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EXHIBIT 2
AGREEMENT AND PLAN OF SHARE EXCHANGE
PARTIES: COLUMBIA BANCORP ("Bancorp")
VALLEY COMMUNITY BANCORP ("VCB")
VALLEY COMMUNITY BANK ("Bank")
DATE: August 3, 1998
RECITALS
A. Bancorp is an Oregon corporation and bank holding company, and is the
parent corporation of Columbia River Bank, an Oregon stock bank. Bancorp's
principal office is at 000 Xxxx Xxxxx Xxxxxx, Xxx Xxxxxx, Xxxxxx 00000.
B. VCB is an Oregon corporation and bank holding company, and is the
parent corporation of Valley Community Bank (the "Bank"), an Oregon stock bank.
The principal place of business of VCB and the Bank is at 000 Xxxxx Xxxxx
Xxxxxx, XxXxxxxxxxx, Xxxxxx 00000-0000.
C. As of June 30, 1998 there were 720,675 issued and outstanding shares
of common stock of VCB (the "VCB Common Stock") held by 310 shareholders of
record, and 205,800 issued and outstanding shares of preferred stock of VCB (the
"VCB Preferred Stock") held by three shareholders of record.
D. VCB is the sole owner and holder of 906,475 shares of the common
stock of the Bank (the "Bank Stock"), which is 100% of the issued and
outstanding shares of the Bank. VCB is also the sole owner and holder of 100% of
the issued and outstanding shares of Valley Community Mortgage Services, Inc.,
an Oregon corporation. The Bank is the sole owner and holder of 100% of the
issued and outstanding shares of Valley Community Financial Services, Inc., an
Oregon corporation.
E. Pursuant to ORS 60.484, the Board of Directors of Bancorp, of VCB and
of the Bank have concluded that the acquisition of VCB by Bancorp under the
terms set forth in this Agreement (the "Agreement") is in the best interests of
the shareholders of Bancorp and of VCB.
NOW, THEREFORE, THE PARTIES AGREE:
1. THE ACQUISITION AND SHARE EXCHANGE.
1.1 Acquisition of Shares Through Share Exchange. Subject to the terms
and conditions of the Agreement and of applicable law, on the Effective Date as
defined herein Bancorp shall acquire 100% of the shares of the VCB Common Stock
issued and outstanding on the Effective Date for an aggregate purchase price of
$15,101,542.50 payable in cash at closing (the "Acquisition"). The Acquisition
shall constitute a share exchange within the meaning of ORS 60.484, and the
Agreement shall constitute a plan of share exchange.
1.2 Conversion of Preferred Stock. Prior to the Effective Date, and as a
condition to the Acquisition, all holders of the VCB Preferred Stock shall have
converted 100% of the issued and outstanding VCB Preferred Stock to VCB Common
Stock, and VCB shall have received the conversion price of $.30 per share of VCB
Preferred Stock.
1.3 Effective Date. The Acquisition shall become effective (the
"Effective Date") on the date of the filing of Articles of Share Exchange with
the Secretary of State of the State of Oregon pursuant to ORS 60.494. The
Effective Date shall occur as soon as practicable after the Closing Date as
defined in Section 2.1 of the Agreement.
1.4 Effect of Acquisition. On the Effective Date, VCB shall become a
wholly owned subsidiary of
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Bancorp, and Bancorp shall be the sole shareholder of VCB.
1.5 Bank Charter; Articles and Bylaws of Bank and VCB. The Charter of
the Bank in effect immediately prior to the Effective Date shall be the Charter
of the Bank on the Effective Date. The Articles of Incorporation and Bylaws of
VCB and of the Bank in effect immediately prior to the Effective Date shall be
the Articles of Incorporation and Bylaws of VCB and of the Bank on the Effective
Date.
1.6 Officers - VCB and Bank. All officers of VCB and of the Bank serving
immediately prior to the Effective Date shall be the officers of VCB and of the
Bank on the Effective Date, all of whom shall continue in office until their
respective successors are duly qualified and appointed.
1.7 Directors - VCB and Bank. Except as otherwise provided herein, all
directors of VCB and of the Bank serving immediately prior to the Effective Date
shall be the directors of VCB and of the Bank on the Effective Date, all of whom
shall continue in office until their respective successors are duly qualified
and elected as provided in the Articles of Incorporation and Bylaws of VCB and
of the Bank; provided, that promptly after the Effective Date the number of
director positions on the Board of Directors of the Bank shall be reduced to no
more than seven (7), and the director positions shall be filled at a special
Bank shareholder meeting called for that purpose.
1.8 Special VCB Stockholders' Meeting. VCB's Board of Directors shall,
in accordance with its Articles of Incorporation, Bylaws and applicable law:
1.8.1 Hold a special meeting (the "VCB Special Meeting") of VCB
stockholders for the purpose of considering and taking action upon the
Acquisition. The Special Meeting shall be scheduled as soon as practicable after
the date of the Agreement;
1.8.2 Include in the proxy statement for the Special Meeting (the
"VCB Proxy Statement") a statement that the Board of Directors of VCB recommends
that stockholders vote in favor of the Acquisition; and
1.8.3 Use its best efforts to obtain the requisite approval of
the Acquisition by the stockholders of VCB.
1.9 Dissenters' Rights. Any VCB stockholder who properly exercises the
stockholder's dissenters' rights under ORS 60.511, et seq. shall be entitled to
receive for the stockholder's shares the value of such shares in accordance with
applicable law.
2. CLOSING.
2.1 Closing Date. Subject to the satisfaction or waiver of all
conditions set forth in Section 8 of the Agreement, the closing of the
Acquisition (the "Closing") shall occur on a date (the "Closing Date") not later
than thirty (30) business days after the Acquisition has been approved by all
relevant regulatory authorities and all required waiting periods have elapsed.
Notwithstanding the foregoing, the Closing Date shall not be earlier than
September 1, 1998 or later than January 1, 1999 unless (i) the January 1, 1999
date is extended by a written amendment to the Agreement, or (ii) the effective
date of any required final approval of a regulatory authority has not occurred
as of January 1, 1999, in which event the Closing Date shall be automatically
extended beyond January 1, 1999 to a date which is as soon as practicable
following the effective date of such approval.
2.2 Actions to Take Place at Closing. At the Closing, (a) Bancorp, VCB
and the Bank shall execute and deliver the closing certificates of executive
officers, opinions, agreements and other documents required of each of them
under the Agreement; (b) Bancorp shall have deposited the amount of
$15,101,542.50 into a designated account of a payment agent ("Payment Agent"),
acceptable to the parties and paid by Bancorp, with instructions to pay the
appropriate amounts under the Agreement to each VBC shareholder; and (c) the VCB
shareholders shall, upon surrender by each of them to the Payment Agent of all
such shareholder's certificates representing shares of VCB stock held of record
(or upon delivery of an appropriate affidavit of loss and at the
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discretion of Bancorp either a bond or an undertaking of indemnity if any such
certificates have been lost, stolen, or destroyed), be entitled to receive cash,
without interest, in the amount to which each of them are entitled.
2.3 Time and Place of Closing. The Closing shall take place at the head
office of Bancorp, 000 Xxxx Xxxxx Xxxxxx, Xxx Xxxxxx, Xxxxxx commencing at 9:00
a.m., or at such other date, time and place agreed to by the parties.
3. REPRESENTATIONS AND WARRANTIES OF VCB AND OF THE BANK
VCB and the Bank each represent and warrant that the following are true
as of the date of the Agreement, except as described in any Schedule referred to
below and attached hereto.
3.1 Organization. VCB and the Bank are duly organized, validly existing
and in good standing under the laws of the states of their organization and
under applicable federal law, and have all requisite corporate power and
authority to own and operate their properties and assets, to lease the leased
properties used in their businesses, and to carry on their businesses as now
conducted. VCB and the Bank own or possess all charters, franchises, licenses,
permits, branch certificates, consents, approvals, waivers and other
authorizations, governmental or otherwise, which are necessary for them to
conduct their businesses as now conducted, none of which will lapse or be
adversely affected by reason of the consummation of the transactions
contemplated by the Agreement. VCB and the Bank are duly qualified and licensed
to do business and are in good standing in every jurisdiction in which such
qualification or license is required or where the failure to be so qualified or
licensed could result in liability or adversely affect the business or
operations of VCB or the Bank in any material respect.
3.2 Articles of Incorporation and Bylaws. The copies of the Articles of
Incorporation, as amended, and the Bylaws, as amended, of VCB and the Bank
delivered to Bancorp are true, correct and complete copies thereof. Neither VCB
nor the Bank are in material violation of any provision of their Articles of
Incorporation or Bylaws. The minute books of VCB and the Bank which have been or
will be made available for inspection by Bancorp contain minutes of all meetings
and consents in lieu of meetings of the Board of Directors (and any committee
thereof) and of the stockholders of each of them, all of which are accurate in
all material respects.
3.3 Execution and Performance of Agreement. VCB and the Bank have all
requisite corporate power and authority to execute and deliver the Agreement and
to consummate the transactions contemplated by the Agreement. The execution and
delivery of the Agreement, compliance with its terms and the consummation of the
transactions contemplated by the Agreement have been duly and validly authorized
by the Board of Directors of VCB and the Bank, and no other corporate actions of
either of them are necessary to authorize the Agreement or to consummate the
transactions contemplated, other than the approval of the Acquisition by VCB's
stockholders.
3.4 Binding Obligation. The Agreement has been duly and validly executed
and delivered by VCB and the Bank and constitutes the valid, legal and binding
agreement of each enforceable in accordance with its terms.
3.5 Corporate Structure. VCB and the Bank are not owned or controlled,
directly or indirectly, by a bank holding company or by any other corporation or
entity, other than VCB's ownership of the Bank. VCB and the Bank do not own or
control, directly or indirectly, any shares of capital stock of any other
corporation or entity, other than (i) VCB's ownership of 100% of the shares of
the Bank, (ii) VCB's ownership of 100% of Valley Community Mortgage Services,
Inc., an Oregon corporation, (iii) the Bank's ownership of 100% of the issued
and outstanding shares of Valley Community Financial Services, Inc., an Oregon
corporation, (iv) shares held in a fiduciary or custodial capacity in the
ordinary course of business, (v) shares acquired in partial or full satisfaction
of any debts owed to VCB or the Bank, and (vi) the shares described in the
attached Schedule 3.5.
3.6 Capital Structure of the Bank. The authorized capital stock of the
Bank consists of 2,000,000 shares of common stock, par value of $1.00 per share,
of which 906,475 shares were issued and outstanding as of July 6, 1998. All of
the Bank Stock has been duly authorized and validly issued in compliance with
applicable law
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including, without limitation, federal and state securities laws, and are fully
paid and nonassessable. None of the Bank Stock has been issued in violation of
the preemptive rights of any stockholder. No Bank Stock shall be issued between
the date of the Agreement and the Effective Date.
3.7 Capital Structure of VCB. The authorized capital stock of VCB
consists of (i) 2,000,000 shares of common stock, par value of $1.00 per share,
of which 720,675 shares were issued and outstanding as of June 30, 1998, and
(ii) 500,000 shares of preferred stock, par value of $1.00 per share, of which
205,800 shares were issued and outstanding as of June 30, 1998. All of the
foregoing shares have been duly authorized and validly issued in compliance with
applicable law including, without limitation, federal and state securities laws,
and are fully paid and nonassessable. None of the foregoing shares have been
issued in violation of the preemptive rights of any stockholder. No shares of
VCB stock shall be issued between the date of the Agreement and the Effective
Date, other than the issuance of shares of VCB Common Stock upon the conversion
of VCB Preferred Stock.
3.8 Consents and Approvals. Except for the applications and approvals
required by the Federal Reserve Bank and any other state or federal governmental
agency that may have or assert jurisdiction over the transaction or the actions
contemplated herein, no consents, approvals or authorizations of any public body
or regulatory agency are necessary for the consummation of the Acquisition and
the other transactions provided under the Agreement.
3.9 No Violations. Subject to compliance with the regulatory approvals
described in Section 3.8 of the Agreement, neither the execution and delivery of
the Agreement nor the consummation of the transactions contemplated hereby, nor
compliance by VCB and the Bank with any of the provisions hereof will (i)
conflict with or result in any breach of any provision of their respective
Articles of Incorporation or Bylaws, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, lease, agreement or other instrument or obligation of VCB or the Bank
or by which either of them or any of their properties or assets may be bound, or
(iii) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to VCB or the Bank, or any of their properties or assets.
3.10 Books and Records. The books and records of VCB and the Bank
accurately reflect the transactions to which they are parties or by which their
assets and properties are subject or bound. Such books and records have been
properly kept and maintained, are in compliance in all material respects with
all legal regulatory and accounting requirements applicable to them, and have
been maintained on a consistent basis in accordance with generally accepted
accounting principles applicable to VCB and the Bank.
3.11 Financial Statements. VCB and the Bank have delivered to Bancorp
true copies of their balance sheets, statements of income, statements of changes
in financial position, and statements of changes in stockholders' equity, and
all notes thereto, for each of the calendar and fiscal years 1994, 1995, 1996
and 1997, and shall deliver the same for the first two quarters of the 1998
fiscal and calendar year as soon as practicable after the full execution of the
Agreement and in any event no later than August 15, 1998. All of the foregoing
(the "Financial Statements"), except as disclosed in Schedule 3.11, (i) are in
accordance with the books and records of VCB and the Bank, (ii) fairly present
the financial position, results of operation, changes in financial position and
stockholders' equity of VCB and the Bank for the periods covered thereby, (iii)
have been prepared and maintained in accordance with generally accepted
accounting principles ("GAAP") on a consistent basis, and (iv) reflect all
material liabilities, contingent or otherwise, of each of them for the periods
covered thereby, except for liabilities not required to be reflected thereon
under GAAP. Neither VCB nor the Bank party have been notified by any regulatory
authority that such authority regards the Financial Statements as deficient in
any material respect.
3.12 Proxy Statements and Other Materials. VCB has delivered to Bancorp
copies of all of VCB's reports and communications to its shareholders since
January 1, 1995, including all proxy statements, financial reports and notices
of meetings. Any proxy statements or other materials communicated to the
shareholders of VCB in connection with the Agreement shall comply in all
material respects with applicable law, and shall not on the date of their
distribution contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they are made, not false
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or misleading, except those statements or omissions in the proxy statement that
may be made in reliance on information provided by Bancorp.
3.13 Policies and Procedures. VCB and the Bank have delivered to Bancorp
or made available for inspection all manuals, booklets and other materials that
set forth the policies and procedures of VCB and the Bank. All actual policies
and procedures of VCB and the Bank are substantially as represented in such
materials.
3.14 Collective Bargaining Agreements. Neither VCB nor the Bank is a
party to or bound by any collective bargaining agreements with respect to any
employees. There has not been, nor to the knowledge of VCB or the Bank was there
or is there threatened, any strike, slowdown, picketing or work stoppage by any
union or other organized group of employees against VCB or the Bank or any of
their premises, any material dispute regarding wages, hours or conditions of
employment, or any other labor dispute or other occurrence, event or condition
of a similar character within five (5) years prior to June 1, 1998 that had or
is expected to have a materially detrimental effect on VCB's or the Bank's
operations. Neither VCB nor the Bank is aware of any attempts to organize a
collective bargaining unit to represent any employee groups of the Bank.
3.15 Employee Benefit Plans. Neither VCB nor the Bank has (i) any
liability, (ii) any funding deficiency, or (iii) any funding waivers outstanding
or applied for to the Pension Benefit Guaranty Corporation or to the IRS with
respect to any pension plan qualified under Section 401 of the Internal Revenue
Code. The value of accrued vested benefits with respect to any such pension plan
do not exceed the value of the total assets of such plan. All "Employee Benefit
Plans," as defined in Section 3(3) of ERISA that cover one or more employees
employed by either VCB or the Bank ("Employee Benefit Plans") comply in all
material respects with ERISA and, where applicable, for tax-qualified or
tax-favored treatment, with the Internal Revenue Code. Neither the Employee
Benefit Plans nor any trustee or administrator thereof has engaged in a
"prohibited transaction" within Section 406 of ERISA or, where applicable,
Section 4975 of the Internal Revenue Code for which no exemption is applicable,
nor have there been any "reportable events" within Section 4043 of ERISA which
are required to be reported but were not timely reported. There is not and has
not been any violation of the Consolidated Omnibus Budget Reconciliation Act of
1986. Neither VCB nor the Bank has contributed to, is not obligated to
contribute to, and has not been a sponsor of a multi-employer plan. VCB and the
Bank have made available to Bancorp true, complete and accurate copies (or, with
respect to oral arrangements, accurate written summaries) of all pension,
retirement, stock purchase, stock bonus, stock ownership, stock option,
performance share, stock appreciation right, phantom stock, savings and
profit-sharing plans; any employment, deferred compensation, incentive
compensation, bonus, consulting and group insurance contracts; any other
incentive, welfare, life insurance, death or survivor's benefit, health
insurance, sickness, disability, medical, surgical, hospital, severance, layoff
and vacation plans, contracts or arrangements; and employee benefit plans or
agreements sponsored, maintained or contributed to by VCB and the Bank for
employees of the Bank.
3.16 Employment Contracts. Except for the contracts described in
Schedule 3.16, there are no employment contracts, deferred compensation
agreements or other arrangements (including, without limitation, contracts or
arrangements providing for severance or termination pay or benefits or increased
or accelerated compensation in the event of a merger, acquisition,
consolidation, reorganization or change of control with respect to VCB or the
Bank or any other event affecting the ownership, control or management of either
VCB or the Bank) with any officer, director, employee, consultant or stockholder
of VCB or the Bank. VCB and the Bank shall be responsible for the payment of all
sums that may be due a terminated employee of VCB or the Bank pursuant to an
employment contract or otherwise prior to the Effective Date.
3.17 Insurance. VCB and the Bank carry insurance with reputable
insurers, including Bankers Blanket Bond Coverage, in such amounts as are
reasonable and are consistent with typical and reasonable industry practices.
All such policies of insurance are in full force and effect, and no notice of
cancellation has been received. Both of them have delivered to Bancorp a list of
all policies of insurance currently in force. All such policies (or policies
affording equivalent coverage) will be maintained in effect through the
Effective Date.
3.18 Properties. VCB and the Bank own or lease all property upon which
their continued business
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operations are dependent. With respect to properties owned, each possesses good
and marketable title to and owns, free of any encumbrance (other than liens for
taxes not yet due and statutory rights of redemption with respect to properties
acquired through foreclosure and encumbrances of record as of the date of the
Agreement), all such real, personal and intangible properties and other assets.
The leases pursuant to which each lease real or personal property are valid and
effective in accordance with their respective terms, and there is not, under any
such lease, any existing default or any event that, with the giving of notice or
lapse of time or otherwise, would constitute a default. The real and personal
property leased by each is free from any adverse claim that would materially
interfere with the business or operations of VCB or the Bank.
3.19 Hazardous Wastes. To their best knowledge and belief, the
properties owned by VCB and the Bank are in good condition, free from any
defects (including asbestos and toxic materials) that would materially interfere
with the continued use thereof in the conduct of each party's normal operations.
Without limiting the foregoing and to the best knowledge of the directors and
officers of the parties, neither VCB nor the Bank, nor any other person having
an interest in any property which VCB or the Bank owns, or has owned (the
"Property"), has engaged in the generation, use, manufacture, treatment,
transportation, storage (in tanks or otherwise), or disposal of hazardous
material on or from any Property. Individually or in the aggregate, there has
been no: (i) presence, use, generation, handling, treatment, storage, release,
threatened release, migration or disposal of hazardous material in violation of
applicable law; (ii) condition that could result in any use, ownership or
transfer restriction; or (iii) condition of nuisance on or from any Property,
any of which individually or collectively would have a material adverse effect
on the business, assets, earnings, operation or condition (financial or
otherwise) of VCB or the Bank. Neither VCB nor the Bank have received notice of,
or has reason to know of, a condition that could give rise to any private or
governmental suit, claim, action, proceeding or investigation against either of
them any such other person or such Property as a result of any of the foregoing
events. For the purpose of this Section, "Hazardous Material" means any
chemical, substance, material, object, condition or waste harmful to human
health or safety or to the environment due to its radioactivity, ignitability,
corrosivity, reactivity, explosivity, toxicity, carcinogenicity, infectiousness
or other harmful or potentially harmful properties or effects, including without
limitation, petroleum or petroleum products, and all of those chemical
substances, materials, objects, conditions, wastes or combinations of them that
are now or become listed, defined or regulated in any manner by federal, state
or local law based, directly or indirectly upon such properties or effects, but
excluding such amounts commonly stored and used in routine cleaning and
maintenance.
3.20 Tax Matters. Except as disclosed in Schedule 3.20 all tax returns
required to be filed by or on behalf of VCB and the Bank have been timely filed
with the appropriate governmental agencies in all jurisdictions in which such
returns are required to be filed. All returns filed are complete, accurate and
properly reflect the taxes of each for the periods covered thereby. All taxes
shown on filed returns have been timely paid. As of the date of the Agreement,
there is no audit, examination, deficiency or refund litigation or tax claim or
any notice of assessment or proposed assessment by any taxing authority, or to
the best knowledge and belief of VCB and the Bank any other matter in
controversy with respect to any taxes that might result in a determination
adverse to VCB or the Bank. All taxes, assessments, interest, additions,
deficiencies, fees, penalties and other governmental charges or impositions due
with respect to completed and settled examinations or concluded litigation have
been property accrued or paid. The tax returns for VCB and the Bank will be
subject to review by Bancorp's accountants. Any unpaid taxes, interest or
penalties shall be paid or accrued by VCB or the Bank prior to the Effective
Date. Neither VCB nor the Bank have executed an extension or waiver of any
statute of limitations on the assessment or collection of any tax due that is
currently in effect. All applicable withholding taxes, Social Security taxes,
unemployment insurance, Workers Compensation premiums and other withholdings due
or payable by VCB or the Bank have been withheld, accounted for and paid as
required by law.
3.21 Compliance with Law. Neither VCB nor the Bank are in violation of
any applicable law or ordinance or any order, rule or regulation of any
governmental agency, in any material respect, and are not in default with
respect to any order, writ, injunction or decree of any court, or in default
under any order, license, regulation or demand of any governmental agency, any
of which violations or defaults might have a materially adverse effect on the
business or properties of either of them. Neither VCB nor the Bank have received
any claim or notice of violation with respect thereto, except as disclosed in
any Schedule to the Agreement.
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3.22 Compliance with Lending Laws and Regulations. Without limiting any
other representation or warranty contained herein, VCB and the Bank represent
and warrant to Bancorp based upon their best knowledge and belief that:
a. The conduct by VCB and the Bank of their business and the
operation by each of the properties or other assets owned or leased by them do
not violate or infringe any domestic or foreign laws, statutes, ordinances,
rules or regulations, the enforcement of which individually or in the aggregate
would materially and adversely affect either of them. Specifically, but without
limiting any other representations or warranty herein, each of VCB and the Bank
are 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 either 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
Federal Reserve Board), the Real Estate Settlement Procedures Act of 1974 and
the Home Mortgage Disclosure Act. All loans, leases, contracts and accounts
receivable, security agreements, guarantees and recourse agreements of each held
in their portfolio or as sold into the secondary market represent and are valid
and binding obligations of their respective parties and debtors enforceable in
accordance with their respective terms, except for defenses, offsets or
counterclaims arising from applicable bankruptcy, insolvency, moratorium,
marshalling or other similar laws and equitable principles relating to the
rights of creditors; each of them is based upon a valid binding and enforceable
contract or commitment, each of which has been executed and delivered in full
compliance in form and substance with any and all federal, state or local laws
applicable to each party or to the other party or parties to the contracts or
commitments, including without limitation the Truth-in-Lending Act, Regulations
Z and U of the Federal Reserve Board, laws and regulations providing for
non-discriminatory 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 full compliance with all applicable
federal, state or local laws or regulations. All Uniform Commercial Code filings
or filings of trust deeds, mortgages or of liens or other security interest
documentation that are required by any applicable federal, state or local
government laws and regulations to perfect security interests referred to in any
and all of such documents or other security agreements have been made, all
security interests under such deeds, documents or security agreements have been
perfected, and all contracts have been entered into or assumed in full
compliance with all applicable material, legal or regulatory requirements.
b. All loan files of the Bank are complete and accurate in all
material respects and have been maintained in accordance with good banking and
business practices.
c. All notices of default, foreclosure proceedings or
repossession proceedings against any real or personal property collateral have
been issued, initiated and conducted by the Bank in full compliance with all
applicable federal, state or local laws and regulations, and the Bank has not
incurred since the date of the most recent Financial Statement (as defined in
Section 3.11), and does not expect to incur, any loss or impairment of any
security interest or any exposure to meritorious lawsuits or other proceedings
of the types or amounts that are not customary for financial institutions in the
business in which the Bank is presently engaged.
d. Neither VCB nor the Bank are in violation of any applicable
servicing agreement or other requirements of the Federal Housing Administration,
the Veterans Administration, Federal National Mortgage Association, Government
National Mortgage Association, Federal Home Loan Mortgage Corporation, Small
Business Administration, the Farmers Home Administration, the Federal Home Loan
Bank or any private mortgage insurer that insured or guaranteed any loans owned
by either of them or as to which either has sold to other investors, the effect
of which violation would materially and adversely affect the business assets,
earnings, operations or condition (financial or otherwise) of VCB or the Bank on
a consolidated basis. Further, with respect to such loans neither VCB nor the
Bank has done or failed to do or cause 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 Veterans Administration guarantee
or commitment of the Veterans Administration to guarantee; (iii) any Small
Business Association guarantees or commitments of the Small Business
Administration guarantee; (iv) any guarantee or commitment of the Farmers Home
Administration or the Federal Home Loan Bank; (v) any private
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mortgage insurance or commitment of any private mortgage insurer to insure; (vi)
any title insurance policy; (vii) any hazard insurance policy or (viii) any
flood insurance policy required by the National Flood Insurance Act of 1968 as
amended, which would materially and adversely affect the business assets
earnings, operation or condition (financial or otherwise) of VCB or the Bank on
a consolidated basis.
e. Neither VCB nor the Bank is or was, as one of its principal
activities, knowingly engaged in the business of extending credit for the
purpose of purchasing or carrying any margin stock.
3.23 Specific Lending and Business Matters. Without limiting any other
representation or warranty contained herein, VCB and the Bank represent and
warrant to Bancorp based upon their best knowledge and belief that:
a. Except for loans or leases paid off or sold in the ordinary
course of business, each loan or lease reflected as an asset in the Bank's
financial statements of June 30, 1998, or made or acquired since the date of the
financial statements, is the valid, legal and binding obligation of the obligor
of such loan or lease, enforceable according to its terms. All secured loans are
secured by valid, perfected and subsisting liens. No loan or lease having an
unpaid balance of principal and interest in excess of $50,000.00 is subject to
any asserted defenses, offsets or counterclaims.
b. The Bank's loan loss reserves are and through the Effective
Date will be adequate to absorb all reasonably anticipated loan losses of the
Bank, taking into account the size and character of its loan portfolio, current
and reasonably foreseeable economic conditions, and all other relevant factors.
Since January 1, 1998 no facts have come to the attention of Bank management
that would cause the Bank to restate in any material way the level of such
reserves for possible credit losses. All loans classified as "doubtful,"
"substandard" or "loss" by an examiner of any state or federal regulatory
agency, or charged off the books of the Bank will be so classified or charged
off prior to the Effective Date. At the time of Closing, the percentage of
reserves in relation to total loans shall not be less than the percentage of
reserves in relation to total loans as of June 30, 1998. The Bank Board of
Directors reviews the adequacy of the loan loss reserves at least once a
quarter. Except as previously disclosed to Bancorp, the timing and methodology
used to evaluate the adequacy of the Bank's loan loss reserves has not been
disapproved or commented on by any state or federal regulatory agency.
c. The Bank has no obligation or liability of any nature, whether
absolute, accrued or contingent, that is material, or that would be material if
combined with all similar obligations or liabilities, except for those disclosed
in the Financial Statements. There exists no set of circumstances resulting from
transactions entered into by the Bank, or events affecting the Bank, or from any
action which the Bank has failed to take, that could reasonably be expected to
result in any such obligation or liability, except as expressly disclosed in the
Financial Statements.
d. Since January 1, 1998 the Bank has (i) conducted its business
in a manner consistent with its past practices, (ii) administered its loan and
investment portfolios in accordance with ordinary and prudent business and
banking practices, (iii) has not lengthened the average maturity of its loan and
investment portfolios to any material extent, and (iv) has not, (except in the
ordinary course of business and consistent with its past practices), to any
material extent, reduced the percentage of its aggregate investment portfolio in
relation to total assets.
e. There are no legal or administrative proceedings of any kind,
including arbitrations or mediations, pending or threatened against the Bank.
There exists no judgment, order or decree against the Bank entered by any court,
arbitrator or government agency that may result in any material adverse change
in the business, results of operations, financial condition or prospects of the
Bank.
f. All contracts creating an obligation or liability on the part
of the Bank or VCB in the sum of $10,000 per contract, excluding deposit
liabilities, loans, loan agreements, loan commitments under which it has
advanced or is obligated to advance funds, security agreements, agreements to
resell or repurchase securities, and agreements to sell or purchase securities
in the ordinary course of business, are disclosed and described in the
9
attached Schedule 3.23(f). Except for those contracts listed on Schedule 3.23(f)
and the Bank's obligations under the Agreement, the Bank is not a party to any
such contract, nor is VCB. Neither the Bank nor VCB are in breach of any
material term of any contract to which they are a party, nor does there exist
any event or circumstance of which they are aware which would give rise to a
default under any such contract with the passage of time, which would cause a
material adverse impact to the Bank. All contracts to which the Bank or VCB is a
party are (i) valid, binding and enforceable, and (ii) (except for contracts
with Datatech of Oregon, Inc. and an ATM-related contract) are cancelable upon
not more than 30 days notice without penalty to the Bank or VCB. All off-balance
sheet risks, such as letters of credit, unfunded loan commitments and
guaranties, have been disclosed by the Bank and VCB to Bancorp.
g. The Bank is in substantial compliance with the Community
Reinvestment Act of 1977 and the regulations promulgated thereunder
(collectively, the "CRA"). The Bank has not been advised of the existence of any
fact or circumstance, or set thereof, which if true would, in the Bank's
reasonable opinion, cause it to fail to be in substantial compliance with the
CRA or to have its current CRA rating lowered. Any change in the current CRA
rating of the Bank which would prevent the consummation of the Acquisition shall
be a material adverse change under the Agreement.
3.24 Absence of Certain Changes. Since January 1, 1998 there has not
been:
a. any material adverse change in the assets, earnings, business,
operations, prospects or financial condition of the Bank, and no fact or
condition exists as of the date of the Agreement that it has reason to believe
could result in any such material adverse change at any time after the date of
the Agreement;
b. the creation of any liability by or on behalf of the Bank,
other than liabilities incurred in the ordinary course of its business
consistent with its past practices, which has or could have a materially adverse
effect on the business or financial condition of the Bank;
c. any damage, destruction or loss not covered by insurance which
materially or adversely affects the business or financial condition of the Bank;
d. the creation of any unusual liability or commitment by or on
behalf of the Bank, or the making of any unusual acquisition or purchase by or
on behalf of the Bank;
e. the declaration, setting aside or payment of any dividend or
other distribution by the Bank, with the exception of regular dividends paid in
accordance with the Bank's usual policies and procedures consistent with past
practices;
f. the repurchase or redemption by the Bank of any of its capital
stock;
g. any transaction entered into by the Bank that has resulted or
will result in the transfer of assets of the Bank for other than their full or
fair consideration, or in a manner which is not in the ordinary course of its
business consistent with its past practices;
h. aggregate capital expenditures by the Bank for depreciable
assets exceeding $10,000;
i. a change in the accounting methods or practices used by the
Bank, or a revaluation of any of its assets or liabilities;
j. any special or extraordinary bonus or remuneration paid to any
officer, director or employee of the Bank, or any increase, or agreement to
increase, the compensation or benefits of any employee, except for increases
made in the ordinary course of its business consistent with its past practices,
or except as otherwise disclosed in the Agreement.
3.25 Regulatory Matters. Except as disclosed in Schedule 3.25, VCB and
the Bank, to their best
10
knowledge and belief as determined after reasonable and diligent inquiry, have
effected all registrations and filed all reports, applications, statements and
other required filings, together with any amendments thereto (collectively, the
"Filings") that either was required to effect or file with all governmental or
regulatory authorities or agencies having jurisdiction over their operations.
Without limiting the generality of the foregoing, VCB (or its predecessor) has
timely filed all required reports pursuant to the Securities Exchange Act of
1934 and the rules and regulations promulgated thereunder. VCB and the Bank have
provided originals or true copies of all Filings to Bancorp. Such Filings were
and are, to the best knowledge and belief of VCB and the Bank, in compliance
with applicable law when filed, and no delinquencies or deficiencies have been
asserted by any regulatory authority with respect thereto. The deposits held by
the Bank are insured by the Federal Deposit Insurance Corporation pursuant to
the provisions of the Federal Deposit Insurance Act (subject to statutory limits
on such insurance), and all assessments required under the Federal Deposit
Insurance Act have been paid.
3.26 Agreements with Bank Regulators. Except as disclosed in Schedule
3.26, neither VCB nor the Bank are not, nor have not been within the last 18
months, a party to or subject to any written order, decree, memorandum of
understanding, commitment letter, undertaking, extraordinary supervisory letter
or any similar agreement or directive with or from any state or federal agency
or authority charged with supervising or regulating depository institutions or
the insurance of deposits therein, except for such agreements or directives
issued in the ordinary course of business to depository institutions in general.
Neither VCB nor the Bank have been advised within the last 18 months that any
such state or federal agency or authority is considering issuing or requiring
such agreement or directive, or is considering the possibility or
appropriateness of doing so.
3.27 Transactions with Affiliates. Except as disclosed in Schedule 3.27,
which schedule discloses each transaction separately, none of the officers,
directors or beneficial holders of five percent or more of the shares of VCB or
the Bank, and no person who is "controlled" (as that term is defined in the
Financial Institutions Regulatory and Interest Rate Control Act of 1978 or by
Section 405 of the Securities Act of 1933) by either of them has any ongoing
transaction or has agreed to enter into any transaction (excluding deposits)
with VCB or the Bank in an amount or value greater than (i) $15,000.00 for a
single transaction, or (ii) $25,000.00 in total for all transactions per
officer, director or beneficial holder. None of such officers, directors,
holders or other persons has any ownership interest in any business, corporate
or otherwise, that is a party to, or in any property that is the subject of,
business arrangements or relationships of any kind with VCB or the Bank. Any
extensions of credit by VCB or the Bank to such officers, directors, holders,
and other persons, or to any business, corporate or otherwise, or with respect
to any property in which such officers, directors, holders and other persons
have a material financial interest, previously have been disclosed in writing to
Bancorp and all loans to such persons are fully performing in accordance with
their terms, which terms are no more favorable than those available to
unaffiliated parties made at or about the same time by VCB or the Bank.
3.28 No Fees. Except for as disclosed in Schedule 3.28, there exist no
claims for brokerage commissions, finder's fees, or similar compensation payable
by VCB or the Bank arising out of or due to any act of VCB or the Bank in
connection with the transactions described in the Agreement or the negotiations
which occurred prior to the date of the Agreement.
3.29 Certain Subsidiaries. Neither Valley Community Mortgage Services,
an Oregon corporation wholly owned by VCB, nor Valley Community Financial
Services, an Oregon corporation wholly owned by the Bank, are engaged in any
business activity of any kind. In addition, neither corporation owns or controls
any material assets or property, and neither will engage in any business
activity from and after the date of the Agreement without Bancorp's prior
consent in writing.
3.30 Further Assurances. VCB and the Bank shall use their best efforts
to promptly to do or cause to be done all things necessary or appropriate under
applicable laws and regulations to consummate the transactions contemplated by
the Agreement.
3.31 Completeness of Warranties and Representations. VCB and the Bank
acknowledge and agree that all representations, warranties and covenants
contained in the Agreement are being relied on by Bancorp and are material
inducements to Bancorp to enter into and perform the Agreement. No
representation, warranty, covenant
11
or other statement of any kind contained herein, and no materials delivered by
VCB or the Bank to Bancorp pursuant to the Agreement, contain any untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they are made, not false or misleading.
4. REPRESENTATIONS AND WARRANTIES OF BANCORP.
4.1 Execution and Performance of Agreement. Bancorp has all requisite
corporate power and authority to execute and deliver the Agreement and to
consummate the transactions contemplated by the Agreement. The execution and
delivery of the Agreement, compliance with its terms and the consummation of the
transactions contemplated by the Agreement have been duly and validly authorized
by the Board of Directors of Bancorp, and no other corporate action of Bancorp
is necessary to authorize the Agreement or to consummate the transactions
contemplated.
4.2 Binding Obligation. The Agreement has been duly and validly executed
and delivered by Bancorp and constitutes the valid, legal and binding agreement
of it enforceable in accordance with its terms.
4.3 Legal and Administrative Proceedings. There are no legal or
administrative proceedings of any kind, including arbitrations or mediations,
pending or threatened against Bancorp, and there exists no judgment, order or
decree against Bancorp entered by any court, arbitrator or government agency,
that would preclude Bancorp's performance of its obligations under the
Agreement.
4.4 Consents and Approvals. Except for the applications and approvals
required by the Federal Reserve Bank and any other state or federal governmental
agency that may have or assert jurisdiction over the transaction or the actions
contemplated herein, no consents, approvals or authorizations of any public body
or regulatory agency are necessary for the consummation of the Acquisition and
the other transactions provided under the Agreement.
4.5 No Violations. Subject to compliance with all required regulatory
approvals, neither the execution and delivery of the Agreement nor the
consummation of the transactions contemplated hereby, nor compliance by Bancorp
with any of the provisions hereof will (i) conflict with or result in any breach
of any provision of its Articles of Incorporation or Bylaws; (ii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, lease, agreement or other instrument or
obligation of Bancorp or by which any of its properties or assets may be bound;
or (iii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Bancorp, or any of its properties or assets.
4.6 No Fees. Except for as disclosed in Schedule 4.6, there exist no
claims for brokerage commissions, finder's fees, or similar compensation payable
by VCB or the Bank arising out of or due to any act of Bancorp in connection
with the transactions described in the Agreement or the negotiations which
occurred prior to the date of the Agreement.
4.7 Further Assurances. Bancorp shall use its best efforts to promptly
do or cause to be done all things necessary or appropriate under applicable laws
and regulations to consummate the transactions contemplated by the Agreement.
4.8 Completeness of Warranties and Representations. Bancorp acknowledges
and agrees that all representations, warranties and covenants contained in the
Agreement are being relied on by VCB and the Bank and are material inducements
to VCB and the Bank to enter into and perform the Agreement. No representation,
12
warranty, covenant or other statement of any kind contained herein, and no
materials delivered by Bancorp to VCB or the Bank pursuant to the Agreement,
contain any untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they are made, not false or misleading.
5. COVENANTS AND PRE-CLOSING ACTIVITIES -- VCB AND THE BANK
From the date of the Agreement until the Effective Date, VCB and the
Bank, together with their officers, directors, employees, agents, and
representatives, hereby covenant and agree as follows:
5.1 Attorneys' Fees of VCB Counsel. VCB shall reach agreement with its
counsel that the attorneys' fees relating to the Acquisition chargeable to VCB
for attorney fee time (including time for paralegals and other personnel of VCB'
attorneys) incurred from and after June 1, 1998 shall not exceed $30,000.
5.2 Regulatory Applications and Approvals. VCB and the Bank, as soon as
reasonably practicable after the date of the Agreement, shall prepare and file
with all governmental agencies that may have or assert jurisdiction over the
transaction or the actions contemplated herein all necessary applications they
are required to file for approval to effect the Acquisition, and such other
documents, instruments, and notices as may be necessary or desirable for VCB and
the Bank to obtain the approval of the applicable governmental agencies. Bancorp
shall provide VCB and the Bank with such information concerning itself, its
directors, officers, and stockholders and such other matters as may be necessary
or advisable in connection with the preparation, filing, or submission of any
required application made by or on behalf of VCB and the Bank to any
governmental body in connection with the Acquisition and other transactions,
applications, or filings contemplated by the Agreement. Bancorp and its
accountants and attorneys shall have the right to review, prior to submission to
any regulatory agencies, all information pertaining to the parties that will be
included in any such applications, filings, or other submissions. VCB and the
Bank will promptly furnish to Bancorp copies of all written communications
received from any governmental agency regarding the transactions contemplated by
the Agreement.
5.3 Rights of Access. Subject to the confidentiality agreement of July
1, 1998 between Bancorp and VCB (the "Confidentiality Agreement"), VCB and the
Bank shall give Bancorp and its representatives including, but not limited to,
its accountants, attorneys, investment bankers, and other advisors, reasonable
access during normal business hours to all its properties, documents, contracts,
books, records, reports (including reports of examination by regulatory agencies
and the replies thereto unless disclosure of such materials to Bancorp is
prohibited by law), and such additional information with respect to their
business affairs, operations, and properties as Bancorp may request. Bancorp and
its accountants shall have the right to consult with the accountants of VCB and
the Bank and to review their work papers, including, without limitation, all
supporting data and documents relative to the preparation of the Financial
Statements and tax returns of VCB and the Bank.
5.4 Interim Tax and Accounting Matters. All deductions and adjustments
taken on the 1997 federal and state income and other tax returns or filings of
VCB are or will be consistent with prior practices, and will not include
unsupported, doubtful, or unlawful deductions or adjustments. Accountants for
Bancorp shall be entitled to review and approve unfiled VCB returns or
amendments thereto, if any, prior to filling. Any objection to VCB's returns or
amendments shall be in writing and shall state the basis for the objection.
VCB shall pay, accrue or otherwise provide for the payment of all
taxes due by VCB, including without limitation income, personal property and
excise taxes, interest and penalties. VCB shall not execute an extension or
waiver of any statute of limitations on the assessment or collection of any tax
due that is currently in effect. All applicable withholding taxes, Social
Security taxes, unemployment insurance, workers compensation premiums and other
withholding will be properly withheld, accounted for and paid or accrued as
required by law.
Expenses incurred by VCB, either paid or unpaid, for goods
purchased and services rendered or to be rendered as of the date of the
Agreement will be properly reflected on VCB's books in accordance with generally
accepted accounting principles applied on a consistent basis. During the period
between the date of the Agreement
13
and the Effective Date, VCB will pay promptly upon receipt of xxxxxxxx all
accounts payable, including professional fees for legal and accounting services,
shall pay all bills promptly consistent with past practices and shall not cause
them to be deferred until after the Effective Date. All obligations of VCB which
are incurred prior to or on the Effective Date shall be paid, accrued, or
otherwise reserved for payment even though the obligation is not recognized for
payment on the financial statements of VCB until a check is issued in payment.
5.5 Corporate Records, Loans, Contracts and Other Documents. VCB and the
Bank shall:
a. Furnish to Bancorp copies of minutes of all meetings of the
Board of Directors of VCB and the Bank, together with committees thereof, the
Bank's Loan Committee, and Executive or Senior Management Committees and
stockholders held after the date of the Agreement; provided, that minutes or
documents relating to the negotiation and performance of the Agreement
reasonably and in good faith deemed confidential or privileged are excluded from
this requirement;
b. Report to Bancorp on at least a monthly basis and otherwise
from time to time as it may request, regarding any loan for which more than
$15,000 (including principal, unpaid interest, fees and costs) is due as of the
report date which VCB or the Bank has substantial doubts regarding its
collectability or has determined is uncollectible, any loan whose terms are
renegotiated or extended because of substantial concerns regarding its
collectability, any loan that becomes more than 60 days past due; any adverse
developments concerning the Bank's OREO; and any non-ordinary losses that, in
the Bank's opinion after reasonable inquiry, may be likely to occur on any loan
of the Bank.
c. Promptly inform Bancorp of any investment, credit or
operational loss (such as an overdraft, check kite or robbery) exceeding $2,500
individually or $5,000 in the aggregate.
5.6 Financial Statements and Call Reports. VCB and the Bank shall:
a. Promptly provide Bancorp with copies of their monthly and
quarterly financial statements, their quarterly Consolidated Reports of Income
and Condition for Banks ("Call Reports") for the months and quarterly period
ending between the date of the Agreement and the Effective Date, and such other
reports as are normally produced in the ordinary course of their business. Such
financial statements and Call Reports shall be in accordance with the books and
records of VCB and the Bank, shall present fairly the financial position and
results of operations of VCB and the Bank, shall be prepared in accordance with
GAAP applied on a consistent basis, shall be in accordance with all applicable
regulatory reporting requirements, and shall be certified to such effect by the
Chief Executive Officer or President of VCB and the Bank.
b. Promptly provide Bancorp with copies of each report filed by
VCB and the Bank with any regulatory agency having jurisdiction over their
activities, including but not limited to the Federal Deposit Insurance
Corporation, the Federal Reserve Bank and the Securities and Exchange
Commission.
c. Select one or more persons as their designated representative
to meet, consult, and confer on a regular basis with representatives of Bancorp
regarding the general condition and the ongoing operations of VCB and the Bank.
d. Promptly notify Bancorp of any material change in the normal
course of business or in the operation of the properties of VCB and the Bank;
any governmental inquiries, complaints, investigations or forthcoming hearings
or communications indicating that the same may be contemplated; the institution
or the threat of any litigation involving VCB or the Bank (including lender
liability claims but excluding routine claims or defenses asserted by a debtor
in a routine collection or bankruptcy case), and thereafter keep Bancorp fully
informed of such events. Without limiting the foregoing, VCB and the Bank will
from time to time and as may be appropriate to insure that the schedules and
other information provided to Bancorp will remain at all times accurate and
complete, to and including the Effective Date, promptly supplement and revise
the schedules and information. Notwithstanding anything to the contrary
contained herein, supplementation of such schedules following the execution of
the Agreement shall not be deemed a modification of the representations or
warranties of VCB and the Bank contained herein.
14
5.7 Certain Prohibited Transactions. From and after the date of the
Agreement, without the prior written consent of Bancorp neither VCB nor the Bank
shall:
a. Declare or pay any cash dividends or property dividends;
b. With respect to the securities of VCB or the Bank, declare or
distribute any stock dividend, authorize a stock split, authorize, issue, sell
or make any distribution of shares or other securities, grant any right, option
or warrant to acquire any shares of capital stock or any other of its
securities, or pledge or encumber any shares of its stock or any other of its
securities, except for those transactions required under Section 1.2 of the
Agreement;
c. Merge into or with, consolidate with, be acquired or
controlled by, or (except in the ordinary course of business) sell its assets or
transfer its liabilities (or portions thereof) to any other bank, savings and
loan association, bank or savings and loan holding company, other financial
institution, corporation, person or entity or enter into any other transaction,
or agree to effect any such transactions not in the ordinary course of their
business, or engage in any discussions concerning such possible transactions,
solicit offers of interest to engage in any such transactions, or engage in
those activities described and prohibited in Section 5.10;
d. Make any direct or indirect redemption, purchase, or other
acquisition of any of the shares of VCB or the Bank, or any other shares of
capital stock;
e. Subject any of their properties or assets to any lien, claim,
charge, option, or encumbrance, except in the ordinary course of business;
f. Increase the rate of compensation of any employee or enter
into any agreement to increase the rate of compensation of any employee except
for increases with respect to employees in the ordinary course of business
consistent with past practices;
g. Create or modify any existing pension or profit-sharing plan,
bonus, incentive compensation, deferred compensation, death benefit, health,
welfare, retirement or employee stock option plan or the level of benefits under
any such existing plan, or increase or decrease any severance or termination pay
benefit or other fringe benefit, except as required by law;
h. Enter into any severance agreement and, except in the ordinary
course of business and subject to any other provision of the Agreement, enter
into any employment or personal services contract with any person or firm,
provided further that Bancorp's approval shall be required for any such
agreement or contract having a value in excess of $10,000, except that Bancorp's
prior approval shall not be required for the hiring of Bank clerical personnel,
in the Bank's ordinary course of business consistent with past practices, on an
at-will employment basis without a written contract;
i. Amend their Articles of Incorporation or Bylaws or change the
number of authorized shares of capital stock;
j. Make any capital expenditure in excess of $5,000 per project
or $10,000 in the aggregate, other than pursuant to binding commitments existing
on the date of the Agreement and other expenditures necessary to maintain
existing properties in good repair;
k. Sell, transfer, encumber or securitize any mortgage, trust
deed, security interest, notes or other assets having a value in excess of
$25,000 per asset, except in the ordinary course of business consistent with the
Bank's past practices; provided further that any such prospective sale or
transfer shall first be offered to Bancorp and its subsidiary Columbia River
Bank;
l. Make application to open or close any branches;
15
m. Materially change lending policies, asset and liability
management policies, investment policies, or other credit, personnel or
operations policies and procedures, except as required by law;
n. Enter into or modify any agreement or arrangements (except for
renewals of previously disclosed indebtedness) that alone or together with all
similar arrangements exceeds $25,000, with any director or officer of VCB or the
Bank, any person who owns more than five percent (5%) of the outstanding capital
stock of VCB or the Bank, or any business or entity in which such director,
officer or beneficial owner has an ownership interest in excess of ten percent
(10%);
o. Purchase or sell additional loans or loan participations from
or to another lender except in the ordinary course of business consistent with
the Bank's past practices; provided that the prospective sale of any such
participation shall first be offered to Bancorp and its subsidiary Columbia
River Bank, and provided further that prospective purchases of any such
participation having a value of over $100,000 per participation shall be subject
to Bancorp's prior written approval.
p. Materially alter the Bank's loan portfolio with respect to
mix, yield or structure;
q. Alter or amend the indemnification provisions applicable to
directors and officers in the articles, bylaws or other operative documents or
agreements of VCB and the Bank, except as required by law;
r. Enter into arrangements or agreements to do any of the
foregoing.
5.8 Preservation of Business. Until the Effective Date, VCB and the Bank
shall:
a. Carry on their business and manage their assets, properties,
and affairs diligently and substantially in the same manner as before,
consistent with past and prudent banking practices;
b. Take no action to substantially change the percentage which
the aggregate investment portfolio bears to the total assets of the Bank or to
change the average maturity of the investment portfolio or of any significant
category thereof to any material extent, except in the ordinary course of
business consistent with past practices;
c. Perform in all material respects all their obligations under
material agreements, contracts, leases, and documents relating to its business;
d. Exert their best efforts to comply in all respects with all
statutes, laws, ordinances, rules, and regulations applicable and material to
the conduct of their business;
e. Continue in effect their present insurance coverage on all
properties, assets, business, directors and personnel;
f. Use their best efforts to preserve their business
organization, to retain their employees, and to preserve their relationships
with customers and others having business dealings with them;
g. Exert their best efforts to not do anything, or fail to do
anything, that will cause a breach of or default in any contract, agreement,
commitment, or obligation to which they are a party or by which they may be
bound;
h. Maintain directors' and officers' liability insurance at a
level of coverage at least equal to the level of coverage in place as of January
1, 1998.
5.9 Continuing Accuracy of Representations and Warranties. From the date
of the Agreement until the Effective Date, VCB and the Bank shall take all
actions necessary to maintain the accuracy of all of their representations and
warranties and shall refrain from taking any action that would cause any of
their representations
16
or warranties to be inaccurate at any time during this period.
5.10 No Solicitation of Offers or Negotiations with Others. Neither VCB
nor the Bank, nor any of their respective directors, officers, employees,
representatives, agents, or other persons employed by, affiliated with, or
controlled by them or either of them, shall, directly or indirectly, encourage,
solicit or initiate or begin negotiations with, or provide any information
(financial or otherwise) regarding Bancorp, VCB or the Bank or the terms of the
Agreement, to any person, corporation, bank holding company, financial
institution, entity, or group for the purpose of soliciting a possible merger,
consolidation, acquisition, change in control, reorganization, sale of
substantial assets or transfer of deposits (or portions thereof) not in the
ordinary course of business, sale of shares of capital stock or similar
transactions of VCB or the Bank, or engage in those activities described in
Section 5.7. VCB and the Bank will promptly communicate to Bancorp the terms of
any unsolicited proposal, inquiry, or other solicitation that they receive with
respect to any of the transactions identified or contemplated herein. VCB and
the Bank shall use their best efforts to cause their officers, directors, and
the others described in this Section to comply with the provisions of this
Section and Section 5.7. The foregoing provisions shall not preclude (i)
communications from VCB to its stockholders prior to any meeting of stockholders
which are previously approved by Bancorp regarding the general terms or status
of the Agreement, (ii) the informal response by an employee of VCB or the Bank
approved by Bancorp to questions asked by a VCB stockholder regarding this
transaction, or (iii) responding to unsolicited inquiries regarding the
acquisition of VCB or the Bank through a share exchange or otherwise in order
for the VCB or Bank boards of directors to comply with their respective
fiduciary obligations.
5.11 Supplements. From time to time prior to Closing, VCB and the Bank
shall promptly supplement or amend the Schedules delivered in connection
herewith with respect to any matter hereinafter arising which if existing,
occurring, or known at the date of the Agreement would have been required to be
set forth or described in such Schedules or which is necessary to correct any
information in such Schedules that has been rendered inaccurate or misleading.
5.12 Closing Financial Statement. VCB and the Bank shall deliver to
Bancorp as soon as available, but not less than five days prior to the Effective
Date, the financial statements of VCB and the Bank as of the end of the calendar
month immediately preceding the Effective Date (the "Closing Financial
Statement") if the Effective Date is on or after the 15th day of the month in
which the Effective Date occurs, and as of the end of the second calendar month
immediately preceding the Effective Date if the Effective Date is prior to the
15th day of the month in which the Effective Date occurs. The Closing Financial
Statement shall contain a balance sheet, statement of income, and statement of
changes in stockholders equity substantially in the form set forth in the
quarterly financial statement of VCB and the Bank for the period ended December
31, 1997. At the time of its delivery, the Closing Financial Statement shall be
in accordance with the books and records of VCB and the Bank, present fairly the
financial position and results of operations of VCB and the Bank, be prepared in
accordance with generally accepted accounting principles applied on a consistent
basis, and be certified to such effect by the President of VCB and the Bank. The
person executing the Certificate shall not be individually liable for any error
in the Closing Financial Statement except for actual fraud. As soon as
practicable thereafter, Bancorp's accountants shall review the Closing Financial
Statement.
5a. COVENANTS AND PRE-CLOSING ACTIVITIES - BANCORP
From the date of the Agreement until the Effective Date, Bancorp,
together with its officers, directors, employees, agents, and representatives,
hereby covenants and agrees as follows:
5a.1 Regulatory Applications and Approvals. As soon as reasonably
practicable after the date of the Agreement, Bancorp shall prepare and file with
the Federal Reserve Bank, and with any other governmental agency that may have
or assert jurisdiction over the transaction or the actions contemplated herein,
appropriate applications for approval to effect the Acquisition, and such other
documents, instruments, and notices as may be necessary or desirable to obtain
the approval of the applicable governmental agencies. VCB and the Bank shall
provide Bancorp with such information concerning themselves, their directors,
officers, and stockholders and such other matters as may be necessary or
advisable in connection with the preparation, filing, or submission of any
application made by or on behalf of Bancorp to any governmental body in
connection with the Acquisition and other transactions,
17
applications, or filings contemplated by the Agreement. VCB and the Bank and
their accountants and attorneys shall have the right to review, prior to
submission to any regulatory agencies, all information pertaining to the parties
that will be included in any such applications, filings, or other submissions.
Bancorp will promptly furnish to VCB and the Bank copies of all written
communications received from any governmental agency regarding the transactions
contemplated by the Agreement.
5a.2 Financial Warranty. Bancorp represents and warrants that it has
adequate liquidity to provide the funds necessary to consummate the transactions
contemplated under this Agreement without dependence on any external sources of
funds or financing. Notwithstanding the foregoing, Bancorp may, at its sole
discretion, obtain the amount of the required funds through a private placement,
public offering or other method.
6. MUTUAL PRE-CLOSING COVENANTS.
6.1 Best Efforts. Subject to the terms of the Agreement and fiduciary
obligations under applicable law, the parties to the Agreement shall use their
best efforts to effectuate the transactions set forth herein and to fulfill the
conditions to their respective obligations under the Agreement. In particular,
and without limitation, the parties shall use their best efforts to cause the
Closing to occur at the earliest possible time.
6.2 Confidentiality. In addition to the obligations set forth in the
Confidentiality Agreement, each party shall use all information that it obtains
from the other pursuant to the Agreement (excluding information that is a matter
of public record) solely for the effectuation of the transactions contemplated
by the Agreement and for other purposes consistent with the intent of the
Agreement. No party to the Agreement shall use any of such information for any
other purpose including, without limitation, to the competitive detriment of any
other party. Each party shall maintain as confidential all information it
receives from any other party and shall upon the expiration or termination of
the Agreement promptly return all documentation provided by any other party or
made available by third parties. Each party may disclose such information to its
attorneys, accountants, investment bankers, tax advisors, other advisors and
consultants.
6.3 Further Assurances. Each party shall use its best efforts to
promptly take or cause to be taken all actions and to do or cause to be done all
things necessary, proper, or advisable under applicable laws and regulations to
consummate the transactions contemplated by the Agreement. If any further action
is necessary or desirable to carry out the purposes of the Agreement after
Closing, the proper officers and directors of each party shall take all such
necessary actions.
6.4. Failure to Reasonably Fulfill Conditions. In the event that any
party reasonably determines that a condition to its obligation to consummate the
transactions contemplated hereby cannot be or is not likely to be fulfilled on
or prior to Closing, and that such condition will not be waived by a party whose
waiver of the condition would be required to consummate the Acquisition, such
party shall promptly notify all other parties to the Agreement.
6.5 Public Announcements. Except as may be required by law, no party to
the Agreement shall disclose any information to the public regarding the terms
of the Agreement without the prior written approval of all parties. All parties
to the Agreement shall cooperate in the development and distribution of news
releases and other communications to stockholders of VCB and Bancorp, and of
other public disclosures with respect to the Agreement or any of the
transactions contemplated hereby.
6.6. Preparation of VCB Proxy Statement. The parties shall cooperate in
the preparation of the VCB Proxy Statement. In particular, Bancorp and VCB shall
(i) provide each other with all necessary or appropriate information for
inclusion in the VCB Proxy Statement to ensure that the VCB Proxy Statement
satisfies all applicable requirements of state and federal securities laws, (ii)
continually supplement such information as necessary or appropriate through and
including the date of the VCB Special Meeting, and (iii) promptly provide notice
to the other if at any time prior to the VCB Special Meeting any information
provided by the party for inclusion in the VCB Proxy Statement becomes incorrect
or incomplete in any material respect, and promptly provide the information
needed to correct such inaccuracy or omission. VCB shall provide Bancorp with a
18
reasonable opportunity to review and comment on the VCB Proxy Statement prior to
its mailing to VCB stockholders, and VCB shall not include therein or omit
therefrom any information over the reasonable objection of Bancorp or its
counsel.
7. EMPLOYEES.
7.1 Employees. Employees of VCB and the Bank who are employed
immediately prior to the Effective Date shall be the employees of the Bank on
the Effective Date, all of whom shall continue such employment on the same terms
and conditions as existed prior to the Effective Date. The Acquisition shall
effect no modifications to the terms of any employment agreement to which the
Bank is a party existing prior to the Effective Date.
7.2 Employee Benefits. The Acquisition shall effect no modifications to
(i) the terms of any employee benefit plans of VCB or the Bank, including stock
incentive and stock option plans, existing prior to the Effective Date, or (ii)
the health care coverage for Bank employees in effect prior to the Effective
Date. Nothing in the Agreement shall preclude or restrict Bancorp or its
affiliates, including the Bank, from modifying such employee benefit plans and
coverage in the ordinary course of business after the Effective Date.
8. CONDITIONS PRECEDENT.
The obligation of the parties to effect the transactions contemplated by
the Agreement shall be subject to the satisfaction or waiver of each of the
following conditions on or before the Effective Date. Each of the following
conditions constitute conditions to Closing.
8.1 Completion of Due Diligence; Financial Statement Audit. The
satisfactory completion of Bancorp's due diligence investigation (other than the
independent financial statement audit described below) of VCB and the Bank
within thirty (30) days from the date of the Agreement; provided, that neither
VCB nor the Bank shall refuse reasonable requests for information from Bancorp
after thirty (30) days from the date of the Agreement. Bancorp hereby
acknowledges that Bancorp's due diligence investigation was substantially
completed prior to the date of the Agreement. Any condition, event or
circumstance uncovered as a result of Bancorp's due diligence investigation
after the date of the Agreement shall be deemed a non-fulfillment of a condition
to Closing only if such condition, event or circumstance (i) significantly and
detrimentally impacts the economic value to Bancorp of the Acquisition, and (ii)
is not cured (if curable) within thirty (30) days notice to VCB and the Bank of
such condition, event or circumstance. In addition, Bancorp may at its option
and as part of its due diligence request an independent audit of the financial
statements of VCB and the Bank, and VCB and the Bank shall fully cooperate with
such audit. Such audit shall (i) reveal no material deviation from the unaudited
statements subject to audit, and (ii) shall be completed and approved by Bancorp
in writing within five (5) business days after Bancorp's recept of the audit
results. Bancorp and VCB shall equally share the cost of such independent audit.
8.2 Stockholder Approval. The Agreement and the Acquisition shall have
been duly and validly authorized, approved and adopted at the VCB Special
Meeting, duly and properly called for such purpose, by the holders of not less
than two-thirds of the then outstanding shares of stock of VCB which are
entitled to vote on the matter. The notice for the Special Meeting shall be
accompanied by the VCB Proxy Statement in form and substance reasonably
satisfactory to the parties and their attorneys.
8.3 Regulatory Approvals and Consents. Orders, consents, and approvals,
in form and substance satisfactory to the parties, shall have been entered by
the Federal Reserve Bank, the Federal Deposit Insurance Corporation, and such
other regulatory authorities having jurisdiction over the parties and the
transactions contemplated hereby, granting the authority necessary for
consummation of the transactions contemplated by the Agreement; all other
requirements prescribed by law or by the rules and regulations of any other
regulatory authority having jurisdiction over such transactions shall have been
satisfied; all other consents necessary for the consummation of the transactions
contemplated by the Agreement shall have been received; and the parties shall
have received evidence satisfactory to them of the satisfaction of the foregoing
conditions. No order, consent or approval shall contain any term, provision,
requirement or condition that is unusually burdensome to any party.
19
8.4 Opinion of Counsel - VCB. Bancorp shall have received from counsel
for VCB an opinion dated as of the Effective Date, in form and substance
satisfactory to Bancorp and its counsel, to the effect that:
a. VCB and its corporate subsidiaries are corporations, and the
Bank is an Oregon stock bank, all of which are duly organized, validly existing
and in good standing under the laws of the State of Oregon and have all
requisite corporate power and authority to own, lease and operate their
properties and assets and carry on their business in the manner being conducted
on the Effective Date;
b. VCB and the Bank have all requisite corporate power and
authority to execute, deliver and perform their obligations under the Agreement;
the execution, delivery and performance of the Agreement and the consummation of
the transactions contemplated thereby have been duly authorized by all requisite
corporate action on the part of VCB and the Bank; and the Agreement has been
duly executed and delivered by VCB and the Bank and constitutes the legal, valid
and binding obligation of VCB and the Bank enforceable in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws or equitable principles, considerations of public
policy, orders or other actions of state or federal regulatory authorities or
agencies, and except for nonmaterial breaches or breaches waived by Bancorp;
c. The Agreement and the obligations to be performed thereunder
are not in conflict with the articles and bylaws of VCB or the Bank.
8.5 Opinion of Counsel - Bancorp. VCB shall have received from counsel
for Bancorp an opinion dated as of the Effective Date, in form and substance
satisfactory to VCB and its counsel, to the effect that:
a. Bancorp is a corporation duly organized, validly existing and
in good standing under the laws of the State of Oregon;
b. Bancorp has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Agreement; the execution,
delivery and performance of the Agreement and the consummation of the
transactions contemplated thereby have been duly authorized by all requisite
corporate action on the part of Bancorp; and the Agreement has been duly
executed and delivered by Bancorp and constitutes the legal, valid and binding
obligation of Bancorp enforceable in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or
equitable principles, considerations of public policy, orders or other actions
of state or federal regulatory authorities or agencies, and except for
nonmaterial breaches or breaches waived by VCB;
c. The Agreement and the obligations to be performed thereunder
are not in conflict with the articles and bylaws of Bancorp.
8.6 Documents. The form and substance of all certificates, instruments,
opinions, and other documents delivered to the parties under the Agreement shall
be reasonably satisfactory in form and substance to the parties and their
counsel.
8.7 No Litigation. The absence of any material suit, action or
proceeding (made or threatened) against any party or any of their directors or
officers seeking to challenge, restrain, enjoin or otherwise affect the
Agreement or the transactions contemplated by the Agreement; seeking to
materially restrict the rights of the parties or the operation of the business
of VCB or Bancorp after the consummation of the Agreement; or seeking to subject
the parties hereto or any of their officers or directors to any liability, fine,
forfeiture or penalty on the grounds that the parties hereto or their directors
or officers have violated or will violate their fiduciary duties or will violate
any applicable laws or regulations in connection with the transactions
contemplated by the Agreement.
8.8 Receipt of Fairness or Valuation Opinions. The parties shall have
received, reviewed and approved one or more written opinions, issued by a
reputable financial analyst, bank stock appraiser or investment banker with
substantial experience in valuing transactions such as those contemplated by the
Agreement, to the effect that the Acquisition is fair to the stockholders of VCB
or otherwise represents a fair valuation of the stock of
20
VCB. Such opinions shall be supplemented and updated by the same or a similarly
qualified financial analyst, bank stock appraiser or investment banker as of the
date of the Proxy Statement if the date of the Proxy Statement is three (3)
months or more later than the date of the most recent fairness opinion. It shall
be a condition to Closing that such opinion, supplement or update does not
disclose a material adverse change in or to any initial opinion or the data
supporting it.
8.9 Covenants. Each party has performed in all material respects their
respective obligations under the Agreement and each party shall not have
breached in any material respect any of its covenants or obligations under the
Agreement, except for obligations or breaches that have been waived.
8.10 Representations and Warranties. The representations and warranties
of the parties contained in the Agreement shall be true and correct in all
material respects at and as of the Effective Date, as if made at and as of such
time, except for representations and warranties that specifically relate to an
earlier date, which shall be true and correct in all material respects as of
such date.
8.11 Closing Certificates. Each party shall deliver at Closing a
Certificate, dated as of the Closing Date, and signed and verified by the Chief
Executive Officer or President of the party, certifying in such detail as any
other party and its counsel may reasonably request, that to the best of the
signator's knowledge after reasonable inquiry the conditions specified in this
Section 8 have been fulfilled and are true and complete on and as of the Closing
Date. The person executing the Certificate shall not be personally liable for
any error in the Certificate except for actual fraud.
8.12 No Material Adverse Change. There shall not have occurred after the
date of the Agreement any material adverse change in the assets, earnings,
business, operations, prospects, or financial condition of VCB or the Bank.
8.13 Other Business Combinations, Etc. Neither VCB nor the Bank shall
have entered into any agreement, letter of intent, understanding or other
arrangement pursuant to which either of them would (i) merge, consolidate with,
effect a business combination with, sell any substantial part of their assets or
acquire a significant part of the shares or assets of any other person or entity
(financial or otherwise), or (ii) adopt any "poison pill" or other type of
anti-takeover arrangement, any shareholder rights provision or any "Golden
Parachute" or similar program (other than as described in Schedule 3.16) which
would have the effect of materially decreasing the value of VCB or the Bank or
decreasing the benefits to Bancorp of proceeding with the transactions set forth
in the Agreement.
8.14 Accounting Matters. There shall have been no change in required or
permitted accounting principles applicable to VCB or the Bank between June 1,
1998 and the Effective Date that has a material adverse effect on their
financial condition, earnings or capital.
8.15 Financial Statements. Not less than five days prior to the
Effective Date, VCB and the Bank shall have delivered to Bancorp the Closing
Financial Statement described in and consistent with the provisions of Section
5.12, which shall have been certified and reviewed in accordance with Section
5.12, and the accountants for Bancorp shall have approved the Closing Financial
Statement for compliance with GAAP and conformance with all applicable
conditions to Closing.
8.16 Stock Transactions by VCB and Affiliates. Other than as provided in
Section 1.2, there shall have been no sales, transfers or other transactions of
or involving shares of VCB held by officers or directors of VCB, beneficial
holders of five percent or more of the shares of VCB, and persons "controlled"
(as that term is defined in the Financial Institutions Regulatory and Interest
Rate Control Act of 1978 or by Section 405 of the Securities Act of 1933) by
VCB, including without limitation sales, transfers or other transactions in
violation of any state or federal securities laws or regulations.
8.17 Attorneys' Fees of VCB Counsel. As of the Effective Date the
attorneys' fees relating to the Acquisition chargeable to VCB or the Bank for
attorney fee time (including time for paralegals and other personnel
21
of VCB' attorneys) incurred from and after June 1, 1998 shall not have exceeded
$30,000. If Bancorp determines prior to Closing that such fees have exceeded or
will exceed $30,000, the difference between $30,000 and actual fees shall be
deducted from the Acquisition purchase price provided in Section 1.1.
8.18 Professionals' Fees of VCB. As of the Effective Date the fees for
professionals other than attorneys, including without limitation fees for one or
more fairness opinions and fees of accountants (other than accountants' fees an
independent financial statement audit, which fees shall not exceed $25,000),
relating to the Acquisition chargeable to VCB incurred from and after June 1,
1998 shall not have exceeded $20,000. If Bancorp determines prior to Closing
that such fees have exceeded or will exceed $20,000, the difference between
$20,000 and actual fees shall be deducted from the Acquisition purchase price
provided in Section 1.1.
8.19 Deposit of Funds. Cash in an amount sufficient to fund the payments
to be made to stockholders of VCB shall have been placed in a designated deposit
account with the Payment Agent with instructions to pay the appropriate amount
to each VCB stockholder.
8.20 Non-Competition Commitments. VCB and the Bank shall use their best
efforts to obtain enforceable non-competition commitments, in form and substance
reasonably acceptable to Bancorp, from key executive employees at Bancorp's
reasonable request and from all present members of the boards of directors of
VCB and the Bank.
9. TERMINATION AND AMENDMENT.
9.1 Termination. Prior to the Effective Date, the Agreement may be
terminated and the Acquisition abandoned at any time notwithstanding approval by
the stockholders of VCB and by any of the applicable regulatory authorities:
9.1.1 Through written consent of the Board of Directors of
Bancorp and VCB;
9.1.2 By Bancorp or VCB if the Effective Date shall not have
occurred within the time provided under the Agreement, unless the Boards of
Directors of Bancorp and VCB have agreed to extend the time in which the
Acquisition may be consummated;
9.1.3 By Bancorp or VCB if any court of competent jurisdiction or
any governmental agency has issued an order, decree, or ruling or taken any
other action restraining, enjoining, or otherwise prohibiting the Acquisition
and such order, decree, ruling, or other action shall have become final and
nonappealable;
9.1.4 By Bancorp or VCB if the conditions to Closing set forth in
Section 8 have failed to be satisfied in any material respect and such failure
has not been either cured (if curable) or waived on or before the Effective
Date;
9.1.5 Upon the final disapproval by any of the Federal Reserve
Bank, the Federal Deposit Insurance Corporation or any other regulatory
authority whose approval is required, in whole or in part, of the transactions
contemplated by the Agreement.
9.2 Amendment. The Agreement may not be amended except by a subsequent
written agreement signed by all parties hereto. The Agreement may be amended by
action of the Boards of Directors of Bancorp and VCB at any time before approval
of the Acquisition by the stockholders of VCB. Such amendment must be in writing
signed on behalf of all the parties hereto by a duly authorized officer thereof.
10. MISCELLANEOUS.
10.1. Governing Law. Each and every portion of the Agreement is
contractual and not a mere recital, and all recitals shall be deemed
incorporated into the Agreement. The Agreement shall be governed by and
interpreted according to Oregon law and any applicable federal law.
22
10.2. Integration. The Agreement, including all Schedules and Exhibits,
and the Confidentiality Agreement, contain the entire understanding and
agreement of the parties with respect to the parties' relationship, and all
prior negotiations, discussions or understandings, oral or written, are hereby
integrated herein. The Agreement supersedes all prior oral and written
agreements and understandings of the parties, except for the Confidentiality
Agreement, with respect to the subject matter of the Agreement.
10.3. Counterparts. The Agreement may be signed in several counterparts.
The signature of one party on any counterpart shall bind such party just as if
all parties had signed that counterpart. Each counterpart shall be considered an
original. All counterparts of the Agreement shall together constitute one
original document.
10.4 Expenses. All expenses of the Acquisition, including without
limitation attorneys' fees, accountants' fees, application, filing and other
fees necessary to obtain regulatory approval, fees for a competitive analysis,
publication costs and printing and mailing costs, shall be paid by the party
incurring such expenses.
10.5 Termination Fee and Costs. Under the circumstances described below,
a party shall be entitled to recover (i) a termination fee to compensate the
party for its expenses and effort taken to enter into and attempt to consummate
the transactions contemplated under the Agreement, plus (ii) the party's
reasonable out-of-pocket expenses, including without limitation attorney's and
accountant's fees, fees for fairness opinions, other professional fees, and
incidental costs and expenses (the "Costs"), relating to the party's efforts to
consummate the transactions contemplated under the Agreement.
a. VCB and the Bank shall be entitled to recover from Bancorp a
termination fee of $500,000.00 plus their Costs if Bancorp fails to close
because of (i) a breach of the financial warranty in Section 5a.2 of the
Agreement, or (ii) an intentional breach without good cause of any other
obligation of Bancorp under the Agreement.
b. Bancorp shall be entitled to recover from VCB and the Bank a
termination fee of $500,000.00 plus its Costs if VCB and the Bank fail to close
because of (i) a breach of Sections 5.7(c), 5.10 or 8.13 of the Agreement, or
(ii) an intentional breach without good cause of any other obligation of VCB or
the Bank under the Agreement.
c. VCB shall be entitled to recover from Bancorp a termination
fee of $150,000.00 plus its Costs if VCB elects not to close because Bancorp has
breached a material representation, warranty, term, covenant or condition to
closing (other than as specified in Section 10.5(a)); provided that such breach
(i) significantly and detrimentally impacts the economic value of the
Acquisition to VCB or its shareholders, and (ii) is not cured (if curable)
within thirty (30) days notice to Bancorp of such breach.
d. Bancorp shall be entitled to recover from VCB and the Bank a
termination fee of $150,000.00 plus its Costs if Bancorp elects not to close
because either VCB and the Bank have breached a material representation,
warranty, term, covenant or condition to closing (other than as specified in
Section 10.5(b)); provided that such breach (i) significantly and detrimentally
impacts the economic value to Bancorp of the Acquisition, and (ii) is not cured
(if curable) within thirty (30) days notice to VCB and the Bank of such breach.
10.6 Attorneys' Fees and Costs. If a suit or action is instituted to
enforce any term of the Agreement, the prevailing party shall be entitled to
recover its reasonable attorneys' fees and costs at any hearing, any trial, on
appeal, and on any petition for review or other trial court or appellate
proceeding. In addition, the prevailing party shall be entitled to recover its
reasonable attorneys' fees and costs incurred by in enforcing its rights under
the Agreement in connection with any nonjudicial action or the exercise of
nonjudicial remedies, in any bankruptcy case, proceeding or motion (including
motions for relief from stay), and in any administrative, arbitrative, mediation
23
or dispute resolution process or proceeding.
10.7 Notices. All notices, requests, claims, demands and other
communications made pursuant to the Agreement shall be in writing and shall be
deemed made when either delivered in person or sent by certified or registered
mail, return receipt requested, as follows:
(i) To Bancorp:
Columbia Bancorp
000 Xxxx Xxxxx Xxxxxx
Xxx Xxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxx
with a copy to:
Xxxxxxx X. Xxxxxxxxx, Esq.
0000 XX Xx. Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
(ii) To VCB:
Valley Community Bancorp
000 Xxxxx Xxxxx Xxxxxx
XxXxxxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxx
with a copy to:
Xxxxx X. Xxxxxxx, Esq.
Xxxxxx Xxxx
000 XX 0xx Xxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000-0000
10.8 Survival of Representations and Warranties. The representations and
warranties of VCB and the Bank shall survive the Closing.
10.9 Fiduciary Duties. All obligations of the parties herein, including
without limitation VCB's and the Bank's obligations under Section 5.10, shall be
subject to and performed in accordance with the fiduciary duties of the
directors of Bancorp, VCB and the Bank; provided, however, that the obligations
set forth in Section 10.5 shall remain in full force and effect even though the
board of directors of the party on whom such obligations are imposed acts in
accordance with its fiduciary duties in acting or failing to act so as to give
rise to such obligations. Any action or failure to act of the directors of any
party that is contrary to the obligations of the parties under the Agreement
shall be taken only if the directors determine, in the exercise of their good
faith judgment and after receiving the advice of counsel, that the fiduciary
duties of the directors require such action or failure to act.
10.10 Parties in Interest. The Agreement is binding on and shall inure
to the benefit of the parties and their successors and assigns, provided, that
neither the Agreement nor any rights, interests or obligations hereunder may be
assigned by any party without the consent of all other parties hereto. Nothing
in the Agreement shall confer, or is intended to confer, either expressly or by
implication, any rights or remedies under or by reason of the Agreement upon any
person not a party hereto, except for provision which expressly and by their
terms are intended to benefit third party beneficiaries.
10.11 Representations and Warranties. The representations and warranties
of each party hereto contained herein shall not be deemed to be waived by any
investigation made by any other party.
24
10.12 Remedies. Except for claims based upon actual fraud of the parties
or their representatives, or as provided in Section 10.5 of the Agreement, the
only remedy available to any party hereunder is for specific performance.
10.13 Best Efforts. If any party is required to use its best efforts
under the Agreement, such party shall diligently and in good faith use such
efforts as are commercially reasonable.
10.14 Employment Contract with Xxxxx X. Xxxxxx. Bancorp and Xxxxx X.
Xxxxxx ("Xxxxxx") have entered into a letter of understanding for the
post-Closing employment of Xxxxxx in the position of President of the Bank.
Bancorp and Xxxxxx shall reduce such understanding to a contract of employment
(the "Xxxxxx Employment Contract") to take effect on the Effective Date subject
to the consummation of the Acquisition. The parties to the Xxxxxx Employment
Contact shall be the Bank and Xxxxxx. At Bancorp's request prior to Closing, the
Board of Directors of the Bank shall authorize the Bank to execute the Xxxxxx
Employment Contact. The Bank's performance under this Section shall not be a
condition to Closing.
10.15 Items on Schedules. Any item of information provided in a schedule
attached hereto shall, if the item of information is responsive to more than one
schedule, be deemed automatically incorporated into all schedules to which it is
responsive.
COLUMBIA BANCORP
______________________________
Board Chairman
______________________________
CEO and President
VALLEY COMMUNITY BANCORP VALLEY COMMUNITY BANK
______________________________ ______________________________
Board Chairman Board Chairman
______________________________ ______________________________
CEO and President CEO and President
AGREEMENT AND PLAN OF SHARE EXCHANGE
SCHEDULES
Schedule 3.5
1. Valley Community Bank holds a one-seventh interest in Datatech of
Oregon, Inc., an Oregon corporation that provides data processing services for
financial institutions. The interest was valued at $34,800.33 as of June 30,
1998.
Schedule 3.11
1. Footnotes to financial statements were prepared by management and may
not be in compliance with GAAP.
Schedule 3.16
25
1. June 15, 1998 contract between VCB and Xxxxx X. Xxxxxx.
2. Deferred compensation agreement between VCB and Xxxxx X. Xxxxxx of
December 1, 1996.
Schedule 3.20
1. None.
Schedule 3.23(f)
1. Datatech of Oregon, Inc. contract for data processing services.
2. Deluxe Data contract for ATM switch services, $1,000 monthly, expires
February 2002.
3. Potential contract with VISA Merchant Service provider (negotiations
pending). Initial expense of approximately $3,000.
4. Fairness opinion expense -- $15,000.
5. Items in Schedule 3.16.
6. Legal expenses for Acquisition, including professional fees incurred
prior to June 1, 1998 in the sum of approximately $28,000. The foregoing are not
reflected in the Bank's most recent financial statements.
Schedule 3.25
1. None.
Schedule 3.26
1. None.
Schedule 3.27
Transactions disclosed on June 30, 1998 Quarterly Banking Call Report
and summarized as follows:
1. $120,778.08 affiliate loan secured by first deed of trust on
duplexes.
2. $142,500.00 director loan secured by first deed of trust on personal
residence.
3. $600,000.00 director loan secured by first deed of trust on
commercial property.
4. $8,327.47 loan secured by vehicle and director guarantee.
Schedule 3.28
1. Acquisition costs payable to PaineWebber of approximately $1,000 for
out-of pocket costs.
Schedule 4.6
1. None.
