December 7, 2000
Board of Directors
Tri-County Bancorp, Inc.
2201 Main Street
P.O. Box 1057
Torrington, Wyoming 82240-2317
Gentlemen:
Platte Valley Financial Service Companies, Inc. ("Platte Valley") is interested
in acquiring 100% of the outstanding common stock of Tri-County Bancorp, Inc.
("Tri-County"). The purpose of this letter is to set forth on a preliminary
basis the terms and conditions of the acquisition and to provide assurances that
our investigation of Tri-County be protected by the confidentiality provisions
contained herein. Except as provided in paragraphs 9, 10, 11 and 15, this letter
is not intended to be binding on the parties and the final terms would be set
forth in a mutually acceptable acquisition agreement.
1. Purchase Price. The purchase price for the stock of Tri-County shall be
$12.60 per share, or $11,138,009.40 in the aggregate (with a maximum of 883,969
shares outstanding at the time of closing), less any adjustments as mutually
agreed by the parties after the due diligence examination provided for below.
2. Form of Transaction. The acquisition would be made by merging a newly-formed
wholly owned subsidiary of Platte Valley into Tri-County so that 100% of the
outstanding stock of Tri-County is acquired by Platte Valley.
3. Form of Payment of Purchase Price. The purchase price shall be paid in cash.
4. Conditions to the Closing. The closing of the proposed acquisition shall be
conditioned upon:
(i) Receipt of all necessary regulatory approvals including, but not limited to,
(A) OTS approval of Platte Valley as a thrift holding company and moving the
Tri-County charter from the Torrington office to the Cheyenne office, (B)
Federal Reserve Board approval of Platte Valley acquiring Tri-County and
engaging in a non-banking activity, and (C) OCC approval of Platte Valley
National Bank acquiring the two Tri-County branches and all of their assets and
liabilities in Torrington and Wheatland;
(ii) Approval of the acquisition by the requisite percentage of shareholders of
Tri-County;
(iii) Approval of the acquisition by the Boards of Platte Valley and Tri-County;
(iv) Consummation of the acquisition occurring on the earlier of March 31, 2001,
or a date which is at least 10 days after all regulatory and other approvals
have been received and all applicable waiting periods have expired, but not
later than June 30, 2001;
(v) Options for 72,207 shares of Tri-County stock currently outstanding shall be
bought out at closing for total consideration not to exceed $529,013.20 and
there will be no other outstanding options, warrants and convertible securities
of Tri-County;
(vi) No material adverse changes in the business or financial condition of
Tri-County prior to closing; however, payouts under existing employment
agreements (previously disclosed) or other merger-related costs mutually agreed
upon by the parties shall not be deemed a material adverse change;
(vii) Satisfactory loan loss reserve, credit quality and loan administration of
Tri-County at closing; and
(viii)Other conditions common to such transactions which are mutually agreed
upon by the parties and their counsel.
5. Covenants Not to Compete/Advisory Board. In exchange for a payment of $4,800,
payable in 24 equal monthly installments, each director and the chief executive
officer of Tri-County shall enter into, at their option, either (i) a two-year
covenant not to compete with Platte Valley or its subsidiaries within those
counties where Platte Valley, Tri-County or their subsidiaries currently have
branches, or (ii) an agreement to serve on the advisory board of Platte Valley
National Bank-Torrington or Tri-County Bank for a period of two years following
the merger.
6. Due Diligence. Until January 5, 2001, Tri-County shall provide free unlimited
access to its financial statements, books, records, loan files, audit and exam
reports, contracts, commitments, insurance policies, surety bonds, leases and
tax returns for the purpose of allowing Platte Valley to conduct a thorough
investigation of Tri-County's financial condition, corporate state, business
operations, asset quality, property and title thereto, litigation and all other
matters relating to Tri-County's business, properties and assets. This
investigation shall be conducted through Platte Valley's employees and agents,
including its accountants, attorneys and consultants. This investigation shall
be conducted in a manner that does not unreasonably interfere with Tri-County's
normal operations. Tri-County shall cause its personnel to assist Platte Valley
in making such investigation and shall cause its legal counsel, accountants,
employees and other representatives to be available to Platte Valley for such
purp ose as reasonably requested. During such investigation, Platte Valley shall
have the right to make copy of such records, files, documents and other
materials as it may deem advisable unless it is limited or restricted from doing
so by law or regulation.
7. Definitive Agreement. Tri-County and Platte Valley shall cooperate fully to
negotiate and draft a definitive agreement after the due diligence review. Upon
the satisfactory completion of the due diligence referred to in paragraph 6
above, the parties shall execute a mutually acceptable definitive agreement
which shall incorporate the terms of this letter and such additional terms as is
customary for transactions of this type, including appropriate representations
and warranties. The definitive agreement shall provide Tri-County may pay
dividends and transaction expenses through the closing date in an amount not to
exceed Tri-County's earnings through the closing date. The definitive agreement
shall provide that no executive bonuses shall be paid through the closing date.
The definitive agreement shall provide that no loans in excess of $150,000 be
made and that no securities be bought or sold without 24 hours' prior notice to
Platte Valley's designee and Platte Valley's approval or non-objection of s uch
transactions shall not be unreasonably withheld. The definitive agreement shall
further provide that Platte Valley shall have full access to the books and
records of Tri-County through the closing and the right to have its non-voting
designee attend all board meetings and meetings of committees of the board of
Tri-County and its subsidiary bank through the closing. If the definitive
agreement is not entered into within 45 days of the date of the execution of
this letter of intent, either party may terminate the transaction.
8. Fairness Opinion. The execution of a definitive agreement by Tri-County shall
be conditioned upon Tri-County receiving a fairness opinion from its investment
banker.
9. Confidentiality. Each party agrees recognizes and acknowledges that the data
and information it shall or may obtain from the other party during the due
diligence review (the "Information") comprise valuable, special and unique
assets of the other party. Each party and its employees, agents and
representatives shall hold in confidence any and all of the Information and
shall not, in whole or in part, disclose the Information to any person or
business for any reason or purpose whatsoever, and shall not make use of any
such Information for any reason or purpose other than to evaluate the proposed
acquisition. These restrictions shall not apply to such Information (i) which is
at the time of disclosure in the public domain other than as a result of
confidential disclosure by the party; (ii) which was disclosed by a third party
not subject to any restrictions on disclosure; (iii) which is required to be
disclosed by the order of a court or other competent authority or under
applicable law; or (iv) with resp ect to which a party may have given its
consent. Further, each party may disclose the Information to its legal counsel,
accountants and other professional advisors subject to their agreement to
maintain the Information in strict confidence and not to disclose or use the
Information, in whole or in part, other than in the course of advising such
party. In the event a party is requested or required by a court or other
confident authority or under applicable law to disclose the Information, such
party shall give the other party prompt notice of such request or requirement to
enable the party to seek an appropriate protective order, and shall consult and
cooperate with the party in attempting to resist or narrow the scope of such
requests or requirement.
10. Return of Documents. If this letter of intent expires, terminates or is
terminated, each party, at its expense and within ten (10) days of the date of
such expiration or termination, shall return to the other party any and all
Information obtained by such party pursuant to its due diligence review or
otherwise, together with all copies thereof and all notes, reports, evaluations,
analysis, summaries, memoranda and other documents prepared by or on behalf of
such party with respect thereto shall be destroyed.
11. Indemnity. Each party shall indemnify, defend and hold harmless the other
party from and against any and all losses, liabilities, damages, costs and
reasonable attorneys' fees suffered or incurred by such party as a result of,
related to or in connection with any breach by the other party of its duties and
obligations under paragraph 10 of this letter of intent.
12. No Solicitation. Platte Valley acknowledges that Tri-County may have
previously contacted other purchasers regarding the sale of Tri-County. While
this letter of intent is effective, Tri-County and its officers and directors
shall not further solicit offers from any other party for the acquisition of a
controlling interest in Tri-County and, if any unsolicited offer is received, or
if one or more offers are received from prospective purchasers previously
contacted by Tri-County, Tri-County shall not, except as required pursuant to
their fiduciary duties, engage in any discussions or negotiations with any other
party with respect to such a transaction. If any offer is received from another
party, Tri-County and its officers and directors shall promptly inform Platte
Valley of the terms of that offer and the identity of the offerer.
13. Employees. In the event the parties do not execute a definitive agreement,
the parties hereto further agree that they will not solicit for employment by
such party or any related entities (including but not limited to wholly or
partially owned subsidiaries or affiliates and affiliates in which any of such
party's representatives have a controlling interest) any of the officers of the
other party so long as they are employed by the other party, during the period
in which there are acquisitions discussions conducted pursuant hereto and for a
period of two years thereafter, without obtaining the prior written consent of
the other party. For purposes of this letter, "solicit for employment" shall not
include (a) referrals made by a placement agency or service or (b) responses to
any advertisement appearing in a newspaper, magazine or trade publication.
14. Press Releases. Neither Platte Valley nor Tri-County shall issue any press
release or other disclosure of the proposed acquisition without the consent of
the other party prior to the execution of the definitive agreement; provided,
however, neither Platte Valley nor Tri-County shall withhold its consent
unreasonably. Notwithstanding the foregoing, Tri-County may disclose the
proposed acquisition in the case that it is advised by legal counsel that
disclosure is required under applicable law including federal and state
securities law. Such disclosure shall be in a form reasonably acceptable to
Platte Valley.
15. Certain Activities. After the date of this letter until termination of
negotiations, Tri-County shall not, without the prior written consent of Platte
Valley (i) make any change in its authorized capital stock; (ii) issue or sell
any shares of its capital stock or securities convertible into or exchangeable
for capital stock; (iii) enter into any transaction not in the usual and
ordinary course of business; or (iv) pay any cash dividends not previously
declared or as permitted in the definitive agreement.
16. Expenses. Platte Valley and Tri-County shall each bear its own expenses
incurred in connection with the negotiation, preparation and consummation of the
contemplated acquisition. Any expenses incurred by any executive officer of
Tri-County for tax planning and employment-related issues shall be considered
personal expenses and not Tri-County corporate expenses.
17. Notices. All notices, demand or other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered or mailed by
certified mail, return receipt requested, postage prepaid if to Tri-County to:
Tri-County Bancorp, Inc.
Attn: Robert Savage, President
2201 Main Street
Torrington, Wyoming 82240-2317
and if to Platte Valley to:
Platte Valley Financial Service Companies, Inc.
Attn: H. Hod Kosman, President
1212 Circle Drive
Scottsbluff, NE 69363-2308
18. Survival. The duties and obligations and sections set forth in paragraphs 9,
10 and 11 of this letter of intent shall survive the expiration or the
termination hereof. Such duties and obligations shall be binding upon and shall
inure to the benefit of, the respective administrators, successors and assigns
of the parties hereto.
19. on-Binding. This letter is an expression of intent, but is not meant to
create a binding obligation of the parties except as provided in paragraphs 9,
10, 11 and 15.
If you believe this letter accurately states our preliminary intentions, please
sign and return one copy to me.
PLATTE VALLEY FINANCIAL SERVICE
COMPANIES, INC.
By: /s/H. Hod Kosman, President
This letter accurately states the preliminary intentions of Tri-County and is
agreed to be binding as to the provisions set forth in paragraphs 9, 10, 11 and
15, as of this 9th day of December 2000.
TRI-COUNTY BANCORP, INC.
By: /s/Robert L. Savage, President