of MVB are complete and accurate in
all material respects and have been maintained in
accordance with good banking practice.
(iii) All notices of default, foreclosure proceedings or
repossession proceedings against any real or personal
property collateral have been issued, initiated and
conducted by MVB in material formal and substantive
compliance with all applicable federal, state or local
laws and regulations, and no loss or impairment of any
security interest, or exposure to meritorious lawsuits or
other proceedings against MVB has been or will be
suffered or incurred by MVB.
(iv) MVB is not in material violation of any applicable
servicer or any other requirements of the FHA, VA, FNMA,
GNMA, FHLMC, SBA or any private mortgage insurer which
insured or guaranteed any loans owned by MVB or as to
which either has sold to other investors, the effect of
which violation would constitute a Material Adverse
Effect on the business, assets, earnings, operation or
condition (financial or otherwise) of MVB, and with
respect to such loans MVB has not done or failed to do,
or caused to be done or omitted to be done, any act the
effect of which act or omission impairs or invalidates
(i) any FHA insurance or commitments of the FHA to
insure, (ii) any VA guarantee or commitment of the VA to
guarantee, (iii) any SBA guarantees or commitments of the
SBA to guarantee, (iv) any private mortgage insurance or
commitment of any private mortgage insurer to insure, (v)
any title insurance policy, (vi) any hazard insurance
policy, or (vii) any flood insurance policy required by
the National Flood Insurance Act of 1968, as amended,
which would constitute a Material Adverse Effect on the
business, assets, earnings, operation or condition
(financial or otherwise) of MVB.
Page 21 - AGREEMENT OF MERGER
(v) MVB has not knowingly engaged principally, or as one
of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any
margin stock.
(i) Compliance with Applicable Laws. The MVB Disclosure
Schedule sets forth all material permits, licenses, variances, exemptions,
orders, registrations, consents, franchises and approvals of all Governmental
entities which are currently held by or have been applied for by MVB (the "MVB
Permits") which constitutes all of the permits, licenses, variances, exemptions,
orders, registrations, consents, franchises and approvals of all Governmental
Entities which are required for the operation of the businesses of MVB as
presently conducted except for those which would not, individually or in the
aggregate, have a Material Adverse Effect on MVB. MVB is not aware of any facts
or circumstances currently existing which are likely to preclude MVB from
securing any permits, licenses, variances, exemptions, orders, registrations,
consents, franchises and approvals of any Governmental Entity which are required
for the operation of the businesses of MVB as planned to be conducted. MVB is in
compliance with the terms of the MVB Permits and all applicable statutes, laws,
ordinances, rules and regulations of all applicable Governmental Entities,
except where the failure so to comply individually or in the aggregate is not
reasonably likely to have a Material Adverse Effect on MVB. No action, demand,
requirement or investigation by any Governmental Entity and no suit, action or
proceeding by any Person, in each case with respect to MVB, or any of its
properties, or is pending or, to the Knowledge of MVB, threatened, other than,
in each case, those the outcome of which individually or in the aggregate are
not reasonably likely to impair the ability of MVB to perform its obligations
under this Agreement or to prevent or materially to delay the consummation of
any of the transactions contemplated by this Agreement.
(j) Absence of Certain Changes or Events. Except for
liabilities incurred in connection with this Agreement or as otherwise disclosed
in the MVB Disclosure Schedule, since June 30, 2003 MVB has conducted its
businesses only in the ordinary course consistent with past practice, and there
has not been (1) any Material Adverse Change in MVB; (2) any declaration,
setting aside or payment of any dividend or other distribution (whether in cash,
stock or property) with respect to the MVB Common Stock; (3) any split,
combination or reclassification of the MVB Common Stock, or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of MVB's Common Stock; (4) (A) any granting by MVB
to any current or former director, executive officer or other employee of MVB of
any increase in compensation, bonus or other benefits, except for normal
increases in cash compensation in the ordinary course of business or as required
under any employment agreements in effect as of the date of the most recent
audited financial statements; (B) any granting by MVB to any such current or
former director, executive officer or employee of any increase in severance or
termination pay, except as was required under any employment, severance or
termination agreements in effect as of December 31, 2002; (C) any entry by MVB
into, or any amendments of, any employment, deferred compensation, consulting,
severance, termination or indemnification agreement with any such current or
former director, executive officer or employee; or (D) any amendment to, or
modification of, any MVB Options; (5) any damage, destruction or loss, whether
or not covered by insurance, that individually or in the aggregate is reasonably
likely to have a Material Adverse Effect on MVB; (6) any change in accounting
methods, principles or practices by MVB materially affecting its reported
financial
Page 22 - AGREEMENT OF MERGER
condition or results of operation; (7) any tax election by MVB that individually
or in the aggregate is reasonably likely to have a Material Adverse Effect on
the tax liability or tax attributes of MVB or any settlement or compromise of
any material tax liability; or (8) as of the date hereof, any cash expenditures,
individually or in the aggregate, in excess of $25,000 (excluding amounts
expended in the ordinary course of MVB's business or paid to MVB's attorneys,
accountants and auditors).
(k) Litigation. There is no suit, action or proceeding pending
or, to the Knowledge of MVB, threatened against or affecting MVB that, if
resolved adversely to MVB, would have a Material Adverse Effect on MVB.
(l) Contracts. MVB is not in violation of or in default under
(nor does there exist any condition which upon the passage of time or the giving
of notice or both would cause such a violation of or default under) any loan or
credit agreement, bond, note, mortgage, indenture, lease or other contract,
agreement, obligation, commitment, arrangement, understanding, instrument,
permit or license to which it is a party or by which it or any of its properties
or assets is bound, except for violations or defaults that individually or in
the aggregate will not, after giving effect to reserves established therefor,
have a Material Adverse Effect on MVB. Section 3.2(l) of the MVB Disclosure
Schedule contains a complete list of (i) each loan or credit arrangement, note,
mortgage, indenture, or lease in an amount exceeding $250,000 under which MVB is
a lender or lessor that is currently in effect; (ii) each loan or credit
arrangement, note, mortgage, indenture, or lease under which MVB is a borrower
or lessee, and each contract, agreement, obligation, commitment, arrangement or
understanding of MVB involving actual or potential obligations or commitments
whether liquidated or contingent, of $25,000 or more that is currently in effect
or that has been discharged since December 31, 2002, and (iii) each contract,
agreement, obligation, commitment, arrangement or understanding between or among
MVB and any Affiliate of MVB other than ordinary course lending arrangements
made and maintained in full compliance with Regulation O (all matters described
in the foregoing clauses (i) through (iii) the "MVB Material Contracts"). Each
of the MVB Material Contracts is valid, binding and in full force and effect.
MVB is not a party to or bound by any non-competition agreement or any other
similar agreement or obligation which purports to limit the manner in which, or
the localities in which, any portion of the business of MVB is or may be
conducted. To MVB's Knowledge, no party to any MVB Material Contract is in
breach of, nor has any event or condition of default occurred, with respect to
any agreement or arrangement necessary to the conduct of MVB's business as
conducted and as proposed to be conducted.
(m) Employee Benefit Plans; ERISA. For purposes of this
Section 3.2(m), the term "MVB" shall include any Person organized under the laws
of the United States or operating therein that is or would be aggregated with
MVB under Section 414(b), (c), (m), or (o) of the Code (an "ERISA Affiliate"),
but other than as expressly referenced herein shall not include any
"multiemployer plan" (as defined in Section 4001(a)(3) of ERISA).
(i) Section 3.2(m) of the MVB Disclosure Schedule sets
forth a true, correct and complete list of:
Page 23 - AGREEMENT OF MERGER
(A) Each termination, change in control or severance
agreement involving MVB, on the one hand, and any of its
respective employees whose annual compensation is at a
base rate equal to or exceeding $50,000, on the other
hand;
(B) All employee benefit plans, as defined in ERISA
Section 3(3); and
(C) All other profit-sharing, bonus, stock option, stock
purchase, stock bonus, restricted stock, stock
appreciation right, phantom stock, vacation pay, holiday
pay, tuition reimbursement, scholarship, severance,
dependent care assistance, excess benefit, incentive
compensation, salary continuation, supplemental
retirement, employee loan or loan guarantee program,
split dollar, cafeteria plan, and other benefits or
compensation arrangements;
in each case maintained or contributed to by MVB for the
benefit of its employees (or former employees), directors (or
former directors) and/or their respective beneficiaries or
under which MVB may incur any liability. All of these types of
arrangements shall be collectively referred to as "Benefit
Plans." An arrangement will not fail to be a Benefit Plan
simply because it only covers one individual, or because MVB's
obligations under the plan arise by reason of its being a
"successor employer" under applicable laws. Furthermore, a
Voluntary Employees' Beneficiary Association under Section
501(c)(9) of the Code will be considered a Benefit Plan for
this purpose.
(ii) MVB has delivered to Purchaser a true and complete copy
of the following documents, to the extent that they are
applicable:
(A) Each Benefit Plan and any related funding agreements
(e.g., trust agreements or insurance contracts),
including all amendments (and Section 3.2(m) of the MVB
Disclosure Schedule includes a description of any such
amendment that is not in writing);
(B) The current draft of the summary plan description and
all subsequent summaries of material modifications of
each Benefit Plan;
(C) The most recent Internal Revenue Service
determination letter for each Benefit Plan that is
intended to qualify for favorable income Tax treatment
under Section 401(a) or 501(c)(9) of the Code, which
determination letter reflects all amendments that have
been made to the plan (except as set forth in Section
3.2(m) of the MVB Disclosure Schedule); and
Page 24 - AGREEMENT OF MERGER
(D) The two (2) most recent Form 5500s (including all
applicable Schedules and the opinions of the independent
accountants) that were filed on behalf of the Benefit
Plan.
(iii) All costs of administering and contributions required to
be made to each Benefit Plan under the terms of that Benefit
Plan, ERISA, the Code, or any other applicable law have been
timely made, and are fully deductible in the year for which
they were paid. All other amounts that should be accrued to
date as liabilities of MVB under or with respect to each
Benefit Plan (including administrative expenses and incurred
but not reported claims) for the current plan year of the plan
have been recorded on the financial statements of MVB. There
will be no liability of MVB (i) with respect to any Benefit
Plan that has previously been terminated or (ii) under any
insurance policy or similar arrangement procured in connection
with any Benefit Plan in the nature of a retroactive rate
adjustment, loss sharing arrangement, or other liability
arising wholly or partially out of events occurring before the
Effective Time.
(iv) Each Benefit Plan has been operated at all times in
accordance with its terms, and complies currently, and has
complied in the past, both in form and in operation, with all
applicable laws, including ERISA and the Code. The Internal
Revenue Service has issued a favorable determination letter
with respect to each Benefit Plan that is intended to qualify
under Section 401(a) or 501(c)(9) of the Code, and no event
has occurred (either before or after the date of the letter)
that would disqualify the plan.
(v) MVB does not maintain any plan that provides (or will
provide) medical, death or other benefits to one or more
former employees, directors, former directors, or independent
contractors (including retirees) following termination of
employment, other than benefits that are required to be
provided under COBRA or any state law continuation coverage or
conversion rights. The MVB have complied in all material
respects with the continuation coverage requirements of COBRA.
(vi) There are no investigations, proceedings, lawsuits or
claims pending or, to the Knowledge of MVB, threatened
relating to any Benefit Plan.
(vii) MVB does not have any intention or commitment, whether
legally binding or not, to create any additional Benefit Plan,
or to modify any existing Benefit Plan so as to increase
benefits to participants or the cost of maintaining the plan.
The benefits under all Benefit Plans are as represented, and
have not been, and will not be increased subsequent to the
date documents are provided to Purchaser except in the
ordinary course of business and consistent with competitive
business standards. No
Page 25 - AGREEMENT OF MERGER
statement, either oral or written, has been made by MVB (or
any agent of MVB) to any Person regarding any Benefit Plan
that is not in accordance with the Benefit Plan that could
have adverse economic consequences to the Company.
(viii) None of the Persons performing services for MVB has
been improperly classified as being independent contractors,
leased employees, or as being exempt from the payment of wages
for overtime.
(ix) None of the Benefit Plans provide any benefits that (i)
become payable or become vested solely as a result of the
consummation of this transaction or (ii) would result in
excess parachute payments (within the meaning of Section 280G
of the Code), either (A) solely as a result of the
consummation of this transaction or (B) as a result of the
consummation of the Merger and any actions taken by the
Company after the Effective Time. Furthermore, the
consummation of this transaction will not require the funding
(whether formal or informal) of the benefits under any Benefit
Plan (e.g., contributions to a "rabbi trust").
(x) None of the assets of any Benefit Plan that is a "pension
plan" within the meaning of Section 3(2) of ERISA are invested
in a group annuity contract or other insurance contract that
is subject to any surrender charge, interest rate adjustment,
or other similar expense upon its premature termination.
(xi) No Benefit Plan has any interest in any annuity contract
or other investment or insurance contract issued by an
insurance company that is the subject of bankruptcy,
conservatorship, rehabilitation, or similar proceeding.
(xii) With respect to each Benefit Plan that is subject to
Title IV of ERISA:
(A) No amount is due or owing from MVB to the PBGC, other
than a liability for premiums under ERISA Section 4007;
(B) All premiums have been paid to the PBGC on a timely
basis;
(C) The value, determined on a termination basis using
the actuarial assumptions stated in the plan, of all
accrued and ancillary benefits (whether or not vested)
under each such plan did not exceed, as of the most
recent valuation date, and will not exceed as of the
Closing Date, the then-current fair market value of the
assets of the plan;
Page 26 - AGREEMENT OF MERGER
(D) No reportable events (within the meaning of ERISA
Section 4043) have occurred;
(E) There is no accumulated funding deficiency (within
the meaning of Code Section 412 or ERISA Section 302),
whether or not such deficiency has been waived;
(F) There is no "unfunded benefit liability" (within the
meaning of Section 4001(a)(18) of ERISA, but excluding
from the definition of "current value" of "assets"
accrued but unpaid contributions); and
(G) the Company and each ERISA Affiliate has made when
due any "required installments" within the meaning of
Section 412(m) of the Code and Section 302(e) of ERISA,
whichever may apply.
(xiii) None of MVB has incurred any withdrawal liability
(including any contingent or secondary withdrawal liability)
to any multiemployer plan, and no event has occurred, and
there exists no condition or set of circumstances, that
presents a material risk of the occurrence of any withdrawal
(partial or otherwise) from, or the partition, termination,
reorganization, or insolvency of any multiemployer plan that
could result in any liability on behalf of MVB to a
multiemployer plan. All contributions required to be made by
MVB and its ERISA Affiliates to any multiemployer plan have
been timely made.
(xiv) The aggregate liability of MVB to all multiemployer
plans in the event of a complete withdrawal therefrom, as of
the close of the most recent plan year of the multiemployer
plan ended prior to the date hereof would not exceed $100,000.
To the Knowledge of MVB, there has been no material change in
the (i) financial condition of any multiemployer plan, (ii)
actuarial assumptions, (iii) required level of Credit Party
contributions, or (iv) level of benefits provided under any
multiemployer plan since the close of the most recent plan
year of the multiemployer plan that, individually or in the
aggregate, would materially increase the amount of this
liability.
(xv) No termination event has occurred or is reasonably
expected to occur that, when taken together with all other
such termination events, could reasonably be expected to
result in material liability to MVB.
(n) Taxes.
(i) MVB has filed all material Returns required to be filed by
it, or requests for extensions to file have been granted and
have not expired, and
Page 27 - AGREEMENT OF MERGER
all such Returns are complete and correct in all material
respects. MVB has paid or caused to be paid all Taxes shown as
due on such Returns or on subsequent assessments with respect
thereto, and no other material Taxes are payable by MVB with
respect to items or periods covered by such Returns (whether
or not shown on or reportable on such Returns) for which the
applicable statute of limitations has not expired, except for
Taxes for which an adequate reserve has been established
therefor. MVB has withheld and paid over all Taxes required to
have been withheld and paid over, and has complied with all
information reporting and backup withholding requirements,
including maintenance of required records with respect
thereto, in connection with amounts paid or owing to any
employee, creditor, independent contractor, or other third
party, except for any failure that would not reasonably be
expected to have a Material Adverse Effect on MVB. There are
no Liens on any of the assets of MVB with respect to Taxes,
other than Liens for Taxes not yet due and payable or for
Taxes that MVB is contesting in good faith through appropriate
proceedings and for which appropriate reserves have been
established.
(ii) No material Returns of MVB are under audit by a
government or taxing authority. No deficiencies for any Taxes
have been proposed, asserted or assessed, in each case in
writing, against MVB that are not adequately reserved for,
except for deficiencies that individually or in the aggregate
are not reasonably likely to have a Material Adverse Effect on
MVB. No waiver or extension of any statute of limitations is
in effect with respect to material Taxes or Returns of MVB.
(iii) MVB has not taken or agreed to take any action and has
no Knowledge of any fact, agreement or plan that would prevent
the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code.
(iv) MVB has not constituted either a "distributing
corporation" or a "controlled corporation" in a distribution
of stock qualifying for tax-free treatment under Section 355
of the Code (x) in the two years prior to the date of this
Agreement; or (y) in a distribution which could otherwise
constitute part of a "plan" or "series of related
transactions" (within the meaning of Section 355(e) of the
Code) in conjunction with the Merger.
(o) Labor and Employment Matters. (1) There are no controversies
pending or, to the Knowledge of MVB, threatened, between MVB and any of its
employees; (2) MVB is not a party to any collective bargaining agreement or
other labor union contract applicable to Persons employed by MVB, nor, to the
Knowledge of MVB, have any activities or proceedings of any labor union or group
of employees to organize any such employees; (3) MVB has not breached or failed
to comply with any provision of any collective bargaining agreement or other
labor union contract, and there are no grievances outstanding against MVB under
such agreement or contract; (4) there are no unfair labor practice complaints
pending against MVB
Page 28 - AGREEMENT OF MERGER
before the National Labor Relations Board or any similar foreign Governmental
Entity, and to the Knowledge of MVB, there are no current union representation
questions involving the employees of MVB; (5) there currently exists no work
slowdown, work stoppage or lockout, nor to the Knowledge of MVB is any such
matter threatened, by or with respect to the employees of MVB; and (6) other
than as disclosed in Section 3.2(o) of the MVB Disclosure Schedule, there are no
contracts or agreements of MVB which provide for or guaranty any employee of MVB
a specific term of employment.
(p) Real Property and Assets. MVB has all necessary right, title and
interest in and to all of its real and personal property, except for Liens and
security interests of record, liens and security interests that do not in the
aggregate exceed $10,000, or liens and security interests that arise in the
ordinary course of business, or which do not materially impair the ownership of
such property. All real property owned or leased by MVB is owned or leased free
and clear of all Liens, encumbrances, rights of way, building use restrictions,
exceptions, variances, reservations, or limitations of any nature except for
Liens and security interests of record, liens and security interests that do not
in the aggregate exceed $10,000, or liens and security interests that arise in
the ordinary course of business, or which do not materially impair the ownership
of such property, and no such property is subject to any governmental decree or
order to be sold or condemned, expropriated or otherwise taken by any public
authority with or without payment of compensation therefor, nor to the Knowledge
of MVB is any such proceeding threatened.
(q) Environmental Matters.
(i) MVB is, and at all times has been, in full compliance
with, and has not been and is not in violation of or liable
under, any Environmental Law. MVB has no basis to expect and
has not received, any actual or threatened order, notice, or
other communication from (i) any governmental body or private
citizen acting in the public interest, or (ii) the current or
prior owner or operator of any facilities, of any actual or
potential violation or failure to comply with any
Environmental Law, or of any actual or threatened obligation
to undertake or bear the cost of any Environmental, Health,
and Safety Liabilities with respect to any of the facilities
or any other properties or assets (whether real, personal, or
mixed) in which MVB has had an interest, or with respect to
any property or facility at or to which Hazardous Materials
were generated, manufactured, refined, transferred, imported,
used, or processed by MVB or any other Person for whose
conduct MVB may be held responsible, or from which Hazardous
Materials have been transported, treated, stored, handled,
transferred, disposed, recycled, or received.
(ii) There are no pending or, to the knowledge of MVB,
threatened claims, encumbrances, or other restrictions of any
nature, resulting from any Environmental, Health, and Safety
Liabilities or arising under or pursuant to any Environmental
Law, with respect to or affecting any of the facilities or any
other properties and assets (whether real, personal, or mixed)
in which MVB has had an interest.
Page 29 - AGREEMENT OF MERGER
(iii) MVB has no basis to expect, nor has MVB received any
citation, directive, inquiry, notice, order, summons, warning,
or other communication that relates to Hazardous Activity,
Hazardous Materials, or any alleged, actual, or potential
violation or failure to comply with any Environmental Law, or
of any alleged, actual, or potential obligation to undertake
or bear the cost of any Environmental, Health, and Safety
Liabilities with respect to any of the facilities or any other
properties or assets (whether real, personal, or mixed) in
which MVB had an interest, or with respect to any property or
facility to which Hazardous Materials generated, manufactured,
refined, transferred, imported, used, or processed by MVB have
been transported, treated, stored, handled, transferred,
disposed, recycled, or received.
(iv) MVB has no Environmental, Health, and Safety Liabilities
with respect to the facilities or with respect to any other
properties and assets (whether real, personal, or mixed) in
which MVB (or any predecessor), has or had an interest, or at
any property geologically or hydrologically adjoining the
facilities or any such other property or assets.
(v) There are no Hazardous Materials present on or in the
environment at the facilities or at any geologically or
hydrologically adjoining property, including any Hazardous
Materials contained in barrels, above or underground storage
tanks, landfills, land deposits, dumps, equipment (whether
moveable or fixed) or other containers, either temporary or
permanent, and deposited or located in land, water, sumps, or
any other part of the facilities or such adjoining property,
or incorporated into any structure therein or thereon. MVB has
not permitted or conducted, and is not aware of, any Hazardous
Activity conducted with respect to the facilities or any other
properties or assets (whether real, personal, or mixed) in
which MVB has or had an interest except in full compliance
with all applicable Environmental Laws.
(vi) There has been no Release or, to the knowledge of MVB,
threat of Release, of any Hazardous Materials at or from the
facilities or at any other locations where any Hazardous
Materials were generated, manufactured, refined, transferred,
produced, imported, used, or processed from or by the
facilities, or from or by any other properties and assets
(whether real, personal, or mixed) in MVB has or had an
interest, or any geologically or hydrologically adjoining
property.
(vii) MVB has delivered to Company true and complete copies
and results of any reports, studies, analyses, tests, or
monitoring possessed or initiated by MVB pertaining to
Hazardous Materials or Hazardous Activities in, on, or under
the facilities, or concerning compliance by MVB, or any other
person for whose conduct they are or may be held responsible,
with Environmental Laws.
Page 30 - AGREEMENT OF MERGER
(r) Brokers; Professional Fees. Other than as disclosed in Section
3.2(r) of the MVB Disclosure Schedule, no broker, investment banker, financial
advisor or other Person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
MVB.
(s) Allowance for Credit Losses. MVB's allowance for credit losses, as
established from time to time, is adequate as determined by the standards
applied to MVB by the applicable bank regulatory agencies and pursuant to GAAP.
Since June 30, 2003, MVB has not and prior to the Closing Date it shall not,
reverse any provision taken for credit losses.
(t) Repurchase Agreement. MVB has valid and perfected first position
security interests in all government securities subject to repurchase agreements
and the market value of the collateral securing each such repurchase agreement
equals or exceeds the amount of the debt secured by such collateral under such
agreement.
(u) Shareholder List. The list of shareholders of MVB provided as
Section 3.2(u) of the MVB Disclosure Schedule, is a true, correct and complete
list of the names, addresses and holdings of all record holders of MVB Common
Stock as of the date thereof. MVB shall notify the Company of any change in
record ownership of more than one percent (1%) through the Closing Date.
(v) Interests of Directors and Others. Except as disclosed in Section
3.2(l) or Section 3.2(v) of the MVB Disclosure Schedule, and for loans and
related arrangements extended and maintained in compliance with Regulation O, no
officer or director of MVB has any material interest in any assets or property
(whether real or personal, tangible or intangible), of or used in the business
of MVB.
(w) Schedules to this Agreement. The information contained in each
schedule to this Agreement prepared by or on behalf of MVB constitutes
additional representations and warranties made by MVB hereunder and is
incorporated herein by reference. The copies of documents furnished as part of
these schedules are true, correct and complete copies and include all
amendments, supplements, and modifications thereto and all express waivers
applicable thereunder.
(x) No Misstatements or Omissions. No representation or warranty of MVB
in this Agreement or in any statement, certificate or schedule furnished or to
be furnished by MVB pursuant to this Agreement or in connection with the
transaction contemplated by this Agreement, contains or as of the Closing Date
will contain any untrue statements of a material fact or omits or will omit to
state any material fact necessary to prevent the statements made from being
misleading in light of the circumstances as a whole.
Page 31 - AGREEMENT OF MERGER
ARTICLE IV.
COVENANTS OF THE PARTIES
------------------------
Section 4.1 Conduct of MVB Business. Except as set forth in Section 4.1
of the MVB Disclosure Schedule, as expressly contemplated by this Agreement, or
as consented to by the Company, which consent shall not be unreasonably withheld
(except as to matters described in Sections 4.1(c) and 4.1(e) below, in which
matters the Company may grant or withhold consent in its absolute discretion),
during the period from the date of this Agreement to the Effective Time, MVB
shall carry on its business in the ordinary course consistent with past
practice, and in compliance with all applicable laws and regulation and, to the
extent consistent therewith, use all reasonable best efforts to preserve and
maintain existing relations and goodwill with employees, customers, brokers,
suppliers and other Persons with which such party has significant business
relations. Without limiting the generality of the foregoing, during the period
from the date of this Agreement to the Effective Time, except as set forth in
the MVB Disclosure Schedule or the MVB business plan as consented to in writing
by the Company, MVB shall not:
(a) declare or pay any dividend or other distribution with
respect to any share of MVB Common Stock;
(b) except as otherwise provided in this Agreement, amend or
otherwise modify its charter, bylaws or other comparable organizational
documents;
(c) take or suffer any action that would constitute or result
in a Change of Control;
(d) issue any MVB Common Stock or securities convertible into
or exchangeable for MVB Common Stock, or any security whose value is based on
changes in the value of MVB Common Stock.
(e) redeem or repurchase any shares of MVB Common Stock,
provided, however, that this provision shall not apply to the repurchase or
redemption of Dissenting Shares from a shareholder that has perfected appraisal
rights pursuant to Section 2.6 and Chapter 13 of the California Corporations
Code;
(f) adopt any change, other than as required by applicable
generally accepted accounting principles, in its accounting policies, procedures
or practices;
(g) pay any bonus, reward or other extraordinary payment to
any of its directors, officers or other employees unless authorized by an
agreement between MVB and such director or officer prior to June 30, 2003 and
disclosed to the Company, provided, however, that without prior consent of the
Company MVB may increase compensation to any employee or group of employees such
that the aggregate of all such increases does not exceed 3.75%;
(h) amend, alter or change any amount payable by MVB in
connection with any termination or severance payment agreement with any current
or former directors, executive officer or employee;
Page 32 - AGREEMENT OF MERGER
(i) enter into any employment agreement, deferred
compensation, consulting, severance, termination or indemnification agreement
with any current or former director, executive office or employee;
(j) enter into any significant agreements that cannot be
terminated without penalty with 30 days notice;
(k) make or commit to make any capital expenditure over
$10,000 without the prior written approval of the Company;
(l) reduce or agree to reduce MVB's regulatory capital from
June 30, 2003 levels;
(m) make any adjustment to increase or decrease MVB's
allowance for loan losses, except at the request of the Company
(n) take any action that would represent a violation of any
Regulatory Order applicable to MVB; or
(o) authorize, or commit or agree to take, any of the
foregoing actions.
Section 4.2 MVB Information. Promptly upon learning of any event or
condition that would result, or that following only the giving of notice or
passage of time would result, in a breach of MVB's representations and
warranties in Section 3.2 above, MVB shall provide the Company with a reasonably
detailed written description of the event or condition as then known, and shall
provide such additional information thereafter regarding such event or condition
as the Company may reasonably request.
Section 4.3 Company Information. Promptly upon learning of any event or
condition that would result, or that following only the giving of notice or
passage of time would result, in a breach of the Company's and the Bank's
representations and warranties in Section 3.1 above, the Company shall provide
MVB with a reasonably detailed written description of the event or condition as
then known, and shall provide such additional information thereafter regarding
such event or condition as MVB may reasonably request.
Section 4.4 Governmental Approvals; Registration of Securities. The
parties shall cooperate to file and pursue to completion the approvals by
Governmental Authorities necessary for the consummation of the Merger and the
other transactions contemplated by this Agreement. Without limiting the
generality of the foregoing, unless this Agreement has been terminated pursuant
to Article VII:
(a) The Company shall prepare and file an Interagency Bank
Merger Application with the FDIC, file the Plan of Merger with Oregon Director
and shall file the Plan of Merger with the California Commissioner together with
all such ancillary documents and supporting information as the FDIC or the
Director may require, and shall respond to inquiries from each such agency, and
MVB shall take such steps and execute, deliver and file (or permit
Page 33 - AGREEMENT OF MERGER
the filing of) such applications and supporting documentation as the Company may
request in connection therewith.
(b) The Company shall prepare and file with the SEC a
registration statement on Form S-4 relating to the Merger Shares. In connection
therewith, MVB shall provide such true, accurate and complete information as the
Company may request from time to time in the preparation of such registration
statement and in response to inquiries the Company may receive from the SEC in
respect thereof. Each of the parties covenants and agrees, severally but not
jointly, that the information provided by such party to be included in the
registration statement shall, as of the date provided and as of the date the
registration statement is declared effective by the SEC does not contain a
misstatement of a material fact, or omit to state a material fact necessary to
make the statements made by or pertaining to such party, not misleading in light
of the circumstances as a whole.
(c) The Company shall prepare and file with the Nasdaq Stock
Market an application to list the Merger Shares on the Nasdaq SmallCap Market.
(d) Each of MVB and the Company shall take such other steps as
may be required to address regulatory or administrative inquiries in connection
with the Merger and the transactions contemplated in connection therewith.
Section 4.5 Takeover Statutes and Provisions. MVB shall use diligent
efforts to (i) exempt MVB, this Agreement, the Merger and the other transactions
contemplated hereby and thereby from the requirements of any state takeover law
(including without limitation, statutes relating to business combinations,
freezeouts, fair price, merger moratorium, control share acquisitions or other
similar antitakeover statutes or regulations enacted under the laws of Oregon or
California) and from any similar provisions (including but not limited to
"fair-price" provisions and shareholder rights plans) of the Articles of
Incorporation or Bylaws of either of them, as applicable, by action of MVB's
Board of Directors, shareholders or otherwise, and (ii) assist the Company or
the Bank in challenging the applicability of any Oregon or California takeover
law to the Merger.
Section 4.6 Compliance with Antitrust Laws. The parties shall use
diligent efforts to resolve such objections, if any, as may be asserted with
respect to the Merger by the FRB, the Department of Justice, the FDIC, or any
other Governmental Entity (including, without limitation, objections under any
antitrust laws and any applicable laws or regulations). If a suit is threatened
or instituted challenging the Merger as violative of the antitrust laws, each of
the parties shall use reasonably diligent efforts to resist, resolve or avoid
the filing of such suit. The parties shall use their reasonably diligent efforts
to take such action as may be required: (a) by the FRB, the Department of
Justice, the FDIC, or any other Governmental Entity in order to resolve such
objections as any of them may have to the Merger, or (b) by any federal or state
court of the United States, in any suit brought by a private party or
Governmental Entity challenging the Merger as violative of any antitrust laws,
in order to avoid the entry of, or to effect the dissolution of, any injunction,
temporary restraining order or other order which has the effect of preventing
the consummation of the Merger.
Page 34 - AGREEMENT OF MERGER
ARTICLE V.
ADDITIONAL AGREEMENTS
---------------------
Section 5.1 Shareholder Approval. MVB shall, as soon as practicable
following the date hereof, establish a record date for, duly call, give notice
of, convene and hold a meeting of the MVB shareholders, for the purpose of
obtaining MVB shareholder approval.
Section 5.2 Reasonable Efforts. Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties agrees to use its
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement including using reasonable efforts to accomplish
the following: (i) the taking of all reasonable acts necessary to cause the
conditions to Closing to be satisfied; (ii) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals from Governmental
Entities and the making of all necessary registrations and filings (including
filings with the SEC, the Director, the FDIC and the FRB contemplated by Section
4.4 above) and the taking of all reasonable steps necessary to obtain an
approval or waiver from, or to avoid an action or proceeding by any Governmental
Entity; (iii) the obtaining of all necessary consents, approvals or waivers from
third parties; and (iv) the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by, and to fully carry out
the purposes of, this Agreement.
Section 5.3 Stock Options. On or before the Closing Date, the board of
directors of MVB shall adopt such resolutions or take such other actions as may
be required to terminate all outstanding MVB Options, whether vested or
unvested, and the Company shall provide for the payment of consideration
therefor as contemplated by Section 2.1(d) above.
Section 5.4 Indemnification, Exculpation and Insurance.
(a) MVB shall indemnify, defend and hold harmless, to the
fullest extent permitted under applicable law (and MVB shall also advance
expenses as incurred to the fullest extent permitted under applicable law
provided the Person to whom expenses are advanced provides an undertaking to
repay such advances if it is ultimately determined that such Person is not
entitled to indemnification), each present and former officer and director of
the MVB who is made a party to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, and whether formal or informal,
because such person is or was an officer or director of MVB, or because such
person is or was serving, at MVB's request, as an officer, director, partner,
trustee, employee or agent of another entity, from and against any liabilities,
fines, penalties, losses, claims, damages, costs, interest and expenses
(including reasonable attorneys' and experts' fees) incurred by such person in
connection with such action, suit or proceeding.
(b) Any person entitled to indemnification under paragraph (a)
above (each, an "Indemnified Party"), upon learning of an action, suit
Page 35 - AGREEMENT OF MERGER
or proceeding or threatened action, suit or proceeding, with respect to which he
or she is or may be entitled to indemnification, shall promptly notify MVB, and
MVB shall have the right to assume the defense thereof, and it shall not be
liable to such Indemnified Party for any legal expenses of other counsel or any
other expenses subsequently incurred by such Indemnified Party in connection
with the defense thereof, except that if MVB elects not to assume such defense
or counsel for the Indemnified Party advises that there are issues which raise
conflicts of interest between MVB and the Indemnified Party, the Indemnified
Party may retain counsel satisfactory to them, and MVB shall pay all reasonable
fees and expenses of such counsel for the Indemnified Party promptly as
statements therefor are received; provided, however, that MVB shall be obligated
pursuant to this paragraph (b) to pay for only one firm of counsel for all
Indemnified Parties in any jurisdiction, (ii) each Indemnified Party will
cooperate in the defense of any such matter and (iii) MVB shall not be liable
for any settlement effected without its prior written consent; and provided,
further, that MVB shall not have any obligation hereunder to any Indemnified
Party to the extent that a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final, the indemnification
(or advance of expenses) of such Indemnified Party in the manner contemplated
hereby is prohibited by applicable law. If such indemnity is not available with
respect to any Indemnified Party, then MVB and the Indemnified Party shall
contribute to the amount payable in such proportion as is appropriate to reflect
relative faults and benefits.
(c) Not less than thirty (30) days before the expected Closing
Date, MVB shall procure policies of directors' and officers' liability insurance
providing "tail" coverage of not less than three million dollars ($3,000,000)
for a term of not less than three (3) years with respect to claims arising from
or related to facts or events which occurred or are alleged to have occurred at
or before the Effective Time and which might, or which might be alleged to,
represent a breach of fiduciary duty or other error or omission of MVB's
directors or officers.
(d) The provisions of this Section 5.4: (i) are intended to be
for the benefit of, and will be enforceable by, each Indemnified Party, his or
her heirs and his or her representatives; (ii) shall be binding upon the
successors and assigns of MVB; (iii) shall survive the Closing; and (iv) are in
addition to, and not in substitution for, any other rights to indemnification or
contribution that any Indemnified Party may have by statute, contract or
otherwise.
Section 5.5 Fees and Expenses. All fees and expenses incurred in
connection with the Merger, this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such fees or expenses, whether or
not the Merger is consummated.
Section 5.6 Public Announcements. MVB and the Company shall consult
with each other before issuing, and provide each other the opportunity to
review, comment upon and concur with, any press release or other public
statements with respect to the transactions contemplated by this Agreement,
including the Merger, and shall not issue any such press release or make any
such public statement prior to such consultation. The parties agree that the
initial press release to be issued with respect to the transactions contemplated
by this Agreement shall be in the form heretofore agreed to by the parties.
Notwithstanding any contrary provision of this Agreement, however, the parties
acknowledge that the Company Common Stock is registered
Page 36 - AGREEMENT OF MERGER
with the SEC pursuant to Section 12(g) of the Exchange Act and is traded on the
Nasdaq Stock Market, and as such the Company is required to file certain reports
and deliver certain materials to the SEC and to the Company's shareholders. To
that end, in the event the Company, on the advice of its counsel, determines
that it is required to make public disclosure of information that otherwise
would be prohibited or limited by this Section 5.6, the Company may file such
reports and issue such communications as it deems reasonably necessary to comply
with Exchange Act regulations and Nasdaq listing qualification rules. In such
event the Company shall provide MVB with a copy of such reports or
communications promptly upon release thereof.
Section 5.7 Tax Treatment. MVB and the Company shall use their
respective best efforts to cause the Merger to qualify as a reorganization under
the provisions of Section 368(a) of the Code and to obtain the opinion of
counsel referred to in Section 6.2(c), including the execution of the letter of
representation referred to therein.
Section 5.8 Loans by MVB. MVB will not make any loans prior to the
Closing Date with a principal amount in excess of $250,000 without the prior
written consent of the Company, which consent shall be deemed to have been
granted if the Company shall not have stated its objection thereto within three
Business Days after receipt from MVB of the terms of such proposed loan and the
creditworthiness and other documentation required in support thereof.
Section 5.9 Compliance with Regulatory Obligations. MVB shall comply
with all requirements imposed by that certain Memorandum of Understanding among
MVB, the FRB dated June 23, 2003.
Section 5.10 Observation Rights. At all times beginning on the date of
this Agreement and continuing until the Closing Date or until this Agreement is
terminated pursuant to Section 7.1, MVB shall (i) provide the Company with
notice of all board of directors' meetings and or the audit committee and loan
committee thereof, and all meetings of any executive officer or director with
any federal or state banking or securities regulator; (ii) provide to the
Company copies of all material provided by MVB to any person whose attendance is
required or permitted at a meeting described in the preceding clause (i),
including without limitation copies of all board packets and draft minutes and
consent resolutions to be submitted for approval, and all materials provided in
connection with this clause (ii) shall be provided to the Company at the same
time and in the same manner as provided to such persons; (iii) permit two (2)
executive officers or directors of the Company to attend all portions, and any
and all adjournments, of any meeting described in clause (i), provided, however,
that no representative of the Company may participate in the deliberations of
the board or of such committee, and provided further, that no representative of
the Company shall be permitted to attend any portion of a meeting during which
the subject matter thereof may not lawfully be disclosed to persons other than
the executive officers or directors of MVB.
Page 37 - AGREEMENT OF MERGER
ARTICLE VI.
CONDITIONS PRECEDENT
--------------------
Section 6.1 Conditions to Each Party's Obligation To Effect the Merger.
The respective obligation of each party to effect the Merger is subject to the
satisfaction, or waiver by each party, on or prior to the Closing Date of the
following conditions:
(a) MVB shareholder approval. The Merger shall have been
approved by the requisite majority of the holders of the MVB Common Stock.
(b) Governmental Approvals. All consents, approvals or orders
of authorization of, or actions by any Governmental Entities required for the
consummation of the Merger and the other actions contemplated by this Agreement
shall have been obtained, including without limitation the approval of the FDIC
and the SEC and all registrations, declarations or filings with any Governmental
Entities shall have been made, except in each case for those the failure of
which to obtain or make, individually or in the aggregate, are not reasonably
likely to have a Material Adverse Effect on the Company or MVB.
(c) Required Third-Party Consents. All necessary third party
consents to and approvals or waivers of the Merger and the transactions
contemplated hereby shall have been obtained from the relevant Persons, except
for those the failure of which to obtain, individually or in the aggregate, are
not reasonably likely to have a Material Adverse Effect on the Company or MVB.
(d) No Litigation. No judgment, order, decree, statute, law,
ordinance, rule or regulation entered, enacted, promulgated, enforced or issued
by any court or other Governmental Entity of competent jurisdiction or other
legal restraint or prohibition (collectively, "Restraints") shall be in effect
enjoining or otherwise prohibiting the consummation of the Merger or which
otherwise is reasonably likely to have a Material Adverse Effect on the Company
or MVB.
(e) Blue Sky Approvals; Nasdaq Listing. All necessary
approvals under federal and state securities or blue sky laws and other
authorizations relating to the issuance of the Merger Shares shall have been
received, and Merger Shares shall have been listed for trading on the Nasdaq
SmallCap Market.
(f) Dissenters Rights. The holders of no more than ten percent
(10%) of the MVB Common Stock shall have exercised statutory appraisal rights as
set forth in the Chapter 13 of the California Corporations Code in connection
with the Merger.
(g) No Banking Moratorium. There shall exist no banking
moratorium or other suspension of payment by banks in the United States or any
new material limitation on extension of credit generally applicable to
commercial banks in the United States.
Section 6.2 Conditions to Obligations of the Company. The obligation of
the Company to effect the Merger is further subject to satisfaction or waiver of
the following conditions:
Page 38 - AGREEMENT OF MERGER
(a) Representations and Warranties. The representations and
warranties of MVB set forth herein qualified as to materiality shall be true and
correct in all material respects, and those not so qualified shall be true and
correct in all respects, in each case as of the date of this Agreement and as of
the Closing Date (except to the extent expressly made as of an earlier date, in
which case as of such date). One (1) day prior to the Closing, MVB will provide
to the Company a written "bring-down" certificate certifying the truth and
accuracy of all of MVB's representations contained herein as of such date, and
reflecting facts, circumstances or events that have arisen or occurred since the
date of this Agreement which would cause such representations to be inaccurate
as of such date.
(b) Performance of Obligations. MVB shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and shall have executed and delivered
all documents required to be delivered by it pursuant to this Agreement.
(c) Tax Opinion. The Company shall have received from Xxxxx
Xxxxxx Xxxxxxxx LLP, counsel to the Company, on the Closing Date, an opinion, in
a form and of the substance reasonably acceptable to the Company and dated as of
the Closing Date to the effect that the transactions contemplated hereby will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code. In rendering such opinion, such counsel will be
entitled to rely upon representations of officers of the Company and MVB,
including representations in substantially the same form as Exhibits B and C.
(d) Opinion of Counsel. The Company shall have received a
favorable opinion of Xxxx Xxxxxx Xxxxxxx & Associates, counsel to MVB, dated as
of the Closing Date, in form and substance satisfactory to the Company to the
effect that:
(i) MVB is a state chartered commercial bank, duly
organized, validly existing and in good standing under
the laws of the State of California, has all requisite
corporate power and authority to own, lease, and operate
its properties and assets, and to carry on a general
banking business;
(ii) MVB has all requisite corporate power and authority
to execute, deliver and perform its obligations under
this Agreement and the Plan of Merger; the execution,
delivery and performance of this Agreement and the Plan
of Merger and the consummation of the transactions
contemplated hereby and thereby have been duly authorized
by all requisite corporate action on the part of MVB; and
this Agreement and the Plan of Merger have been duly
executed and delivered by MVB and constitute the legal,
valid and binding obligation of MVB, enforceable against
MVB in accordance with its terms, except as the same may
be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws or by equitable principles;
(iii) the authorized capital stock of MVB consists of
2,000,000 shares of common stock, no par value per share,
of which [COMPLETE AS OF THE
Page 39 - AGREEMENT OF MERGER
CLOSING DATE] shares are outstanding and are validly
issued, fully paid and nonassessable. Such shares are the
only shares of capital stock of MVB authorized, issued or
outstanding; and to the knowledge of Xxxx Xxxxxx Xxxxxxx
and Associates, MVB is not a party to, and is not
obligated by, any commitment, plan or arrangement to
issue or to sell any shares of capital stock or any other
equity interest in MVB other than the MVB Option Plan or
as disclosed in the MVB Disclosure Schedule; and
(iv) the execution and delivery by MVB of, and the
performance of the transactions contemplated by, each of
the transaction documents do not (a) violate MVB's
Articles or Bylaws, (b) breach, or result in a default
under, any existing obligation of MVB under any material
agreement or instrument to which MVB is a party, or (c)
breach or otherwise violate any existing obligation of
MVB under any court order that names MVB and is
specifically directed to it or its property.
(e) Corporate Documents. The Company shall have received:
(i) a certificate of existence and good standing
certificate for MVB issued by the California Secretary of
State and a certificate of good standing for MVB issued
by the California Commissioner as of the Business Day
immediately preceding the Closing Date; and
(ii) a copy, certified by the secretary of MVB, of
resolutions adopted by the board of directors and
shareholders of MVB approving this Agreement and the Plan
of Merger.
(f) Material Adverse Change. MVB shall not have experienced
any Material Adverse Change.
(g) Employment Agreement. The Company shall have entered into
an employment agreement with Xxxx Xxxxxxx in the form attached as Exhibit H.
(h) Affiliate Agreements. Each director of MVB and each person
known by MVB to be the holder of ten percent (10%) or more of the MVB Common
Stock shall have entered into an agreement to vote their shares in favor of the
Merger, and, in the case of the directors of MVB, not to not compete with the
Resulting Bank for a period of eighteen (18) months after the Closing Date, such
agreement to be substantially in the form of Exhibit D.
(i) Certificate. The Company shall have received a certificate
of the Chief Executive Officer and the Chief Financial Officer of MVB,
substantially in the form of Exhibit F, dated as of the Closing Date, certifying
to their Knowledge the fulfillment of the conditions set forth in this Section
6.2(a) through (e), together with such other matters as the Company may
reasonably request.
Section 6.3 Conditions to Obligations of MVB. The obligation of MVB to
effect the Merger is further subject to satisfaction or waiver by the Company of
the following conditions:
Page 40 - AGREEMENT OF MERGER
(a) Representations and Warranties. The representations and
warranties of the Company and the Bank set forth herein qualified as to
materiality shall be true and correct in all material respects, and those not so
qualified shall be true and correct in all respects, in each case as of the date
of this Agreement and as of the Closing Date (except to the extent expressly
made as of an earlier date, in which case as of such date). One (1) day prior to
the Closing, the Company will provide to MVB a written bring-down certificate
certifying the truth and accuracy of all of the Company's and the Bank's
representations contained herein as of such date, and reflecting facts,
circumstances or events that have arisen or occurred since the date of this
Agreement which would cause such representations to be inaccurate as of such
date.
(b) Performance of Obligations. The Company and the Bank shall
have performed in all material respects all obligations required to be performed
by them under this Agreement at or prior to the Closing Date.
(c) Opinion of Counsel. MVB shall have received the opinion of
Xxxxx Xxxxxx Xxxxxxxx LLP, counsel to the Company, dated as of the Closing Date,
in form and substance satisfactory to MVB, to the effect that:
(i) the Company is a corporation, duly organized and
validly existing under the laws of the State of Oregon,
and has all requisite corporate power and authority to
own, lease, and operate its properties and assets and
carry on its business in the manner being conducted on
the Closing Date;
(ii) the Bank is a state chartered stock bank, duly
organized, validly existing and in good standing under
the laws of the State of Oregon, has all requisite
corporate power and authority to own, lease, and operate
its properties and assets, and to carry on a general
banking business;
(iii) the Company and the Bank each have all requisite
corporate power and authority to execute, deliver and
perform its obligations under the Agreement and the Plans
of Merger; the execution, delivery and performance of the
Agreement and the Plans of Merger and the consummation of
the transactions contemplated thereby, have been duly
authorized by all requisite corporate action on the part
of each; and the Agreement and the Plans of Merger have
been duly executed and delivered by them and constitute
the legal, valid and binding obligation of each,
enforceable against the Company and the Bank in
accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws or by equitable principles;
(iv) The authorized capital stock of the Company consists
of 21,000,000 shares of capital stock of which 20,000,000
are shares of common stock, no par value per share, of
which [COMPLETE AS OF THE CLOSING DATE] shares are
outstanding and are validly issued, fully paid and
nonassessable and 1,000,000 shares of preferred stock, of
which [11,000]
Page 41 - AGREEMENT OF MERGER
are no par value designated Series A Preferred Stock, of
which [COMPLETE AS OF THE CLOSING Date]shares are
outstanding and are validly issued, fully paid and
nonassessable. Such shares are the only shares of capital
stock of the Company authorized, issued or outstanding;
and to the best knowledge of such counsel, the Company is
not a party to, and is not obligated by, any commitment,
plan or arrangement to issue or to sell any shares of
capital stock or any other equity interest in the
Company, except as set forth in the Company Securities
Filings.
(v) All of the issued and outstanding capital stock of
the Bank is owned by the Company.
(vi) The Merger Shares, when delivered in exchange (or in
partial exchange) for the shares of MVB Common Stock,
will be authorized, validly issued, fully paid and
nonassessable; and
(vii) The Merger Shares have been registered under the
Securities Act and to the best knowledge of the opinion
giver, no stop order has been issued suspending the
effectiveness of the Order of Registration or the
issuance of the shares in any jurisdiction, and no
proceeding for any such purpose has been initiated or
pending or are contemplated under the Securities Act or
any other securities laws. The Merger Shares have been
listed for trading on the Nasdaq SmallCap Market.
(d) Corporate Documents. MVB shall have received:
(i) a certificate of existence for the Company issued by
the Oregon Secretary of State and a certificate of
existence and good standing for the Bank issued by the
Oregon Director, in each case as of the Business Day
immediately preceding the Closing Date;
(ii) a copy, certified by the secretary of the Company
and the Bank, of the resolutions adopted by the
respective board of directors approving this Agreement
and the Plan of Merger.
(e) Neither the Company nor the Bank shall have experienced
any Material Adverse Change.
ARTICLE VII.
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
Section 7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after MVB shareholder approval:
(a) by mutual written consent of MVB and the Company;
Page 42 - AGREEMENT OF MERGER
(b) by either MVB or the Company:
(i) if the Merger shall not have been consummated on or
before January 31, 2004; provided, however, that the
right to terminate this Agreement pursuant to this
Section 7.1(b)(i) shall not be available to any party
whose failure to perform any of its obligations under
this Agreement results in the failure of the Merger to be
consummated by such time, and provided further that the
closing may be extended by either party to April 30, 2004
if regulatory approval has not been received before
January 31, 2004;
(ii) if (A) there shall be any law or regulation that
makes consummation of the Merger illegal or otherwise
prohibited or (B) any judgment, injunction, order or
decree of any court or other Governmental Entity having
competent jurisdiction enjoining MVB and the Company from
consummating the Merger is entered and such judgment,
injunction or order shall have become final and
non-appealable;
(iii) if any Restraint shall be in effect and shall have
become final and non-appealable;
(iv) if the Weighted Average Closing Price is less than
$6.63 per share or greater than $10.97 per share;
(v) if the board of directors of the terminating party
determines that the exercise of its fiduciary duty so
requires.
(c) by MVB, if the Company or the Bank shall have (i)
misrepresented, breached or failed to perform in any material respect any of
their representations, covenants or other agreements contained in this
Agreement, or (ii) experienced a Material Adverse Change, (each a "Company
Default"), which Company Default would give rise to the failure of a condition
set forth in Section 6.3(a) or (b) at the time of such Company Default; provided
that if such Company Default is curable by the Company through the exercise of
commercially reasonable efforts, then MVB may not terminate this Agreement under
this Section 7.1(c) until twenty (20) days after delivery of written notice to
the Company of the Company Default if such Company Default is then continuing,
or prior to the end of such 20-day period if the Company fails continuously to
exercise commercially reasonable efforts to cure the Company Default.
Termination pursuant to this Section 7.1(c) shall be MVB's sole remedy in the
event of a material misrepresentation or breach of warranty made by the Company
or the Bank in this Agreement.
(d) by the Company, at any time prior to the Closing if MVB
shall have misrepresented, breached or failed to perform in any material respect
any of its representations, covenants or other agreements contained in this
Agreement (each an "MVB Default"), which MVB Default would give rise to the
failure of a condition set forth in Section 6.2(a) or (b) at the time of such
MVB Default; provided that if such MVB Default is curable by MVB through the
Page 43 - AGREEMENT OF MERGER
exercise of commercially reasonable efforts, then the Company may not terminate
this Agreement under this Section 7.1(d) until twenty (20) days after delivery
of written notice to MVB of such MVB Default if such MVB Default is then
continuing, or prior to the end of such 20-day period if MVB fails to
continuously exercise commercially reasonable efforts to cure the MVB Default.
Termination pursuant to this Section 7.1(d) shall be the Company's sole remedy
in the event of a material misrepresentation or breach of warranty made by MVB
in this Agreement.
Section 7.2 Effect of Termination. In the event of termination of this
Agreement by MVB as provided in Section 7.1, this Agreement shall forthwith
become void and have no effect, without any liability or obligation on the part
of MVB or the Company, other than the provisions of this Section 7.2, Section
7.3 and Article VIII, which provisions survive such termination. In the event of
a termination of this Agreement by either party as a result of a Company Default
or a MVB Default (other than a Company Default or MVB Default consisting solely
of a material breach of a representation or warranty hereunder), the terminating
party shall be entitled to recover its reasonable out-of-pocket costs and
attorney's fees, resulting from or in connection with the negotiation and
performance of this Agreement and such default and termination. No termination
of this Agreement shall relieve any party from any liability arising from the
willful breach by any party of any of its representations, covenants or
agreements set forth in this Agreement.
Section 7.3 Effect of Certain Terminations. In the event either party
terminates this Agreement (other than a termination by either party pursuant to
Section 7.1(a), 7.1(b)(ii), 7.1(b)(iii) or Section 7.1(b)(iv)), the terminating
party shall pay to the non-terminating party, without demand by the
non-terminating party, an amount to five hundred thousand dollars ($500,000), an
amount the parties believe represents a reasonable estimate of the value of the
legal, accounting and advisory fees, plus the expense of employee time and other
costs and losses, the non-terminating party would have incurred in connection
with this Agreement and the transactions contemplated hereby, which costs and
losses would be extremely difficult to quantify. In addition to such payment,
the Company shall, immediately upon or at any time following the announcement of
a Change of Control by MVB which occurs within one year after the termination of
this Agreement, be entitled to elect between either (a) immediate cash payment
of a fee (the "Breakup Fee") equal to one million dollars ($1,000,000) payable
upon demand by the Company to MVB, which payment represents the parties'
reasonable estimate of the damage to reputation, foregone opportunities,
diversion of management attention, and other costs and losses that would be
difficult or impossible to quantify, or (b) exercise of that certain Stock
Option on the terms and subject to the conditions set forth in the Stock Option
Agreement, substantially in the form of Exhibit G. Such remedies shall serve as
the sole remedies in favor of the non-terminating party for a termination
hereof, and the parties hereby acknowledge that such amount represents a fair
and reasonable estimate of the harm that would be incurred by the
non-terminating party in entering into this Agreement and foregoing other
opportunities that it otherwise would have pursued, which damages would
otherwise be extremely difficult or impossible to quantify.
Section 7.4 Amendment. This Agreement may be amended by the parties at
any time before or after MVB shareholder approval; provided, however, that after
MVB shareholder
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approval, there shall not be made any amendment that by law requires further
approval by the shareholders of MVB without such approval. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties.
Section 7.5 Extension; Waiver. At any time prior to the Effective Time,
a party may (a) extend the time for the performance of any of the obligations or
other acts of the other parties; (b) waive any inaccuracies in the
representations of the other parties contained in this Agreement or in any
document delivered pursuant to this Agreement; or (c) waive any condition to
Closing that lawfully may be waived. Any agreement on the part of a party to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights.
Section 7.6 Procedure for Termination, Amendment, Extension or Waiver.
A termination of this Agreement pursuant to Section 7.1, an amendment of this
Agreement pursuant to Section 7.4 or an extension or waiver pursuant to Section
7.5 shall, in order to be effective, require, in the case of MVB or the Company,
action by its board of directors.
ARTICLE VIII.
GENERAL PROVISIONS
------------------
Section 8.1 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 8.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
Section 8.2 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, telecopied (which is confirmed) or sent by
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
if to MVB, to:
Mid Valley Bank
(if by mail)
X.X. Xxx 000
Xxx Xxxxx, XX 00000-0000
(if by courier or other direct delivery)
000 Xxxx Xxxxxx, Xxxxx X
Xxx Xxxxx, XX 00000
Telecopier: (000) 000-0000
Attn: Xxxx Xxxxxxxxx
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with a copy to:
Xxxx Xxxxxx Xxxxxxx, Esq.
Xxxx Xxxxxx Xxxxxxx & Associates
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attn: Xxxx Xxxxxxx
if to the Company or the Bank, to
PremierWest Bancorp
000 Xxxxxxx Xxxx
Xxxxxxx, Xxxxxx 00000
Telecopier: (000) 000-0000
Attn: Xxxx Xxxxxx
With a copy to:
Xxxxx Xxxxxx Xxxxxxxx LLP
2300 Xxxxx Fargo Tower
0000 XX Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxx
Section 8.3 Definitions. For purposes of this Agreement:
(a) "Adjusted Merger Consideration" has the meaning assigned
in Section 2.2(d).
(b) An "Affiliate" of any Person means another Person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first Person, where
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management policies of a Person, whether through
the ownership of voting securities, by contract, as trustee or executor, or
otherwise;
(c) "Agreement" means this Agreement and Merger and any and
all exhibits and schedules and amendments hereto.
(d) "Bank" has the meaning specified in the preamble to this
Agreement.
(e) "Benefit Plans" has the meaning assigned in Section
3.2(m)(i).
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(f) "Breakup Fee" has the meaning assigned in Section 7.3.
(g) "Business Day" means any day other than Saturday, Sunday
or any other day on which (i) banks are legally permitted to be closed in the
State of Oregon, and (ii) the Nasdaq Stock Market is closed for the publication
of securities trading information.
(h) "California Banking Law" has the meaning specified in
Section 1.1.
(i) "California Commissioner" means the California
Commissioner of Financial Institutions.
(j) "Cash Component" has the meaning assigned in Section
2.2(c).
(k) "Cash Election Shares" has the meaning assigned in Section
2.3(a).
(l) "Certificate" and "Certificates" have the meanings
specified in Section 2.4(b).
(m) "Change of Control" means any of the following
circumstances: MVB or its board of directors enters into an agreement or
recommends to its shareholders an agreement (other than this Agreement) pursuant
to which any Person or any "group," as that term is interpreted for purposes of
Section 13(d)(3) of the Exchange Act, would (i) merge or consolidate with MVB or
cause MVB to merge or consolidate with such Person (including any "affiliate" of
such Person, as that term is defined in Rule 144(a) under the Securities Act),
(ii) directly or indirectly acquire twenty percent (20%) or more of the assets
or liabilities of, or enter into any similar transaction with MVB, or (iii)
directly or indirectly purchase or otherwise acquire (including by merger,
consolidation, share exchange or any similar transaction) securities
representing or convertible into twenty percent (20%) or more of the stock of
MVB. No Change of Control shall be deemed to have arisen in connection with any
primary offering of securities in which MVB sells shares of MVB Common Stock for
the purpose of financing capital required to meet obligations imposed by a
Regulatory Order.
(n) "Closing" shall have the meaning specified in Section 1.2.
(o) "Closing Date" shall have the meaning specified in Section
1.2.
(p) "Code" means the Internal Revenue Code of 1986, as
amended.
(q) "Company" has the meaning in the preamble to this
Agreement.
(r) "Company Common Stock" shall have the meaning assigned in
Section 2.1(c)(i).
(s) "Company Default" shall have the meaning specified in
Section 7.1(c).
(t) "Company Disclosure Schedule" shall have the meaning
specified in Section 3.1.
Page 47 - AGREEMENT OF MERGER
(u) "Company Options" shall mean any option, warrant or other
security convertible into or exchangeable (with or without additional
consideration) for Company Common Stock.
(v) "Company Securities Filings" means the documents filed
with or delivered to the SEC by the Company, or required to be so filed or
delivered, pursuant to Section 13 or Section 15(d) of the Exchange Act since
September 30, 2000.
(w) "Company Stock Plans" means the plans and arrangements
providing for the grant of options or warrants for the purchase of shares of
Company Common Stock.
(x) "Dissenting Shares" shall have the meaning specified in
Section 2.6(a).
(y) "Effective Time" shall have the meaning specified in
Section 1.3.
(z) "Election Deadline" shall mean 7:00 p.m. on the thirtieth
(30th) day following the date on which the Effective Time occurs.
(aa) "Environmental, Health, and Safety Liabilities" means any
cost, damages, expense, liability, obligation, or other responsibility arising
from or under Environmental Law or occupational safety and health Law and
consisting of or relating to:
(a) any environmental, health, or safety matters or
conditions (including on-site or off-site contamination, occupational safety and
health, and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements,
legal or administrative proceedings, damages, losses, claims, demands and
response, investigative, remedial, or inspection costs and expenses arising
under Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or
occupational safety and health law for cleanup costs or corrective action,
including any investigation, cleanup, removal, containment, or other remediation
or response actions ("Cleanup") required by applicable Environmental Law or
occupational safety and health Law (whether or not such Cleanup has been
required or requested by any governmental body or any other person) and for any
natural resource damages; or
(d) any other compliance, corrective, investigative, or
remedial measures required under Environmental Law or occupational safety and
health Law.
The terms "removal," "remedial," and "response action,"
include the types of activities covered by the United States Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C.ss.9601 et
seq., as amended ("CERCLA").
Page 48 - AGREEMENT OF MERGER
(bb) "Environmental Law" means any legal requirement that
requires or relates to:
(a) advising appropriate authorities, employees, and the
public of intended or actual releases of pollutants or hazardous substances or
materials, violations of discharge limits, or other prohibitions and of the
commencements of activities, such as resource extraction or construction, that
could have significant impact on the environment;
(b) preventing or reducing to acceptable levels the
release of pollutants or hazardous substances or materials into the environment;
(c) reducing the quantities, preventing the release, or
minimizing the hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated,
packaged, and used so that they do not present unreasonable risks to human
health or the environment when used or disposed of;
(e) protecting resources, species, or ecological
amenities;
(f) reducing to acceptable levels the risks inherent in
the transportation of hazardous substances, pollutants, oil, or other
potentially harmful substances;
(g) cleaning up pollutants that have been released,
preventing the threat of release, or paying the costs of such clean up or
prevention; or
(h) making responsible parties pay private parties, or
groups of them, for damages done to their health or the Environment, or
permitting self-appointed representatives of the public interest to recover for
injuries done to public assets.
(cc) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
(dd) "ERISA Affiliate" shall have the meaning assigned in
Section 3.2(m).
(ee) "Exchange Agent" shall have the meaning assigned in
Section 2.4(a).
(ff) "FDIC" means the Federal Deposit Insurance Corporation.
(gg) "FHA" means the Federal Housing Administration.
(hh) "FHLMC" means the Federal Home Loan Mortgage Corporation.
(ii) "FNMA" means the Federal National Mortgage Association.
(jj) "FRB" means Federal Reserve Board.
Page 49 - AGREEMENT OF MERGER
(kk) "Form of Election" shall have the meaning assigned in
Section 2.3(a).
(ll) "GAAP" means generally accepted accounting principals,
consistently applied.
(mm) "GNMA" means the Government National Mortgage
Association.
(nn) "Hazardous Activity" means the distribution, generation,
handling, importing, management, manufacturing, processing, production,
refinement, release, storage, transfer, transportation, treatment, or use
(including any withdrawal or other use of groundwater) of Hazardous Materials
in, on, under, about, or from the facilities or any part thereof into the
environment, and any other act, business, operation, or thing that increases the
danger, or risk of danger, or poses an unreasonable risk of harm to persons or
property on or off the facilities, or that may affect the value of the
facilities or the MVB.
(oo) "Hazardous Materials" means any waste or other substance
that is listed, defined, designated, or classified as, or otherwise determined
to be, hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any admixture or solution thereof,
and specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.
(pp) "Indemnified Party" shall have the meaning assigned in
Section 5.4(b).
(qq) "Indemnifying Party" shall mean a party required under
Section 5.4(a) or 5.4(b) to provide for indemnification. Following the Effective
Time the Indemnifying Party in respect of MVB's obligations under Section 5.4(b)
shall be the insurer of such obligation as contemplated by Section 5.4(d).
(rr) "Knowledge" of any Person that is not an individual
means, with respect to any specific matter, the actual knowledge of such
Person's executive officers and other officers having primary responsibility for
such matter, together with such knowledge as would be obtained in the conduct of
their duties in the ordinary course and in the exercise of reasonable inquiry
under the circumstances.
(ss) "Liens" shall have the meaning specified in Section
3.1(b).
(tt) "Material Adverse Change" or "Material Adverse Effect"
means, when used in connection with the Company or MVB, any change, effect,
event, occurrence or state of facts that is, or is reasonably likely to be,
materially adverse to the business, financial condition, assets, results of
operations or prospects of such party and its subsidiaries taken as a whole,
other than any change, effect, event, occurrence or state of facts relating to
the economy in general. Without limited the generality of the foregoing, a
"Material Adverse Change" shall have occurred if any party (i) is identified by
any bank regulatory authority as being in material default under any material
law, regulation, regulatory order or memorandum of understanding, whether or not
existing at the date of this Agreement, or (ii) receives or enters into any
cease and desist order, memorandum of understanding, or other adverse regulatory
order not existing at the
Page 50 - AGREEMENT OF MERGER
date of this Agreement, or (iii) is notified by any bank regulatory authority
that it intends to commence or seek any order described in clause (ii) above.
(uu) "Merger" shall have the meaning specified in Section 1.1.
(vv) "Merger Consideration" shall have the meaning specified
in Section 2.1(a).
(ww) "Merger Shares" shall have the meaning specified in
Section 2.2(b).
(xx) "MVB" has the meaning assigned in the preamble to this
Agreement.
(yy) "MVB Balance Sheet" shall have the meaning specified in
Section 3.2(f).
(zz) "MVB Common Stock" shall have the meaning assigned in
Section 3.2(c)(i).
(aaa) "MVB Default" shall have the meaning specified in
Section 7.1(d). (bbb) "MVB Disclosure Schedule" shall have the meaning specified
in Section 3.2.
(ccc) "MVB Material Contracts" shall have the meaning
specified in Section 3.2(l).
(ddd) "MVB Options" shall mean any option, warrant or other
security convertible into or exchangeable (with or without additional
consideration) for MVB Common Stock.
(eee) "MVB Permits" shall have the meaning specified in
Section 3.2(i).
(fff) "MVB Stock Plans" means the plans and arrangements
providing for the grant of options and warrants for the purchase of shares of
MVB Common Stock.
(ggg) "Non-Election Shares" shall have the meaning assigned in
Section 2.3(c).
(hhh) "ORS" means the Oregon Revised Statutes.
(iii) "Oregon Bank Act" has the meaning specified in Section
1.1.
(jjj) "Oregon Director" shall mean the director of the Oregon
Department of Consumer and Business Services.
(kkk) "PBGC" means the Pension Benefit Guaranty Corporation.
(lll) "Per-Share Consideration" means the Adjusted Merger
Consideration divided by the number of shares of MVB Common Stock outstanding
immediately prior to the Effective Time.
Page 51 - AGREEMENT OF MERGER
(mmm) "Person" means an individual, corporation, partnership,
limited liability Company, joint venture, association, trust, unincorporated
organization or other entity;
(nnn) "Plan of Merger" shall have the meaning specified in
Section 1.3.
(ooo) "Recapitalization Event" shall have the meaning
specified in Section 2.1(e).
(ppp) "Regulatory Order" shall have the meaning specified in
Section 3.2(g).
(qqq) "Release" means any spilling, leaking, emitting,
discharging, depositing, escaping, leaching, dumping, or other releasing into
the environment, whether intentional or unintentional.
(rrr) "Restraints" shall have the meaning specified in Section
6.1(d).
(sss) "Resulting Bank" shall have the meaning specified in
Section 1.1.
(ttt) "Returns" means all Federal, state, local, provincial
and foreign Tax returns, declarations, statements, reports, schedules, forms and
information returns and any amended Tax return relating to Taxes.
(uuu) "SBA" means the Small Business Administration.
(vvv) "SEC" means the U.S. Securities Exchange Commission.
(www) "Securities Act" means the Securities Act of 1933, as
amended.
(xxx) "Stock Election Shares" shall have the meaning assigned
in Section 2.3(a).
(yyy) "Stock Option" shall have the meanings assigned in
Section 1 of that certain Stock Option Agreement attached hereto in the form of
Exhibit G.
(zzz) A "Subsidiary" of any Person means another Person, an
amount of the voting securities, other voting ownership, membership or
partnership interests of which is sufficient to elect at least a majority of its
board of directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which) is owned directly or
indirectly by such first Person; provided, however, that for the purposes of
this Agreement, the Company shall not be considered to be a Subsidiary of MVB.
(aaaa) "Taxes" includes all forms of taxation, whenever
created or imposed, and whether of the United States or elsewhere, and whether
imposed by a local, municipal, governmental, state, foreign, Federal or other
Governmental Entity, or in connection with any agreement with respect to Taxes,
including all interest, penalties and additions imposed with respect to such
amount.
Page 52 - AGREEMENT OF MERGER
(bbbb) "VA" means the United States Veterans' Administration.
(cccc) "Weighted Average Closing Price" means the weighted
average (based on the number of shares traded) of the last reported sale prices
on the Nasdaq Stock Market for each trading day beginning on and including
November 14, 2003 and ending on and including December 15, 2003; provided,
however, that in the event the parties, by mutual agreement, extend the Closing
Date until a date later than January 31, 2003, then the "Weighted Average
Closing Price" shall instead be the weighted average (based on the number of
shares traded) of the last reported sale prices on the Nasdaq Stock Market for
each of the ten (10) trading days ending on and including the fifth (5th)
trading day prior to the Closing Date.
Section 8.4 Interpretation. When a reference is made in this Agreement
to an Article, Section or Exhibit, such reference shall be to an Article or
Section of, or an Exhibit to, this Agreement unless otherwise indicated. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation." The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. All terms defined in this
Agreement shall have the defined meanings when used in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is referred
to herein means such agreement, instrument or statute as from time to time
amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent; and (in the case of statutes) by succession
of comparable successor statutes and references to all attachments thereto and
instruments incorporated therein. References to a Person are also to its
permitted successors and assigns.
Section 8.5 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 8.6 Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein) (a)
constitutes the entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement; and (b) except for the provisions of Article
II and Section 5.4, are not intended to confer upon any Person other than the
parties any rights or remedies.
Section 8.7 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Oregon, without reference
to the laws that might otherwise govern under applicable principles of conflict
of laws thereof.
Page 53 - AGREEMENT OF MERGER
Section 8.8 Attorney's Fees. The prevailing party in any dispute
arising out of this Agreement or any breach thereof shall be entitled to recover
its costs and attorney's fees in any proceeding.
Section 8.9 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by either of the parties hereto without
the prior written consent of the other party. Any assignment in violation of the
preceding sentence shall be void. Subject to the preceding two sentences, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
Section 8.10 Enforcement. The parties agree that irreparable damage
would occur and that the parties would not have any adequate remedy at law 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 of this Agreement in any Federal court located in the
State of Oregon or in Oregon state court, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of the
parties hereto (a) consents to submit itself to the personal jurisdiction of any
federal court located in the State of Oregon or any Oregon state court in the
event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement; (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court; and (c) agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated by this Agreement in any court
other than a federal court sitting in the State of Oregon or an Oregon state
court.
Section 8.11 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
Page 54 - AGREEMENT OF MERGER
IN WITNESS WHEREOF, MVB, the Company and the Bank have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
Mid Valley Bank
By: _________________________
Xxxx X. Xxxxxxxxx, Chairman and Chief Executive Officer
PremierWest Bancorp
By: _________________________
Xxxx Xxxxxx, President and Chief Executive Officer
PremierWest Bank
By: _________________________
Xxxx Xxxxxx, President and Chief Executive Officer
Page 55 - AGREEMENT OF MERGER
EXHIBIT LIST
EXHIBIT A Plan of Merger
EXHIBIT B Tax Certificate of the Company
EXHIBIT C Tax Certificate of MVB
EXHIBIT D Form of Affiliate Agreement - Officers and Directors
EXHIBIT E Form of Affiliate Agreement - Significant Shareholders
EXHIBIT F Certificate of Executive Officers
EXHIBIT G Form of Stock Option Agreement
EXHIBIT H Form of Employment Agreement
Page 56 - AGREEMENT OF MERGER
