1
AGREEMENT AND
PLAN OF REORGANIZATION
BY AND BETWEEN
VIB CORP
AND
BANK OF XXXXXXXXX, F.S.B.
DATED SEPTEMBER 15, 1998
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TABLE OF CONTENTS
AGREEMENT AND PLAN OF REORGANIZATION
PAGE
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ARTICLE I - THE MERGER AND RELATED TRANSACTIONS....................................................... 2
1.1 Creation of BOS Interim Bank........................................................ 2
1.2 Merger.............................................................................. 2
(a) Merger of BOS Interim Bank and BOS......................................... 2
(b) Effect on BOS Interim Bank Shares.......................................... 2
(c) Effect on BOS Shares....................................................... 2
(d) Effect on VIBC Shares...................................................... 3
(e) Alternative Method......................................................... 3
1.3 Dissenting Shares of BOS Stock...................................................... 3
1.4 Dissenting Shares of VIBC Stock..................................................... 3
1.5 Fractional Shares................................................................... 4
1.6 Delivery of Certificates and Cash................................................... 4
(a) Transfer Agent............................................................. 4
(b) Exchange Procedures........................................................ 4
(c) Transfers.................................................................. 4
(d) Termination of Exchange Fund............................................... 4
(e) Lost, Stolen or Destroyed Certificates..................................... 5
1.7 Exchange of BOS Stock Options....................................................... 5
1.8 Effect of the Merger................................................................ 5
1.9 Name of Merged Bank................................................................. 5
1.10 Charter and Bylaws of Merged Bank................................................... 5
1.11 Directors and Officers of Merged Bank............................................... 6
1.12 Articles of Incorporation, Bylaws and Directors of VIBC............................. 6
1.13 Director's Agreement................................................................ 6
1.14 Affiliate's Letter.................................................................. 6
1.15 Shareholder's Agreement............................................................. 6
1.16 Cooperation; Best Efforts........................................................... 6
ARTICLE II - THE CLOSING.............................................................................. 6
2.1 Closing Date........................................................................ 6
2.2 Execution of Merger Agreement....................................................... 7
2.3 Documents to be Delivered........................................................... 7
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF BOS................................................... 7
3.1 Organization, Standing and Power.................................................... 7
3.2 Capitalization...................................................................... 8
3.3 Subsidiaries........................................................................ 8
3.4 Authority........................................................................... 8
3.5 Branches............................................................................ 9
3.6 Financial Statements................................................................ 9
3.7 Undisclosed Liabilities............................................................. 9
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3.8 Title to Assets.................................................................... 10
3.9 Real Estate........................................................................ 10
3.10 Environmental Liabilities.......................................................... 10
(a) Compliance................................................................ 10
(b) No Investigations......................................................... 11
(c) Hazardous Substances...................................................... 11
3.11 Loans and Investments.............................................................. 12
3.12 Extensions of Credit............................................................... 12
3.13 Deposits........................................................................... 13
3.14 Litigation and Governmental Proceedings............................................ 13
3.15 Contracts and Agreements........................................................... 13
3.16 Performance of Obligations......................................................... 14
3.17 Insurance.......................................................................... 14
3.18 Taxes.............................................................................. 15
3.19 Absence of Certain Changes......................................................... 15
3.20 Brokers' and Finders' Fees......................................................... 16
3.21 Employees.......................................................................... 16
3.22 Regulatory Reports................................................................. 16
3.23 BOS Employee Benefit Plans and Employment and Labor Contracts...................... 17
3.24 Stock Option Plans................................................................. 19
3.25 Absence of Certain Practices....................................................... 19
3.26 No Violation of Law................................................................ 19
3.27 Certain Interests.................................................................. 19
3.28 Minute Books....................................................................... 20
3.29 Accounting Records; Data Processing................................................ 20
3.30 Operating Losses................................................................... 20
3.31 CRA Standing....................................................................... 20
3.32 Year 2000 Matters.................................................................. 20
3.33 Accuracy and Currentness of Information Furnished.................................. 21
3.34 Effective Date of Representations, Warranties, Covenants and
Agreements......................................................................... 21
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF VIBC.................................................. 21
4.1 Organization, Standing and Power................................................... 21
4.2 Capitalization..................................................................... 21
4.3 Subsidiaries....................................................................... 21
4.4 Authority.......................................................................... 22
4.5 Financial Statements............................................................... 22
4.6 Undisclosed Liabilities............................................................ 23
4.7 Title to Assets.................................................................... 23
4.8 Real Estate........................................................................ 23
4.9 Environmental Liabilities.......................................................... 24
(a) Compliance................................................................ 24
(b) No Investigations......................................................... 24
(c) Hazardous Substances...................................................... 24
4.10 Loans and Investments.............................................................. 24
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4.11 Deposits........................................................................... 25
4.12 Litigation and Governmental Proceedings............................................ 25
4.13 Contracts and Agreements........................................................... 25
4.14 Performance of Obligations......................................................... 26
4.15 Insurance.......................................................................... 27
4.16 Taxes.............................................................................. 27
4.17 Absence of Certain Changes......................................................... 27
4.18 Brokers' and Finders' Fees......................................................... 28
4.19 Employees.......................................................................... 28
4.20 Regulatory Reports................................................................. 28
4.21 VIBC Employee Benefit Plans and Employment and Labor Contracts..................... 29
4.22 Stock Option Plan.................................................................. 31
4.23 Absence of Certain Practices....................................................... 31
4.24 No Violation of Law................................................................ 31
4.25 Certain Interests.................................................................. 32
4.26 Minute Books....................................................................... 32
4.27 Accounting Records; Data Processing................................................ 32
4.28 Operating Losses................................................................... 32
4.29 CRA Standing....................................................................... 32
4.30 Year 2000 Matters.................................................................. 33
4.31 Accuracy and Currentness of Information Furnished.................................. 33
4.32 Effective Date of Representations, Warranties, Covenants and
Agreements......................................................................... 33
ARTICLE V - COVENANTS OF BOS PRIOR TO CLOSING........................................................ 33
5.1 Business Records and Information................................................... 33
5.2 Limitations Upon BOS Prior to Closing.............................................. 34
5.3 Affirmative Conduct of BOS Prior to Closing........................................ 36
5.4 Indemnification.................................................................... 38
5.5 Execute Agreement to Merge......................................................... 38
5.6 Discussion With Third Parties...................................................... 38
(a) Strategic Transactions.................................................... 38
(b) Qualifying Proposal....................................................... 39
(c) Disclosure and Trading.................................................... 39
5.7 Stock Option Plans................................................................. 40
5.8 Change in Control and Salary Continuation Agreements............................... 40
5.9 Proxy Statement.................................................................... 40
ARTICLE VI - COVENANTS OF VIBC PRIOR TO CLOSING...................................................... 41
6.1 Business Records and Information................................................... 41
6.2 Limitations Upon VIBC Prior to Closing............................................. 41
6.3 Affirmative Conduct of VIBC Prior to Closing....................................... 43
6.4 Indemnification.................................................................... 44
6.5 Discussion With Third Parties...................................................... 44
(a) Strategic Transactions.................................................... 44
(b) Qualifying Proposal....................................................... 44
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(c) VIBC Acquisition Transaction.............................................. 45
(d) Disclosure and Trading.................................................... 45
6.6 Stock Option Plan.................................................................. 46
6.7 Preparation of S-4 and the Proxy Statement......................................... 46
6.8 Proxy Statement.................................................................... 46
ARTICLE VII - MEETINGS OF SHAREHOLDERS AND FEDERAL SECURITIES LAWS................................... 46
7.1 Shareholders' Meetings............................................................. 46
7.2 Federal Securities Laws............................................................ 47
ARTICLE VIII - CONDITIONS PRECEDENT TO OBLIGATIONS OF BOS............................................ 47
8.1 Continued Accuracy of Representations and Warranties............................... 48
8.2 Performance of Obligations......................................................... 48
8.3 Absence of Material Changes........................................................ 48
8.4 Officers' Certificate.............................................................. 48
8.5 Receipt of Legal Opinion........................................................... 48
8.6 Fairness Opinion................................................................... 48
8.7 Appointment of VIBC Director....................................................... 48
8.8 Closing Documents.................................................................. 48
ARTICLE IX - CONDITIONS PRECEDENT TO OBLIGATIONS OF VIBC............................................. 49
9.1 Continued Accuracy of Representations and Warranties............................... 49
9.2 Performance of Obligations......................................................... 49
9.3 Absence of Material Changes........................................................ 49
9.4 Affiliate's Letters................................................................ 49
9.5 Resignation and Appointment of Directors........................................... 49
9.6 Officers' Certificate.............................................................. 49
9.7 Receipt of Legal Opinion........................................................... 49
9.8 Fairness Opinion................................................................... 50
9.9 Closing Documents.................................................................. 50
ARTICLE X - CONDITIONS PRECEDENT TO THE MERGER....................................................... 50
10.1 Permits and Approvals.............................................................. 50
10.2 Tax Ruling or Opinion.............................................................. 50
10.3 Absence of Litigation.............................................................. 51
10.4 Shareholder Approvals.............................................................. 51
(a) Approval of Merger........................................................ 51
(b) Other Actions............................................................. 52
10.5 Continuity of Interest............................................................. 52
ARTICLE XI - TERMINATION............................................................................. 52
11.1 Termination of This Agreement...................................................... 52
11.2 Immaterial Breach.................................................................. 53
11.3 Effect of Termination.............................................................. 53
11.4 Termination Fee and Liquidated Damages............................................. 54
(a) Termination Fee........................................................... 54
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(b) Liquidated Damages........................................................ 54
(c) Exclusive Remedy.......................................................... 54
ARTICLE XII - GENERAL PROVISIONS..................................................................... 54
12.1 Expenses........................................................................... 54
12.2 Notices............................................................................ 54
12.3 Successors and Assigns............................................................. 55
12.4 Third Party Beneficiaries.......................................................... 55
12.5 Counterparts....................................................................... 55
12.6 Governing Law...................................................................... 56
12.7 Captions........................................................................... 56
12.8 Exhibits and Schedules............................................................. 56
12.9 Representations and Warranties..................................................... 56
12.10 Waiver and Modification............................................................ 56
12.11 Attorneys' Fees.................................................................... 56
12.12 Knowledge.......................................................................... 56
12.13 Entire Agreement................................................................... 57
12.14 Consents........................................................................... 57
12.15 Severability....................................................................... 57
12.16 Press Release...................................................................... 57
12.17 Arbitration........................................................................ 57
LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
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Merger Agreement................................................................ Exhibit A
Director's Agreement (BOS)...................................................... Exhibit B-1
Director's Agreement (VIBC)..................................................... Exhibit B-2
Affiliate's Letter.............................................................. Exhibit C
Shareholder's Agreement......................................................... Exhibit D
SCHEDULES
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Bank of Xxxxxxxxx, F.S.B.:
Articles of Association and Bylaws.............................................. Schedule 3.1
Subsidiaries.................................................................... Schedule 3.3
Agreements, Instruments, Obligations............................................ Schedule 3.4
Financial Statements ........................................................... Schedule 3.6
Liabilities..................................................................... Schedule 3.7
Assets.......................................................................... Schedule 3.8
Real Estate .................................................................... Schedule 3.9
Environmental Liabilities....................................................... Schedule 3.10
Loans and Investments........................................................... Schedule 3.11
Classified Loans................................................................ Schedule 3.12
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Deposits ....................................................................... Schedule 3.13
Litigation ..................................................................... Schedule 3.14
Understandings ................................................................. Schedule 3.15
Obligations..................................................................... Schedule 3.16
Insurance ...................................................................... Schedule 3.17
Taxes........................................................................... Schedule 3.18
Certain Changes................................................................. Schedule 3.19
Brokers' and Finders' Fees...................................................... Schedule 3.20
Regulatory Reports.............................................................. Schedule 3.22
Employee Benefit Plans.......................................................... Schedule 3.23
Stock Option Plan............................................................... Schedule 3.24
Certain Practices............................................................... Schedule 3.25
Certain Interests............................................................... Schedule 3.27
Data Processing ................................................................ Schedule 3.29
Operating Losses................................................................ Schedule 3.30
VIB Corp:
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Articles of Incorporation and Bylaws ........................................... Schedule 4.1
Agreements, Instruments and Obligations ........................................ Schedule 4.4
Financial Statements............................................................ Schedule 4.5
Liabilities..................................................................... Schedule 4.6
Assets.......................................................................... Schedule 4.7
Real Estate .................................................................... Schedule 4.8
Environmental Liabilities....................................................... Schedule 4.9
Loans and Investments........................................................... Schedule 4.10
Deposits........................................................................ Schedule 4.11
Litigation...................................................................... Schedule 4.12
Understandings.................................................................. Schedule 4.13
Obligations..................................................................... Schedule 4.14
Insurance....................................................................... Schedule 4.15
Taxes........................................................................... Schedule 4.16
Certain Changes................................................................. Schedule 4.17
Brokers' and Finders' Fees...................................................... Schedule 4.18
Regulatory Reports.............................................................. Schedule 4.20
Employee Benefit Plans.......................................................... Schedule 4.21
Stock Option Plan............................................................... Schedule 4.22
Certain Practices............................................................... Schedule 4.23
Data Processing................................................................. Schedule 4.27
Operating Losses ............................................................... Schedule 4.28
Closing:
Closing Schedule................................................................ Schedule 2.3
Legal Opinion to BOS............................................................ Schedule 8.5
Legal Opinion to VIBC........................................................... Schedule 9.7
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made and
entered into as of September 15, 1998, by and among VIB Corp, a California
corporation ("VIBC"), 0000 Xxxx Xxxxxx, Xx Xxxxxx, Xxxxxxxxxx 00000, and Bank of
Xxxxxxxxx, F.S.B., a federal stock savings bank ("BOS"), 0000 Xxxxxxxxx Xxxxxxx,
Xxxxxxxxxxx, Xxxxxxxxxx 00000, pursuant to which BOS will become a separate,
wholly-owned subsidiary of VIBC, with reference to the following:
R E C I T A L S
WHEREAS, BOS is a federal stock savings bank with its principal
office in the City of Bakersfield, County of Xxxx, State of
California, and VIBC is a California corporation with its principal
office in the City of El Centro, County of Imperial, State of
California;
WHEREAS, Valley Independent Bank ("VIB") is a California banking
corporation with its principal office in the City of El Centro, County
of Imperial, State of California, and is a wholly-owned subsidiary of
VIBC;
WHEREAS, BOS and VIBC desire to enter into this Agreement which
contemplates the acquisition of BOS by VIBC, pursuant to which BOS
will become a separate, wholly-owned subsidiary of VIBC;
WHEREAS, this Agreement provides for the completion of the
acquisition of BOS by VIBC through the merger (the "Merger") of BOS
with an interim federal stock savings bank which shall be a
wholly-owned subsidiary of VIBC ("BOS Interim Bank") under the
applicable laws of the United States and in accordance with the
articles of combination (the "Merger Agreement") to be entered into by
and between BOS Interim Bank and BOS substantially in the form of
Exhibit "A" hereto;
WHEREAS, to consummate the Merger the parties hereto will have to
take various steps and actions in furtherance of the transaction
contemplated by this Agreement (collectively, with the Merger, the
"Transactions"); and
WHEREAS, the Boards of Directors of VIBC and BOS have determined
that this Agreement and the Transactions are in the best interests of
their respective shareholders and have approved this Agreement and
authorized its execution;
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties contained herein, and
intending to be legally bound, the parties hereto agree as follows:
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A G R E E M E N T
ARTICLE I
THE MERGER AND RELATED TRANSACTIONS
1.1 CREATION OF BOS INTERIM BANK. As soon as practicable VIBC shall
organize BOS Interim Bank pursuant to 12 CFR Section 552.2-2 as a new, interim
federal stock savings bank wholly-owned by VIBC.
1.2 MERGER. The Merger shall become effective (the "Effective Time of
the Merger") on the date and time specified on the endorsement of the articles
of combination by the Office of Thrift Supervision (the "OTS"). At the Effective
Time of the Merger and pursuant to the terms of this Agreement and the Merger
Agreement, the following transactions will be deemed to have occurred
simultaneously:
(a) MERGER OF BOS INTERIM BANK AND BOS. BOS Interim Bank and
BOS will merge, and the separate corporate existence of BOS Interim
Bank shall cease. BOS as the savings bank surviving the Merger is
sometimes referred to herein as the "Merged Bank."
(b) EFFECT ON BOS INTERIM BANK SHARES. Each share of the
common stock of BOS Interim Bank (the "BOS Interim Bank Stock") issued
and outstanding immediately prior to the Effective Time of the Merger,
on and after the Effective Time of the Merger, pursuant to the Merger
Agreement and without any further action on the part of VIBC or BOS
Interim Bank, shall be converted into one share of common stock of the
Merged Bank (the "Merged Bank Stock"). Each outstanding stock
certificate which prior to the Effective Time of the Merger represented
shares of BOS Interim Bank Stock automatically and for all purposes
shall be deemed to represent the number of shares of Merged Bank Stock
into which the shares of BOS Interim Bank Stock represented by such
certificate have been converted as provided in this Section 1.2(b);
provided, however, at the request of VIBC, the Merged Bank shall
exchange VIBC's certificate or certificates formerly representing
shares of BOS Interim Bank Stock for a certificate or certificates of
Merged Bank Stock.
(c) EFFECT ON BOS SHARES. Each share of the common stock,
$4.00 par value, of BOS (the "BOS Stock") issued and outstanding
immediately prior to the Effective Time of the Merger, on and after the
Effective Time of the Merger, pursuant to the Merger Agreement and
without any further action on the part of BOS or the holders of BOS
Stock, automatically shall be canceled and cease to be an issued and
outstanding share of BOS Stock and shall be converted into the right to
receive that number of newly issued shares of common stock, no par
value, of VIBC (the "VIBC Stock") equal to the whole and fractional
number resulting from dividing the BOS Per Share Value by the VIBC
Market Value Per Share (the "Exchange Ratio"); provided, however, cash
shall be paid in lieu of fractional interests pursuant to Section 1.5
hereof. For purposes of this Agreement, the BOS Per Share Value shall
be determined by: (i) first, subtracting the amount of $180,000 from
the BOS shareholders' equity as of the last day of the calendar month
next preceding the month of the Closing; (ii) second, multiplying the
result times 2.83; (iii) third, subtracting from the resultant
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multiple all expenses related to this Agreement, including finders'
fees; and (iv) fourth, dividing the result by the total number of
shares of BOS Stock outstanding at the Closing. The BOS shareholders'
equity shall be determined in accordance with generally accepted
accounting principles, consistently applied, and shall be determined
consistent with the requirements of Section 3.6 hereof. For purposes of
this Agreement the VIBC Market Value Per Share shall be determined by
taking the average of the closing prices of the VIBC Stock on the
Nasdaq National Market for the 20 trading days preceding the fifth
business day prior to the Closing (the "Nasdaq Average"). In the event
the Nasdaq Average is between $9.50 and $15.50, the VIBC Market Value
Per Share shall be the Nasdaq Average. In the event the Nasdaq Average
is less than $9.50, the VIBC Market Value Per Share shall be $9.50. In
the event the Nasdaq Average is greater than $15.50, but not greater
than $19.50, then the VIBC Market Value Per Share shall be $15.50 plus
twenty-five percent (25%) of the amount by which the Nasdaq Average
exceeds $15.50. In the event the Nasdaq Average exceeds $19.50, the
VIBC Market Value per Share shall be $16.50. Certificates formerly
evidencing shares of BOS Stock shall be surrendered for exchange to the
Transfer Agent (as defined in Section 1.6 hereof) in accordance with
Section 1.6.
(d) EFFECT ON VIBC SHARES. Each share of VIBC Stock issued and
outstanding immediately prior to the Effective Time of the Merger
shall, on and after the Effective Time of the Merger, remain issued and
outstanding and shall automatically and for all purposes be deemed to
represent one share of common stock of VIBC.
(e) ALTERNATIVE METHOD. Anything herein to the contrary
notwithstanding, upon written notice to BOS, VIBC may at any time prior
to the Effective Time of the Merger change the method of effecting the
acquisition of BOS (including, without limitation, the provisions of
this Article I) if and to the extent it deems such change to be
necessary, appropriate or desirable; provided, however, that no such
change shall (i) alter or change the amount or kind of consideration to
be issued to holders of BOS Stock as provided for in this Agreement,
(ii) cause the transaction to be treated as anything other than a
tax-free reorganization to the holders of BOS Stock, or (iii)
materially impede or delay the receipt of any approvals referred to in
Section 10.1 or the consummation of the Transactions contemplated by
this Agreement.
1.3 DISSENTING SHARES OF BOS STOCK. Each outstanding shares of BOS
Stock whose holder has lawfully dissented from the Merger in accordance with 12
C.F.R. Section 552.14 and has timely filed with BOS a written demand for
appraisal of his or her shares accompanied by surrender of his or her stock
certificates pursuant to Section 552.14 is herein called a "Dissenting BOS
Share." Dissenting BOS Shares whose holders have not effectively withdrawn or
lost their dissenters' rights under Section 552.14 shall not be converted
pursuant to Section 1.2(c), but the holders thereof shall be entitled only to
such rights as are granted them by Section 552.14. Each dissenting shareholder
who is entitled to payment pursuant to Section 552.14 shall receive such payment
in an amount as determined pursuant to Section 552.14.
1.4 DISSENTING SHARES OF VIBC STOCK. Any shareholder of VIBC who shall
have lawfully dissented from the Transactions in accordance with the applicable
statutes of the State of California, and who shall have timely demanded payment
of the value of such shareholder's VIBC Stock and submitted such shares for
endorsement as provided in Section 1300(b) of the California
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General Corporation Law ("Dissenting VIBC Shares"), shall thereafter have only
such rights as are provided a dissenting shareholder in accordance with said
statutes and shall have no other rights under this Agreement or as shareholders
of VIBC.
1.5 FRACTIONAL SHARES. No fractional shares of VIBC Stock shall be
issued in the Merger. In lieu thereof, each holder of BOS Stock who would
otherwise be entitled to receive fractional shares of VIBC Stock shall receive
an amount in cash equal to the VIBC Fair Market Value Per Share (as determined
in Section 1.2(c) hereof), multiplied by the fraction of a share of VIBC Stock
to which such holder would otherwise be entitled.
1.6 DELIVERY OF CERTIFICATES AND CASH.
(a) TRANSFER AGENT. Prior to the Effective Time of the Merger
VIBC shall deliver or cause to be delivered to U.S. Stock Transfer
Corporation, its transfer agent (the "Transfer Agent"), an amount of
cash equal to the anticipated aggregate amount of fractional interests
to be paid pursuant to Section 1.5 hereof, and sufficient certificates
of the VIBC Stock for issuance to BOS's shareholders. Delivery to the
holders of BOS Stock of the certificates for VIBC Stock and cash to
which they are entitled will subsequently be made by the Transfer Agent
against delivery of share certificates formerly evidencing BOS Stock
(duly executed and in proper form for transfer) to the Transfer Agent
in accordance with this Section 1.6 and the terms and conditions of an
agreement to be entered into by and between VIBC and the Transfer Agent
(the "Transfer Agent Agreement"). A copy of the Transfer Agent
Agreement will be provided to BOS and its counsel for approval prior to
consummation of the Merger, which approval shall not be unreasonably
withheld.
(b) EXCHANGE PROCEDURES. As soon as practicable after the
Effective Time of the Merger, the Transfer Agent will send a notice and
transmittal form to each holder of a certificate previously
representing shares of BOS Stock advising such holders of the
applicable terms of the conversion effected by the Merger and the
procedure for surrendering to the Transfer Agent such certificate for
conversion. Each holder of such certificates, upon surrender of the
same to the Transfer Agent in accordance with such transmittal form,
shall be entitled to receive the consideration provided for in Section
1.2(c) hereof. If the consideration for shares of BOS Stock provided
for in Section 1.2(c) is to be delivered to any person other than the
registered holder of said shares surrendered for exchange, the amount
of any stock transfer tax or similar taxes (whether imposed on the
registered holder or such person) payable on account of the transfer to
such person shall be paid to the Transfer Agent by such person, or the
Transfer Agent may refuse to make such exchange unless satisfactory
evidence of the payment of such taxes or exemption therefrom is
submitted. The certificates so surrendered shall forthwith be canceled.
No interest will be paid or accrued on any amount payable upon due
surrender of the certificates.
(c) TRANSFERS. After the Effective Time of the Merger, there
shall be no transfers on the stock transfer books of BOS of the BOS
Stock that was outstanding immediately prior to the Effective Time of
the Merger.
(d) TERMINATION OF EXCHANGE FUND. Any portion of the cash
delivered to the Transfer Agent (including the proceeds of any
investments thereof) that remains unclaimed
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by the holders of BOS Stock for six months after the Effective Time of
the Merger shall be returned to VIBC. Any holders of BOS Stock who have
not theretofore complied with this Section 1.6 shall thereafter look
only to VIBC for exchange of their BOS Stock upon due surrender of
their certificates (or affidavits of loss in lieu thereof), without any
interest thereon. Notwithstanding the foregoing, none of VIBC, BOS, the
Transfer Agent or any other person shall be liable to any former holder
of BOS Stock for any amount properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(e) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
certificate shall have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming such certificate to
be lost, stolen or destroyed and, if required by VIBC, the posting by
such person of a bond in customary amount as indemnity against any
claim that may be made against it with respect to such certificate, the
Transfer Agent shall exchange such lost, stolen or destroyed
certificate, upon due surrender thereof, in accordance with the
provisions of this Section 1.6.
1.7 EXCHANGE OF BOS STOCK OPTIONS. VIBC shall issue substitute stock
options, effective at the Effective Time of the Merger, to each optionee holding
an outstanding stock option pursuant to BOS's 1985 and 1995 Stock Option Plans.
The substitute stock options, to be issued pursuant to VIBC's 1997 Stock Option
Plan, shall be issued for the same remaining terms and the same vesting
schedules as the BOS stock options being exchanged therefor; and shall be issued
for the same numbers of shares of VIBC Stock and the same exercise prices,
adjusted for the Exchange Ratio. Such adjustment in the numbers and exercise
prices shall be made without change in the total exercise price applicable to
the unexercised portion of the BOS stock option. Any fractional share interests
shall be disregarded.
1.8 EFFECT OF THE MERGER. By virtue of the Merger and at the Effective
Time of the Merger, all of the rights, privileges, powers and franchises and all
property and assets of every kind and description of BOS Interim Bank and BOS
shall be vested in and be held and enjoyed by the Merged Bank, without further
act or deed, and all the estates and interests of every kind of BOS Interim Bank
and BOS, including all debts due to either of them, shall be as effectively the
property of the Merged Bank as they were the property of BOS Interim Bank and
BOS, and the title to any real estate vested by deed or otherwise in either BOS
Interim Bank or BOS shall not revert or be in any way impaired by reason of the
Merger; and all rights of creditors and liens upon any property of BOS Interim
Bank and BOS shall be preserved unimpaired, and all debts, liabilities and
duties of BOS Interim Bank and BOS shall be debts, liabilities and duties of the
Merged Bank and may be enforced against it to the same extent as if such debts,
liabilities and duties had been incurred or contracted by it, and none of such
debts, liabilities or duties shall be expanded, increased, broadened or enlarged
by reason of the Merger.
1.9 NAME OF MERGED BANK. The name of the Merged Bank shall be "Bank of
Xxxxxxxxx, F.S.B."
1.10 CHARTER AND BYLAWS OF MERGED BANK. The Charter and Bylaws of BOS
as in effect immediately prior to the Effective Time of the Merger shall be the
Charter and Bylaws of the Merged Bank.
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1.11 DIRECTORS AND OFFICERS OF MERGED BANK. The directors of BOS at the
Effective Time of the Merger shall be the directors of the Merged Bank until
their successors have been chosen and qualified in accordance with the Charter
and the Bylaws of the Merged Bank; provided, however, that at the Effective Time
of the Merger Messrs. Xxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx shall resign from
the BOS Board of Directors and Messrs. Xxxxxxx X. Xxxx and Xxxxxx X. Xxxx shall
be appointed for three-year terms to the Board of Directors of BOS. The officers
of BOS at the Effective Time of the Merger shall be the officers of the Merged
Bank until they resign or are replaced or terminated by the Board of Directors
of the Merged Bank or otherwise in accordance with the Merged Bank's Charter or
Bylaws.
1.12 ARTICLES OF INCORPORATION, BYLAWS AND DIRECTORS OF VIBC. At the
Closing, VIBC's Articles of Incorporation and Bylaws as in effect immediately
prior to the Closing shall remain the Articles of Incorporation and Bylaws of
VIBC. At the Effective Time of the Merger, Xx. Xx X. Xxxxxxx, or if he shall be
unable to serve, another individual designated by VIBC, in its sole and absolute
discretion, shall be appointed for a one-year term to the Board of Directors of
VIBC.
1.13 DIRECTOR'S AGREEMENT. Concurrently with the execution of this
Agreement BOS and VIBC shall cause each of their directors to enter into an
agreement in the form of Exhibit "B-1" or Exhibit "B-2" hereto, respectively,
pursuant to which each director shall agree to vote or cause to be voted all
shares of his or her BOS Stock or VIBC Stock with respect to which such director
has voting power on the date hereof or hereafter acquired to approve the
Transactions contemplated hereby and all requisite matters related thereto.
1.14 AFFILIATE'S LETTER. Concurrently with the execution of this
Agreement BOS shall use its best efforts to cause each of its "affiliates" for
purposes of Rule 145 under the Securities Act of 1933, as amended, to sign an
Affiliates' Letter substantially in the form of Exhibit "C" hereto. At the
Closing, BOS shall use its best efforts to cause any affiliates who had not
previously signed an Affiliates' Letter to do so. Each share of VIBC Stock
issued in respect of BOS Stock pursuant to the Merger to such affiliates shall
bear the restrictive legend specified in Exhibit "C".
1.15 SHAREHOLDER'S AGREEMENT. Concurrently with the execution of this
Agreement BOS shall cause Financial Institutions Partners, Ltd. and Xx. Xxxx X.
Xxxxx to enter into a Shareholder's Agreement substantially in the form of
Exhibit "D" hereto.
1.16 COOPERATION; BEST EFFORTS. Each of the parties, consistent with
the fiduciary duties of the directors of each party, will use its best efforts
to consummate the Transactions contemplated by this Agreement and cooperate in
any action necessary or advisable to facilitate such consummation including,
without limitation, making all filings required in order to obtain any necessary
consents or to comply with any law and providing any information required in
connection therewith.
ARTICLE II
THE CLOSING
2.1 CLOSING DATE. The consummation of the Transactions contemplated by
this Agreement (the "Closing"), unless another date or place is agreed in
writing by the parties hereto, shall take place at the main office of BOS, 0000
Xxxxxxxxx Xxxxxxx, Xxxxxxxxxxx, Xxxxxxxxxx 00000,
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on a date designated in a written notice to BOS by VIBC within 15 days after the
last of the following shall have occurred: (i) the receipt of all approvals and
consents specified in Article X hereof; (ii) the expiration of the applicable
waiting period under the Bank Merger Act and the Bank Holding Company Act; and
(iii) all conditions specified in Articles VIII, IX and X hereof shall have been
satisfied (the "Closing Date"); provided, however, that if the parties cannot
agree on the Closing Date, the Closing Date shall be the last business day in
such fifteen day period.
2.2 EXECUTION OF MERGER AGREEMENT. Prior to the Closing Date, and as
soon as practicable after the approval of the OTS to organize BOS Interim Bank,
and the approval of this Agreement and the Transactions contemplated hereby by
the shareholder of BOS Interim Bank and the shareholders of BOS and VIBC and the
satisfaction of the conditions precedent to the consummation of the Merger, the
Merger Agreement in the form attached as Exhibit "A" (as amended, if necessary,
to conform to the requirements of law or a governmental authority or agency
having authority over the Merger which requirements are not materially in
contravention of any of the substantive terms hereof) shall be executed by BOS
and BOS Interim Bank. The Merger shall become effective in accordance with the
approval granted by the OTS (the "Effective Time of the Merger").
2.3 DOCUMENTS TO BE DELIVERED. The parties shall deliver, or cause to
be delivered, the documents called for by the Closing Schedule attached hereto
as Schedule 2.3, along with such other documents or certificates as may be
necessary, in the reasonable opinion of counsel for each of the parties, to
effectuate the Transactions called for hereunder. In the event that counsel for
any of the parties believes that documents necessary for the Closing have not
been set forth on the Closing Schedule, counsel shall advise the other party in
writing, no less than five business days prior to the Closing Date, setting
forth a brief description of the additional documents desired and such documents
shall also be provided at the Closing. If, at any time after the Effective Time
of the Merger, the Merged Bank or VIBC or their successors or assigns shall
determine that any further conveyance, assignment or other documents or any
further action is necessary or desirable to further effectuate the Transactions
set forth herein or contemplated hereby, the officers and directors of the
parties hereto shall execute and deliver, or cause to be executed and delivered,
all such documents as may be reasonably required to effectuate such
Transactions, whether at the Closing of thereafter.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BOS
BOS hereby represents and warrants to VIBC as follows:
3.1 ORGANIZATION, STANDING AND POWER. BOS is a federal stock savings
bank, duly organized, validly existing and in good standing under the laws of
the United States, and is authorized by the OTS to conduct business as a federal
savings bank. BOS is a member of the Federal Home Loan Bank of San Francisco and
is an "insured depository institution" as defined in the Federal Deposit
Insurance Act; and BOS has all requisite corporate power and authority to own,
lease and operate its properties and assets and to carry on its business as
presently conducted. Neither the scope of the business of BOS nor the location
of any of its properties requires that it be licensed or qualified to do
business in any jurisdiction other than the State of California. Attached hereto
as Schedule 3.1 are true and correct copies of its Charter and Bylaws, as
amended to the date hereof.
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3.2 CAPITALIZATION. The authorized capitalization of BOS consists of
10,000,000 shares of common stock, $4.00 par value, of which 1,212,265 shares
are issued and outstanding as of the date of this Agreement. As of the date of
this Agreement, the BOS Stock is held of record or beneficially by approximately
205 shareholders and the BOS Stock was not registered under the Securities
Exchange Act of 1934, as amended. All of the outstanding shares of the BOS Stock
are validly issued, fully paid and nonassessable. Except as contemplated herein
and except for fully vested stock options covering 33,000 shares of the BOS
Stock under the BOS 1985 and 1995 Stock Option Plans, there are presently, and
on the Closing Date there will be, no outstanding options, warrants or other
rights in or with respect to the unissued shares of the BOS Stock or any
securities convertible into such BOS Stock, and BOS is not obligated to issue
any additional shares of its BOS Stock or any other security convertible into
its BOS Stock.
3.3 SUBSIDIARIES. Except as set forth on Schedule 3.3, BOS does not
own, directly or indirectly (except as pledgee pursuant to loans which are not
in default or for shares held by BOS as the result of any foreclosure by BOS on
any loan, which shares do not exceed 4.9% of the outstanding common stock of any
such company), any outstanding stock or other voting interests in any
corporation, partnership, joint venture or other entity. Each subsidiary is duly
organized, validly existing and in good standing under the laws of the
jurisdiction set forth on Schedule 3.3.
3.4 AUTHORITY. The execution and delivery by BOS of this Agreement and
the Merger Agreement and the consummation of the Transactions contemplated
hereby and thereby, have been duly and validly authorized by all necessary
corporate action on the part of BOS. The Agreement is, and the Merger Agreement
will be, binding and enforceable obligations of BOS, except as enforceability
thereof may be limited by bankruptcy, insolvency, moratorium or similar laws
affecting the rights of creditors generally or federal savings banks, or by
general equitable principles, or by 12 U.S.C. Section 1818(b)(6)(D). Neither the
execution and delivery by BOS of this Agreement or the Merger Agreement, nor the
consummation of the Transactions contemplated herein or therein, nor compliance
by BOS with any of the provisions hereof or thereof will: (a) conflict with, or
result in a breach of, any provision of its Charter or Bylaws; or (b) except as
set forth in Schedule 3.4, constitute a breach of, or result in default, or give
rise to any rights of termination, cancellation or acceleration, or give rise to
any right by any other person or entity to acquire any security interest in any
assets under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, franchise, license, permit, agreement or other instrument
or obligation to which BOS or any of its properties or assets are subject. No
consent or approval of, notice to or filing with any governmental authority
having jurisdiction over any aspect of the business or assets of BOS, and no
consent or approval of or notice to any other person or entity, is required in
connection with the execution and delivery by BOS of this Agreement or the
Merger Agreement or the consummation by BOS of the Transactions contemplated
hereby or thereby, except: (a) approval of this Agreement and the Merger
Agreement by the shareholders of BOS and BOS Interim Bank; (b) such approvals of
this Agreement, the Merger Agreement, and the Transactions contemplated herein
as may be required by the OTS pursuant to the applicable requirements of the
Home Owners' Loan Act and the Bank Merger Act and/or by the Board of Governors
of the Federal Reserve System as may be required under the Bank Holding Company
Act of 1956, as amended; and (c) as set forth on Schedule 3.4.
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3.5 BRANCHES. Except for its main office located at 0000 Xxxxxxxxx
Xxxxxxx, Xxxxxxxxxxx, Xxxxxxxxxx 00000, and its branch offices located at 0000
Xxxxxxx Xxxx, Xxxxxxxxxxx, Xxxxxxxxxx 00000, and 0000 Xxxxx Xxxxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxxx 00000, a loan production office located at 0000 Xxxxx
Xxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000, and a loan servicing office
located at 0000 Xxxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxxx 00000, BOS does not
operate or conduct business out of any other location and has not applied for or
received permission to open any other branch or to operate out of any other
location.
3.6 FINANCIAL STATEMENTS. Except as disclosed in the notes relating
thereto, or otherwise on Schedule 3.6, the audited financial statements of BOS
as of and for the periods ended December 31, 1996 and 1997, as well as the
unaudited financial statements of BOS as of and for the periods ended June 30,
1997 and 1998, attached hereto as Schedule 3.6 (all of these statements are
collectively referred to herein as the "BOS Financial Statements"): (i) fairly
and accurately present the financial condition of BOS as of the dates thereof
and the results of operations and its cash flows for the periods therein set
forth; (ii) have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved; and (iii) are
based on the books and records of BOS. Except to the extent that VIBC and BOS
have agreed that, following regulatory approval being obtained and the
satisfaction of all other conditions to the Closing and immediately prior to the
Effective Time of the Merger, BOS shall increase its reserves for possible loan
losses by $300,000 over its reserve for possible loan losses as reported in the
BOS Financial Statements as of June 30, 1998 and maintain its reserves for
possible loan losses at a level at least as adequate as so adjusted, BOS's
reserves for possible loan losses as disclosed in the BOS Financial Statements
were adequate as of such dates to absorb reasonably anticipated losses in the
loan portfolio of BOS in view of the size and character of such portfolio, then
current economic conditions, and other pertinent factors; and no facts have
subsequently come to the attention of management of BOS which would cause
management to restate as of any of such dates in any material way the level of
such reserves for possible loan losses. Except to the extent that VIBC and BOS
have agreed that BOS will hereafter fully accrue for all benefits due its
executive officers pursuant to their Salary Continuation Agreements and for all
benefits due its directors pursuant to their Deferred Compensation Plans as a
result of the "change in control" provisions thereof, the BOS Financial
Statements have properly accrued for all known and reasonably anticipated
liabilities and contingencies. With respect to other real estate owned by BOS,
the value attributed thereto for purposes of preparing the BOS Financial
Statements does not exceed the aggregate fair market value of such real estate
as of the date of acquisition of such real estate or as subsequently reduced,
all in accordance with generally accepted accounting principles. With regard to
investments owned by BOS, the value attributed thereto for purposes of preparing
the BOS Financial Statements is in accordance with generally accepted accounting
principles.
3.7 UNDISCLOSED LIABILITIES. BOS does not have any liabilities or
obligations, either accrued or contingent, which are material to BOS taken as a
whole and which have not been: (a) reflected or disclosed in the BOS Financial
Statements; or (b) disclosed in Schedule 3.7. BOS does not know of any basis for
the assertion against it of any liability, obligation or claim (including,
without limitation, that of any regulatory authority) that is reasonably likely
to result in or cause any material adverse change in the business or financial
condition of BOS when taken as a whole, which is not fairly reflected in the BOS
Financial Statements or otherwise disclosed in Schedule 3.7 hereto.
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3.8 TITLE TO ASSETS. BOS has good, valid and marketable title to all
material properties and assets, other than real property and securities pledged
to secure public deposits or retail repurchase agreements, owned or stated to be
owned by BOS and reflected on the BOS Financial Statements, or acquired after
December 31, 1997 (except properties sold or otherwise transferred in the
ordinary course of business since December 31, 1997), free and clear of all
mortgages, liens, encumbrances, pledges or charges of any kind or nature (except
for liens for current taxes not yet due and payable and except as disclosed in
the BOS Financial Statements or in Schedule 3.8 hereto).
3.9 REAL ESTATE. Schedule 3.9 hereto contains a list of all real
property, including leaseholds and "other real estate owned," owned by BOS and
copies of all leases to which BOS is a party. Schedule 3.9 contains, among other
things, an accurate summary of all material commitments which BOS has to improve
real estate owned or leased by it. BOS has good and marketable title to all the
real property, and valid leasehold interests in the leaseholds, described in
Schedule 3.9, free and clear of all mortgages, covenants, conditions,
restrictions, easements, liens, security interests, charges, claims and
encumbrances, except for: (a) rights of lessors, co-lessees or sublessees in
such matters which are reflected in the leases; (b) current taxes not yet due
and payable; (c) as described in any title policies (included in Schedule 3.9);
(d) such imperfections of title and encumbrances, if any, as do not materially
detract from the value of or materially interfere with the present use of such
property; or (e) except as described in Schedule 3.9 hereto. Copies of title
policies for properties described in Schedule 3.9 as owned by BOS have been
delivered or made available to VIBC. The activities of BOS with respect to its
real property owned and their leaseholds for use in connection with their
operations are in all material respects permitted and authorized by applicable
zoning laws, ordinances and regulations and all laws and regulations of any
governmental department or agency relative to environmental matters affecting
such property, except as otherwise disclosed in Schedule 3.9. BOS enjoys quiet
and peaceful possession of all such property. All tangible properties of BOS
that are material to the business, financial condition, results of operations or
prospects of BOS are in a good state of maintenance and repair, except for
ordinary wear and tear, and are adequate for the conduct of the business of BOS
as presently conducted. Except as set forth in Schedule 3.9: (i) the execution
of this Agreement, the performance of the obligations of BOS hereunder and the
consummation of the Transactions contemplated herein do not conflict with and
will not result in a breach or default under any lease, agreement or contract
described in Schedule 3.9, or give any other party thereto a right to terminate
or modify any term thereof; (ii) each lease and agreement under which BOS is a
lessee or holds or operates any property (real, personal or mixed) owned by any
third party is in full force and effect and is a valid and legally binding
obligation of BOS; (iii) BOS and each other party to any such lease or agreement
have performed in all material respects all the obligations required to be
performed by them to date under such lease or agreement and are not in default
in any material respect under any such lease or agreement and there is no
pending or threatened proceeding, or proceeding which BOS has reason to believe
may be threatened, that would interfere with the quiet enjoyment of such
leasehold or such material property by BOS; (iv) no underground storage tanks or
surface impoundments are on or in the real property; and (v) no asbestos is
contained or located on any of the real property. None of such leases or
agreements contain any unusual provision which now or in the future may cause a
material adverse change in the business condition of BOS.
3.10 ENVIRONMENTAL LIABILITIES.
(a) COMPLIANCE. Except as set forth on Exhibit 3.10, BOS is
conducting and, to the best of its knowledge, has conducted its
business, and is using and, to the best of its
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knowledge, has used its properties, whether currently owned, operated
or leased, or owned, operated or leased by BOS at any time in the past,
and all properties in which BOS has a security interest have been used
and are being used, in compliance with all applicable Environmental
Laws (as that term is defined below).
For purposes of this Agreement, "Environmental Law" shall mean
any federal, state, county, or local statute, law, ordinance, rule,
regulation, order, consent, decree, judicial or administrative decision
or directive of the United States or other jurisdiction whether now
existing or as hereinafter promulgated, issued or enacted prior to the
Closing relating to: (i) pollution or protection of the environment,
including natural resources; (ii) exposure of persons, including
employees, to Hazardous Substances (as that term is defined below) or
other products, materials or chemicals; (iii) protection of the public
health or welfare from the effects of products, by-products, wastes,
emissions, discharges or releases of chemicals or other substances from
industrial or commercial activities; or (iv) regulation of the
manufacture, use or introduction into commerce of substances from
industrial or commercial activities; or (iv) regulation of the
manufacture, use or introduction into commerce of substances,
including, without limitation, their manufacture, formulation,
packaging, labeling, distribution, transportation, handling, storage
and disposal. For the purposes of this definition, the term
"Environmental Law" shall include, without limiting the foregoing, the
following statutes, as amended from time to time: (1) the Clean Air
Act, as amended, 42 U.S.C. Section 7401 et seq.; (2) the Federal Water
Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; (3)
the Resource Conservation and Recovery Act of 1976, as amended, 42
U.S.C. Section 6901 et seq.; (4) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (including
the Superfund Amendments and Reauthorization Act of 1986), 42 U.S.C.
Section 2601 et seq.; (5) the Toxic Substances Control Act, as amended,
15 U.S.C. Section 2601 et seq.; (6) the Occupational Safety and Health
Act, as amended, 29 U.S.C. Section 651; (7) the Emergency Planning and
Community Right-To-Know Act of 1986, 42 U.S.C. Section 1101 et seq.;
(8) the Mine Safety and Health Act of 1977, as amended, 30 U.S.C.
Section 801 et seq.; (9) the Safe Drinking Water Act, 42 U.S.C. Section
300f et seq.; and (10) all comparable state and local laws, laws of
other applicable jurisdictions or orders and regulations including, but
not limited to, the Xxxxxxxxx-Xxxxxxx-Xxxxxx Hazardous Substance
Account Act, California Health & Safety Code Section 25300 et seq.
(b) NO INVESTIGATIONS. BOS has not received notice that any
property currently owned, operated or leased by BOS or which has been
in the past owned, operated or leased by BOS, or in which BOS has a
security interest, is subject to any existing, pending or threatened
investigation, action or proceeding, including any notice of violation,
by any governmental authority regarding contamination of any part of
the property or infractions of any law, statute, ordinance or
regulation or any license or permit issued by any government agency
pertaining to health, industrial hygiene or environmental safety or
environmental conditions on, under or about the property, except for
such investigations, actions, proceedings, notifications, or
infractions which, in the aggregate, have not had and are not
reasonably likely to have a material adverse effect on BOS.
(c) HAZARDOUS SUBSTANCES. Except as set forth on Schedule
3.10, there are no Hazardous Substances (as that term is defined below)
presently located on, under or about any property which is currently
owned, operated, under the control of, or leased by BOS, or
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in which BOS has a security interest, nor was there any Hazardous
Substances located on, under or about any property prior to or during
the period any such property has been owned, operated, under the
control of, or leased by BOS. There has not been any generation, use,
handling, transportation, treatment or disposal of any Hazardous
Substances in connection with the conduct of the business of BOS that
has or might result in any material liability under any Environmental
Law.
For purposes of this Agreement, the term "Hazardous
Substances" shall mean: (i) substances that are defined or listed in,
or otherwise classified pursuant to, or the use or disposal of which
are regulated by, any Environmental Law as "hazardous substances,"
"toxic substances," or any other formulation intended to define, list
or classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, reproductive
toxicity, or "EP toxicity"; (ii) oil or petroleum derived from
substances and drilling fluids, produced waters, and other wastes
associated with the exploration, development, or production of crude
oil, natural gas, or geothermal resources; (iii) any flammable
substances or explosives, any radioactive materials, any hazardous
wastes or substances, any toxic wastes or substances or any other
materials or pollutants which pose a hazard to any property or to
individuals or entities on or about such property; and (iv) asbestos in
any form or electrical equipment which contains any oil or dielectric
fluid containing levels of polychlorinated biphenyls in excess of 50
parts per million.
3.11 LOANS AND INVESTMENTS. Except as disclosed in Schedule 3.11
hereto: (a) all the loans and investments of BOS are legal, valid and permitted
under federal and state laws and regulations applicable at the time of their
origination or assumption; and (b) BOS is not subject to any liability or claim
for violation of any state or federal law or regulation concerning extensions of
credit, including, without limitation, those relating to discriminatory lending
practices and truth-in-lending. Except for investments that have matured or been
sold, Schedule 3.11 sets forth all of the investments reflected in the balance
sheets of BOS dated December 31, 1997 and June 30, 1998. Except as set forth in
Schedule 3.11, none of such investments is subject to any restriction,
contractual, statutory or other, that would materially impair the ability of BOS
to dispose freely of any such investment at any time, except restrictions on the
public distribution or transfer of such investments under the Securities Act of
1933, as amended, or state securities laws. Except as set forth in Schedule
3.11, as of December 31, 1997, BOS had no holdings of positions in forwards,
futures, options, swaps, interest rate caps, collars and floors, or any other
similar instruments ("Derivative Instruments"). Except as set forth in Schedule
3.11, since January 1, 1996 BOS has not engaged in any transactions in or
involving Derivative Instruments except as agent on the order and for the
account of others. Schedule 3.11 sets forth for each Derivative Instrument held
by BOS since January 1, 1996, the present book value and market value, if
applicable, the open exposure of BOS, if any, and whether any counterparties to
any contract or agreement with respect to any such instrument is in default with
respect to such contract or agreement.
3.12 EXTENSIONS OF CREDIT. Schedule 3.12 sets forth a description of:
(a) by type and classification, if any, all loans, leases or other extensions of
credit by BOS on nonaccrual; (b) by type and classification, if any, all loans,
leases, or other extensions of credit or other real estate owned that have been
classified by the OTS or FDIC examiners, external or internal auditors,
directors, or management as "Watch List," "Specially Mentioned," "Substandard,"
"Doubtful," "Loss" or any
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comparable classification; and (c) all loans, leases or other extensions of
credit of BOS as to which any payment of principal, interest or other amount is
90 days or more past due.
3.13 DEPOSITS. Schedule 3.13 sets forth a list of deposit accounts
outstanding at BOS with an outstanding balance as of June 30, 1998, in excess of
$100,000.00.
3.14 LITIGATION AND GOVERNMENTAL PROCEEDINGS. Except as otherwise
expressly disclosed in Schedule 3.14, BOS is not engaged in, or threatened with,
any legal action or other proceeding before any court or administrative agency
which might be material to its business or in which the amount claimed against
it is $25,000 or more; except as set forth in Schedule 3.14, BOS is not in
default of any of its duties or obligations under, or with respect to, any
judgment, order, writ, injunction or decree of any court or governmental
department, commission, board, bureau, agency or other instrumentality having
jurisdiction over BOS or its business; except as disclosed in Schedule 3.14, BOS
has not been served with notice of and is not, to the best of its knowledge,
under investigation with respect to, any possible violation of any provision of
federal, state or local laws, rules, or regulations; and except as set forth in
Schedule 3.14, BOS is not subject to any order, letter agreement or written
direction of any governmental agency with respect to its financial or operating
ratios, or with respect to any other standards or tests imposed by state and
federal laws and regulations, including, without limitation, those relating to
net worth, liquidity and the maintenance of reserves, nor has any such order,
letter agreement or written direction been proposed to BOS. Schedule 3.14
contains a list identifying any claims pending on behalf of BOS against the
Small Business Administration (the "SBA"), any other governmental agencies, or
any third parties for reimbursement for loan defaults, indicating the date of
the claim, the name of the borrower, and the amount of the claim.
3.15 CONTRACTS AND AGREEMENTS. Except as provided by this Agreement and
except as set forth in Schedule 3.15, BOS is not a party to any contract,
agreement, commitment or offer which may become a binding obligation if accepted
by another person or entity, whether written or oral (collectively referred to
herein as an "Understanding") which individually, or with all other similar
Understandings relating to the same or similar subject matter, falls within any
of the following classifications:
(a) Any loan commitment, agreement, pledge, conditional sale
contract, security agreement, lease (excluding leases of real property
listed in Schedule 3.9), guarantee, subordination agreement or other
similar or related type of Understanding (but not including any deposit
agreements as to which BOS is the debtor), involving the expenditure of
$25,000 or more as to which BOS is a debtor, pledgor, lessee or
obligor;
(b) Any Understanding for the employment of any officer or
employee which is not terminable by BOS without liability, except as
may be provided by law, on not more than 30 days' notice;
(c) Any Understanding with any labor organization;
(d) Any Understanding which obligates BOS for a period in
excess of one year to purchase, sell or provide services, materials,
supplies, merchandise, facilities or equipment;
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(e) Any Understanding for the sale of any of its assets in
excess of $25,000 in amount, or for the grant of any preferential right
to purchase any of its assets, properties or rights in excess of
$25,000 in amount, or which requires the consent of any third party to
the transfer and assignment of any of its assets, properties or rights
in excess of $25,000 in amount, other than in the ordinary course of
business;
(f) Any Understanding for the borrowing of any money by BOS or
for a line of credit to BOS, except borrowings from the Federal Home
Loan Bank of San Francisco in the ordinary course of business;
(g) Any Understanding for any one capital expenditure or
series of related capital expenditures in excess of $25,000;
(h) Any Understanding to make, renew or extend the term of a
loan to any affiliate (as that term is defined for purposes of Rule 144
under the Securities Act of 1933) or group of persons related to any
affiliate, which, including any undisbursed or unfunded amount, when
aggregated with all outstanding indebtedness of such affiliate or group
of related persons to BOS, would exceed $25,000;
(i) Any Understanding of any kind (other than contracts
relating to demand, savings or time deposits) with any director or
officer of BOS or with any affiliate or member of the immediate family
(defined to include a person's spouse, parents, in laws, descendants or
siblings) of any such director, officer or affiliate;
(j) Any Understanding for the sale of loans with recourse; or
(k) Any Understanding not otherwise disclosed pursuant to this
Section 3.15 which is material to the financial condition, results of
operations, assets or business of BOS taken as a whole.
True and correct copies of all contracts, including amendments thereto,
setting forth the foregoing Understandings, are attached as a part of Schedule
3.15.
3.16 PERFORMANCE OF OBLIGATIONS. BOS has performed in all respects all
of the material obligations required to be performed by it to date and BOS is
not in default in any material respect under any agreement, contract or lease to
which it is a party or subject or is otherwise bound and which are material to
the financial condition of BOS taken as a whole; and no party with whom BOS has
an agreement which is of material importance to the business of BOS is in
material default thereunder, except as has been disclosed in Schedule 3.16. With
respect to loan delinquencies, Schedule 3.12 contains the monthly loan
delinquency report dated on or about June 30, 1998, in the form customarily
prepared for and delivered to the Board of Directors of BOS.
3.17 INSURANCE. Except as set forth in Schedule 3.17, BOS has in full
force and effect policies of insurance, including, without limitation, a
banker's blanket bond, with respect to its assets and business and against such
casualties and contingencies and of such amounts, types and forms as are
appropriate for its business, operations, properties and assets and as are usual
and customary in the banking industry. Set forth in Schedule 3.17 hereto is a
schedule of all policies of insurance (other
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than title insurance) carried and owned by BOS; showing the name of the
insurance company, the nature of the coverage, the policy limit, the annual
premiums and the expiration dates. There has been delivered to or made available
to VIBC a copy of each such policy of insurance. BOS has continually for the
past five years maintained a fidelity bond insuring it against acts of
dishonesty by its employees in such amounts as are disclosed in Schedule 3.17.
No claims have been made under such bond. BOS is not aware of any facts which
would form the basis of a claim under any such bond; nor does BOS have any
reason to believe that any insurance coverage will not be renewed by the
existing carrier on substantially the same terms as existing coverage.
3.18 TAXES. Except as set forth in Schedule 3.18 hereto, BOS has timely
filed all federal, state and local tax returns required to be filed by it or on
its behalf. Except as set forth in Schedule 3.18, all taxes shown by such
returns to be due and payable have been paid or are reflected as a liability on
the BOS Financial Statements. None of the federal, state and local tax returns
of BOS have been audited by the Internal Revenue Service or other governmental
authorities having jurisdiction over the examination of such returns except for
the years or periods indicated in Schedule 3.18. All material deficiencies
(including interest and penalties, if any, thereon), if any, imposed as a result
of such examinations have been either paid, or have been accrued as a liability
on the BOS Financial Statements, or are being contested in good faith and are
disclosed in Schedule 3.18. No material tax deficiency has been or to the
knowledge of BOS is proposed to be assessed against BOS by any federal, state or
local authority or agency. BOS has not agreed to any extension of time for the
assessment of any taxes of whatsoever kind or nature payable by it, nor has BOS
waived or been requested to waive any applicable statute of limitations with
relation to the payment of any federal, state or local taxes. The accruals for
taxes reflected on the BOS Financial Statements are adequate for all unpaid
federal, state or local taxes (including interest and penalties, if any,
thereon) due, or which became due for any period commencing prior to December
31, 1997.
3.19 ABSENCE OF CERTAIN CHANGES. Except as disclosed on Schedule 3.19
or as permitted by this Agreement, since December 31, 1997, the business of BOS
has been conducted diligently and only in the ordinary course, in the same
manner as heretofore conducted and there has not been:
(a) Any change (other than changes affecting financial
institutions generally, including changes in interest rates, laws or
regulations) in the financial condition of BOS taken as a whole which
has been materially adverse;
(b) Any declaration, setting aside, or the payment of any
dividend or other distribution with respect to BOS Stock or the
issuance of any additional shares of, or options to purchase, BOS Stock
or any other security of BOS;
(c) Any damage, destruction or loss (whether or not covered by
insurance) which individually or taken as a whole materially adversely
affects the property, business or prospects of BOS;
(d) Any change in accounting methods or practices of BOS;
(e) Any revaluation by BOS of any of BOS's assets except as
may be applicable to available-for-sale securities;
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(f) Any increase in the salary schedule or compensation rate,
or the declaration, payment or commitment or obligation of any kind for
the payment by BOS of a bonus or other additional salary or
compensation, other than in accordance with past practice;
(g) Any sale, assignment or transfer of any material assets of
BOS except in the ordinary course of business;
(h) Any waiver or release of any material right or claim of
BOS, except in the ordinary course of business; or
(i) Any agreement to take any action specified in Sections
3.19(a) through (h) hereof.
3.20 BROKERS' AND FINDERS' FEES. Except for Xxxxx Financial, Inc., or
as specified in Schedule 3.20, neither BOS nor any of its officers or employees
have paid or agreed to pay, or have done any act which would give rise to the
payment of, any fee, commission or consideration to any agent, broker, finder or
other person on account of services rendered as a broker or finder in connection
with this Agreement or the Transactions contemplated herein, or which has
resulted in, or may give rise to, any obligation on the part of BOS or VIBC
therefor. Schedule 3.20 contains a true and correct copy of the fee agreement
with Xxxxx Financial, Inc. BOS agrees to indemnify and hold VIBC harmless from
and against any and all claims, liabilities, or obligations with respect to any
other brokers' or finders' fees, commissions, or expenses asserted by any other
person on the basis of any act or statement alleged to have been made by BOS or
its affiliates.
3.21 EMPLOYEES. There are no material controversies pending or
threatened between BOS and any of its employees. Except as disclosed in the BOS
Financial Statements, all material sums due for employee compensation and
benefits have been duly and adequately paid or accrued on the books of BOS.
3.22 REGULATORY REPORTS. Except as otherwise set forth in Schedule
3.22, since January 1, 1995, BOS has filed all reports, returns, registrations
and statements, together with any amendments required to be made with respect
thereto (such reports, filings and amendments referred to hereinafter as "BOS
Filings"), that were required to be filed with (a) the OTS, (b) the FDIC, and
(c) any other applicable regulatory agency, except where the failure to file
such reports, returns, registrations and statements has not had and is not
reasonably expected to have a material adverse effect on the business, financial
condition, results of operations or prospects of BOS. Except as otherwise set
forth in Schedule 3.22, no administrative actions have been taken or orders
issued in connection with such BOS Filings and as of their respective dates,
each of such BOS Filings: (i) complied in all material respects with all rules
and regulations promulgated by the regulatory agency with which it was filed (or
was amended so as to be so promptly following discovery of any such
noncompliance); and (ii) did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Any financial statement contained in any of such BOS
Filings that was intended to present the financial position of BOS fairly
presented the financial position of BOS and was prepared in accordance with
generally accepted accounting principles or banking regulations consistently
applied, except as stated therein, during the periods
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involved. BOS has furnished VIBC with true and correct copies of all BOS Filings
filed by BOS since January 1, 1996.
3.23 BOS EMPLOYEE BENEFIT PLANS AND EMPLOYMENT AND LABOR CONTRACTS.
(a) Schedule 3.23 sets forth and describes all director and/or
employee benefit plans and any collective bargaining agreements, labor
contracts and employment agreements in which BOS participates, or by
which it is bound, including, without limitation: (i) any profit
sharing, deferred compensation, bonus, stock option, stock purchase,
pension, ESOP, retainer consulting, retirement, welfare or incentive
plan or agreement whether legally binding or not; (ii) any written
employment agreement and any other employment agreement whether written
or oral; (iii) any other "employee benefit plan" [within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1975
("ERISA")] (collectively, the "BOS Employment Agreements"); or (iv) any
salary continuation or change in control agreements. Except as set
forth in Schedule 3.23: (i) there are no negotiations, demands or
proposals that are pending or, to the best knowledge of BOS, threatened
that concern matters now covered, or that would be covered, by any
employment agreements or employee benefit plans other than amendments
to plans qualified under Section 401 of the Internal Revenue Code (the
"Code") that are required by the Tax Reform Act of 1986 and later
legislation; (ii) BOS is in material compliance with the requirements
prescribed by any and all rules and regulations currently in effect
including but not limited to ERISA and the Code applicable to all such
employee benefit plans; (iii) BOS is in compliance in all material
respects with all other rules and regulations applicable to employee
benefit plans and employment agreements; (iv) BOS has performed all of
its obligations under all such employee benefit plans and employment
agreements; and (v) there are no actions, suits or claims pending or,
to the best knowledge of BOS, threatened against any such employee
benefit plans, or the assets of such plans, or with respect to any BOS
Employment Agreements, and no facts exist which are reasonably likely
to give rise to any actions, suits or claims (other than routine claims
for benefits) against such plans or the assets of such plans or BOS on
account of any such employment agreements, whether written or oral.
(b) The "employee pension benefit plans" (within the meaning
of Section 312 of ERISA) described on Schedule 3.23 have been duly
authorized by the Board of Directors of BOS. Except as set forth in
Schedule 3.23, each such plan and associated trust is qualified in form
and operation under Section 401(a) and exempt from tax under Section
501(a) of the Code, respectively, and no event has occurred that will
or is reasonably likely to give rise to disqualification of any such
plan or loss of the exemption from tax of any such trust under said
sections. No event has occurred that will or is reasonably likely to
subject any such plans to tax under Section 511 of the Code. None of
such plans has engaged in a merger or consolidation with any other plan
or transferred assets or liabilities from any other plan. No prohibited
transaction (within the meaning of Section 409 or 502(i) of ERISA or
Section 4975 of the Code) or party-in-interest transaction (within the
meaning of Section 406 of ERISA) has occurred with respect to any of
such plans. No employee of BOS has engaged in any transactions which
could subject BOS to indemnify such person against liability. All costs
of plans have been provided for on the basis of consistent methods in
accordance with sound actuarial assumptions and practices. No employee
benefit plan has incurred any "accumulated funding deficiency" (as
defined in ERISA), whether or not waived, taking into
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account contributions made within the period described in Section
412(c)(10) of the Code; nor are there any unfunded amounts under any
employee benefit plan; nor has BOS failed to make any contributions or
pay any amount due and owing as required by law or the terms of any
employee benefit plan or employment agreement. Subject to amendments
that are required by the Tax Reform Act of 1986 as amended and later
legislation, since the last valuation date for each employee pension
benefit plan, there has been no amendment or change to such plan that
would increase the amount of benefits thereunder.
(c) BOS does not sponsor or participate in, and has not
sponsored or participated in, any employee benefit pension plan to
which Section 4021 of ERISA applies that would create a liability under
Title IV of ERISA.
(d) BOS does not sponsor or participate in, and has not
sponsored or participated in, any employee benefit pension plan that is
a "multi-employer plan" (within the meaning of Section 3(37) of ERISA)
that would subject BOS to any liability with respect to any such plan.
(e) All group health plans of BOS (including any plans of
affiliates of BOS that must be taken into account under Section 162(i)
or (k) of the Code as in effect immediately prior to the Technical and
Miscellaneous Revenue Act of 1988 and Section 4980B of the Code) have
been operated in compliance with the group health plan continuation
coverage requirements of Section 4980B of the Code to the extent such
requirements are applicable.
(f) There have been no acts or omissions by BOS that have
given rise to or, to the best knowledge of BOS, may give rise to fines,
penalties, taxes, or related charges under Sections 502(c) or (i) or
4071 of ERISA or Chapter 43 of the Code.
(g) Except as described in Section 3.23(j), BOS does not
maintain any employee benefit plan or employment agreement pursuant to
which any benefit plan or other payment will be required to be made by
BOS or pursuant to which any other benefit will accrue or vest in any
director, officer or employee of BOS, in either case as a result of the
consummation of the transactions contemplated by the Agreement.
(h) No "reportable event," as defined in ERISA, has occurred
with respect to any of the employee benefit plans.
(i) All amendments required to bring each of the employee
benefit plans into conformity with all of the provisions of ERISA and
the Code and all other applicable laws, rules and regulations have been
made.
(j) Schedule 3.23 sets forth the name of each director,
officer or employee of BOS entitled to receive any benefit or any
payment of any amount under any existing employment agreement,
severance plan or other benefit plan as a result of the consummation of
any transaction contemplated in this Agreement, and with respect to
each such person, the nature of such benefit or the amount of such
payment, the event triggering the benefit or payment, and the date of,
and parties to, such employment agreement, severance plan or other
benefit plan. BOS has furnished VIBC with true and correct copies of
all documents with
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respect to the plans and agreements referred to in Schedule 3.23
delivered as of the date of this Agreement, including all amendments
and supplements thereto, and all related summary plan descriptions. For
each of the employee pension benefit plans of BOS referred to in
Schedule 3.23 delivered as of the date of this Agreement, if any, or
except as noted therein, BOS has furnished VIBC with true and correct
copies of: (i) the Form 5500 which was filed in each of the three most
recent plan years, including without limitation, all schedules thereto
and all financial statements with attached opinions of independent
accountants; (ii) the most recent determination letter from the
Internal Revenue Service; (iii) the statement of assets and liabilities
as of the most recent valuation date; and (iv) the statement of changes
in fund balance and in financial position or the statement of changes
in net assets available for benefits under each of said plans for the
most recently ended plan year. The documents referred to in
subdivisions (iii) and (iv) fairly present the financial condition of
each of said plans as of and at such dates and the results of
operations of each of said plans, all in accordance with generally
accepted accounting principles applied on a consistent basis.
3.24 STOCK OPTION PLANS. Schedule 3.24 sets forth a true and correct
copy of BOS's 1985 and 1995 Stock Option Plans and a schedule showing the names,
dates of grant, vesting schedules, termination dates, and option prices for each
option outstanding as of the date of this Agreement. The 1985 and 1995 Stock
Option Plans have been duly approved by the Board of Directors and shareholders
of BOS and by the OTS, each stock option has been approved by the Board of
Directors of BOS, and, upon exercise of the options in accordance with their
terms, the shares of BOS Stock issued have been and will be validly issued,
fully paid and nonassessable.
3.25 ABSENCE OF CERTAIN PRACTICES. Except as may be disclosed to VIBC
on Schedule 3.25, neither BOS, nor any officer, director, employee or agent of
BOS has, directly or indirectly, within the past four years, given or made or
agreed to give or make any illegal commission, payment, gratuity, gift,
political contribution or similar benefit to any customer, supplier,
governmental employee or other person in order to obtain business for or further
the business of BOS.
3.26 NO VIOLATION OF LAW. BOS is in substantial compliance with all
material laws relating to its business or employment practices or the ownership
of its properties, and is in substantial compliance with each material law,
ordinance, order, decree or regulation of any governmental entity applicable to
the conduct thereof or the ownership of the properties related thereto, except
in each case for violations which either individually or in the aggregate do not
and will not have a material adverse effect on the business, financial condition
or results of operations of BOS taken as a whole.
3.27 CERTAIN INTERESTS. Except as disclosed on Schedule 3.27, except in
arm's-length transactions pursuant to normal commercial terms and conditions:
(a) no officer or director of BOS has any material interest in any property,
real or personal, tangible or intangible, used in or pertaining to the business
of BOS except for the normal rights of a shareholder of BOS; (b) no such person
is indebted to BOS except for normal business expense advances or lending
transactions in the ordinary course of business on the same terms, including
interest rates and collateral on loans as those prevailing at the same time for
comparable transactions with others; and (c) BOS is not indebted to any such
person except for amounts due under normal salary or reimbursement of ordinary
business expenses. Except as disclosed on Schedule 3.23, the consummation of the
Transactions contemplated hereby will not (either alone, or upon the occurrence
of any act or event, or with the lapse of time,
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or both) result in any payment (severance or other) becoming due from BOS to any
employee of BOS.
3.28 MINUTE BOOKS. The minute books of BOS accurately reflect all
material actions duly taken by the shareholders, Board of Directors and
committees of BOS and contain true and complete copies of BOS's Charter and
Bylaws and all amendments thereto.
3.29 ACCOUNTING RECORDS; DATA PROCESSING. BOS has records that, in all
material respects, fairly reflect its transactions, and accounting controls
sufficient to ensure that such transactions are in all material respects: (a)
executed in accordance with management's general or specific authorization; and
(b) recorded in conformity with generally accepted accounting principles.
Schedule 3.29 contains a true and correct copy of the OTS's most recent audit of
BOS's data processing system. Except as set forth in Schedule 3.29, the
procedures and equipment, including, without limitation, the data processing
equipment, data transmission equipment, and related peripheral equipment and
software, used by BOS in the operation of its business (including any disaster
recovery facility) to generate and retrieve such records are adequate in
relation to the size and complexity of the business of BOS.
3.30 OPERATING LOSSES. Schedule 3.30 sets forth any individual
Operating Loss (as defined below) in excess of $500.00 that has occurred at BOS
during the period after December 31, 1997. Except as set forth on Schedule 3.30,
since December 31, 1997, no event has occurred, and no action has been taken or
omitted to be taken by any employee of BOS that has resulted in the occurrence
by BOS of an Operating Loss or that might reasonably be expected to result in
the occurrence by BOS of an Operating Loss after December 31, 1997, which, net
of any insurance proceeds payable in respect thereof, exceeds, or would exceed
$10,000 by itself or $50,000 when aggregated with all other Operating Losses
during such period. For purposes of this Agreement, "Operating Loss" means any
loss resulting from cash shortages, lost or misposted items, disputed clerical
and accounting errors, forged checks, payment of checks over stop payment
orders, counterfeit money, wire transfers made in error, theft, robberies,
employee dishonesty, defalcations, check kiting, fraudulent use of credit cards
or electronic teller machines, civil money penalties, fines, litigation, claims,
arbitration awards or other similar acts or occurrences.
3.31 CRA STANDING. BOS's compliance under the Community Reinvestment
Act (the "CRA") should not constitute grounds for either the denial by any
regulatory agency of any application to consummate the Transactions contemplated
by this Agreement or the imposition of a materially burdensome condition in
connection with the approval of any such application. BOS has not been advised
of any concerns regarding compliance with the CRA by any regulatory agency or
any other person.
3.32 YEAR 2000 MATTERS. BOS has completed a review of its computer
systems to identify systems that could be affected by the "Year 2000." The
management of BOS has developed and commenced implementation of a plan to
respond to this issue. Between the date of this Agreement and the Effective Time
of the Merger, BOS shall use commercially practicable efforts to implement
and/or continue to undertake such a plan. BOS has not been advised by any
regulatory authority to undertake any additional actions nor is BOS subject to
any regulatory order, memorandum or directive (other than directives of general
applicability to financial institutions) with respect thereto.
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Year 2000 issues have not had, and are not reasonably expected to have, a
material adverse effect on BOS.
3.33 ACCURACY AND CURRENTNESS OF INFORMATION FURNISHED. The
representations and warranties made by BOS hereby and in the schedules hereto
contain no statements of fact which are untrue or misleading, or omit to state
any material fact which is necessary under the circumstances to prevent the
statements contained herein or in such schedules from being misleading. BOS
hereby covenants that it shall, as of the Effective Time of the Merger, amend
and/or supplement the schedules prepared and delivered pursuant to this Article
III to ensure that the information set forth in such schedules accurately
reflects the then-current status of BOS.
3.34 EFFECTIVE DATE OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. Each representation, warranty, covenant and agreement of BOS set
forth in this Agreement shall be deemed to be made on and as of the date hereof
and, as subsequently amended and/or supplemented as provided in Section 3.33, as
of the Effective Time of the Merger.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF VIBC
VIBC hereby represents and warrants to BOS as follows:
4.1 ORGANIZATION, STANDING AND POWER. VIBC is a California corporation,
duly organized, validly existing and in good standing under the laws of the
State of California and VIBC has all requisite corporate power and authority to
own, lease and operate its properties and assets and to carry on its business as
presently conducted. Neither the scope of the business of VIBC nor the location
of any of its properties requires that it be licensed to do business in any
jurisdiction other than the State of California. Attached hereto as Schedule 4.1
are true and correct copies of its Articles of Incorporation and Bylaws, as
amended to the date hereof.
4.2 CAPITALIZATION. The authorized capitalization of VIBC consists of
10,000,000 shares of Preferred Stock of which none are issued and outstanding
and 25,000,000 shares of Common Stock, no par value, of which 7,803,121 shares
are issued and outstanding as of the date of this Agreement. As of the date of
this Agreement, VIBC Stock was held of record or beneficially by approximately
2,061 shareholders of record and the VIBC Stock was registered under the
Securities Exchange Act of 1934, as amended. All of the outstanding shares of
the VIBC Stock are, and when issued in exchange for the BOS Stock will be,
validly issued, fully paid and nonassessable.
4.3 SUBSIDIARIES. Except for VIB, VIBC does not own, directly or
indirectly (except as pledgee pursuant to loans which are not in default or for
shares held by VIB as the result of any foreclosure by VIB on any loan, which
shares do not exceed 4.9% of the outstanding common stock of any such company),
any outstanding stock or other voting interests in any corporation, partnership,
joint venture or other entity. VIB is a California state banking corporation,
duly organized, validly existing and in good standing under the laws of the
State of California; is an "insured bank" as defined in the Federal Deposit
Insurance Act; and VIB has all requisite corporate power and authority to own,
lease and operate its properties and assets and carry on its business as
presently conducted. Neither the scope of the business of VIB nor the location
of any of its properties requires that it be
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licensed or qualified to do business in any jurisdiction other than the States
of California, Arizona and Nevada. The shares of VIB's common stock held by VIBC
are free and clear of all security interests, encumbrances, restrictions, claims
or other defects in title.
4.4 AUTHORITY. The execution and delivery by VIBC of this Agreement and
the consummation of the Transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of VIBC. The
Agreement is, and the Merger Agreement will be, binding and enforceable
obligations of VIBC and BOS Interim Bank, respectively, except as enforceability
thereof may be limited by bankruptcy, insolvency, moratorium or similar laws
affecting the rights of creditors generally or California corporations, or
federal savings banks, or by general equitable principles, or by 12 U.S.C.
Section 1818(b)(6)(D). Neither the execution and delivery by VIBC of this
Agreement, nor the consummation of the Transactions contemplated herein, nor
compliance by VIBC with any of the provisions hereof will: (a) conflict with, or
result in a breach of, any provision of its Articles of Incorporation or Bylaws;
or (b) except as set forth in Schedule 4.4, constitute a breach of, or result in
default, or give rise to any rights of termination, cancellation or
acceleration, or give rise to any right by any other person or entity to acquire
any security interest in any assets under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, franchise, license, permit,
agreement or other instrument or obligation to which VIBC or any of its
properties or assets are subject. No consent or approval of, notice to or filing
with any governmental authority having jurisdiction over any aspect of the
business or assets of VIBC, and no consent or approval of or notice to any other
person or entity, is required in connection with the execution and delivery by
VIBC of this Agreement or by BOS Interim Bank of the Merger Agreement or the
consummation by VIBC of the Transactions contemplated hereby or thereby, except:
(a) approval of this Agreement and the Merger Agreement by the shareholder of
BOS Interim Bank; (b) such approvals of this Agreement, the Merger Agreement,
and the Transactions contemplated herein and therein as may be required by the
OTS pursuant to the applicable requirements of the Home Owners Loan Act, as
amended, and the Bank Merger Act, as amended, and/or by the Board of Governors
of the Federal Reserve System as may be required under the Bank Holding Company
Act of 1956, as amended; and (c) as set forth on Schedule 4.4.
4.5 FINANCIAL STATEMENTS. Except as disclosed in the notes relating
thereto, or otherwise on Schedule 4.5, the audited consolidated financial
statements of VIBC as of and for the periods ended December 31, 1996 and 1997,
as well as the unaudited consolidated financial statements of VIBC as of and for
the periods ended June 30, 1997 and 1998, attached hereto as Schedule 4.5 (all
of these statements are collectively referred to herein as the "VIBC Financial
Statements"): (i) fairly and accurately present the financial condition of VIBC
as of the dates thereof and the results of operations and its cash flows for the
periods therein set forth; (ii) have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved; and (iii) are based on the books and records of VIBC. VIBC's reserves
for possible loan losses as disclosed in the VIBC Financial Statements were
adequate as of such dates to absorb reasonably anticipated losses in the loan
portfolio of VIBC in view of the size and character of such portfolio, then
current economic conditions, and other pertinent factors; and no facts have
subsequently come to the attention of management of VIBC which would cause
management to restate as of any of such dates in any material way the level of
such reserves for possible loan losses. With respect to other real estate owned
by VIBC, the value attributed thereto for purposes of preparing the VIBC
Financial Statements does not exceed the aggregate fair market value of such
real estate as of the date of acquisition of such real estate or as subsequently
reduced, all in accordance with generally accepted
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accounting principles. With regard to investments owned by VIBC, the value
attributed thereto for purposes of preparing the VIBC Financial Statements is in
accordance with generally accepted accounting principles.
4.6 UNDISCLOSED LIABILITIES. VIBC and VIB do not have any liabilities
or obligations, either accrued or contingent, which are material to VIBC taken
as a whole and which have not been: (a) reflected or disclosed in the VIBC
Financial Statements; or (b) disclosed in Schedule 4.6. VIBC does not know of
any basis for the assertion against it or VIB of any liability, obligation or
claim (including, without limitation, that of any regulatory authority) that is
reasonably likely to result in or cause any material adverse change in the
business or financial condition of VIBC when taken as a whole, which is not
fairly reflected in the VIBC Financial Statements or otherwise disclosed in
Schedule 4.6 hereto.
4.7 TITLE TO ASSETS. VIBC and VIB have good, valid and marketable title
to all material properties and assets, other than real property and securities
pledged to secure public deposits or retail repurchase agreements, owned or
stated to be owned by VIBC or VIB and reflected on the VIBC Financial
Statements, or acquired after December 31, 1997 (except properties sold or
otherwise transferred in the ordinary course of business since December 31,
1997), free and clear of all mortgages, liens, encumbrances, pledges or charges
of any kind or nature (except for liens for current taxes not yet due and
payable and except as disclosed in the VIBC Financial Statements or in Schedule
4.7 hereto).
4.8 REAL ESTATE. Schedule 4.8 hereto contains a list of all real
property, including leaseholds and "other real estate owned," owned or leased by
VIBC or VIB. Schedule 4.8 contains, among other things, an accurate summary of
all material commitments which VIBC or VIB has to improve real estate owned or
leased by it. VIBC or VIB has good and marketable title to all the real
property, and valid leasehold interests in the leaseholds, described in Schedule
4.8, free and clear of all mortgages, covenants, conditions, restrictions,
easements, liens, security interests, charges, claims and encumbrances, except
for: (a) rights of lessors, co-lessees or sublessees in such matters which are
reflected in the leases; (b) current taxes not yet due and payable; (c) as
described in any title policies; (d) such imperfections of title and
encumbrances, if any, as do not materially detract from the value of or
materially interfere with the present use of such property; or (e) except as
described in Schedule 4.8 hereto. Copies of title policies for properties
described in Schedule 4.8 as owned by VIBC or VIB have been made available to
BOS. The activities of VIBC and VIB with respect to their real property owned
and their leaseholds for use in connection with their operations are in all
material respects permitted and authorized by applicable zoning laws, ordinances
and regulations and all laws and regulations of any governmental department or
agency relative to environmental matters affecting such property, except as
otherwise disclosed in Schedule 4.8. VIBC and/or VIB enjoy quiet and peaceful
possession of all such property. All tangible properties of VIBC that are
material to the business, financial condition, results of operations or
prospects of VIBC are in a good state of maintenance and repair, except for
ordinary wear and tear, and are adequate for the conduct of the business of VIBC
and VIB as presently conducted. Except as set forth in Schedule 4.8: (i) the
execution of this Agreement, the performance of the obligations of VIBC
hereunder and the consummation of the Transactions contemplated herein do not
conflict with and will not result in a breach or default under any lease,
agreement or contract described in Schedule 4.8, or give any other party thereto
a right to terminate or modify any term thereof; (ii) each lease and agreement
under which VIBC or VIB is a lessee or holds or operates any property (real,
personal or mixed) owned
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by any third party is in full force and effect and is a valid and legally
binding obligation of VIBC or VIB; (iii) VIBC or VIB and each other party to any
such lease or agreement have performed in all material respects all the
obligations required to be performed by them to date under such lease or
agreement and are not in default in any material respect under any such lease or
agreement and there is no pending or threatened proceeding, or proceeding which
VIBC has reason to believe may be threatened, that would interfere with the
quiet enjoyment of such leasehold or such material property by VIBC or VIB; (iv)
no underground storage tanks or surface impoundments are on or in the real
property; and (v) no asbestos is contained or located on any of the real
property. None of such leases or agreements contain any unusual provision which
now or in the future may cause a material adverse change in the business
condition of VIBC.
4.9 ENVIRONMENTAL LIABILITIES.
(a) COMPLIANCE. Except as set forth on Schedule 4.9, VIBC and
VIB are conducting and, to the best of their knowledge, have conducted
their business, and are using and, to the best of their knowledge, have
used their properties, whether currently owned, operated or leased, or
owned, operated or leased by VIBC or VIB at any time in the past, and
all properties in which VIBC or VIB has a security interest have been
used and are being used, in compliance with all applicable
Environmental Laws.
(b) NO INVESTIGATIONS. Neither VIBC nor VIB has received
notice that any property currently owned, operated or leased by VIBC or
VIB or which has been in the past owned, operated or leased by VIBC or
VIB, or in which VIBC or VIB has a security interest, is subject to any
existing, pending or threatened investigation, action or proceeding,
including any notice of violation, by any governmental authority
regarding contamination of any part of the property or infractions of
any law, statute, ordinance or regulation or any license or permit
issued by any government agency pertaining to health, industrial
hygiene or environmental safety or environmental conditions on, under
or about the property, except for such investigations, actions,
proceedings, notifications, or infractions which, in the aggregate,
have not had and are not reasonably likely to have a material adverse
effect on VIBC.
(c) HAZARDOUS SUBSTANCES. Except as set forth on Schedule 4.9,
there are no Hazardous Substances presently located on, under or about
any property which is currently owned, operated, under the control of,
or leased by VIBC or VIB, or in which VIBC or VIB have a security
interest, nor was there any Hazardous Substances located on, under or
about any property prior to or during the period any such property has
been owned, operated, under the control of, or leased by VIBC or VIB.
There has not been any generation, use, handling, transportation,
treatment or disposal of any Hazardous Substances in connection with
the conduct of the business of VIBC or VIB that has or might result in
any material liability under any Environmental Law.
4.10 LOANS AND INVESTMENTS. Except as disclosed in Schedule 4.10
hereto: (a) all the loans and investments of VIB are legal, valid and permitted
under federal and state laws and regulations applicable at the time of their
origination or assumption; and (b) VIB is not subject to any liability or claim
for violation of any state or federal law or regulation concerning extensions of
credit, including, without limitation, those relating to discriminatory lending
practices and truth-in-lending. Except for investments that have matured or been
sold, Schedule 4.10 sets forth all of the investments
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reflected in the balance sheets of VIB dated December 31, 1997 and June 30,
1998. Except as set forth in Schedule 4.10, none of such investments is subject
to any restriction, contractual, statutory or other, that would materially
impair the ability of VIB to dispose freely of any such investment at any time,
except restrictions on the public distribution or transfer of such investments
under the Securities Act of 1933, as amended, or state securities laws. Except
as set forth in Schedule 4.10, as of December 31, 1997, VIB had no holdings of
positions in Derivative Instruments. Except as set forth in Schedule 4.10, since
January 1, 1996 VIB has not engaged in any transactions in or involving
Derivative Instruments except as agent on the order and for the account of
others. Schedule 4.10 sets forth for each Derivative Instrument held by VIB
since January 1, 1996, the present book value and market value, if applicable,
the open exposure of VIB, if any, and whether any counterparties to any contract
or agreement with respect to any such instrument is in default with respect to
such contract or agreement.
4.11 DEPOSITS. Schedule 4.11 sets forth a list of deposit accounts
outstanding at VIB with an outstanding balance as of July 20, 1998, in excess of
$250,000.00.
4.12 LITIGATION AND GOVERNMENTAL PROCEEDINGS. Except as otherwise
expressly disclosed in Schedule 4.12, VIBC and VIB are not engaged in, or
threatened with, any legal action or other proceeding before any court or
administrative agency which might be material to its or their business or in
which the amount claimed against them is $100,000 or more; except as set forth
in Schedule 4.12, VIBC and VIB are not in default of any of their duties or
obligations under, or with respect to, any judgment, order, writ, injunction or
decree of any court or governmental department, commission, board, bureau,
agency or other instrumentality having jurisdiction over VIBC and VIB or their
businesses; except as disclosed in Schedule 4.12, VIBC and VIB have not been
served with notice of and are not, to the best of their knowledge, under
investigation with respect to, any possible violation of any provision of
federal, state or local laws, rules, or regulations; and except as set forth in
Schedule 4.12, VIBC and VIB are not subject to any order, letter agreement or
written direction of any governmental agency with respect to its financial or
operating ratios, or with respect to any other standards or tests imposed by
state and federal laws and regulations, including, without limitation, those
relating to net worth, liquidity and the maintenance of reserves, nor has any
such order, letter agreement or written direction been proposed to VIBC or VIB.
Schedule 4.12 contains a list identifying any claims pending on behalf of VIB
against the SBA, any other governmental agencies, or any third parties for
reimbursement for loan defaults, indicating the date of the claim, the name of
the borrower, and the amount of the claim.
4.13 CONTRACTS AND AGREEMENTS. Except as provided by this Agreement and
except as forth in Schedule 4.13 VIBC and VIB are not parties to any
Understanding which individually, or with all other similar Understandings
relating to the same or similar subject matter, falls within any of the
following classifications:
(a) Any loan commitment, agreement, pledge, conditional sale
contract, security agreement, lease (excluding leases of real property
listed in Schedule 4.8), guarantee, subordination agreement or other
similar or related type of Understanding (but not including any deposit
agreements as to which VIB is the debtor), involving the expenditure of
$100,000 or more as to which VIBC or VIB is a debtor, pledgor, lessee
or obligor;
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(b) Any Understanding for the employment of any officer or
employee which is not terminable by VIBC or VIB without liability on
not more than 30 days' notice;
(c) Any Understanding with any labor organization;
(d) Any Understanding which obligates VIBC or VIB for a period
in excess of one year to purchase, sell or provide services, materials,
supplies, merchandise, facilities or equipment;
(e) Any Understanding for the sale of any of VIBC's or VIB's
assets in excess of $100,000 in amount, or for the grant of any
preferential right to purchase any of their assets, properties or
rights in excess of $100,000 in amount, or which requires the consent
of any third party to the transfer and assignment of any of their
assets, properties or rights in excess of $100,000 in amount, other
than in the ordinary course of business;
(f) Any Understanding for the borrowing of any money by VIBC
or VIB or for a line of credit to VIBC or VIB, except borrowings from
the Federal Reserve Bank of San Francisco in the ordinary course of
business;
(g) Any Understanding for any one capital expenditure or
series of related capital expenditures in excess of $100,000;
(h) Any Understanding to make, renew or extend the term of a
loan to any affiliate (as that term is defined for purposes of Rule 144
under the Securities Act of 1933) or group of persons related to any
affiliate, which, including any undisbursed or unfunded amount, when
aggregated with all outstanding indebtedness of such affiliate or group
of related persons to VIBC, would exceed $100,000;
(i) Any Understanding of any kind (other than contracts
relating to demand, savings or time deposits) with any director or
officer of VIBC or with any affiliate or member of the immediate family
(defined to include a person's spouse, parents, in laws, descendants or
siblings) of any such director, officer or affiliate;
(j) Any Understanding for the sale of loans with recourse; or
(k) Any Understanding not otherwise disclosed pursuant to this
Section 4.13 which is material to the financial condition, results of
operations, assets or business of VIBC taken as a whole.
True and correct copies of all contracts, including amendments thereto,
setting forth the foregoing Understandings, are attached as a part of Schedule
4.13.
4.14 PERFORMANCE OF OBLIGATIONS. VIBC and VIB have performed in all
respects all of the material obligations required to be performed by them to
date and VIBC or VIB are not in default in any material respect under any
agreement, contract or lease to which they are a party or subject or are
otherwise bound and which are material to the financial condition of VIBC taken
as a whole; no party with whom VIBC or VIB has an agreement which is of material
importance to the business
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of VIBC is in material default thereunder, except as has been disclosed in
Schedule 4.14. With respect to loan delinquencies, Schedule 4.14 contains the
monthly loan delinquency report dated on or about June 30, 1998, in the form
customarily prepared for and delivered to the Board of Directors of VIB.
4.15 INSURANCE. Except as set forth in Schedule 4.15, VIBC and VIB have
in full force and effect policies of insurance, including, without limitation, a
banker's blanket bond, with respect to their assets and business and against
such casualties and contingencies and of such amounts, types and forms as are
appropriate for their business, operations, properties and assets and as are
usual and customary in the banking industry. Set forth in Schedule 4.15 hereto
is a schedule of all policies of insurance (other than title insurance) carried
and owned by VIBC and VIB; showing the name of the insurance company, the nature
of the coverage, the policy limit, the annual premiums and the expiration dates.
There has been delivered to or made available to BOS a copy of each such policy
of insurance. VIB has continually for the past five years maintained a fidelity
bond insuring it against acts of dishonesty by its employees in such amounts as
are disclosed in Schedule 4.15. No claims have been made under such bond. VIBC
is not aware of any facts which would form the basis of a claim under any such
bond; nor does VIBC have any reason to believe that any insurance coverage will
not be renewed by the existing carrier on substantially the same terms as
existing coverage.
4.16 TAXES. Except as set forth in Schedule 4.16 hereto, VIBC and VIB
have timely filed all federal, state and local tax returns required to be filed
by them or on their behalf. Except as set forth in Schedule 4.16, all taxes
shown by such returns to be due and payable have been paid or are reflected as a
liability on the VIBC Financial Statements. None of the federal, state and local
tax returns of VIBC or VIB have been audited by the Internal Revenue Service or
other governmental authorities having jurisdiction over the examination of such
returns except for the years or periods indicated in Schedule 4.16. All material
deficiencies (including interest and penalties, if any, thereon), if any,
imposed as a result of such examinations have been either paid, or have been
accrued as a liability on the VIBC Financial Statements, or are being contested
in good faith and are disclosed in Schedule 4.16. No material tax deficiency has
been or to the knowledge of VIBC is proposed to be assessed against VIBC or VIB
by any federal, state or local authority or agency. Neither VIBC nor VIB have
agreed to any extension of time for the assessment of any taxes of whatsoever
kind or nature payable by it, nor has VIBC or VIB waived or been requested to
waive any applicable statute of limitations with relation to the payment of any
federal, state or local taxes. The accruals for taxes reflected on the VIBC
Financial Statements are adequate for all unpaid federal, state or local taxes
(including interest and penalties, if any, thereon) due, or which became due for
any period commencing prior to December 31, 1997.
4.17 ABSENCE OF CERTAIN CHANGES. Except as disclosed on Schedule 4.17
or as permitted by this Agreement, since December 31, 1997, the business of VIBC
and VIB have been conducted diligently and only in the ordinary course, in the
same manner as heretofore conducted and there has not been:
(a) Any change (other than changes affecting financial
institutions generally, including changes in interest rates, laws or
regulations) in the financial condition of VIBC taken as a whole which
has been materially adverse;
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(b) Any declaration, setting aside, or the payment of any
dividend or other distribution with respect to the VIBC Stock or the
issuance of any additional shares of, or options to purchase, the VIBC
Stock or any other security of VIBC;
(c) Any damage, destruction or loss (whether or not covered by
insurance) which individually or taken as a whole materially adversely
affects the property, business or prospects of VIBC;
(d) Any change in accounting methods or practices of VIBC;
(e) Any revaluation by VIBC of any of VIBC's assets except as
may be applicable to available-for-sale securities;
(f) Any increase in the salary schedule or compensation rate,
or the declaration, payment or commitment or obligation of any kind for
the payment by VIBC of a bonus or other additional salary or
compensation, other than in accordance with past practice;
(g) Any sale, assignment or transfer of any material assets of
VIBC except in the ordinary course of business;
(h) Any waiver or release of any material right or claim of
VIBC, except in the ordinary course of business; or
(i) Any agreement to take any action specified in Sections
4.17(a) through (h) hereof.
4.18 BROKERS' AND FINDERS' FEES. Except as specified in Schedule 4.18,
neither VIBC, VIB, nor any of their officers or employees have paid or agreed to
pay, or have done any act which would give rise to the payment of, any fee,
commission or consideration to any agent, broker, finder or other person on
account of services rendered as a broker or finder in connection with this
Agreement or the Transactions, or which has resulted in, or may give rise to,
any obligation on the part of VIBC or BOS therefor. VIBC agrees to indemnify and
hold BOS harmless from and against any and all claims, liabilities, or
obligations with respect to any brokers' or finders' fees, commissions, or
expenses asserted by any person on the basis of any act or statement alleged to
have been made by VIBC or its affiliates.
4.19 EMPLOYEES. To the best of VIBC's knowledge there are no material
controversies pending or threatened between VIBC or VIB and any of their
employees. Except as disclosed in the VIBC Financial Statements, all material
sums due for employee compensation and benefits have been duly and adequately
paid or accrued on the books of VIBC.
4.20 REGULATORY REPORTS. Except as otherwise set forth in Schedule
4.20, since January 1, 1995, VIBC and VIB have filed all reports, returns,
registrations and statements, together with any amendments required to be made
with respect thereto (such reports, filings and amendments referred to
hereinafter as "VIB Filings"), that were required to be filed with (a) the
California Department of Financial Institutions, (b) the FDIC, (c) the FRB, (d)
the Securities and Exchange Commission (the "SEC"), and (e) any other applicable
regulatory agency, except where the failure to file such reports,
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returns, registrations and statements has not had and is not reasonably expected
to have a material adverse effect on the business, financial condition, results
of operations or prospects of VIBC. Except as otherwise set forth in Schedule
4.20, no administrative actions have been taken or orders issued in connection
with such VIB Filings and as of their respective dates, each of such VIB
Filings: (i) complied in all material respects with all rules and regulations
promulgated by the regulatory agency with which it was filed (or was amended so
as to be so promptly following discovery of any such noncompliance); and (ii)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Any financial statement contained in any of such VIB Filings that
was intended to present the financial position of VIB or VIBC fairly presented
the financial position of VIB or VIBC and was prepared in accordance with
generally accepted accounting principles or banking regulations and/or
securities rules and regulations, as applicable, consistently applied, except as
stated therein, during the periods involved. VIBC has furnished BOS with true
and correct copies of all VIB Filings filed by VIB or VIBC since January 1,
1996.
4.21 VIBC EMPLOYEE BENEFIT PLANS AND EMPLOYMENT AND LABOR CONTRACTS.
(a) Schedule 4.21 sets forth and describes all employee
benefit plans and any collective bargaining agreements, labor contracts
and employment agreements in which VIB or VIBC participates, or by
which they are bound, including, without limitation: (i) any profit
sharing, deferred compensation, bonus, stock option, stock purchase,
pension, ESOP, retainer consulting, retirement, welfare or incentive
plan or agreement whether legally binding or not; (ii) any written
employment agreement and any other employment agreement whether written
or oral; or (iii) any other "employee benefit plan" [within the meaning
of Section 3(3) of "ERISA"] (collectively, the "VIB Employment
Agreements"). Except as set forth in Schedule 4.21: (i) there are no
negotiations, demands or proposals that are pending or, to the best of
VIBC's knowledge, threatened that concern matters now covered, or that
would be covered, by any employment agreements or employee benefit
plans other than amendments to plans qualified under Section 401 of the
Code that are required by the Tax Reform Act of 1986 and later
legislation; (ii) VIB and VIBC are in material compliance with the
requirements prescribed by any and all rules and regulations currently
in effect including but not limited to ERISA and the Code applicable to
all such employee benefit plans; (iii) VIB and VIBC are in compliance
in all material respects with all other rules and regulations
applicable to employee benefit plans and employment agreements; (iv)
VIB and VIBC have performed all of their obligations under all such
employee benefit plans and employment agreements; and (v) there are no
actions, suits or claims pending or, to the best of VIBC's knowledge,
threatened against any such employee benefit plans, the assets of such
plans, or with respect to any VIB Employment Agreements, and no facts
exist which could give rise to any actions, suits or claims (other than
routine claims for benefits) against such plans or the assets of such
plans or VIB or VIBC on account of any such employment agreements,
whether written or oral.
(b) The "employee pension benefit plans" (within the meaning
of Section 312 of ERISA) described on Schedule 4.21 have been duly
authorized by the Board of Directors of VIB or VIBC. Except as set
forth in Schedule 4.21, each such plan and associated trust is
qualified in form and operation under Section 401(a) and exempt from
tax under Section
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501(a) of the Code, respectively, and no event has occurred that will
or is reasonably likely to give rise to disqualification of any such
plan or loss of the exemption from tax of any such trust under said
sections. No event has occurred that will or is reasonably likely to
subject any such plans to tax under Section 511 of the Code. None of
such plans has engaged in a merger or consolidation with any other plan
or transferred assets or liabilities from any other plan. No prohibited
transaction (within the meaning of Section 409 or 502(i) of ERISA or
Section 4975 of the Code) or party-in-interest transaction (within the
meaning of Section 406 of ERISA) has occurred with respect to any of
such plans. No employee of VIB or VIBC has engaged in any transactions
which could subject VIB or VIBC to indemnify such person against
liability. All costs of plans have been provided for on the basis of
consistent methods in accordance with sound actuarial assumptions and
practices. No employee benefit plan has incurred any "accumulated
funding deficiency" (as defined in ERISA), whether or not waived,
taking into account contributions made within the period described in
Section 412(c)(10) of the Code; nor are there any unfunded amounts
under any employee benefit plan; nor has VIB or VIBC failed to make any
contributions or pay any amount due and owing as required by law or the
terms of any employee benefit plan or employment agreement. Subject to
amendments that are required by the Tax Reform Act of 1986 as amended
and later legislation, since the last valuation date for each employee
pension benefit plan, there has been no amendment or change to such
plan that would increase the amount of benefits thereunder.
(c) VIB and VIBC do not sponsor or participate in, and have
not sponsored or participated in, any employee benefit pension plan to
which Section 4021 of ERISA applies that would create a liability under
Title IV of ERISA.
(d) VIB and VIBC do not sponsor or participate in, and have
not sponsored or participated in, any employee benefit pension plan
that is a "multi-employer plan" (within the meaning of Section 3(37) of
ERISA) that would subject VIBC or VIB to any liability with respect to
any such plan.
(e) All group health plans of VIB and VIBC (including any
plans of affiliates of VIB or VIBC that must be taken into account
under Section 162(i) or (k) of the Code as in effect immediately prior
to the Technical and Miscellaneous Revenue Act of 1988 and Section
4980B of the Code) have been operated in compliance with the group
health plan continuation coverage requirements of Section 4980B of the
Code to the extent such requirements are applicable.
(f) There have been no acts or omissions by VIB or VIBC that
have given rise to or, to the best knowledge of VIB or VIBC, may give
rise to fines, penalties, taxes, or related charges under Sections
502(c) or (i) or 4071 of ERISA or Chapter 43 of the Code.
(g) Except as described in Section 4.21(j), VIB and VIBC do
not maintain any employee benefit plan or employment agreement pursuant
to which any benefit plan or other payment will be required to be made
by VIB or VIBC or pursuant to which any other benefit will accrue or
vest in any director, officer or employee of VIB or VIBC, in either
case as a result of the consummation of the transactions contemplated
by the Agreement.
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(h) No "reportable event," as defined in ERISA, has occurred
with respect to any of the employee benefit plans.
(i) All amendments required to bring each of the employee
benefit plans into conformity with all of the provisions of ERISA and
the Code and all other applicable laws, rules and regulations have been
made.
(j) Schedule 4.21 sets forth the name of each director,
officer or employee of VIB or VIBC entitled to receive any benefit or
any payment of any amount under any existing employment agreement,
severance plan or other benefit plan as a result of the consummation of
any transaction contemplated in this Agreement, and with respect to
each such person, the nature of such benefit or the amount of such
payment, the event triggering the benefit or payment, and the date of,
and parties to, such employment agreement, severance plan or other
benefit plan. VIBC has furnished BOS with true and correct copies of
all documents with respect to the plans and agreements referred to in
Schedule 4.21 delivered as of the date of this Agreement, including all
amendments and supplements thereto, and all related summary plan
descriptions. For each of the employee pension benefit plans of VIB or
VIBC referred to in Schedule 4.21 delivered as of the date of this
Agreement, if any, or except as noted therein, VIBC has furnished BOS
with true and correct copies of: (i) the Form 5500 which was filed in
each of the three most recent plan years, including without limitation,
all schedules thereto and all financial statements with attached
opinions of independent accountants; (ii) the most recent determination
letter from the Internal Revenue Service; (iii) the statement of assets
and liabilities as of the most recent valuation date; and (iv) the
statement of changes in fund balance and in financial position or the
statement of changes in net assets available for benefits under each of
said plans for the most recently ended plan year. The documents
referred to in subdivisions (iii) and (iv) fairly present the financial
condition of each of said plans as of and at such dates and the results
of operations of each of said plans, all in accordance with generally
accepted accounting principles applied on a consistent basis.
4.22 STOCK OPTION PLAN. Schedule 4.22 sets forth a true and correct
copy of VIBC's 1997 Stock Option Plan and a schedule showing the names, dates of
grant, vesting schedules, termination dates, and option prices for each option
outstanding as of the date of this Agreement. The 1997 Stock Option Plan has
been duly approved by the Board of Directors and shareholders of VIBC, and
registered under the Securities and Exchange Act of 1934, each stock option has
been approved by the Board of Directors of VIBC, and, upon exercise of the
options in accordance with their terms, the shares of VIBC Stock issued have
been and will be validly issued, fully paid and nonassessable.
4.23 ABSENCE OF CERTAIN PRACTICES. Except as may be disclosed to BOS on
Schedule 4.23, neither VIBC nor VIB, nor any officer, director, employee or
agent of VIBC or VIB has, directly or indirectly, within the past four years,
given or made or agreed to give or make any illegal commission, payment,
gratuity, gift, political contribution or similar benefit to any customer,
supplier, governmental employee or other person in order to obtain business for
or further the business of VIBC or VIB.
4.24 NO VIOLATION OF LAW. VIBC and VIB are in substantial compliance
with all material laws relating to their business or employment practices or the
ownership of their properties, and are
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in substantial compliance with each material law, ordinance, order, decree or
regulation of any governmental entity applicable to the conduct thereof or the
ownership of the properties related thereto, except in each case for violations
which either individually or in the aggregate do not and will not have a
material adverse effect on the business, financial condition or results of
operations of VIBC taken as a whole.
4.25 CERTAIN INTERESTS. Except in arm's-length transactions pursuant to
normal commercial terms and conditions: (a) no officer or director of VIBC or
VIB has any material interest in any property, real or personal, tangible or
intangible, used in or pertaining to the business of VIBC or VIB except for the
normal rights of a shareholder of VIBC; (b) no such person is indebted to VIBC
or VIB except for normal business expense advances or banking transactions in
the ordinary course of business on the same terms, including interest rates and
collateral on loans as those prevailing at the same time for comparable
transactions with others; and (c) VIBC and VIB are not indebted to any such
person except for amounts due under normal salary or reimbursement of ordinary
business expenses. The consummation of the Transactions contemplated hereby will
not (either alone, or upon the occurrence of any act or event, or with the lapse
of time, or both) result in any payment (severance or other) becoming due from
VIBC or VIB to any employee of VIBC or VIB.
4.26 MINUTE BOOKS. The minute books of VIBC and VIB accurately reflect
all material actions duly taken by the shareholders, Boards of Directors and
committees of VIBC or VIB, as applicable, and contain true and complete copies
of VIBC's and VIB's Articles of Incorporation and Bylaws and all amendments
thereto.
4.27 ACCOUNTING RECORDS; DATA PROCESSING. VIBC and VIB have records
that, in all material respects, fairly reflect their transactions and accounting
controls sufficient to ensure that such transactions are in all material
respects: (a) executed in accordance with management's general or specific
authorization; and (b) recorded in conformity with generally accepted accounting
principles. Schedule 4.27 contains a true and correct copy of Maslac &
Associates' most recent audit of VIBC's data processing system. Except as set
forth in Schedule 4.27, the procedures and equipment, including, without
limitation, the data processing equipment, data transmission equipment, and
related peripheral equipment and software, used by VIBC and VIB in the operation
of their businesses (including any disaster recovery facility) to generate and
retrieve such records are adequate in relation to the size and complexity of the
business of VIBC and VIB.
4.28 OPERATING LOSSES. Schedule 4.28 sets forth any individual
Operating Loss in excess of $500.00 that has occurred at VIB during the period
after December 31, 1997. Except as set forth on Schedule 4.28, since December
31, 1997, no event has occurred, and no action has been taken or omitted to be
taken by any employee of VIBC or VIB that has resulted in the occurrence by VIB
of an Operating Loss or that might reasonably be expected to result in the
occurrence by VIB of an Operating Loss after December 31, 1997, which, net of
any insurance proceeds payable in respect thereof, exceeds, or would exceed
$50,000 by itself or $250,000 when aggregated with all other Operating Losses
during such period.
4.29 CRA STANDING. VIB's compliance under the CRA should not constitute
grounds for either the denial by any regulatory agency of any application to
consummate the Transactions contemplated by this Agreement or the imposition of
a materially burdensome condition in connection
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with the approval of any such application. VIB has not been advised of any
concerns regarding compliance with the CRA by any regulatory agency or any other
person.
4.30 YEAR 2000 MATTERS. VIBC and VIB have completed a review of their
computer systems to identify systems that could be affected by the "Year 2000."
The respective management of each of VIBC and VIB has developed and commenced
implementation of a plan to respond to this issue. Between the date of this
Agreement and the Effective Time of the Merger, VIBC and VIB shall each use
commercially practicable efforts to implement and/or continue to undertake such
a plan. Neither VIBC nor VIB has been advised by any regulatory authority to
undertake any additional actions nor are either of VIBC or VIB subject to any
regulatory order, memorandum or directive (other than directives of general
applicability to financial institutions) with respect thereto. Year 2000 issues
have not had, and are not reasonably expected to have, a material adverse effect
on VIBC or VIB.
4.31 ACCURACY AND CURRENTNESS OF INFORMATION FURNISHED. The
representations and warranties made by VIBC hereby and in the schedules hereto
contain no statements of fact which are untrue or misleading, or omit to state
any material fact which is necessary under the circumstances to prevent the
statements contained herein or in such schedules from being misleading. VIBC
hereby covenants that it shall, as of the Effective Time of the Merger, amend
and/or supplement the schedules prepared and delivered pursuant to this Article
IV to ensure that the information set forth in such schedules accurately
reflects the then-current status of VIBC or VIB.
4.32 EFFECTIVE DATE OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. Each representation, warranty, covenant and agreement of VIBC set
forth in this Agreement shall be deemed to be made on and as of the date hereof
and, as subsequently amended and/or supplemented as provided in Section 4.31, as
of the Effective Time of the Merger.
ARTICLE V
COVENANTS OF BOS PRIOR TO CLOSING
BOS hereby covenants and agrees with VIBC as follows:
5.1 BUSINESS RECORDS AND INFORMATION. During the period commencing on
the date hereof, and ending on the Closing Date, BOS will afford VIBC, its
representatives, counsel, accountants, agents and employees reasonable access
during normal business hours to all of its business, operations, properties,
books, files and records and will do everything reasonably necessary to enable
VIBC and its representatives, counsel, accountants, agents and employees to make
a complete examination of the financial statements, business, operations, assets
and properties of BOS and the conditions thereof, and to update such examination
at such reasonable intervals as VIBC shall deem appropriate. Such examination
shall be conducted in cooperation with the officers of BOS in such a manner as
to minimize, to the extent possible consistent with the conducting of a
comprehensive examination, any disruption of or interference with the normal
business operations of BOS. No such examination or VIBC's examination prior to
the date of this Agreement, however, shall constitute a waiver or relinquishment
on the part of VIBC of its right to rely upon the representations, warranties or
covenants made by BOS herein or pursuant hereto. BOS will permit an authorized
representative or representatives of VIBC, designated as such from time to time
by
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VIBC's President (the "VIBC Representative") access during normal business hours
to all of its business, operations, properties, books, files and records for the
additional purpose of rendering any approvals required of VIBC by BOS pursuant
to Section 5.2. BOS will use its best efforts to have the VIBC Representative or
another authorized representative available during BOS's normal business hours
to render approvals required pursuant to Section 5.2. In addition, BOS shall
provide VIBC and the VIBC Representative with three days' notice of all regular
meetings of its Board of Directors and notice, at the same time notice is given
to members, of any committee meeting, and the earliest possible notice of all
special meetings of its Board of Directors. BOS will permit the VIBC
Representative to attend and observe all Board and committee meetings (except
during confidential discussions regarding the Merger), and BOS shall indemnify
and hold harmless VIBC, BOS Interim Bank and the VIBC Representative in
connection with actions taken by BOS (i) pursuant to any approvals obtained
pursuant to Section 5.2 or (ii) during any Board or committee meetings attended
and observed by the VIBC Representative. It is agreed and acknowledged by BOS
that any such indemnification may be deemed a material adverse change pursuant
to Section 8.3 hereof. BOS will hold in strict confidence all documents and
information concerning VIBC or VIB obtained pursuant to Section 6.1 or obtained
previously pursuant to a Letter of Understanding dated June 22, 1998 and will
not use such documents or information for its own benefit (except to the extent
that such documents or information are a matter of public record or require
disclosure in any application necessary to obtain regulatory approval of the
Transactions contemplated by this Agreement) and, if the Transactions
contemplated herein are not consummated, such confidence shall be maintained and
all such documents shall be returned to VIBC, without any copies being retained
by BOS and BOS shall destroy any document, memoranda, notes and other writings
whatsoever prepared by BOS or any of its agents relating to or containing the
confidential information promptly upon notice by VIBC. Upon request by VIBC,
such destruction shall be certified in writing to VIBC by an authorized officer
of BOS supervising such destruction.
5.2 LIMITATIONS UPON BOS PRIOR TO CLOSING. Except as required by this
Agreement, between the date hereof and the Closing Date, without the prior
written consent of VIBC, which shall not be unreasonably withheld and which
shall be deemed granted if within five days after receipt of written request
refusal of such written consent is not received from VIBC by BOS, BOS shall not
do any of the following:
(a) Create or take action to incur any liabilities in excess
of $25,000 or having a term in excess of one year, other than
liabilities incurred in the ordinary course of business or in
connection with the creation or performance of this Agreement;
(b) Except in the usual or ordinary course of business, create
or incur or suffer to exist any mortgage, lien, pledge, security
interest, charge, encumbrance or restriction of any kind against or in
respect of any property or right of BOS securing an obligation in
excess of $25,000 or having a term in excess of one year, and except
for a pledge of security interests given in connection with the
acceptance of repurchase agreements or government deposits;
(c) Make or become a party to any contract or commitment in
excess of $25,000 or having a term in excess of one year, or renew,
extend, amend or modify any contract or commitment in excess of
$25,000, except in the usual and ordinary course of business or except
in connection with the Transactions contemplated in this Agreement or
the Merger Agreement;
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(d) Make any loan, loan commitment, or renewal or extension
thereof ("Loan") to any person or entity, which, individually or when
aggregated with all other outstanding Loans made by BOS to such person
or entity, exceeds $600,000, or make any Loan to any of its directors
or executive officers;
(e) Purchase any loan participation interest in excess of
$200,000;
(f) File a notice of default on any delinquent real estate
secured loan with a principal balance of $200,000 or more;
(g) Make any capital expenditures in excess of $25,000, except
for ordinary and necessary repairs and replacements;
(h) Sell or otherwise dispose of any of its assets or
properties in excess of $25,000 in value, except in the usual and
ordinary course of its business, or charge off any of its assets or
properties in excess of $25,000 in value;
(i) Declare or pay any dividend (cash, in kind, or stock) or
make any other distribution upon, or purchase or redeem, any shares of
BOS Stock;
(j) Except as contemplated herein, issue or sell or obligate
itself to issue or sell any shares of BOS Stock or any other securities
including, without limitation, any capital notes, or any warrants,
rights or options to acquire any shares of BOS Stock or other
securities otherwise than pursuant to this Agreement; except pursuant
to the exercise of the stock options set forth in Schedule 3.24;
(k) Acquire capital stock of any corporation or any interest
in any person except in the usual and ordinary course of its business;
(l) Amend its Charter or Bylaws, except for such amendments as
contemplated by this Agreement;
(m) Grant any salary increase or enter into or amend, except
as may be required by applicable law, any bonus, incentive
compensation, deferred compensation, pension, profit sharing,
retirement, group insurance or other benefit plan or any employment
agreement or consulting agreement or amend its Personnel Policy where
the individual or aggregate cost to BOS is increased, except as
approved by VIBC, which approval shall not be unreasonably withheld;
(n) Pay any obligation or liability, absolute or contingent,
in excess of $25,000 except liabilities shown on the BOS Financial
Statements, or except in the usual and ordinary course of business or
in connection with the Transactions contemplated herein;
(o) Institute, settle or agree to settle any claim, action or
proceeding involving an expenditure by BOS or waiver of its claims in
excess of $25,000 before any court or governmental agency, except in
the usual and ordinary course of its business;
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(p) Invest in any real estate except upon the foreclosure of
loans in the ordinary course of business, or acceptance of a deed in
lieu of foreclosure, in the ordinary course of business;
(q) Except in the usual and ordinary course of its business,
enter into any continuing contract or series of related contracts in
excess of $25,000 for the purchase of materials, supplies, equipment or
services which cannot be terminated without cause and without payment
of any amount as a penalty, bonus, premium or other compensation for
such termination;
(r) Except as contemplated in Section 5.8 hereof, enter into
or amend any contract or agreement (other than loans or bank accounts)
with any officer, director or any affiliate of such person on terms
that are less favorable to BOS than could be obtained from an unrelated
third party on an arm's-length basis;
(s) File any applications for additional branches or to
relocate operations from any existing location, except as contemplated
herein;
(t) Change any of BOS's basic policies and practices with
respect to liquidity management and cash flow planning, marketing,
deposit origination, lending, budgeting, profit and tax planning,
personnel practices, accounting or any other material aspect of its
business or operations, except such change as may be required in the
opinion of BOS's management to respond to economic or market conditions
or as may be required by the rules of the AICPA or FASB, by applicable
law, or by bank regulatory authorities;
(u) Knowingly default in any material respect under any
Understanding to which BOS is a party, and which, individually or
together with other Understandings with respect to which a default by
BOS exists, would materially adversely affect the business, properties,
prospects or financial condition of BOS taken as a whole; or
(v) Conduct its business in a manner that would violate its
Charter or Bylaws or would materially violate or be in material
conflict with any law, ordinance, rule or regulation of any applicable
federal or state authority; provided, however, that no exception to
this Section 5.2(v) shall constitute a waiver of any rights of VIBC
under any other provision of this Agreement.
5.3 AFFIRMATIVE CONDUCT OF BOS PRIOR TO CLOSING. Between the date
hereof and the Closing Date, BOS shall:
(a) Use its best efforts to obtain as expeditiously as
possible and cooperate with others to expeditiously bring about the
satisfaction of the conditions and approvals specified in Articles VII,
VIII, IX and X hereof and advise VIBC promptly in writing of any matter
which would make the representations and warranties set forth in
Article III hereof not true and correct in all material respects at the
Closing;
(b) Use and devote its best efforts consistent with this
Agreement to maintain and preserve intact its present business
organization and to maintain and preserve its relationships
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and goodwill with account holders, borrowers, employees and others
having business relationships with it;
(c) Carefully prepare or review and make available to VIBC
prior to filing all federal, state and local tax returns and reports to
government authorities regarding BOS required to be filed by it between
the date hereof and the Closing;
(d) Furnish VIBC with such financial and other information
with respect to BOS and its properties, business and operations as in
the reasonable opinion of VIBC, counsel for VIBC and counsel for BOS
shall be necessary in order to prepare applications for and obtain the
permits, approvals, nondisapprovals, consents and authorizations
referred to in Article X hereof; such information will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
information contained therein not misleading;
(e) Provide VIBC and the VIBC Representative with BOS's
monthly Board package and all committee meeting packages at the time
provided to BOS's directors (excluding any confidential information
regarding the transactions contemplated hereby);
(f) Provide VIBC all monthly new loan reports, all monthly
past due loan reports, all listings of any new loans placed on
non-accrual, all monthly watchlist reports, and all listings of loans
greater than $100,000 that have been downgraded within two days of when
such reports are prepared;
(g) Provide VIBC with five days' notice and, subject to any
limitation or prohibition of any so-called "right to privacy" law, a
copy of the applicable credit report prior to making any Loan to any
person or entity which, individually or when aggregated with all other
outstanding Loans made by BOS to such person or entity, exceeds
$450,000;
(h) Provide VIBC with five days' notice prior to purchasing or
selling any loan participation interest;
(i) Provide VIBC with five days' notice prior to initiating
any action to foreclose on real estate or personal property collateral
and provide VIBC with monthly status reports on all foreclosed
properties;
(j) Provide VIBC with qualified appraisals on all newly
acquired foreclosed properties and on all existing foreclosed
properties where appraisals are or become more than 12 months old;
(k) Maintain insurance coverage at least equal to that now in
effect on all of its properties and on all properties for which it is
responsible, and carry not less than the same coverage for fidelity,
directors and officers, public liability, personal injury and property
damage that is presently in effect;
(l) Duly observe and conform to lawful requirements applicable
to its business in all material respects;
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(m) Maintain its books of account and records in the regular
manner in accordance with generally accepted accounting principles,
with all applicable statutory and regulatory requirements applied on a
consistent basis;
(n) Provide VIBC with an independent third-party's
profitability analysis of the BOS Mortgage Department, and provide such
analysis to VIBC no later than when BOS provides the analysis to the
OTS;
(o) Following receipt of regulatory approval and the
satisfaction of all other conditions precedent to the Closing and
immediately prior to the Effective Time of the Merger, BOS shall
increase its reserves for possible loan losses by $300,000. These
reserves shall be additive to those provisions contained in BOS's 1998
Operating Plan; and
(p) Notify VIBC by telephone, confirmed promptly in writing,
of any breach or violation on BOS's part of any covenant contained
herein, or of the occurrence of an event which would cause any
warranties or representations made by BOS herein to be or become false
or misleading, or if BOS becomes a party or is threatened with becoming
a party to any legal or equitable proceeding or governmental
investigation, or upon the occurrence of any event which would result
in a material change in the circumstances of BOS described in the
representations and warranties contained herein.
5.4 INDEMNIFICATION. BOS hereby agrees to indemnify and hold harmless
VIBC against, and with respect to, any liability, damages, losses, expenses or
costs arising from or by virtue of any misstatement or omission to state any
fact which is required to be disclosed by BOS for purposes of the inclusion of
such information in any regulatory filing made on behalf of the parties hereto
for the purpose of effecting the terms of this Agreement and consummating the
Transactions contemplated herein and for any material breach of any
representation, warranty, covenant or agreement of BOS under this Agreement.
5.5 EXECUTE AGREEMENT TO MERGE. As soon as possible after receipt of
approval of the OTS to organize BOS Interim Bank, BOS shall execute the Merger
Agreement.
5.6 DISCUSSION WITH THIRD PARTIES.
(a) STRATEGIC TRANSACTIONS. BOS: (i) shall not, and shall
instruct and cause each of its directors, officers, employees, agents,
representatives and advisors ("Representatives") not to, solicit or
encourage, directly or indirectly, inquires or proposals with respect
to any Strategic Transaction Proposal (as hereinafter defined); and
(ii) except as expressly permitted by Section 5.6(b), shall not, and
shall instruct and cause each of its Representatives not to, furnish
any non-public information relating to or participate in any
negotiations, discussions or other activities concerning, any Strategic
Transaction (as hereinafter defined) with any party other than VIBC.
BOS shall notify VIBC promptly after any Strategic Transaction Proposal
is received by, or any negotiations or discussions regarding a
Strategic Transaction Proposal are sought to be initiated with,
directly or indirectly, BOS or any of its Representatives, and shall
disclose to VIBC the identity of the third party making or seeking to
make such Strategic Transaction Proposal, the terms and conditions
thereof and such other information as VIBC reasonably may request;
provided, however, that if BOS receives a
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Strategic Transaction Proposal and the foregoing disclosure of such
Strategic Transaction Proposal to VIBC would violate a confidentiality
agreement by which BOS is bound, BOS (i) shall make the foregoing
disclosure only to the maximum extent permissible under such
confidentiality agreement, (ii) shall return such Strategic Transaction
Proposal to the initiating party without substantive response, and
(iii) to the extent such disclosure has not been made under clause (i)
of this sentence, shall notify VIBC that a Strategic Transaction
Proposal has been received and that the same has been returned to the
initiating party without substantive response. A "Strategic Transaction
Proposal" means any proposal regarding a Strategic Transaction. For
purposes of this Section 5.6, a "Strategic Transaction" means any
acquisition or purchase of all or a significant (i.e., more than 5%)
portion of the assets of or a significant equity interest in, BOS or
any merger or other business combination involving BOS or any
recapitalization involving BOS resulting in an extraordinary dividend
or distribution to BOS's shareholders or a self-tender for or
redemption of some or all of the outstanding shares of BOS Stock.
(b) QUALIFYING PROPOSAL. Notwithstanding Section 5.6(a),
following receipt of a Qualifying Strategic Transaction Proposal (as
hereinafter defined), neither BOS nor any of its Representatives shall
be prohibited from (i) engaging in discussions or negotiations with a
third party which has made a proposal that satisfies the requirements
of a Qualifying Strategic Transaction Proposal and thereafter providing
to such third party information previously provided or made available
to VIBC, provided the third party shall have entered into a
confidentiality agreement, (ii) taking and disclosing to BOS's
shareholders a position contemplated by Rule 14e-2(a) under the
Securities Exchange Act of 1934, or otherwise making disclosure of the
Qualifying Strategic Transaction Proposal to BOS's shareholders, or
(iii) subject to the terms of Section 11.1(d), terminating this
Agreement. For purposes of this Section 5.6, a "Qualifying Strategic
Transaction Proposal" shall mean a bona fide written Strategic
Transaction Proposal with respect to which BOS's Board of Directors
shall have determined, after consultation with BOS's counsel, that the
action by BOS contemplated under either clause (i), (ii) or (iii), as
applicable, of the immediately preceding sentence is required under the
fiduciary duties owed by the Board of Directors to the holders of BOS
Stock, which determination has been made acting in good faith and on
the basis of a written opinion from a financial advisor retained by BOS
to the effect that the financial terms of such Strategic Transaction
Proposal are, from BOS's shareholders' perspective, superior to the
Merger.
(c) DISCLOSURE AND TRADING. Upon receipt of the disclosure by
VIBC of a Strategic Transaction Proposal involving VIBC or any
subsidiary thereof or a VIBC Acquisition Transaction (as that term is
defined in Section 6.5(c) hereof), BOS, its executive officers and
directors shall, and each hereby agrees to, maintain the
confidentiality of all non-public information regarding the Strategic
Transaction Proposal involving VIBC or any subsidiary thereof or the
VIBC Acquisition Transaction to the same extent as required of VIBC
and/or any subsidiary thereof under the terms of any confidentiality
agreement to which VIBC and/or any subsidiary is a party or is bound
and to refrain from trading in VIBC Stock, BOS Stock and the securities
of the party or parties to the Strategic Transaction Proposal or the
VIBC Acquisition Transaction until the earlier of: (i) full public
disclosure of such non-public information has been made and trading in
the subject securities would not be a violation of applicable
securities laws; or (ii) the Strategic Transaction Proposal or the VIBC
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Acquisition Transaction has been terminated or has expired by its terms
and disclosure of such non-public information is permitted under the
terms of any agreement regarding the transaction and trading in the
subject securities would not be a violation of applicable securities
laws.
5.7 STOCK OPTION PLANS. BOS shall cause its 1985 and 1995 Stock Option
Plans to be terminated as of or prior to the Closing Date. To the extent any
heretofore outstanding options are not exercised, such options will be converted
into VIBC stock options pursuant to Section 1.7 of this Agreement.
5.8 CHANGE IN CONTROL AND SALARY CONTINUATION AGREEMENTS. BOS shall
take all steps necessary and appropriate to amend each of its outstanding Change
in Control Agreements and Salary Continuation Agreements to change the
definitions of "good reason" in the following respects: (i) Paragraph 5.4.1 of
the Salary Continuation Agreements and Paragraph 3(d)(i) of the Change in
Control Agreements shall be amended to read as follows:
"the permanent assignment of the Executive by the Company
employing the Executive to duties materially inconsistent
with, or which substantially or materially alters the nature
or status of the Executive's responsibilities immediately
prior to a Change in Control of the Company."
(ii) Paragraph 5.4.4 of the Salary Continuation Agreements and Paragraph
3(a)(iv) of the Change in Control Agreements shall be amended to read as
follows:
"the Company is requiring the Executive to relocated, or the
assignment to the Executive of duties that reasonably require
the Executive to relocated, to any place other than the
Bakersfield, California, metropolitan area."
and (iii) a new Paragraph 5.4.8 of the Salary Continuation Agreements and a new
Paragraph 3(d)(viii) of the Change in Control Agreements shall be added to read
as follows:
"the Company requiring the Executive to travel a substantial
amount of time, except for travel related to corporate
meetings and temporary assignments, to an extent substantially
inconsistent with Executive's business travel obligations at
the time of a Change in Control of the Company."
5.9 PROXY STATEMENT. The proxy statement and/or any other materials or
documents (collectively, the "Proxy Materials") to be used in connection with
the shareholders' meeting required pursuant to Section 7.1 hereof, with respect
to all information set forth therein relating to BOS, the Agreement, the Merger
Agreement and the Transactions, at the time of mailing to shareholders and at
the time of the shareholders' meetings, shall:
(a) Comply in all material respects with the provisions of all
applicable laws and regulations; and
(b) Except with respect to any information regarding VIBC or
VIB supplied to BOS by VIBC for inclusion in the Proxy Materials, not
contain any statement which, at the
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time and in light of the circumstances under which it is made, is false
or misleading with respect to any material fact or not omit to state
any material fact necessary in order to make the statements therein not
false or misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of a proxy for
the same meeting or subject matter that has become false or misleading.
ARTICLE VI
COVENANTS OF VIBC PRIOR TO CLOSING
VIBC hereby covenants and agrees with BOS as follows:
6.1 BUSINESS RECORDS AND INFORMATION. During the period commencing on
the date hereof, and ending on the Closing Date, VIBC will afford BOS, its
representatives, counsel, accountants, agents and employees reasonable access
during normal business hours to all of its business, operations, properties,
books, files and records and will do everything reasonably necessary to enable
BOS and its representatives, counsel, accountants, agents and employees to make
a complete examination of the financial statements, business, operations, assets
and properties of VIBC and VIB and the conditions thereof, and to update such
examination at such intervals as BOS shall deem appropriate. Such examination
shall be conducted in cooperation with the officers of VIBC or VIB in such a
manner as to minimize, to the extent possible consistent with the conducting of
a comprehensive examination, any disruption of or interference with the normal
business operations of VIBC or VIB. No such examination or BOS's examination
prior to the date of this Agreement, however, shall constitute a waiver or
relinquishment on the part of BOS of its right to rely upon the representations,
warranties or covenants made by VIBC herein or pursuant hereto. VIBC will hold
in strict confidence all documents and information concerning BOS obtained
pursuant to Section 5.1 or obtained previously pursuant to a Letter of
Understanding dated June 22, 1998 and will not use such documents or information
for its own benefit (except to the extent that such documents or information are
a matter of public record or require disclosure in any application necessary to
obtain regulatory approval of the Transactions contemplated by this Agreement)
and, if the Transactions contemplated herein are not consummated, such
confidence shall be maintained and all such documents and any documents provided
pursuant to Section 5.3(d) shall be returned to BOS, without any copies being
retained by VIBC and VIBC shall destroy any document, memoranda, notes and other
writings whatsoever prepared by VIBC or any of its agents relating to or
containing the confidential information promptly upon notice by BOS. Upon
request by BOS, such destruction shall be certified in writing to BOS by an
authorized officer of VIBC supervising such destruction.
6.2 LIMITATIONS UPON VIBC PRIOR TO CLOSING. Except as required by this
Agreement, between the date hereof and the Closing Date, without the prior
written consent of BOS, which shall not be unreasonably withheld and which shall
be deemed granted if within ten days after receipt of written request refusal of
such written consent is not received from BOS by VIBC, VIBC shall not do any of
the following:
(a) Create or take action to incur any liabilities in excess
of $1,000,000 or having a term in excess of one year, other than
liabilities incurred in the ordinary course of business or in
connection with the creation or performance of this Agreement;
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(b) Except in the usual or ordinary course of business, create
or incur or suffer to exist any mortgage, lien, pledge, security
interest, charge, encumbrance or restriction of any kind against or in
respect of any property or right of VIBC securing an obligation in
excess of $1,000,000, or having a term in excess of one year, and
except for a pledge of security interests given in connection with the
acceptance of repurchase agreements or government deposits;
(c) Make or become a party to any contract or commitment in
excess of $1,000,000 or having a term in excess of one year, or renew,
extend, amend or modify any contract or commitment in excess of
$1,000,000, except in the usual and ordinary course of business or in
connection with the Transaction and as contemplated by this Agreement
or the Merger Agreement;
(d) Make any capital expenditures in excess of $1,000,000,
except for ordinary and necessary repairs and replacements;
(e) Sell or otherwise dispose of any of its assets or
properties in excess of $1,000,000 in value, except in the usual and
ordinary course of its business;
(f) Pay any obligation or liability, absolute or contingent,
in excess of $1,000,000 except liabilities shown on the VIBC Financial
Statements, or except in the usual and ordinary course of business or
in connection with the Transactions contemplated herein;
(g) Institute, settle or agree to settle any claim, action or
proceeding involving an expenditure by VIBC or VIB or waiver of its
claims in excess of $500,000 before any court or governmental agency,
except in the usual and ordinary course of its business;
(h) Enter into or amend any contract or agreement (other than
loans or bank accounts) with any officer, director or principal
shareholder of VIBC or VIB or any affiliate of such person on terms
that are less favorable to VIBC or VIB than could be obtained from an
unrelated third party on an arm's-length basis;
(i) Change any of VIBC's or VIB's basic policies and practices
with respect to liquidity management and cash flow planning, marketing,
deposit origination, lending, budgeting, profit and tax planning,
personnel practices, accounting or any other material aspect of their
business or operations, except such change as may be required in the
opinion of VIBC's or VIB's management to respond to economic or market
conditions or as may be required by the rules of the AICPA or FASB, by
applicable law, or by bank regulatory authorities;
(j) Knowingly default in any material respect under any
Understanding to which VIBC or VIB is a party, and which, individually
or together with other Understandings with respect to which a default
by VIBC or VIB exists, would materially adversely affect the business,
properties, prospects or financial condition of VIBC taken as a whole;
or
(k) Conduct their business in a manner that would violate
their Articles of Incorporation or Bylaws or would materially violate
or be in material conflict with any law,
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ordinance, rule or regulation of any applicable federal or state
authority; provided, however, that no exception to this Section 6.2(k)
shall constitute a waiver of any rights of BOS under any other
provision of this Agreement.
6.3 AFFIRMATIVE CONDUCT OF VIBC PRIOR TO CLOSING. Between the date
hereof and the Closing Date, VIBC shall:
(a) Use its best efforts to obtain as expeditiously as
possible and cooperate with others to expeditiously bring about the
satisfaction of the conditions and approvals specified in Articles VII,
VIII, IX and X hereof, including the organization of BOS Interim Bank,
and advise BOS promptly in writing of any matter which would make the
representations and warranties set forth in Article IV hereof not true
and correct in all material respects at the Closing;
(b) Use and devote its best efforts consistent with this
Agreement to maintain and preserve intact its present business
organization and to maintain and preserve its relationships and
goodwill with account holders, borrowers, employees and others having
business relationships with it;
(c) Furnish BOS with such financial and other information with
respect to VIBC and its properties, business and operations as in the
reasonable opinion of BOS, counsel for BOS and counsel for VIBC shall
be necessary in order to prepare applications for and obtain the
permits, approvals, nondisapprovals, consents and authorizations
referred to in Article X hereof; such information will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
information contained therein not misleading;
(d) Maintain its and VIB's insurance coverage at least equal
to that now in effect on all of their properties and on all properties
for which they are responsible, and carry the same coverage for
fidelity, directors and officers, public liability, personal injury and
property damage that is presently in effect;
(e) Duly observe and conform to lawful requirements applicable
to its and VIB's business in all material respects;
(f) Maintain its and VIB's books of account and records in the
regular manner in accordance with generally accepted accounting
principles, with all applicable statutory and regulatory requirements
applied on a consistent basis; and
(g) Notify BOS by telephone, confirmed promptly in writing, of
any breach or violation on VIBC's part of any covenant contained
herein, or of the occurrence of an event which would cause any
warranties or representations made by VIBC herein to be or become false
or misleading, or if VIBC becomes a party or is threatened with
becoming a party to any legal or equitable proceeding or governmental
investigation, or upon the occurrence of any event which would result
in a change in the circumstances of VIBC described in the
representations and warranties contained herein.
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6.4 INDEMNIFICATION. VIBC hereby agrees to indemnify and hold harmless
BOS against, and with respect to, any liability, damages, losses, expenses or
costs arising from or by virtue of any misstatement or omission to state any
fact which is required to be disclosed by VIBC for purposes of the inclusion of
such information in any regulatory filing made on behalf of the parties hereto
for the purpose of effecting the terms of this Agreement and consummating the
Transactions contemplated herein and for any material breach of any
representation, warranty, covenant or agreement of VIBC under this Agreement.
6.5 DISCUSSION WITH THIRD PARTIES.
(a) STRATEGIC TRANSACTIONS. VIBC and VIB: (i) shall not, and
shall instruct and cause each of their Representatives not to, solicit
or encourage, directly or indirectly, inquires or proposals with
respect to any Strategic Transaction Proposal (as hereinafter defined);
and (ii) except as expressly permitted by Section 6.5(b), shall not,
and shall instruct and cause each of their Representatives not to,
furnish any non-public information relating to or participate in any
negotiations, discussions or other activities concerning, any Strategic
Transaction (as hereinafter defined) with any party other than BOS.
VIBC and VIB shall notify BOS promptly after any Strategic Transaction
Proposal is received by, or any negotiations or discussions regarding a
Strategic Transaction Proposal are sought to be initiated with,
directly or indirectly, VIBC or VIB or any of their Representatives,
and shall disclose to BOS the identity of the third party making or
seeking to make such Strategic Transaction Proposal, the terms and
conditions thereof and such other information as BOS reasonably may
request; provided, however, that if VIBC or VIB receives a Strategic
Transaction Proposal and the foregoing disclosure of such Strategic
Transaction Proposal to BOS would violate a confidentiality agreement
by which VIBC or VIB is bound, VIBC (i) shall make the foregoing
disclosure only to the maximum extent permissible under such
confidentiality agreement, (ii) shall return such Strategic Transaction
Proposal to the initiating party without substantive response, and
(iii) to the extent such disclosure has not been made under clause (i)
of this sentence, shall notify BOS that a Strategic Transaction
Proposal has been received and that the same has been returned to the
initiating party without substantive response. A "Strategic Transaction
Proposal" means any proposal regarding a Strategic Transaction. For
purposes of this Section 6.5, a "Strategic Transaction" means any
acquisition or purchase of all or a significant (i.e., more than 5%)
portion of the assets of or a significant equity interest in, VIBC or
VIB or any merger or other business combination involving VIBC or VIB
or any recapitalization involving VIBC or VIB resulting in an
extraordinary dividend or distribution to VIBC's or VIB's shareholders
or a self-tender for or redemption of some or all of the outstanding
shares of VIBC Stock.
(b) QUALIFYING PROPOSAL. Notwithstanding Section 6.5(a),
following receipt of a Qualifying Strategic Transaction Proposal (as
hereinafter defined), neither VIBC, VIB, nor any of their
Representatives shall be prohibited from (i) engaging in discussions or
negotiations with a third party which has made a proposal that
satisfies the requirements of a Qualifying Strategic Transaction
Proposal and thereafter providing to such third party information
previously provided or made available to BOS, provided the third party
shall have entered into a confidentiality agreement, (ii) taking and
disclosing to VIBC's shareholders a position contemplated by Rule
14e-2(a) under the Exchange Act, or otherwise making disclosure of the
Qualifying Strategic Transaction Proposal to VIBC's shareholders, or
(iii)
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subject to the terms of Section 11.1(e) terminating this Agreement. For
purposes of this Section 6.5, a "Qualifying Strategic Transaction
Proposal" shall mean a bona fide written Strategic Transaction Proposal
with respect to which VIBC's Board of Directors shall have determined,
after consultation with VIBC's counsel, that the action by VIBC
contemplated under either clause (i), (ii) or (iii), as applicable, of
the immediately preceding sentence is required under the fiduciary
duties owed by the Board of Directors to the holders of VIBC Stock,
which determination has been made acting in good faith and on the basis
of a written opinion from a financial advisor retained by VIBC to the
effect that the financial terms of such Strategic Transaction Proposal
are, from VIBC's shareholders' perspective, superior to the Merger.
(c) VIBC ACQUISITION TRANSACTION. Notwithstanding Sections
6.5(a) or (b) hereof, VIBC or VIB shall be permitted to and may cause
their Representatives to solicit, encourage, discuss, negotiate, enter
into agreements, and carry out and complete transactions regarding a
VIBC Acquisition Transaction; provided, however, that should VIBC enter
into or modify any agreement, or complete without any agreement, any
VIBC Acquisition Transaction which has a material adverse effect upon
VIBC or the Transactions contemplated by this Agreement and the Merger
Agreement without written approval of BOS, then such action shall
constitute a breach under this Agreement giving rise to a right of
termination by BOS in accordance with Section 11.1(e) of this
Agreement. For purposes of this Agreement, the term "VIBC Acquisition
Transaction" shall mean: (i) a merger or consolidation or any similar
transaction where VIBC or any of its subsidiaries will be the surviving
or resulting corporation or where the holders of VIBC Stock or any of
VIBC's subsidiaries immediately prior to the completion of the
transaction will own 50% or more of the surviving or resulting
corporation immediately after the completion of the transaction, (ii) a
purchase, lease or other acquisition of all or substantially all of the
assets of or assumption of all or substantially all the deposits of
another corporation, partnership or limited liability company which
business is permissible under the Bank Holding Company Act of 1956, as
amended, and Regulation Y promulgated pursuant thereto, or (iii) the
purchase or other acquisition of securities representing 10% or more of
the voting power of another corporation, partnership or limited
liability company which business is permissible under the Bank Holding
Company Act of 1956, as amended and Regulation Y promulgated pursuant
thereto. VIBC shall promptly notify BOS of any VIBC Acquisition
Transaction and shall disclose to BOS the identity of the party or
parties to the transaction, and the terms and conditions thereof. To
the extent VIBC makes a disclosure of any non-public information to
BOS, its executive officers and/or directors, then BOS and its
executive officers and directors shall, and each hereby agrees to,
maintain the confidentiality of all non-public information regarding
the VIBC Acquisition Transaction so disclosed and to refrain from
trading in VIBC Stock, BOS Stock and the securities of the party or
parties to the VIBC Acquisition Transaction so disclosed in accordance
with the provisions of Section 5.6(c) hereof.
(d) DISCLOSURE AND TRADING. Upon receipt of the disclosure by
BOS of a Strategic Transaction Proposal involving BOS, VIBC, its
executive officers and directors shall, and each hereby agrees to,
maintain the confidentiality of all non-public information regarding
the Strategic Transaction Proposal involving BOS to the same extent as
required of BOS under the terms of any confidentiality agreement to
which BOS is a party or is bound and to refrain from trading in VIBC
Stock, BOS Stock and the securities of the party or
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parties to the Strategic Transaction Proposal until the earlier of: (i)
full public disclosure of such non-public information has been made and
trading in the subject securities would not be a violation of all
applicable securities laws, or (ii) the Strategic Transaction Proposal
has been terminated or has expired by its terms and disclosure of such
non-public information is permitted under the terms of any agreement
regarding the transaction and trading in the subject securities would
not be a violation of applicable securities laws.
6.6 STOCK OPTION PLAN. VIBC shall take all actions necessary for the
issuance of replacement stock options to holders of stock options pursuant to
BOS's 1985 and 1995 Stock Option Plans in accordance with Section 1.7 hereof.
6.7 PREPARATION OF S-4 AND THE PROXY STATEMENT. VIBC shall promptly
prepare and file with the SEC a Registration Statement on Form S-4, in which the
Proxy Statement prepared jointly by BOS and VIBC will be included. Each of VIBC
and BOS shall use its best efforts to have the S-4 declared effective under the
Securities Act of 1933, as amended, as promptly as practicable after such
filing. VIBC shall also take any action (other than qualifying to do business in
any jurisdiction in which it is now not so qualified) required to be taken under
any applicable state securities laws in connection with the issuance of VIBC
Common Stock in the Merger, and BOS shall furnish all information concerning BOS
and the holders of BOS Common Stock as may be reasonably requested in connection
with any such action.
6.8 PROXY STATEMENT. The Proxy Materials to be used in connection with
the shareholders' meetings required pursuant to Section 7.1 hereof, with respect
to all information set forth therein relating to VIBC, the Agreement, the Merger
Agreement and the Transactions, at the time of mailing to shareholders and at
the time of the shareholders' meetings, shall:
(a) Comply in all material respects with the provisions of all
applicable laws and regulations; and
(b) Except with respect to any information regarding BOS
supplied to VIBC by BOS for inclusion in the Proxy Materials, not
contain any statement which, at the time and in light of the
circumstances under which it is made, is false or misleading with
respect to any material fact or not omit to state any material fact
necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of a proxy for the same
meeting or subject matter that has become false or misleading.
ARTICLE VII
MEETINGS OF SHAREHOLDERS AND FEDERAL SECURITIES LAWS
VIBC and BOS each covenant and agree with the other as follows:
7.1 SHAREHOLDERS' MEETINGS. BOS and VIBC will, promptly after execution
of this Agreement, cause a meeting of their shareholders (hereinafter referred
to as the "BOS Meeting" and the "VIBC Meeting," respectively) to be duly called
and held upon requisite notice for the purpose of:
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(a) Authorizing and approving this Agreement and the
Transactions contemplated herein; and
(b) Conducting such other business as its Board of Directors
deems advisable and proper in connection therewith.
Each of BOS and VIBC, through its Board of Directors, will recommend
that its shareholders approve the Transactions contemplated hereby, and will use
its best efforts to obtain the affirmative votes of the holders of the largest
possible percentage of its outstanding shares of common stock.
7.2 FEDERAL SECURITIES LAWS. In obtaining the consents of their
shareholders to the matters described in Section 7.1 hereof, VIBC and BOS and
their officers, directors, controlling shareholders, and representatives, will,
in all respects, comply with Sections 10 and 14 of the Securities Exchange Act
of 1934, as amended (the "1934 Act"), the rules and regulations of the SEC
promulgated thereunder, the rules and regulations of the OTS promulgated
thereunder, if applicable, and the securities laws of all states in which
shareholders of BOS or VIBC reside, if required. Without in any way limiting the
generality of the forgoing, VIBC and BOS agree with the other that the Notice of
Meeting, Proxy Statement submitted in connection therewith, form of Proxy, and
other solicitation materials that will be used by them in soliciting the
aforesaid shareholder approvals and authorizations (collectively, the "Proxy
Materials"):
(a) Will be filed with, and not be used before the same are
cleared for use by the SEC and the OTS and, to the extent required, the
securities administrators of all states in which their shareholders
reside;
(b) Will contain all of the information required by the 1934
Act and the rules and regulations of the SEC and OTS thereunder; and
(c) Will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, except that
neither party warrants the accuracy or completeness of any information
contained therein which is furnished to it by the other relating to the
business, assets, properties, financial condition or management of the
other or any corporation or person affiliated therewith.
VIBC and BOS will use their respective best efforts to obtain clearance
by all appropriate regulatory authorities for the use of their Proxy Materials.
VIBC and BOS will consult and cooperate with the other in the preparation of all
such Proxy Materials for the BOS Meeting and the VIBC Meeting.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF BOS
All obligations of BOS to consummate the Transactions contemplated
herein are subject to the satisfaction, on or before the Closing Date, of the
following conditions precedent, unless
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compliance with or the occurrence of any one or more of such conditions
precedent is waived in writing by BOS:
8.1 CONTINUED ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of VIBC contained in this Agreement shall be true
and correct in all material respects as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date, except as
otherwise contemplated by this Agreement.
8.2 PERFORMANCE OF OBLIGATIONS. VIBC shall have performed and satisfied
in all material respects all of the covenants, agreements, obligations and
conditions required by this Agreement to be performed and satisfied by VIBC at
or prior to the Closing Date.
8.3 ABSENCE OF MATERIAL CHANGES. Between the date of this Agreement and
the Closing Date there shall have been: (a) no damage, destruction, whether or
not covered by insurance (except damage, destruction or loss for which, prior to
the Closing Date, VIBC has been compensated by insurance in such measure as to
fully cover the replacement or repair of all damage, destruction or loss) or
Operating Loss, materially and adversely affecting the business or prospects of
VIBC taken as a whole; (b) no material adverse change in the business,
operations, financial condition, income, or prospects of VIBC; and (c) an
absence of the institution of litigation involving VIBC or any of its assets
(including VIB) which, if determined adverse to VIBC or VIB, would have a
material adverse effect upon VIBC taken as a whole, unless BOS shall have
received an opinion satisfactory to it of counsel handling such matter stating
that such action or proceeding will not, in all likelihood, have a material
adverse effect upon VIBC.
8.4 OFFICERS' CERTIFICATE. There shall have been delivered to BOS at
the Closing a certificate executed by the President and Chief Executive Officer,
by the Corporate Secretary, and by the Chief Financial Officer of VIBC
certifying, to the best of their knowledge, compliance by VIBC with all of the
provisions of Sections 8.1, 8.2, and 8.3 of this Agreement.
8.5 RECEIPT OF LEGAL OPINION. BOS shall have received a legal opinion
from Horgan, Rosen, Beckham & Coren, L.L.P., counsel for VIBC, addressed to BOS
and dated the Closing Date and substantially in the form set forth on Schedule
8.5 hereto or in such other form as agreed to by the parties.
8.6 FAIRNESS OPINION. BOS shall have received an opinion from an
investment banking or bank consulting firm on or before the date the Proxy
Materials are first mailed for the BOS Meeting to the effect that the
Transactions contemplated by this Agreement are fair and equitable to the
holders of BOS Stock.
8.7 APPOINTMENT OF VIBC DIRECTOR. VIBC shall have delivered to BOS at
the Closing a copy of resolutions duly adopted by its Board of Directors, which
copy shall be certified by its Corporate Secretary, providing for the
appointment of Xx. Xx X. Xxxxxxx by VIBC to the VIBC Board of Directors, as
required by Section 1.12 hereof, effective as of the Closing Date.
8.8 CLOSING DOCUMENTS. VIBC shall have delivered to BOS the Closing
documents required pursuant to Schedule 2.3 and Section 2.3 of this Agreement.
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ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF VIBC
All obligations of VIBC to consummate the Transactions contemplated
herein are subject to the satisfaction, on or before the Closing Date, of the
following conditions precedent, unless compliance with or the occurrence of any
one or more of such conditions precedent is waived in writing by VIBC:
9.1 CONTINUED ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of BOS contained in this Agreement shall be true
and correct in all material respects as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date, except as
otherwise contemplated by this Agreement.
9.2 PERFORMANCE OF OBLIGATIONS. BOS shall have performed and satisfied
in all material respects all of the covenants, agreements, obligations and
conditions required by this Agreement to be performed and satisfied by BOS at or
prior to the Closing Date.
9.3 ABSENCE OF MATERIAL CHANGES. Between the date of this Agreement and
the Closing Date there shall have been: (a) no damage, destruction, whether or
not covered by insurance (except damage, destruction or loss for which, prior to
the Closing Date, BOS has been compensated by insurance in such measure as to
fully cover the replacement or repair of all damage, destruction or loss) or
Operating Loss, materially and adversely affecting the business or prospects of
BOS taken as a whole; (b) no material adverse change in the business,
operations, financial condition, income, or prospects of BOS; and (c) an absence
of the institution of litigation involving BOS or any of its assets which, if
determined adverse to BOS, would have a material adverse effect upon BOS, unless
VIBC shall have received an opinion satisfactory to it of counsel handling such
matter stating that such action or proceeding will not, in all likelihood, have
a material adverse effect upon BOS.
9.4 AFFILIATE'S LETTERS. BOS shall have delivered to VIBC Affiliate's
Letters, substantially in the form of Exhibit "C" hereto, signed by each of its
affiliates, in accordance with Section 1.14 hereof.
9.5 RESIGNATION AND APPOINTMENT OF DIRECTORS. BOS shall have delivered
to VIBC at the Closing the written resignations as directors of BOS, effective
as of the Closing Date, of Messrs. Xxxxxxx and Xxxxxxx. BOS also shall have
delivered to VIBC at the Closing a copy of resolutions duly adopted by its Board
of Directors, which copy shall be certified by its Corporate Secretary,
providing for the appointment of Messrs. Xxxx and Xxxx to the BOS Board of
Directors, as required by Section 1.11 hereof, effective as of the Closing Date.
9.6 OFFICERS' CERTIFICATE. There shall have been delivered to VIBC at
the Closing a certificate executed by the President and Chief Executive Officer,
by the Corporate Secretary, and by the Chief Financial Officer of BOS
certifying, to the best of their knowledge, compliance by BOS with all of the
provisions of Sections 9.1, 9.2, 9.3, 9.4 and 9.5 of this Agreement.
9.7 RECEIPT OF LEGAL OPINION. VIBC shall have received a legal opinion
from McCormick, Barstow, Xxxxxxxx, Xxxxx & Xxxxxxx, LLP, counsel for BOS,
addressed to VIBC and
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BOS Interim Bank and dated the Closing Date, substantially in the form set forth
as Schedule 9.7 hereto or in such other form as agreed to by the parties.
9.8 FAIRNESS OPINION. VIBC shall have received an opinion from an
investment banking or bank consulting firm on or before the date the Proxy
Materials are first mailed for the VIBC Meeting to the effect that the
Transactions contemplated by this Agreement are fair and equitable to the
holders of VIBC Stock.
9.9 CLOSING DOCUMENTS. BOS shall have delivered to VIBC the Closing
documents required pursuant to Schedule 2.3 and Section 2.3 of this Agreement.
ARTICLE X
CONDITIONS PRECEDENT TO THE MERGER
The obligations of VIBC and BOS to proceed with the Merger and the
Transactions provided for herein are subject to the fulfillment, at or prior to
the Effective Time of Merger, of the following conditions:
10.1 PERMITS AND APPROVALS. Appropriate permits or approvals from the
OTS, the Federal Reserve System, and any other governmental agencies having
jurisdiction which are necessary to carry out the Transactions contemplated in
this Agreement, shall have been received without the imposition of any
conditions or requirements which, in the reasonable opinion of the affected
party, are materially burdensome or undesirable, and the United States
Department of Justice shall not have taken any adverse action within the period
allowed under 12 U.S.C. Section 1828(c)(6). Said permits and approvals shall be
on terms and conditions acceptable to VIBC and BOS and shall include, but shall
not be limited to, the following:
(a) Prior written approval from the OTS to organize BOS
Interim Bank;
(b) Issuance of a charter for BOS Interim Bank by the OTS;
(c) Prior written approval from the OTS for BOS to merge with
BOS Interim Bank pursuant to 12 U.S.C. Section 1828(c)(2)(D);
(d) Receipt of approval from the Board of Governors of the
Federal Reserve System under the Bank Holding Company Xxx 0000, as
amended, for VIBC to acquire control of BOS; and
(e) The declaration as effective by the SEC of a registration
statement under the Securities Act of 1933, as amended, with respect to
the shares of VIBC Stock to be issued upon consummation of the Merger,
and the approvals of any requisite state securities administrators.
10.2 TAX RULING OR OPINION. Receipt by the parties of a ruling issued
by the Internal Revenue Service or, in lieu thereof, the opinion of Vavrinek,
Trine, Day & Co., L.L.P., to the effect that:
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(a) The Merger qualifies as a reorganization within the
meaning of Section 368(a)(1)(A) of the Internal Revenue Code of 1986,
as amended (the "Code"), and VIBC, BOS, and BOS Interim Bank are
parties to a reorganization under Section 368(d) of the Code;
(b) No gain or loss will be recognized by the parties as a
result of the Merger;
(c) The basis and holding periods of the assets and
liabilities exchanged between the parties to the Merger will be the
same as the basis and holding periods of those assets and liabilities
prior to the Merger;
(d) No gain or loss will be recognized by the holders of BOS
Stock upon the conversion of their shares of BOS Stock into shares of
VIBC Stock (except for any fractional share interests to which they may
be entitled);
(e) Where BOS's shareholders hold their BOS Stock as a capital
asset, the basis of VIBC Stock to be received by BOS shareholders will
be the same as the basis of BOS Stock converted into VIBC Stock;
(f) Where BOS's shareholders hold their BOS Stock as a capital
asset, the holding period of VIBC Stock to be received by holders of
BOS Stock will be the same as the holding period of BOS Stock converted
into VIBC Stock; and
(g) Where cash is received by a shareholder of BOS in lieu of
a fractional share interest in VIBC Stock, the cash will be treated as
being received by the shareholder as a distribution in redemption of
his or her fractional share interest, subject to the provisions and
limitations of Section 302 of the Code.
10.3 ABSENCE OF LITIGATION. On the Closing Date and at the Effective
Time of the Merger:
(a) There shall be no action pending before any court of
competent jurisdiction in which any injunction is sought by any
governmental authority against the Transactions contemplated hereby,
unless VIBC shall have received an opinion satisfactory to it of
counsel handling such matter for VIBC or BOS stating that such action
or proceeding will not, in all likelihood, result in a restraint or
prohibition; and
(b) There shall be in effect no order, writ, injunction or
decree of any court or governmental authority prohibiting the
consummation of any of the Transactions contemplated hereby.
10.4 SHAREHOLDER APPROVALS.
(a) APPROVAL OF MERGER. This Agreement shall have been
approved by the holders of at least two-thirds of the issued and
outstanding shares of BOS Stock entitled to vote, by the holder of at
least two-thirds of the issued and outstanding shares of BOS Interim
Bank Stock entitled to vote, and by the holders of at least a majority
of the issued and outstanding shares of VIBC Stock entitled to vote.
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(b) OTHER ACTIONS. Any and all other actions required by the
shareholders of BOS to authorize or effect the Transactions called for
herein shall have been duly and validly taken.
10.5 CONTINUITY OF INTEREST. Taking into account payments to, and
proposed payments to, holders of Dissenting BOS Shares and Dissenting VIBC
Shares and payments of expenses incurred in connection with the Transactions
called for herein, after the Effective Time of the Merger BOS will hold at least
90% of the fair market value of the net assets and 70% of the fair market value
of the gross assets owned by both it and BOS Interim Bank immediately before the
Effective Time of the Merger. All redemptions and distributions made by BOS
immediately preceding the Effective Time of the Merger and which are part of
this Agreement will be considered as assets held by BOS immediately prior to the
Effective Time of the Merger. No fact, circumstance or event shall have occurred
or is reasonably likely to occur that would cause the Merger not to be deemed a
tax-free reorganization within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended, or that would cause the Merger to not qualify
for pooling-of-interests accounting treatment, including without limitation
payments made on account of fractional shares of VIBC Stock to be issued in
consideration of BOS Stock in the Merger, Dissenting BOS Shares and Dissenting
VIBC Shares.
ARTICLE XI
TERMINATION
11.1 TERMINATION OF THIS AGREEMENT. This Agreement shall terminate and
be of no further force and effect as between the parties hereto, except as to
liability for a material breach of any representation, warranty or covenant
occurring or arising prior to the date of termination, upon the occurrence of
any of the following:
(a) Immediately upon the expiration of 30 days from the date
that VIBC has given notice to BOS of breach or default by BOS in the
performance of any covenant, agreement, representation, warranty, duty
or obligation hereunder; provided, however, that no such termination
shall be effective if, within said 30-day period, BOS shall have
substantially corrected and cured the grounds for the termination as
set forth in said notice of termination;
(b) Immediately upon the expiration of 30 days from the date
that BOS has given notice to VIBC of breach or default by VIBC in the
performance of any covenant, agreement, representation, warranty, duty
or obligation hereunder provided, however, that no such termination
shall be effective if, within said 30-day period VIBC shall have
substantially corrected and cured the grounds for the termination as
set forth in said notice of termination;
(c) Upon the expiration of 30 days after the OTS, the FRB or
any other applicable regulatory agency denies or refuses in writing to
grant the approvals, nondisapprovals, consents, or authorizations
required to be obtained in order to consummate the Transactions
contemplated by this Agreement, unless within said 30-day period the
parties hereto agree to appeal or resubmit the application to the
regulatory authority which has denied or refused to grant such
approval, nondisapproval, consent, authorization or ruling, as the case
may be;
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(d) Immediately after: (i) VIBC is notified by BOS or VIBC
otherwise becomes aware that, pursuant to Section 5.6, BOS has received
a Qualifying Strategic Transaction Proposal; and (ii) payment by BOS to
VIBC of the Termination Fee pursuant to Section 11.4(a) hereof;
(e) Immediately after: (i) BOS is notified by VIBC or BOS
otherwise becomes aware that, pursuant to Section 6.5, VIBC has
received a Qualifying Strategic Transaction Proposal that is not a VIBC
Acquisition Transaction; and (ii) VIBC has provided BOS with evidence
showing that VIBC has used its best efforts by taking all reasonable
measures necessary to provide for the inclusion of BOS in the
Qualifying Strategic Transaction; and (iii) payment by VIBC of the
Termination Fee pursuant to Section 11.4(a) hereof; provided, however,
in the event VIBC has received a Qualifying Strategic Transaction
Proposal that is not a VIBC Acquisition Transaction and that does not
require VIBC to abandon the Merger as a condition to the consummation
of the transaction contemplated by the Qualifying Strategic Transaction
Proposal, then, at BOS's option by written notice to VIBC, this
Agreement will not be terminated and VIBC shall not be obligated to pay
BOS the Termination Fee pursuant to Section 11.4(a) hereof; or (iv)
VIBC is notified by BOS that VIBC has breached this Agreement as set
forth in Section 6.5(c) and payment by VIBC of the Termination Fee
pursuant to Section 11.4(a) hereof.
(f) By notice by VIBC to BOS or by BOS to VIBC, if the Closing
has not occurred on or before January 31, 1999, but subject to the
expiration of any statutory waiting periods following receipt of any
required regulatory approvals received prior to January 31, 1999,
unless said date shall be extended by the mutual agreement of the
parties hereto and unless such failure results primarily from any
material breach pursuant to Sections 11.1(a) or (b) or by virtue of the
events described in Sections 11.1(c), (d) or (e); or
(g) Upon the mutual agreement of the parties hereto.
11.2 IMMATERIAL BREACH. Notwithstanding anything to the contrary
contained herein, no party hereto shall have the right to terminate this
Agreement on account of its own breach or due to any immaterial breach by any
other party hereto of any covenant, agreement, representation, warranty, duty or
obligation hereunder.
11.3 EFFECT OF TERMINATION. If this Agreement shall be terminated as
provided herein, each party shall redeliver all documents, work papers and other
material of the other party relating to the Transactions contemplated herein to
the party furnishing the same, except that the foregoing shall not apply to any
documents, work papers, material or information which is a matter of public
knowledge. No termination of this Agreement under this Article XI for any reason
or in any manner, except as permitted by Sections 11.1 (f), (g) and (h), shall
release, or be construed as so releasing, any party hereto from any liability or
damage to any other party hereto arising out of, in connection with or otherwise
relating to, directly or indirectly, said party's material and bad faith breach,
default or failure in performance of any of its covenants, agreements, duties or
obligations arising hereunder, or any breaches of any representation or warranty
contained herein; provided, however, neither party shall be liable to the other
for termination pursuant to Section 11.1(c) for the failure of the OTS, the FRB,
or any other applicable regulatory agency to grant the approvals,
nondisapprovals, consents, or authorizations required if the failure is not the
result of a material breach by that party of a
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representation, warranty or covenant set forth in this Agreement. If, however,
such termination shall result from an election to terminate by VIBC pursuant to
Section 11.1(a), then BOS shall pay to VIBC, as reasonable and full liquidated
damages and reasonable compensation for the loss sustained thereby and not as a
penalty or forfeiture, the Liquidated Damages as set forth in Section 11.4(b).
If, however, such termination shall result from an election to terminate by BOS
pursuant to Section 11.1(b), then VIBC shall pay to BOS, as reasonable and full
liquidated damages and reasonable compensation for the loss sustained thereby
and not as a penalty for forfeiture, the Liquidated Damages as set forth in
Section 11.4(b). If, however, such termination shall result from an election to
terminate by VIBC or BOS pursuant to Section 11.1(d), then BOS shall pay to VIBC
the Termination Fee pursuant to Section 11.4(a). If, however, such termination
shall result from an election to terminate by BOS or VIBC pursuant to Section
11.1(e), then VIBC shall pay to BOS the Termination Fee pursuant to Section
11.4(a).
11.4 TERMINATION FEE AND LIQUIDATED DAMAGES.
(a) TERMINATION FEE. The Termination Fee shall be the amount
of $750,000 (the "Termination Fee") in the event this Agreement is
terminated pursuant to Section 11.1(d) or Section 11.1(e).
(b) LIQUIDATED DAMAGES. As reasonable and full liquidated
damages and reasonable compensation for the loss sustained and not as a
penalty or forfeiture in the event that this Agreement is terminated
pursuant to Section 11.1(a) or Section 11.1(b), the liquidated damages
shall be the amount of $150,000 (the "Liquidated Damages").
(c) EXCLUSIVE REMEDY. Except in the event the responsible
party fails to pay the Termination Fee or the Liquidated Damages, as
applicable, within ten business days after receipt of an invoice
therefor, which period shall be extended by an additional reasonable
time if the responsible party has reasonably disputed the existence or
amount of such obligations, timely receipt of such payment shall
constitute an exclusive remedy, and following such receipt and
acceptance, the receiving party shall be barred from recovering damages
for any breach of any term of this Agreement.
ARTICLE XII
GENERAL PROVISIONS
12.1 EXPENSES. VIBC and BOS agree that VIBC and BOS shall each bear
their own expenses incurred in connection with the negotiation, preparation, and
performance of this Agreement, including legal and accounting fees, printing
costs, filing fees, and other necessary expenses regardless of whether the
Merger or any of the Transactions contemplated under this Agreement are
consummated.
12.2 NOTICES. All notices, demands or other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered in
person, or if sent by Federal Express, overnight delivery United States mail, or
other overnight delivery service, or sent by facsimile transmission (with
confirmation) addressed as follows:
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(i) If to VIBC, to:
VIB Corp
0000 Xxxx Xxxxxx
Xx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxx, President and CEO
Fax: (000) 000-0000
With a copy to:
Horgan, Rosen, Beckham & Coren, L.L.P.
00000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: S. Xxxx Xxxxx, Esq.
Fax: (000) 000-0000
(ii) If to BOS, to:
Bank of Stockdale, F.S.B.
0000 Xxxxxxxxx Xxxxxxx
Xxxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xx X. Xxxxxxx, President and CEO
Fax: (000) 000-0000
With a copy to:
McCormick, Barstow, Xxxxxxxx, Xxxxx & Xxxxxxx, LLP
0 Xxxxxxxxx Xxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxx Xxxxxxx, Esq.
Fax: (000) 000-0000
The persons or addresses to which mailings or deliveries shall be made
may change from time to time by notice given pursuant to the provisions of this
Section 12.2. Any notice, demand or other communications given pursuant to the
provisions of this Section 12.2 shall be deemed to have been given on the date
actually delivered or the business day following the date sent by overnight
delivery, as the case may be.
12.3 SUCCESSORS AND ASSIGNS. All terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective transferees, successors and assigns; provided, however, that except
as otherwise contemplated hereby, this Agreement and all rights, privileges,
duties and obligations of the parties hereto may not be assigned or delegated by
any party hereto without the prior written consent of the other parties to this
Agreement.
12.4 THIRD PARTY BENEFICIARIES. BOS and VIBC intend that this Agreement
shall not benefit or create any right or cause of action in or on behalf of any
person other than BOS or VIBC.
12.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
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12.6 GOVERNING LAW. This Agreement is made and entered into in the
State of California and the internal laws (without regard to the conflict of law
provisions thereof) of that state shall govern the validity and interpretation
hereof and the performance of the parties hereto of their respective duties and
obligations hereunder, except as required by applicable provisions of Title 12
of the United States Code.
12.7 CAPTIONS. The captions contained in this Agreement and the
Exhibits and Schedules hereto are for convenience of reference only and do not
form a part of or affect the interpretation of this Agreement.
12.8 EXHIBITS AND SCHEDULES. The Exhibits and Schedules attached hereto
are an integral part of this Agreement and each Exhibit and Schedule shall be
applicable as if set forth in full in the text hereof only with respect to the
sections of this Agreement to which it is cross-referenced. In the event there
is any absolute unconditional representation contained in this Agreement, said
representation shall be modified by any contrary information set forth on a
Schedule which expressly cross-references to the section where the absolute or
unconditional representation is contained.
12.9 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the parties hereto contained in this Agreement or any Exhibit or Schedule
hereto shall terminate after the Effective Time of the Merger and shall be of no
further force and effect. Nothing in this Article XII shall be construed as
limiting the applicable statute of limitations in the event the Transactions are
not consummated.
12.10 WAIVER AND MODIFICATION. No waiver of any term, provision or
condition of this Agreement, whether by conduct or otherwise, in any one or more
instances shall be deemed to be or construed as a further or continuing waiver
of any such term, provision or condition of this Agreement. This Agreement may
be modified or amended only by an instrument of equal formality signed by the
parties or their duly authorized agents.
12.11 ATTORNEYS' FEES. In the event any of the parties to this
Agreement brings an action or suit against any other party by reason of any
breach of any covenant, agreement, representation, warranty or other provision
hereof, the substantially prevailing party in whose favor final judgment is
entered shall be entitled to have and recover of and from the other party all
reasonable costs and expenses incurred or sustained by such prevailing party in
connection with such suit or action, including, without limitation, legal fees
and court costs.
12.12 KNOWLEDGE. In all representations and warranties concerning the
knowledge of BOS, VIBC or VIB, wherever included herein, there shall be imputed
to BOS, VIBC or VIB the actual and constructive knowledge and notice of their
respective current directors and executive officers.
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12.13 ENTIRE AGREEMENT. The making, execution and delivery of this
Agreement by the parties hereto have been induced by no representations,
statements, warranties or agreements other than those herein expressed. This
Agreement embodies the entire understanding of the parties and there are no
further or other agreements or understandings, written or oral, in effect
between the parties relating to the subject matter hereof, unless expressly
referred to by reference herein.
12.14 CONSENTS. Any and all consents required to be obtained from any
of the parties hereto under this Agreement shall not be unreasonably withheld
and shall be deemed given unless the requesting party receives written notice to
the contrary from the party to whom such request is made within ten business
days after request therefor.
12.15 SEVERABILITY. If any portion of this Agreement shall be deemed by
a court of competent jurisdiction to be unenforceable, the remaining terms
hereof shall provide for the consummation of the Transactions contemplated
herein in substantially the same manner as originally set forth at the date this
Agreement was executed.
12.16 PRESS RELEASE. No press release or other public disclosure of
matters related to this Agreement of any of the Transactions contemplated hereby
shall be made by VIBC, BOS Interim Bank, or BOS unless the other parties shall
have provided their prior consent to the form and substance thereof; provided,
however, that nothing herein shall be deemed to prohibit any party hereto from
making any disclosure which its counsel deems necessary or advisable in order to
fulfill such party's disclosure obligations imposed by law.
12.17 ARBITRATION. Any controversy or claim arising out of or relating
to this Agreement, or the breach hereof, and which arises after the effective
date of this Agreement, shall be settled by arbitration to take place in Los
Angeles, California, in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, and judgment upon the award rendered by the
arbitrator or arbitrators may be entered in any court having jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
BANK OF XXXXXXXXX, F.S.B. VIB CORP
By: /s/ Xx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxx
---------------------------------------- ---------------------------------------
Xx X. Xxxxxxx Xxxxxx X. Xxxx
Its: President and Chief Executive Officer Its: President and Chief Executive Officer
By: /s/ Xxxx X. Xxxxxxxx, Xx. By: /s/ Xxxxxxxxx Xxxxxx
---------------------------------------- ---------------------------------------
Xxxx X. Xxxxxxxx, Xx. Xxxxxxxxx Xxxxxx
Its: Corporate Secretary Its: Corporate Secretary
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