STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of
9/16, 1996 (this "Agreement"), is by and between
Carolyn E. Roth (the "Seller") and Feather River State Bank,
a California banking corporation (the "Bank").
RECITALS
A. Seller owns one hundred percent of the
outstanding shares of capital stock (the "Shares") of E.P.I.
Leasing Co., Inc., a California corporation (the "Company"),
which shares Seller desires to sell to Bank and which shares
Bank is willing to purchase from Seller, on the terms and
conditions set forth herein.
B. In connection with said purchase and sale
of the Shares, Seller and Bank desire to enter into a
related employment agreement, attached hereto as EXHIBIT A
and a noncompetition agreement (the "Noncompetition
Agreement"), attached hereto as EXHIBIT B, which are
incorporated herein by this reference.
NOW, THEREFORE, on the basis of the foregoing
recitals and in consideration of the mutual covenants,
agreements, representations and warranties contained herein,
the parties hereto do covenant and agree as follows:
DEFINITIONS
Except as otherwise expressly provided for in this
Agreement, or unless the context otherwise requires, as used
throughout this Agreement the following terms shall have the
respective meanings specified below:
"Affiliate" of, or a person "Affiliated" with, a
specific person(s) is a person that directly or indirectly,
through one or more intermediaries, controls, or is
controlled by, or is under common control with, the
person(s) specified.
"Arthur Andersen" means Arthur Andersen LLP, the
Bank's independent accountants.
"Bank" has the meaning set forth in the preamble
to this Agreement.
"Bank Conflicts and Consents List" has the meaning
set forth in Section 4.3.
"Bank List" means any list required to be
furnished by Bank to Seller.
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"Benefit Arrangements" has the meaning set forth
in Section 3.20(b).
"Business Day" means any day other than a
Saturday, Sunday or day on which a bank chartered under the
laws of the State of California is closed.
"CIB" means California Independent Bancorp, a
California corporation and holding company for the Bank.
"Claim" has the meaning set forth in Section 14.3.
"Closing" means the consummation of the
transactions contemplated by this Agreement (as defined
herein) provided for in Article II of this Agreement on the
Closing Date (as defined herein) at the offices of Feather
River State Bank, 1005 Stafford Way, Yuba City, California,
or at such other place as the parties may agree upon.
"Closing Date" means the first Friday which is at
least five Business Days following receipt of all necessary
regulatory approvals to consummate the transaction
contemplated by the Agreement, or such other date as the
parties shall mutually agree upon.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Company" means E.P.I. Leasing Co., Inc., a
California corporation.
"Company Bank Accounts" means those accounts
maintained at a "depository institution" as that term is
defined in 12 C.F.R. Section 348.2, and any parent,
subsidiary or affiliate thereof.
"Company Conflicts and Consents List" has the
meaning set forth in Section 3.6.
"Company Contract List" has the meaning set forth
in Section 3.16.
"Company Employee Plan List" has the meaning set
forth in Section 3.20.
"Company Environmental Compliance List" has the
meaning set forth in Section 3.12.
"Company Filings" has the meaning set forth in
Section 3.5.
"Company Filings List" has the meaning set forth
in Section 3.5.
"Company Insurance List" has the meaning set forth
in Section 3.7.
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"Company List" means any list required to be
furnished by Seller to the Bank herewith.
"Company Litigation List" has the meaning set
forth in Section 3.10.
"Company Personal Property List" has the meaning
set forth in Section 3.8.
"Company Real Property List" has the meaning set
forth in Section 3.9.
"Company Stock" means the common stock, no par
value, of the Company.
"Company Tax List" has the meaning set forth in
Section 3.11.
"Employee Plans" has the meaning set forth in
Section 3.20(a).
"Encumbrance" shall mean any option, pledge,
security interest, lien, charge, encumbrance or restriction
(whether on voting or disposition or otherwise), whether
imposed by agreement, understanding, law or otherwise.
"Environmental Regulations" has the meaning set
forth in Section 3.12(b).
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
"FDIC" means the Federal Deposit Insurance
Corporation
"Financial Statements of CIB" means the audited
consolidated financial statements of CIB consisting of the
consolidated statements of condition as of December 31,
1993, 1994 and 1995, the related consolidated statements of
income, stockholders' equity and cash flows for the years
then ended and the related notes thereto and related
opinions thereon for the years then ended and CIB's
unaudited consolidated statements of financial condition and
consolidated statement of income and cash flows as of and
for the six month period ended June 30, 1996.
"Financial Statements of the Company" means the
compiled financial statements of the Company consisting of
the balance sheets as of September 30, 1993, 1994 and 1995,
the related statements of operations, stockholders' equity
and cash flows for the years then ended and the related
notes thereto and related opinions thereon for the years
then ended and the Company's balance sheet and statements of
operations and cash flows as of and for the six month period
ending June 30, 1996.
"FRB" means the Board of Governors of the Federal
Reserve System.
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"Governmental Entity" shall mean any court or
tribunal in any jurisdiction or any United States federal,
state, municipal, domestic, foreign or other administrative
authority or instrumentality.
"Hazardous Materials" has the meaning set forth in
Section 3.12(b).
"Immediate Family" means a person's spouse,
parents, in-laws, children and siblings.
"Indemnifiable Expenses" shall have the meaning
set forth in Section 14.1.
"IRS" means the Internal Revenue Service.
"Logoluso" means Gerald P. Logoluso, CPA the
Company's independent accountants.
"Losses" shall have the meaning set forth in
Section 14.1.
"Person" means any individual, corporation,
association, partnership, trust, joint venture, other
entity, unincorporated body, government or governmental
department or agency.
"Preliminary Purchase Price" has the meaning set
forth in Section 1.2.
"Preliminary Purchase Price Certificate" means a
certificate delivered no later than four Business Days prior
to the Closing Date setting forth the Preliminary Purchase
Price.
"Purchase Options/Residuals" are all residuals
reflected on the books of the Company at the time of
Closing.
"Purchase Price" shall have the meaning set forth
in Section 8.2.
"Purchase Price Certificate" shall mean a
certificate, executed by the Seller and the President of the
Company, setting forth the Purchase Price.
"Receivables" means: (i) in-house lease
receivables, (ii) monies due the Company from their funding
sources on transactions which are signed but not yet funded;
(iii) bonuses from funding sources earned but not yet
received; (iv) refunds due the Company; (v) monies due the
Company from vendors to reimburse the Company for pre-funded
transactions and (vi) monies due from lessees for payments
due on signed documents.
"Related Group of Persons" means Affiliates,
members of an Immediate Family or Persons the obligations of
whom would be attributed to another Person pursuant to the
regulations promulgated by the SEC at 17 C.F.R. Section
240.13d3 (as defined herein).
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"SBD" means the California State Banking
Department.
"Shares" means all the outstanding shares of
Company Stock.
"Tanks" has the meaning set forth in Section
3.12(b).
"Understanding" means any contract, agreement,
understanding, commitment or offer, whether oral or written,
which may become a binding obligation if accepted by another
Person.
ARTICLE I
PURCHASE AND SALE
1.1 PURCHASE AND SALE OF SHARES. Subject to
the terms and conditions set forth in this Agreement, at the
Closing, the Seller shall sell, transfer, convey and deliver
to the Bank, and Bank shall accept, acquire and take
delivery of, all of the Shares owned by the Seller.
1.2 PURCHASE PRICE. As full consideration for
the sale, transfer, conveyance and delivery to Bank of all
of the Shares on the Closing Date, Bank shall pay to Seller
an amount (the "Purchase Price") calculated pursuant to
Section 8.2
1.3 PRELIMINARY AMOUNT. On the Closing Date,
Bank shall pay to Seller a preliminary amount (the
"Preliminary Amount") for all of the Shares determined as
follows:
(a) Cash in an amount equal to all monies
contained in the Company's Bank Accounts five Business Days
prior to the Closing Date plus Receivables; plus
(b) Cash in an amount equal to 85 percent
of the Purchase Options/Residuals and all applicable fees in
conjunction therewith five Business Days prior to the
Closing Date; plus
(c) Cash in an amount equal to $100,000
for all of the Company's physical assets; plus
(d) Cash in an amount of $240,000 for the
Company's goodwill.
1.4 OFFICER'S CERTIFICATE AND ACCOUNTANT'S
REVIEW. The Preliminary Amount shall be set forth not later
than four Business Days prior to the Closing Date in a
Preliminary Amount Certificate to be delivered by Seller to
Bank. The amounts contained in the Preliminary Amount
Certificate and the procedures upon which the calculation of
the Preliminary Amount
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shall be reviewed and confirmed by Arthur Anderson or such
other reviewer as the Bank may designate.
1.5 ADJUSTMENTS TO PURCHASE PRICE. If the
Purchase Price, as determined based on the Closing Review to
be conducted pursuant to Section 8.2 hereof, is an amount
less than the amount set forth in the Preliminary Amount
Certificate, then the Seller shall deliver to the Bank in
immediately available funds, within 10 Business Days of
delivery of the Closing Review to the Seller, the difference
between the amount set forth in the Purchase Price
Certificate and the Preliminary Amount Certificate.
If the Purchase Price is an amount greater than
the amount set forth in the Preliminary Amount Certificate,
then the Bank shall deliver to the Seller in immediately
available funds, within 10 Business Days of delivery of the
Closing Review to the Seller, the difference between the
Purchase Price and the amount set forth in the Preliminary
Amount Certificate.
ARTICLE II
THE CLOSING
2.1 CLOSING. The closing (the "Closing")
shall take place at the offices of the Bank at 10:00 a.m. on
the Closing Date.
2.2 DELIVERIES BY SELLER At or prior to the
Closing, the Seller shall deliver to the Bank the following:
(a) Certificates evidencing all of the
Shares, which certificates shall be duly endorsed in blank
or accompanied by duly executed stock powers;
(b) Resignations of all directors of the
Company except for Carolyn Roth;
(c) The certificate referred to in
Section 11.10;
(d) The opinion referred to in
Section 11.1;
(e) All financial, accounting, stock and
corporate books and records, and any other books or records
material to the business of the Company;
(f) Complete and correct copies of the
Company's Articles of Incorporation and Bylaws certified by
the Company's corporate secretary, as in effect on the date
hereof and the Closing Date;
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(g) A certificate of good standing dated
as of a day within five Business Days of the Closing from
the Secretary of State of California;
(h) All consents, waivers or approvals,
if any, obtained with respect to the consummation of the
transactions contemplated by this Agreement;
(i) the Preliminary Amount Certificate;
(k) An executed copy of the key-man
insurance policy referred to in Section 11.10; and
(l) Evidence showing compliance with
Section 11.12.
2.3 DELIVERIES BY THE BANK. At or prior to
the Closing, the Bank will deliver to the Seller the
following:
(a) The Preliminary Amount;
(b) The payment required by Section 4.1
of the Noncompetition Agreement between the Bank and Seller;
(c) The opinion referred to in Section 10.1;
(d) The certificate referred to in Section 10.5;
(e) A certificate of good standing with
respect to the Bank dated as of a day within five Business
Days of the Closing from the Secretary of State of
California; and
(f) Complete and correct copies,
certified by the Bank's corporate secretary, of the Bank's:
(i) Articles of Incorporation; (ii) Bylaws; and (iii)
resolutions of the Board of Directors authorizing the Bank
to consummate the transactions contemplated by the
Agreement.
(g) A copy of all regulatory approvals
from all Governmental Entities necessary to consummate the
transactions contemplated herein.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Bank as
follows:
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3.1 INCORPORATION, STANDING AND POWER. The
Company is a California corporation duly organized, validly
existing and in good standing under the laws of the State of
California. The Company has all requisite corporate power
and authority to own, lease and operate its properties and
assets and to carry on its businesses as presently
conducted. Neither the scope of the business of the Company
nor the location of any of its respective properties
requires that the Company be licensed to do business in any
jurisdiction other than the State of California where the
failure to be so licensed would, individually or in the
aggregate, have a materially adverse effect on the financial
condition, results of operation or business of the Company.
The Company has delivered to the Bank true and correct
copies of its Articles of Incorporation and Bylaws, as
amended, and in effect as of the date hereof.
3.2 CAPITALIZATION. As of the date of this
Agreement, the authorized capital stock of the Company
consists of 1,000,000 shares of the Company Stock, of which
500 shares are issued and outstanding and all of which are
owned by Seller. All of the outstanding shares of the
Company Stock are duly authorized, validly issued, fully
paid and nonassessable. There are no outstanding options,
warrants or other rights in or with respect to the unissued
shares of the Company Stock nor any securities convertible
into such stock, and the Company is not obligated to issue
any additional shares of its Company Stock or any additional
options, warrants or other rights in or with respect to the
unissued shares of such stock or any other securities
convertible into such stock.
3.3 SUBSIDIARIES. The Company does not own,
directly or indirectly, the outstanding stock or equity or
other voting interest in any corporation, partnership, joint
venture or other entity.
3.4 FINANCIAL STATEMENTS. The Seller has
previously furnished to the Bank a copy of the Financial
Statements of the Company. The Financial Statements of the
Company: (a) present fairly the financial condition of the
Company as of the respective dates indicated and its results
of operations and changes in cash flows, for the respective
periods then ended, subject, in the case of the unaudited
interim financial statements, to normal recurring
adjustments; (b) have been prepared in accordance with
generally accepted accounting principles consistently
applied (except as otherwise indicated therein); and (c)
are based upon the books and records of the Company.
3.5 REPORTS AND FILINGS. Except as set forth
in a list (the "Company Filings List"), since January 1,
1993, to the best of Seller's knowledge, the Company has
filed all reports, returns, registrations and statements
(such reports and filings referred to as "the Company
Filings"), together with any amendments required to be made
with respect thereto, that were required to be filed with
(a) any applicable Governmental Entity, including taxing
authorities, except where the failure to file such reports,
returns, registrations or 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 the Company. No administrative actions have
been taken or orders issued in connection with such the
Company Filings. As of their respective dates, each of
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such Company Filings (y) complied in all material respects
with all laws and regulations enforced or promulgated by the
Governmental Entity with which it was filed (or was amended
so as to be in compliance promptly following discovery of
any such noncompliance); and (z) 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 Company Filings fairly
presented the financial position of the Company and was
prepared in accordance with generally accepted accounting
principles or banking regulations consistently applied,
except as stated therein, during the periods involved. The
Company has furnished the Bank with true and correct copies
of all the Company Filings filed by the Company since
January 1, 1993.
3.6 AUTHORITY OF THE SELLER. The Seller has
full personal power and authority to enter into this
Agreement and to carry out the transactions contemplated
hereby, and this Agreement has been duly executed and
delivered by such Seller and constitutes the legal, valid
and binding obligations of such Seller and this Agreement is
upon due execution and delivery by the respective parties
thereto, a valid and binding obligation of the Seller
enforceable in accordance with its terms. Except as set
forth in a list furnished by the Seller to the Bank (the
"Company Conflicts and Consents List"), neither the
execution and delivery by the Seller of this Agreement the
consummation of the transactions contemplated herein or
therein, nor compliance by the Seller or the Company with
any of the provisions hereof or thereof, will: (a) conflict
with or result in a breach of any provision of the Company's
Articles of Incorporation, as amended, or Bylaws, as
amended; (b) constitute a breach of or result in a default
(or give rise to any rights of termination, cancellation or
acceleration, or any right to acquire any securities or
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
the Company or the Seller is a party, or by which the
Company or the Seller or any of their respective properties
or assets is bound; (c) result in the creation or imposition
of any Encumbrance on any of the properties or assets of the
Company or the Shares or; (d) violate any order, writ,
injunction, decree, statute, rule or regulation applicable
to the Company or any of its properties or assets or
(e) permit the acceleration of the maturity of any
indebtedness of the Company or any indebtedness secured by
any of the Company assets or the Shares. Except as set
forth in the Company Conflicts and Consents List, no consent
of, approval of, notice to or filing with any Governmental
Entity having jurisdiction over any aspect of the business
or assets of the Company, and no consent of, approval of or
notice to any other Person, is required in connection with
the execution and delivery by the Seller of this Agreement
or the consummation of the transactions contemplated hereby.
3.7 INSURANCE. The Company has policies of
insurance and bonds with respect to its assets and business
against such casualties and contingencies and in such
amounts, types and forms as it reasonably deems appropriate
and adequate for its business, operations, properties and
assets. All such insurance policies and bonds are in full
force and effect. Except as set forth in a list furnished
by the Seller to the Bank (the "Company Insurance List"), no
insurer under any
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such policy or bond has canceled or indicated an intention
to cancel or not to renew any such policy or bond or
generally disclaimed liability thereunder. Except as set
forth in the Company Insurance List, the Company is not in
default under any such policy or bond and all material
claims thereunder have been filed in a timely fashion. Set
forth in the Company Insurance List is a list of all
policies of insurance carried and owned by the Company
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 the Bank a
copy of each such policy of insurance.
3.8 TITLE TO ASSETS. The Company has good and
marketable title to all its material properties and assets,
other than real property, owned or stated to be owned by the
Company, free and clear of all Encumbrances except: (a) as
set forth in the Financial Statements of the Company; (b)
for Encumbrances for current taxes not yet due; (c) for
Encumbrances incurred in the ordinary course of business;
(d) for Encumbrances that are not substantial in character,
amount or extent and that do not materially detract from the
value, or interfere with present use, of the property
subject thereto or affected thereby, or otherwise materially
impair the conduct of business of the Company; or (e) as set
forth in a list furnished by the Seller to the Bank (the
"Company Personal Property List.")
3.9 REAL ESTATE. The Company has no interests
in any real property, including leaseholds and all other
interests in real property.
3.10 LITIGATION. Except as set forth in the
Company Filings or in a list furnished by the Company to the
Bank (the "Company Litigation List"), there is no private or
governmental suit, claim, action or proceeding pending, nor
to the Seller's knowledge threatened, against the Company or
against any of its directors, officers or employees relating
to the performance of their duties in such capacities or
against or affecting any properties of the Company which, if
adversely determined, would have a material adverse effect
upon the business, financial condition or results of
operations of the Company or the transactions contemplated
hereby, or which may involve a judgment against the Company
in excess of $10,000. Also, except as disclosed in the
Company Filings or in the Company Litigation List, there are
no material judgments, decrees, stipulations or orders
against the Company or enjoining its directors, officers or
employees in respect of, or the effect of which is to
prohibit, any business practice or the acquisition of any
property or the conduct of business in any area.
3.11 TAXES. To the best of Seller's knowledge,
the Company has filed all federal and foreign income tax
returns, all state and local franchise and income tax, real
and personal property tax, sales and use tax, premium tax,
excise tax and other tax returns of every character required
to be filed and has paid all taxes, together with any
interest and penalties owing in connection therewith, shown
on such returns to be due in respect of the periods covered
by such returns, other than taxes which are being contested
in good faith and for which adequate reserves have been
established. The Company has not filed a consent pursuant
to Section 341(f) of the Code. The tax and audit positions
taken by the Company in connection with the tax returns
described in the preceding sentence were reasonable and
asserted in good faith. The
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Company has filed all required payroll tax returns, has
fulfilled all tax withholding obligations and has paid over
to the appropriate governmental authorities the proper
amounts with respect to the foregoing. Adequate provision
has been made in the books and records of the Company and,
to the extent required by generally accepted accounting
procedures, reflected in the Financial Statements of the
Company, for all tax liabilities, including interest or
penalties, whether or not due and payable and whether or not
disputed, with respect to any and all federal, foreign,
state, local and other taxes for the periods covered by such
financial statements and for all prior periods. The Seller
has furnished the Bank a list (the "Company Tax List")
setting forth the date or dates through which the IRS has
examined the federal tax returns of the Company and the date
or dates through which any foreign, state, local or other
taxing authority has examined any other tax returns of the
Company. The Company Tax List also contains a complete list
of each year for which any federal, state, local or foreign
tax authority has obtained or has requested an extension of
the statute of limitations from the Company and lists each
tax case of the Company currently pending in audit, at the
administrative appeals level or in litigation. The Company
Tax List further lists the date and issuing authority of
each statutory notice of deficiency, notice of proposed
assessment and revenue agent's report issued to the Company
within the last twelve (12) months. Except as set forth in
the Company List, neither the IRS nor any foreign, state,
local or other taxing authority has, during the past three
years, examined or is in the process of examining any
federal, foreign, state, local or other tax returns of the
Company. To the knowledge of the Company, neither the IRS
nor any foreign, state, local or other taxing authority is
now asserting or threatening to assert any deficiency or
claim for additional taxes (or interest thereon or penalties
in connection therewith) except as set forth on the Company
Tax List.
3.12 COMPLIANCE WITH LAWS AND REGULATIONS.
(a) To the best of Seller's knowledge, the
Company is not in default under or in breach of any
provision its Articles of Incorporation, as amended, or
Bylaws, as amended, or law, ordinance, rule or regulation
promulgated by any Governmental Entity, where such default
or breach would have a material adverse effect on the
business, financial condition or results of operations of
the Company.
(b) Without limiting Section 3.12(a), to
the best of the Seller's knowledge and except as set forth
on a list furnished by the Seller to the Bank (the "Company
Environmental Compliance List") (i) the Seller and the
Company are in compliance with all Environmental
Regulations; (ii) there are no Tanks on or about the Company
Property; (iii) there are no Hazardous Materials on, below
or above the surface of, or migrating to or from the Company
Property; (iv) the Company has no loans outstanding secured
by real property that is not in compliance with
Environmental Regulations or which has a leaking Tank or
upon which there are Hazardous Materials on or migrating to
or from; and (v) without limiting Section 3.10 or the
foregoing representations and warranties contained in
clauses (i) through (iv), as of the date of this Agreement,
there is no claim, action, suit, or proceeding or notice
thereof before any Governmental Entity pending against the
Company or concerning property securing the Company leases
and/or loans and there is no outstanding judgment, order,
writ, injunction,
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decree, or award against or affecting the Company Property
or property securing the Company leases and/or loans,
relating to the foregoing representations (i) - (iv), in
each case the noncompliance with which, or the presence of
which would have a material adverse effect on the business,
financial condition or results of operation of the Company.
For purposes of this Section 3.12(b), the term
"Environmental Regulations" shall mean all applicable
statutes, regulations, rules, ordinances, codes, licenses,
permits, orders, approvals, plans, authorizations,
concessions, franchises, and similar items, of all
Governmental Entities and all applicable judicial,
administrative, and regulatory decrees, judgments, and
orders relating to the protection of human health or the
environment, including, without limitation: all
requirements, including, but not limited to those pertaining
to reporting, licensing, permitting, investigation, and
remediation of emissions, discharges, releases, or
threatened releases of Hazardous Materials, chemical
substances, pollutants, contaminants, or hazardous or toxic
substances, materials or wastes whether solid, liquid, or
gaseous in nature, into the air, surface water, groundwater,
or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport,
or handling of chemical substances, pollutants,
contaminants, or hazardous or toxic substances, materials,
or wastes, whether solid, liquid, or gaseous in nature and
all requirements pertaining to the protection of the health
and safety of employees or the public. "The Company
Property" shall mean real estate currently owned, leased, or
otherwise used by the Company, or in which the Company has
an investment or security interest (by mortgage, deed of
trust, sale and lease-back or otherwise), including, without
limitation, properties under foreclosure and properties held
by the Company in its capacity as a trustee or otherwise.
"Tank" shall mean treatment or storage tanks, sumps, or
water, gas or oil wells and associated piping transportation
devices. "Hazardous Materials" shall mean any substance the
presence of which requires investigation or remediation
under any federal, state or local statute, regulation,
ordinance, order, action, policy or common law; or which is
or becomes defined as a hazardous waste, hazardous
substance, hazardous material, used oil, pollutant or
contaminant under any federal, state or local statute,
regulation, rule or ordinance or amendments thereto
including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42
U.S.C. Section 9601, ET SEQ.); the Resource Conservation and
Recovery Act (42 U.S.C. Section 6901, ET SEQ.); the Clean
Air Act, as amended (42 U.S.C. Section 7401, ET SEQ.); the
Federal Water Pollution Control Act, as amended (33 U.S.C.
Section 1251, ET SEQ.); the Toxic Substances Control Act, as
amended (15 U.S.C. Section 9601, ET SEQ.); the Occupational
Safety and Health Act, as amended (29 U.S.C. Section 651;
the Emergency Planning and Community Right-to-Know Act of
1986 (42 U.S.C. Section 11001, ET SEQ.); the Mine Safety and
Health Act of 1977, as amended (30 U.S.C. Section 801, ET
SEQ.); the Safe Drinking Water Act (42 U.S.C. Section 300f,
ET SEQ.); and all comparable state and local laws, including
without limitation, the Carpenter-Presley-Tanner Hazardous
Substance Account Act (State Superfund), the Porter-Cologne
Water Quality Control Act, Section 25140, 25501(j) and (k),
25501.1,25281 and 25250.1 of the California Health and
Safety Code and/or Article I of Title 22 of the California
Code of Regulations, Division 4, Chapter 30; laws of other
jurisdictions or orders and regulations; or the presence of
which causes or threatens to cause a nuisance, trespass or
other common law tort upon real property or adjacent
properties or poses or threatens to pose a hazard to the
health or safety of persons or without
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limitation, which contains gasoline, diesel fuel or other
petroleum hydrocarbons; polychlorinated biphenyls (PCBs),
asbestos or urea formaldehyde foam insulation.
3.13 PERFORMANCE OF OBLIGATIONS. To the best of
Seller's knowledge, the Company has performed in all
material respects all of the obligations required to be
performed by it to date and is not in default under or in
breach of any term or provision of any covenant, contract,
lease, indenture or any other covenant to which it is a
party, is subject or is otherwise bound, and no event has
occurred that, with the giving of notice or the passage of
time or both, would constitute such default or breach, where
such default or breach would have a material adverse effect
on the business, financial condition or results of
operations of the Company. To the best of the Seller's
knowledge, no party with whom the Company has an agreement
that is of material importance to the business of the
Company is in default thereunder.
3.14 EMPLOYEES. There are no controversies
pending or threatened between the Company and any of its
employees that are likely to have a material adverse effect
on the business, financial condition or results of operation
of the Company. The Company is not a party to any
collective bargaining agreement with respect to any of its
employees or any labor organization to which its employees
or any of them belong.
3.15 BROKERS AND FINDERS. The Company is not a
party to or obligated under any agreement with any broker or
finder relating to the transactions contemplated hereby, and
neither the execution of this Agreement nor the consummation
of the transactions provided for herein will result in any
liability to any broker or finder.
3.16 MATERIAL CONTRACTS. Except as set forth in
a list furnished by the Seller to the Bank (the "Company
Contract List") hereto (all items listed or required to be
listed in such Company Contract List being referred to
herein as "Scheduled Contracts"), the Company is not a party
or otherwise subject to:
(a) any employment, deferred
compensation, bonus or consulting contract that (i) has a
remaining term, as of the date of this Agreement, of more
than one year in length of obligation on the part of the
Company and is not terminable by the Company within one year
without penalty or (ii) requires payment by the Company of
$5,000 or more per annum;
(b) any advertising, brokerage,
licensing, dealership, representative or agency relationship
or contract requiring payment by the Company of $5,000 or
more per annum;
(c) any contract or agreement that
restricts the Company (or would restrict any Affiliate of
any of them (including the Bank)) after the Closing from
competing in any line of business with any Person or using
or employing the services of any Person;
13
(d) any lease of real or personal
property providing for annual lease payments by or to the
Company in excess of $10,000 per annum other than (A) leases
entered into in the ordinary course of business in which the
Company is lessor and (B) leases of real property presently
used by the Company as its principal office;
(e) any mortgage, pledge, conditional
sales contract, security agreement, option, or any other
similar agreement with respect to any interest of the
Company (other than as mortgagor or pledgor in the ordinary
course of its banking business or as mortgagee, secured
party or deed of trust beneficiary in the ordinary course of
its business) in personal property having a value of $10,000
or more;
(f) other than as described in the
Company Filings or as set forth in the Company Employee Plan
List, any stock purchase, stock option, stock bonus, stock
ownership, profit sharing, group insurance, bonus, deferred
compensation, severance pay, pension, retirement, savings or
other incentive, welfare or employment plan or material
agreement providing benefits to any present or former
employees, officers or directors of the Company;
(g) any agreement to acquire equipment or
any commitment to make capital expenditures of $10,000 or
more;
(h) other than agreements entered into in
the ordinary course of business, including sales of other
real estate owned, any agreement for the sale of any
property or assets in which the Company has an ownership
interest or for the grant of any preferential right to
purchase any such property or asset;
(i) any agreement for the borrowing of
any money;
(j) any restrictive covenant contained in
any deed to or lease of real property owned or leased by the
Company (as lessee) that materially restricts the use,
transferability or value of such property;
(k) any guarantee or indemnification
which involves the sum of $10,000 or more, other than lease
commitments issued in the normal course of business;
(l) any supply, maintenance or landscape
contracts not terminable by the Company without penalty on
30 days' or less notice and which provides for payments in
excess of $2,500 per annum;
(m) other than as disclosed with
reference to subparagraph (k) of this Section 3.16, any
material agreement which would be terminable other than by
the Company as a result of the consummation of the
transactions contemplated by this Agreement;
14
(n) any contract relating to the
provision of data processing services to the Company; or
(o) any other agreement of any other kind
which involves future payments or receipts or performances
of services or delivery of items requiring payment of
$10,000 or more to or by the Company other than payments
made under or pursuant to loan agreements, participation
agreements and other agreements for the extension of credit
in the ordinary course of their business.
(p) any agreement that, alone or in
conjunction with any other agreements, would result in a
deduction disallowance under Section 280G of the Code or
imposition of an excise tax under Section 4999 of the Code.
True copies of all Scheduled Contracts,
including all amendments and supplements thereto, have been
delivered to the Bank.
3.17 CERTAIN MATERIAL CHANGES. Except as
specifically required, permitted or effected by this
Agreement, since December 31, 1995, there has not been,
occurred or arisen any of the following (whether or not in
the ordinary course of business unless otherwise indicated):
(a) Any change in any of the assets,
liabilities, permits, methods of accounting or accounting
practices, business, or manner of conducting business, of
the Company or any other event or development that has had
or may reasonably be expected to have a material adverse
effect on the assets, liabilities, permits, business,
financial condition, results of operations or prospects of
the Company;
(b) Any damage, destruction or other
casualty loss (whether or not covered by insurance) that has
had or may reasonably be expected to have a material adverse
effect on the assets, liabilities, business, financial
condition, results of operations or prospects of the Company
or that may involve a loss of more than $10,000 in excess of
applicable insurance coverage;
(c) Any amendment, modification or
termination of any existing, or entry into any new, material
contract or permit that has had or may reasonably be
expected to have a material adverse effect on the assets,
liabilities, business, financial condition, results of
operations or prospects of the Company;
(d) Any disposition by the Company of an
asset the lack of which has had or may reasonably be
expected to have a material adverse effect on the assets,
liabilities, business, financial condition, results of
operations or prospects of the Company; or
(e) Any direct or indirect redemption,
purchase or other acquisition by the Company of any equity
securities or any declaration, setting aside or payment of
any
15
dividend (except, in the case of the declaration, setting
aside or payment of a cash dividend, as disclosed in the
Financial Statements of the Company) or other distribution
on or in respect of the Company Stock whether consisting of
money, other personal property, real property or other
things of value.
3.18 LICENSES AND PERMITS. To the best of
Seller's knowledge, the Company has all material licenses
and permits that are necessary for the conduct of its
business, and such licenses are in full force and effect,
except for any failure to be in full force and effect that
would not, individually or in the aggregate, have a material
adverse effect on the business, financial condition or
results of operations of the Company. The properties,
assets, operations and business of the Company are and have
been maintained and conducted, in all material respects, in
compliance with all applicable licenses and permits. The
properties and operations of the Company are and have been
maintained and conducted, in all material respects, in
compliance with all applicable laws and regulations.
3.19 UNDISCLOSED LIABILITIES. The Company does
not have any liabilities or obligations, either accrued or
contingent, that are material to the Company and that have
not been: (a) reflected or disclosed in the Financial
Statements of the Company; (b) incurred subsequent to
December 31, 1995 in the ordinary course of business; or
(c) disclosed in a list furnished by the Company to Bank
(the "Undisclosed Liabilities List") or on any other the
Company List. The Seller does not know of any basis for the
assertion against the Company of any liability, obligation
or claim (including, without limitation, that of any
regulatory authority) that is likely to result in or cause a
material adverse change in the business, financial condition
or results of operations of the Company that is not fairly
reflected in the Financial Statements of the Company or
otherwise disclosed in this Agreement.
3.20 EMPLOYEE BENEFIT PLANS.
(a) The Company has no "employee benefit
plan," as defined in Section 3(3) of ERISA, and which is
subject to any provision of ERISA.
(b) The Seller has previously made
available to the Bank copies or descriptions of each plan or
arrangement maintained or otherwise contributed to by the
Company which (exclusive of base salary and base wages)
provides for any form of current or deferred compensation,
bonus, stock option, profit sharing, benefit, retirement,
incentive, group health or insurance, welfare or similar
plan or arrangement for the benefit of any employee or class
of employees, whether active or retired, of the Company
(such plans and arrangements being collectively referred to
herein as "Benefit Arrangements"). All Benefit
Arrangements which are in effect were in effect for
substantially all of 1994. There has been no material
amendment thereof or increase in the cost thereof or
benefits payable thereunder since January 1, 1995. There
has been no material increase in the compensation of or
benefits payable to any senior executive employee of he
Company since December 31, 1994, nor any employment,
severance or similar contract entered into with any such
employee, nor any amendment to any such
16
contract, since December 31, 1994. There is no contract,
agreement or benefit arrangement covering any employee of
the Company which individually or collectively could give
rise to the payment of any amount which would constitute an
"excess parachute payment," as such term is defined in
Section 280(G) of the Code.
(c) With respect to all Benefit
Arrangements, the Company is in material compliance (other
than noncompliance the cost or liability for which is not
material) with the requirements prescribed by any and all
statutes, governmental or court orders, or governmental
rules or regulations currently in effect, including but not
limited to ERISA and the Code, applicable to such plans or
arrangements. All material government reports and filings
required by law have been properly and timely filed and all
information required to be distributed to participants or
beneficiaries has been distributed with respect to each
Employee. The Company has performed all of its obligations
under all such Benefit Arrangements in all material aspects.
There is no pending or, to the knowledge of the Company
threatened legal action, proceeding or investigation against
or involving any Benefit Arrangement which could result in a
material amount of liability to such Benefit Arrangement.
No "prohibited transaction," as defined in Section 406 of
ERISA and Section 4975 of the Code, has occurred with
respect to any employee benefit plan maintained by the
Company which is covered by Title I of ERISA, which could
subject any person (other than a person for whom the Company
is not directly or indirectly responsible) to a material
amount of liability under Title I of ERISA or to the
imposition of a material amount of tax under Section 4975 of
the Code which could have a material adverse effect on the
business, assets, financial condition, results of operations
or prospects of the Company; nor has any Employee Plan
subject to Part III of Subtitle B of Title I of ERISA or
Section 412 of the Code, or both, incurred any "accumulated
funding deficiency," as defined in Section 412 of the Code,
whether or not waived, nor has the Company failed to make
any contribution or pay any amount due and owing as required
by the terms of any Benefit Arrangement. No "reportable
event" as defined in ERISA has occurred with respect to any
of the Employee Plans. To the knowledge of the Company, the
Company has not incurred nor expects to incur, directly or
indirectly, a material amount of liability under Title IV or
ERISA arising in connection with the termination of, or a
complete or partial withdrawal from, any plan covered or
previously covered by Title IV of ERISA which could
constitute a liability of CIB or of any of its affiliates
(including the Company) at or after the Closing Date.
(d) Except for Scheduled Contracts set
forth in the Company Contract List, each Benefit Arrangement
and each personal services contract, fringe benefit,
consulting contract or similar arrangement with or for the
benefit of any officer, director, employee or other person
can be terminated by the Company within a period of 30 days
following the Closing Date, without payment of any amount as
a penalty, bonus, premium, severance pay or other
compensation for such termination.
(e) All group health plans of the Company
have been operated in compliance with the group health plan
continuation coverage requirements of Section 4980B of the
Code in all material respects.
17
3.21 CORPORATE RECORDS. Seller has provided the
minute books of the Company to the Bank. The entries in the
minute books accurately reflect all material actions taken
to this date by the respective shareholders, boards of
directors and committees of the Company and contain true and
complete copies of the Articles of Incorporation, Bylaws and
other charter documents, and all amendments thereto.
3.22 ACCOUNTING RECORDS. To the best of
Seller's knowledge, the Company maintains accounting records
which fairly and validly reflect, in all material respects,
its transactions and accounting controls exist sufficient to
provide reasonable assurances that such transactions are, in
all material respects, (i) executed in accordance with its
management's general or specific authorization, and (ii)
recorded as necessary to permit the preparation of financial
statements in conformity with generally accepted accounting
procedures. Such records, to the extent they contain
important information pertaining to the Company which is not
easily and readily available elsewhere, have been
duplicated, and such duplicates are stored safely and
securely.
3.23 POWER OF ATTORNEY. The Company has not
granted any Person a power of attorney or similar
authorization that is presently in effect or outstanding,
except as may be part of any agreement identified in the
Company Contract List.
3.24 FACTS AFFECTING REGULATORY APPROVALS. To
the best knowledge of the Seller, there is no fact, event or
condition applicable to the Company which will, or
reasonably could be expected to, adversely affect the
likelihood of securing the requisite approvals or consents
of any Governmental Entity to the transactions contemplated
by this Agreement.
3.25 ACCURACY AND CURRENTNESS OF INFORMATION
FURNISHED. The representations and warranties made by the
Seller hereby or in the Company Lists or schedules hereto do
not contain any untrue statement of a material fact or omit
to state any material fact which is necessary under the
circumstances under which they were made to prevent the
statements contained herein or in such schedules from being
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BANK
The Bank hereby represents and warrants to the
Seller as follows:
4.1 INCORPORATION, STANDING AND POWER. The
Bank is a bank duly organized, and validly existing and in
good standing under the laws of the State of California and
is authorized by the Superintendent to conduct a general
banking business. The Bank's deposits are insured by the
FDIC in the manner and to the extent provided by law. The
Bank has all
18
requisite corporate power and authority to own, lease and
operate their respective properties and assets and to carry
on their respective businesses as presently conducted. The
Bank is duly qualified and in good standing as a foreign
corporation, and is authorized to do business, in all states
or other jurisdictions in which such qualification or
authorization is necessary, except where the failure to be
so qualified or authorized would not, individually or in the
aggregate, have a materially adverse effect on the financial
condition, results of operation or business of the Bank.
The Bank has delivered to the Seller true and correct copies
of its Articles of Incorporation and Bylaws, as amended, and
in effect as of the date hereof.
4.2 FINANCIAL STATEMENTS. The Bank has
previously furnished to the Seller a copy of the Financial
Statements of CIB. The Financial Statements of CIB:
(a) present fairly the consolidated financial condition of
CIB as of the respective dates indicated and its
consolidated results of operations and changes in cash
flows, as applicable, for the respective periods then ended,
subject, in the case of the unaudited consolidated interim
financial statements, to normal recurring adjustments;
(b) have been prepared in accordance with generally accepted
accounting principles consistently applied (except as
otherwise indicated therein); (c) set forth as of the
respective dates indicated adequate reserves for loan losses
and other contingencies; and (d) are based upon the books
and records of CIB.
4.3 AUTHORITY OF THE BANK. The execution and
delivery by the Bank of this Agreement, the consummation of
the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the
part of the Bank, and this Agreement will be upon execution
and delivery by the respective parties thereto, a valid and
binding obligation of the Bank enforceable in accordance
with their respective terms, except as the enforceability
thereof may be limited by bankruptcy, liquidation,
receivership, conservatorship, insolvency, moratorium or
other similar laws affecting the rights of creditors
generally and by general equitable principles and by Section
8(b)(6)(D) of the Federal Deposit Insurance Act, 12 U.S.C.
Section 1818(b)(6)(D). Except as set forth in a list
furnished by the Bank to the Company (the "Bank Conflicts
and Consents List"), neither the execution and delivery by
the Bank of this Agreement, the consummation of the
transactions contemplated herein, nor compliance by the Bank
with any of the provisions hereof or thereof, will:
(a) conflict with or result in a breach of any provision of
its Articles of Incorporation, as amended, or Bylaws, as
amended; (b) constitute a breach of or result in a default
(or give rise to any rights of termination, cancellation or
acceleration, or any right to acquire any securities or
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
the Bank or any subsidiary of the Bank is a party, or by
which the Bank, or any subsidiary of the Bank or any of its
respective properties or assets is bound; (c) result in the
creation or imposition of any Encumbrance on any of the
properties or assets of the Bank or any subsidiary; or
(d) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Bank or any subsidiary
of the Bank or any of their respective properties or assets.
Except as set forth in the "the Bank Conflicts and Consents
List," no consent of, approval of, notice to or filing with
any Governmental Entity having jurisdiction over any aspect
of the business or assets of the Bank, and no consent of,
approval of or notice to any
19
other Person, is required in connection with the execution
and delivery by the Bank of this Agreement the consummation
by the Bank and contemplated hereby, except such approvals
as may be required by any Government Entity.
4.4 ACCURACY AND CURRENTNESS OF INFORMATION
FURNISHED. The representations and warranties made by the
Bank hereby or in the Bank Lists or Schedules hereto do not
contain any untrue statement of material fact or omit to
state any material fact which is necessary under the
circumstances under which they were made to prevent the
statements contained herein or in such schedules from being
misleading.
4.5 BROKERS AND FINDERS. The Bank is not a
party to or obligated under any agreement with any broker or
finder relating to the transactions contemplated hereby, and
neither the execution of this Agreement nor the consummation
of the transaction provided for herein will result in any
liability to any broker or finder, except for a payment to
Kropschot Financial Services in the amount of 5% of the
amount reflected in the Purchase Price Certificate.
4.6 DUE DILIGENCE. The Bank has performed due
diligence concerning the Seller and Company based on the
information provided to the Bank by the Company and the
Seller.
ARTICLE V
COVENANTS OF THE SELLER
PENDING THE CLOSING DATE
Seller covenants and agrees with the Bank as
follows:
5.1 LIMITATION ON THE SELLER'S AND COMPANY'S
CONDUCT PRIOR TO THE CLOSING DATE. Between the date hereof
and the Closing Date, except as contemplated by this
Agreement, the Seller will take all action required of it
and will use reasonably best efforts to cause the Company to
conduct its business in the ordinary course in substantially
the manner heretofore conducted and in accordance with sound
corporate practices, and will cause the Company not, without
prior written consent of the Bank (which consent shall not
be unreasonably withheld and which consent (except with
respect to subparagraphs (h), (j) and (p) of this
Section 5.1) shall be deemed granted if within five (5)
Business Days of the Bank's receipt of written notice of a
request for prior written consent, written notice of
objection is not received by the Seller):
(a) issue, sell or grant any Company
Stock, any other securities (including long term debt) of
the Company, or any rights, options or securities to acquire
any of the Company's Stock, or any other securities
(including long term debt) of the Company;
20
(b) declare, set aside or pay any
dividend or make any other distribution upon or split,
combine or reclassify any shares of capital stock or other
securities of the Company;
(c) sell, dispose, hypothecate, or
transfer in any other manner, the Shares;
(d) purchase, redeem or otherwise acquire
any capital stock or other securities of the Company or any
rights, options, or securities to acquire any capital stock
or other securities of the Company;
(e) except as may be required to effect
the transactions contemplated herein, amend its Articles of
Incorporation or Bylaws;
(f) grant any general or uniform increase
in the rate of pay of employees or employee benefits;
(g) grant any increase in salary,
incentive compensation or employee benefits or pay any bonus
to any Person except for salary increases of not more than
5% granted in the ordinary course of business and consistent
with past practices or as required by an existing written
employment agreement;
(h) make any capital expenditure or
commitments with respect thereto in excess of $10,000 in the
aggregate, except for ordinary repairs, renewals and
replacements;
(i) compromise or otherwise settle or
adjust any assertion or claim of a deficiency in taxes (or
interest thereon or penalties in connection therewith),
extend the statute of limitations with any tax authority or
file any pleading in court in any tax litigation or any
appeal from an asserted deficiency, or file or amend any
federal, foreign, state or local tax return, or make any tax
election;
(j) change any method or period of
accounting unless required by generally accepted accounting
principles or a Governmental Entity;
(k) grant or commit to grant any
extension of credit or amend the terms of any such credit
outstanding on the date hereof to any executive officer,
director or holder of ten percent (10%) or more of the
outstanding Company's Stock, or any Affiliate of such
Person, if such credit would exceed $5,000 (consent shall be
deemed granted if within two Business Days of written notice
delivered to the Bank's designee, written notice of
objection is not received by the Company);
(l) close any offices at which business
is conducted or open any new offices;
21
(m) adopt or enter into any new
employment agreement or other employee benefit plan or
arrangement or amend or modify any employment agreement or
employee benefit plan or arrangement of any such type except
for such amendments as are required by law;
(n) initiate, solicit, or encourage
(including by way of furnishing information or assistance),
or take any other action to facilitate, any inquiries or the
making of any proposal which constitutes, or may reasonably
be expected to lead to, any Competing Transaction (as such
term is defined below), or negotiate with any person in
furtherance of such inquiries or to obtain a Competing
Transaction, or agree to or endorse any Competing
Transaction, or authorize or permit any of the Company's
officers, directors, or employees, shareholders or any
financial advisor, attorney, accountant, or any other
representative retained by it or any of its Affiliates to
take any such action, and the Seller shall promptly notify
the Bank (orally and in writing) of all of the relevant
details relating to all inquiries and proposals which it may
receive relating to any of such matters. For purposes of
this Agreement, "Competing Transaction" shall mean any of
the following involving the Company: any merger,
consolidation, share exchange or other business combination;
a sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets of the Company representing ten
percent (10%) or more of the assets of the Company; a sale
or other form of disposition of the Shares (or securities
convertible or exchangeable into or otherwise evidencing, or
any agreement or instrument evidencing, the right to acquire
capital stock of the Company; a tender offer or exchange
offer for any of the Shares.
(o) change any of the Company's basic
policies and practices with respect to leasing, cash flow
planning, marketing, budgeting, profit and tax planning,
personnel practices or any other material aspect of the
Company's business or operations, except such changes as may
be required in the opinion of the Company's management to
respond to economic or market conditions or as may be
required by any Governmental Entity;
(p) grant any Person a power of attorney
or similar authority;
(q) make any investment by purchase of
stock or securities (including an Investment Security),
contributions to capital, property transfers or otherwise in
any other Person, except for obligations of the United
States Treasury or an agency of the United States Government
the obligations of which are entitled to or implied to have
the full faith and credit of the United States government
and which have an original maturity not in excess of one
year, in any case, in the ordinary course of business
consistent with past practices and which are not designated
as trading (consent for any such transaction other than
Investment Securities classified as trading shall be deemed
granted if within two business days of written notice
delivered to the Bank's designee, written notice of
objection is not received by the Company);
22
(r) amend or modify any Scheduled
Contract or enter into any agreement or contract that would
be a Scheduled Contract under Section 3.16;
(s) sell, transfer, mortgage, encumber or
otherwise dispose of any assets or release or waive any
claim, except in the ordinary course of business and
consistent with past practices;
(t) take any action which would or is
reasonably likely to (i) adversely affect the ability of the
Seller or the Company to obtain any necessary approval of
any Governmental Entity required for the transactions
contemplated hereby; (ii) adversely affect the Seller's or
the Company's ability to perform its covenants and
agreements under this Agreement; or (iii) result in any of
the conditions to the performance of the Seller's or the
Company's obligations hereunder, as set forth in Articles IX
or XI herein not being satisfied;
(u) make any special or extraordinary
payments to any Person;
(v) take title to any real property; and
agree or make any commitment to take any actions prohibited
by this Section 5.1.
5.2 AFFIRMATIVE CONDUCT OF THE SELLER PRIOR TO
THE CLOSING DATE. Between the date hereof and the Closing
Date, the Seller will take all action required of it and
will use its reasonably best efforts to cause the Company
to:
(a) maintain complete and absolute
ownership of the Shares in Seller;
(b) use its commercially reasonable
efforts consistent with this Agreement to maintain and
preserve intact its present business organization and to
maintain and preserve its relationships and goodwill with
all those having business relationships with the Company;
(c) use its commercially reasonable
efforts to keep in full force and effect all of the existing
material permits and licenses of the Company;
(d) use its commercially reasonable
efforts to maintain insurance coverage at least equal to
that now in effect on all properties for which it is
responsible and on its business operations;
(e) perform its material contractual
obligations and not become in material default on any such
obligations;
23
(f) duly observe and conform to all
lawful requirements applicable to its business, except for
any failure to so observe and conform that would not have a
material adverse effect on the business of the Company;
(g) maintain its assets and properties in
good condition and repair, normal wear and tear excepted;
(h) promptly notify the Bank regarding
receipt from any tax authority of any notification of the
commencement of an audit, any request to extend the statute
of limitations, any statutory notice of deficiency, any
revenue agent's report, any notice of proposed assessment,
or any other similar notification of potential adjustments
to the tax liabilities of the Company, or any actual or
threatened collection enforcement activity by any tax
authority with respect to tax liabilities of the Company;
(i) make available to the Bank monthly
unaudited balance sheets and income statements of the
Company within twenty-five (25) days after the close of each
calendar month;
(j) not later than the 20th day of each
calendar month, amend or supplement the Company Lists
prepared and delivered pursuant to Article III to ensure
that the information set forth in the Company Lists
accurately reflects the then-current status of the Company.
The Company shall further amend or supplement the Company
Lists as of the Closing Date if necessary to reflect any
additional information that needs to be included in the
Company Lists; and
(k) use its commercially reasonable
efforts to obtain any third party consent with respect to
any contract, agreement, lease, license, arrangement, permit
or release that is material to the business of the Company
or that is contemplated in this Agreement.
5.3 ACCESS TO INFORMATION. Seller will cause
the Company to afford, upon reasonable notice, to the Bank
and 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 the Bank and its representatives, counsel,
accountants, agents and employees to make a complete
examination of the financial statements, business, assets
and properties of the Company and the condition thereof and
to update such examination at such intervals as the Bank
shall deem appropriate. Such examination shall be conducted
in cooperation with the officers of the Company and in such
a manner as to minimize any disruption of, or interference
with, the normal business operations of the Company. Upon
the request of the Bank, the Seller will request Logoluso to
provide reasonable access by Arthur Andersen to auditors'
work papers with respect to the business and properties of
the Company, including tax accrual work papers prepared for
the Company during the preceding thirty-six (36) months,
other than (a) books, records and documents covered by the
attorney-client privilege, or that are attorneys' work
product, and (b)
24
books, records and documents that the Company is legally
obligated to keep confidential. No examination or review
conducted under this section shall constitute a waiver or
relinquishment on the part of the Bank of the right to rely
upon the representations and warranties made by the Company
herein; provided, that the Bank shall disclose to the
Company any fact or circumstance it may discover which the
Bank believes renders any representation or warranty made by
the Company hereunder incorrect in any respect. The Bank
covenants and agrees that it, its subsidiaries, and their
respective representatives, counsel, accountants, agents and
employees will hold in strict confidence all documents and
information concerning the Company so obtained (except to
the extent that such documents or information are a matter
of public record or require disclosure in the applications
required to be filed with any Governmental Entity to obtain
the approvals and consents required to effect the
transactions contemplated hereby), and if the transactions
contemplated herein are not consummated, such confidence
shall be maintained and all such documents shall be returned
to the Company.
(a) A representative of the Bank,
selected by the Bank in its sole discretion, shall be
authorized and permitted to review each loan, lease, or
other credit funded or renewed by the Company that is
retained on the books of the Company and not sold to a third
party, after the date hereof until the Closing Date, and all
information associated with such loan, lease or other credit
within three business days of such funding or renewal, such
review to take place, if possible, on the Company's
premises.
(b) A representative of the Bank,
selected by the Bank in its sole discretion, shall be
permitted by the Company to attend all regular and special
Board of Directors' and committee meetings of the Company
from the date hereof until the Closing; provided, however,
that the attendance of such representative shall not be
permitted at any meeting, or portion thereof, for the sole
purpose of discussing the transactions contemplated by this
Agreement or the obligations of the Company under this
Agreement.
5.4 AUDIT BY ARTHUR ANDERSEN. Promptly upon
request of the Bank, and prior to the Closing Date, the
Seller will cause the Company to permit Arthur Andersen to
perform an audit of the Company's financial records, books
and other information Arthur Andersen reasonably requests,
which audit shall be performed at the expense of the Bank.
5.5 FILINGS. The Seller will use her best
efforts to cause all of the reports, registrations,
statements and other filings required to be filed with any
applicable Governmental Entity by the Company to comply in
all material respects with all the applicable statutes,
rules and regulations enforced or promulgated by the
Governmental Entity with which it will be filed and to
ensure that none will contain any untrue statement of
material fact or omit to state a material fact required to
be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading. Any financial statement contained in
any such report, registration, statement or other filing
that is intended to present the financial position of the
entity to which it relates will fairly present the financial
position of such
25
entity and will be prepared in accordance with generally
accepted accounting principles or applicable banking
regulations consistently applied during the periods
involved.
5.6 NOTICES; REPORTS. The Seller will promptly
notify the Bank of any event of which the Seller obtains
knowledge which has had or may have a materially adverse
effect on the financial condition, operations, business or
prospects of the Company or in the event that the Seller
determines that it is unable to fulfill any of the
conditions to the performance of the Bank's obligations
hereunder.
ARTICLE VI
COVENANTS OF THE BANK
PENDING THE CLOSING
The Bank covenants and agrees with the Seller as
follows:
6.1 LIMITATION ON THE BANK'S CONDUCT PRIOR TO
CLOSING. Between the date hereof and the Closing, except as
contemplated by this Agreement and subject to requirements
of law and regulation generally applicable to California
banks, the Bank agrees to conduct, and to cause each of its
subsidiaries to conduct its business, in the ordinary course
of business in substantially the manner heretofore conducted
and in accordance with sound business practices, and the
Bank shall not, without prior written consent of the Seller
which consent shall not be unreasonably withheld and which
consent shall be deemed granted if within five (5) Business
Days of the Company's receipt of written notice of a request
for prior written consent, written notice of objection is
not received by the Bank):
(a) take any action which would or is
reasonably likely to (i) adversely affect the ability of the
Bank to obtain any necessary approvals of any Governmental
Entity required for the transactions contemplated hereby;
(ii) adversely affect the Bank's ability to perform its
covenants and agreements under this Agreement; or
(iii) result in any of the conditions to the performance of
the Bank's obligations hereunder as set forth in Articles IX
and X not being satisfied;
(b) agree or make any commitment to take
any actions prohibited by this Section 6.1.
6.2 AFFIRMATIVE CONDUCT OF THE BANK PRIOR TO
THE CLOSING. Between the date hereof and the Closing Date,
the Bank shall:
(a) use its commercially reasonable
efforts to keep in full force and effect all of the existing
material permits and licenses of the Bank;
26
(b) duly observe and conform to all
lawful requirements applicable to the business of the Bank,
except for any failure to so observe and conform that would
not have a material adverse effect on the business of the
Bank;
(c) use its commercially reasonable
efforts to obtain any third party consent with respect to
any contract, agreement, lease, license, arrangement, permit
or release that is material to the business of the Bank on a
consolidated basis or that is contemplated in this Agreement
as required in connection with the Closing;
(d) not later than the 20th day of each
calendar month, amend or supplement the Bank Lists prepared
and delivered pursuant to Article IV to ensure that the
information set forth in the Bank Lists accurately reflects
the then-current status of the Bank and its subsidiaries.
The Bank shall further amend or supplement the Bank Lists as
of the Closing Date if necessary to reflect any additional
information that needs to be included in the Bank Lists;
6.3 APPLICATIONS. The Bank will promptly
prepare and file or cause to be prepared and filed (i) any
required notice and application for approval of the
acquisition of the Shares, with the FRB, the State Banking
Department or the FDIC, and (ii) the Bank will use its
commercially reasonable efforts to obtain all regulatory
approvals or consents necessary to effect the transactions
contemplated by the Agreement.
6.4 NOTICES; REPORTS. The Bank will promptly
notify the Seller in the event the Bank determines that it
is unable to fulfill any of the conditions to the
performance of its obligations hereunder.
6.5 REMOVAL OF CONDITIONS. In the event of the
imposition of a condition to any regulatory approvals which
the Bank deems to materially adversely affect it or to be
materially burdensome as provided in Section 10.4 hereof,
the Bank shall use its commercially reasonable efforts for
purposes of obtaining the removal of such condition.
6.6 CONFIDENTIALITY OF DOCUMENTS OF THE
COMPANY. All information concerning or pertaining to the
business, plans and prospects of the the Company which Bank
may now possess, or may obtain prior to the Closing, is
understood and agreed to be confidential and to be the
property of the Company. The Bank shall not, without prior
written consent of the Company, cause or permit such
information to be published, disclosed, divulged or
otherwise made accessible to any other firm, person or
corporation prior to the Closing except as required by
applicable law. Bank acknowledges the confidentiality of
Company's customer lists, funding sources, and trade secrets
and shall not use any such information for the purpose of
competing with the Company.
27
Within 10 days of any termination of this
Agreement, Bank shall return to Company all information,
documents and records provided by Company to Bank, together
with any copies thereof made by or on behalf of Bank, in any
form, including information stored in any electronic media,
and Bank covenants and agrees that all information
concerning Company disclosed to Bank or its agents, shall be
held in strict confidence without disclosure to any third
party. Bank further agrees to provide a list of all persons
or entities who were provided confidential information
belonging to Company and shall obtain from those persons or
entities an acknowledgment that all information provide by
Company to Bank is and shall remain confidential.
ARTICLE VII
ADDITIONAL COVENANTS
The parties hereto hereby mutually covenant and
agree with each other as follows:
7.1 BEST EFFORTS. Subject to the terms and
conditions of this Agreement, each party will use its best
efforts to take, or cause to be taken, all actions and to
do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement
as promptly as practical.
7.2 PUBLIC ANNOUNCEMENTS. No press release or
other public disclosure of matters related to this Agreement
or any of the transactions contemplated hereby shall be made
by the Bank or the Company unless the other party shall have
provided its 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.
The Bank agrees to keep confidential and not to
disclose any nonpublic information obtained in the course of
such environmental investigation relating to environmental
contamination or suspected contamination of any property on
the Company Real Property List, except as required by law.
7.3 NONDISRUPTION. Other than as provided for
in this Agreement, the Bank agrees to use its best efforts
not to disrupt the business of the Seller and the Company
between the date hereof and the Closing Date.
28
ARTICLE VIII
COVENANTS OF THE BANK FOLLOWING THE CLOSING
The Bank hereby covenants and agrees with the
Seller as follows:
8.1 LOCATION OF EPI. The Bank will maintain
EPI's current location at 6929 Sunrise Boulevard, Suite 205,
Citrus Heights, California 95610 at least until December 31,
1997.
8.2 CLOSING REVIEW AND PURCHASE PRICE. Within
30 Business Days after the Closing Date, the Bank shall
cause a representative from Arthur Andersen to review
("Closing Review") the Seller's financial accounts and
records for the purpose of calculating the Purchase Price as
of the Closing Date (the "Purchase Price"), which shall be
calculated as follows:
(a) Cash in an amount equal to all monies
contained in the Company's Bank Accounts on the Closing Date
plus Receivables; plus
(b) Cash in an amount equal to 85 percent
of the Purchase Options/Residuals and all applicable fees in
conjunction therewith on the Closing Date; plus
(c) Cash in an amount equal to $100,000
for all of the Company's physical assets; plus
(d) Cash in an amount equal to $240,000
for all of the Company's goodwill.
8.3 PURCHASE PRICE CERTIFICATE. The Purchase
Price shall be set forth in a certificate (the "Purchase
Price Certificate") which shall be prepared by Arthur
Andersen, within 10 Business Days of completion of the
Closing Review, and delivered to the Seller and the Bank.
ARTICLE IX
CONDITIONS PRECEDENT TO THE CLOSING
The obligations of each of the parties hereto to
consummate the transactions contemplated herein are subject
to the satisfaction, on or before the Closing Date, of the
following conditions:
9.1 NO JUDGMENTS OR ORDERS. No judgment,
decree, injunction, order or proceeding shall be outstanding
or threatened by any Governmental Entity which prohibits or
restricts the effectuation of, or threatens to invalidate or
set aside, the transactions contemplated by this Agreement,
unless counsel to the party against whom such action or
proceeding was
29
instituted or threatened renders to the other parties hereto
a favorable opinion that such judgment, decree, injunction,
order or proceeding is without merit.
9.2 REGULATORY APPROVALS. To the extent
required by applicable law or regulation, all approvals or
consents of any Governmental Entity, shall have been
obtained or granted for the transactions contemplated hereby
and the applicable waiting period under all laws shall have
expired. All other statutory or regulatory requirements for
the valid completion of the transactions contemplated hereby
shall have been satisfied.
ARTICLE X
CONDITIONS PRECEDENT TO
THE OBLIGATIONS OF THE SELLER
All of the obligations of the Seller to effect the
transactions contemplated hereby shall be subject to the
satisfaction, on or before the Closing Date, of the
following conditions, any of which may be waived in writing
by the Seller.
10.1 LEGAL OPINION. The Seller shall have
received the opinion of Manatt, Phelps & Phillips, LLP,
attorneys for the Bank, dated as of the Closing Date, and in
form and substance satisfactory to the counsel of the
Company, to the effect that : (i) the Bank is a corporation
validly existing under the laws of its jurisdiction of
incorporation with full corporate power and authority to
enter into this Agreement and to consummate the transactions
contemplated thereby; and (ii) this Agreement has been duly
and validly authorized, executed and delivered on behalf of
the Bank and constitutes (subject to standard exceptions of
enforceability arising from the Bankruptcy laws, banking
laws and rules of equity) a valid and binding agreement of
the Bank.
10.2 REPRESENTATIONS AND WARRANTIES; PERFORMANCE
OF COVENANTS. All the covenants, terms and conditions of
this Agreement to be complied with and performed by the Bank
at or before the Closing Date shall have been complied with
and performed in all material respects. Each of the
representations and warranties of the Bank contained in
Article IV hereof shall have been true and correct in all
material respects (except that where any statement in a
representation or warranty expressly includes a standard of
materiality, such statement shall be true and correct in all
respects) on and as of the date of this Agreement and
(except to the extent such representations and warranties
speak as of an earlier date or for changes expressly
contemplated by this Agreement) on and as of the Closing
Date, with the same effect as though such representations
and warranties had been made on and as of the Closing Date.
It is understood and acknowledged that the representations
being made on and as of the Closing Date shall be made
without giving effect to any update with respect to the Bank
Lists in accordance with Section 6.2(d).
30
10.3 AUTHORIZATION OF AGREEMENT. All actions
necessary to authorize the execution, delivery and
performance of this Agreement by the Bank and the
consummation of the transactions contemplated hereby shall
have been duly and validly taken by the Board of Directors
as required by applicable law.
10.4 GOVERNMENTAL APPROVALS. Any governmental and
regulatory approvals and consents which are referred to in
this Agreement and are required to consummate the
transactions contemplated by this Agreement shall have been
granted without the imposition of conditions that are or
would have become applicable to the Bank and that the Bank,
in its sole opinion, concludes would materially adversely
affect the financial condition or operations or prospects of
the Bank or otherwise would be materially burdensome to the
Bank.
10.5 OFFICERS' CERTIFICATE. There shall have
been delivered to the Company on the Closing Date and dated
as of the Closing Date a certificate executed by the Chief
Executive Officer and the Chief Financial Officer of the
Bank certifying, to the best of their knowledge, compliance
with all of the provisions of Sections 10.2 and 10.3.
10.6 EMPLOYMENT AGREEMENT. Concurrently with
the execution of this Agreement, the Bank shall have
executed the employment agreement with Ms. Roth
substantially in the form of Exhibit A hereto and such
agreement shall be in full force and effect as of the
Closing.
10.7 KEY-MAN INSURANCE POLICY. A key-man life
insurance policy shall have been issued in the amount of
$1,000,000 on the life of Carolyn E. Roth as President of
the Company, effective as of the Closing Date, naming the
Bank as beneficiary.
ARTICLE XI
CONDITIONS PRECEDENT TO
OBLIGATIONS OF THE BANK
All of the obligations of the Bank to effect the
transactions contemplated hereby shall be subject to the
satisfaction, on or before the Closing Date, of the
following conditions, any of which may be waived in writing
by the Bank:
11.1 LEGAL OPINION. The Bank shall have
received the opinion of William Brewer, attorney for the
Seller, and in form and substance satisfactory to the
counsel of the Bank, to the aggregate effect that: (i) the
Company is a California corporation duly incorporated,
validly existing and in good standing under the laws of
California, (ii) this Agreement has been duly and validly
authorized, on behalf of the Seller and Seller has full
corporate, fiduciary or personal power and authority to
enter into the Agreement, (iii) the Agreement has been duly
executed and delivered by Seller and constitutes a valid and
binding obligation of Seller (subject
31
to standard exceptions of enforceability arising from the
Bankruptcy laws and rules of equity); (iv) upon transfer to
the Bank, the Seller will convey good title to the Shares
free and clear of all Encumbrances and (v) no order,
consent or approval of any state or federal governmental
authority, which has not already been obtained, is required
on the part of the Company or the Seller for the execution
and delivery of this Agreement or for the consummation of
the transactions contemplated hereby.
11.2 REPRESENTATIONS AND WARRANTIES; PERFORMANCE
OF COVENANTS. All the covenants, terms and conditions of
this Agreement to be complied with and performed by Seller
at or before the Closing Date shall have been complied with
and performed in all material respects. Each of the
representations and warranties of the Seller contained in
Article IV hereof shall have been true and correct in all
material respects (except that where any statement in a
representation or warranty expressly includes a standard of
materiality, such statement shall be true and correct in all
respects) on and as of the date of this Agreement and
(except to the extent such representations and warranties
speak as of an earlier date or for changes expressly
contemplated by this Agreement) on and as of the Closing
Date, with the same effect as though such representations
and warranties had been made on and as of the Closing Date.
It is understood and acknowledged that the representations
being made on and as of the Closing Date shall be made
without giving effect to any update with respect to the
Company Lists in accordance with Section 5.2(j).
11.3 AUTHORIZATION OF AGREEMENT. All actions
necessary to authorize the execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby and thereby shall have been
duly and validly taken by the Seller.
11.4 THIRD PARTY CONSENTS. The Seller shall
have obtained all consents of other parties to its
respective material mortgages, notes, leases, franchises,
agreements, licenses and permits as the Seller or the Bank
may reasonably deem to be necessary to permit the
transactions contemplated herein to be consummated without a
material default, acceleration, breach or loss of rights or
benefits thereunder.
11.5 ABSENCE OF CERTAIN CHANGES. Between the
date of this Agreement and the Closing Date, there shall not
have occurred any event that has had or could reasonably be
expected to have a material adverse effect on the business,
financial condition, results of operations or prospects of
the Company, whether or not such event, change or effect is
reflected in the Company Lists as amended or supplemented
after the date of this Agreement.
11.6 NONCOMPETITION AGREEMENT. Concurrently
with the execution of this Agreement, the Seller shall have
been executed and delivered to the Bank the agreement
substantially in the form of Exhibit B and such agreement
shall be in full force and effect as of the Closing.
32
11.7 EMPLOYEE BENEFIT PLANS. The Bank shall
have received satisfactory evidence that the Company's
employee benefit plans, programs and arrangements,
identified by the Bank have been terminated on terms and
conditions reasonably satisfactory to the Bank.
11.8 EMPLOYMENT AGREEMENT. Concurrently with
the execution of this Agreement, the employment agreement
between the Bank, the Company, and Ms. Roth on the other
hand substantially in the form of Exhibit A shall have been
executed and such agreement shall be in full force and
effect as of the Closing.
11.9 CERTIFICATE. There shall have been
delivered to the Bank as of the Closing Date and dated as of
the Closing Date a certificate executed by the Seller
certifying to the best of her knowledge, compliance with all
of the provisions of Sections 11.2, 11.3, 11.4 and 11.5.
11.10 KEY-MAN LIFE INSURANCE POLICY. A key-
man life insurance policy in the amount of $1,000,000 shall
have been issued on the life of Carolyn E. Roth, as
President of the Company, effective as of the Closing Date,
naming the Bank as beneficiary. Bank shall pay the premium
for such policy.
11.11 SECURITIES LAWS. The Seller will have
complied, and will have caused the Company to comply, with
all state or federal governmental authority rules,
regulations, orders, consents or approvals necessary for the
consummation of the transactions contemplated by this
Agreement.
11.12 APPOINTMENT OF DIRECTORS. All necessary
action shall have been taken by Seller to have the directors
of the Bank as of the Closing Date and Carolyn Roth elected
or appointed to serve, from and after the Closing, as
directors of the Company.
ARTICLE XII
EMPLOYEE BENEFITS
As soon as practicable after the Closing Date, all
of the Company Benefit Arrangements will be continued,
discontinued or merged into the Bank plans, in the
discretion of the Bank, and employees of the Company shall
become eligible for the employee benefit plans of the Bank
on the same terms as such plans and benefits are generally
offered from time to time to employees of the Bank and its
subsidiaries in comparable positions with the Bank or its
subsidiaries, except that the Bank will continue, after the
Closing Date, the vacation policy of the Company for those
Company employees employed as of the date of this Agreement.
For purposes of determining such employment eligibility and
vesting under the employee benefit plans of the Bank, the
Bank shall recognize such employees years of service with
the Company
33
beginning on the date such employees commenced employment
with the Company through the Closing Date.
ARTICLE XIII
TERMINATION
13.1 TERMINATION. This Agreement may be
terminated at any time prior to the Closing Date upon the
occurrence of any of the following:
(a) By mutual agreement of the parties,
in writing;
(b) By the Seller immediately upon
expiration of twenty (20) days from delivery of written
notice by the Seller to the Bank of the Bank's breach of or
failure to satisfy any covenant or agreement contained
herein resulting in a material impairment of the benefit
reasonably expected to be derived by the Seller from the
performance or satisfaction of such covenant or agreement
(provided that such breach has not been waived by the Seller
or cured by the Bank, as the case may be, prior to
expiration of such twenty (20) day period);
(c) By the Bank immediately upon
expiration of twenty (20) days from delivery of written
notice by the Bank to the Seller of the Seller's breach of
or failure to satisfy any covenant or agreement contained
herein resulting in a material impairment of the benefit
reasonably expected to be derived by the Bank from the
performance or satisfaction of such covenant or agreement
(provided that such breach has not been waived by the Bank
or cured by the Seller, as the case may be, prior to
expiration of such twenty (20) day period);
(d) By the Seller or the Bank upon the
expiration of thirty (30) days after any Governmental Entity
denies or refuses to grant any approval, consent or
authorization required to be obtained in order to consummate
the transactions contemplated by this Agreement unless,
within said thirty (30) day period after such denial or
refusal, all parties hereto agree to submit a new or revised
application to the regulatory authority that has denied, or
refused to grant the approval, consent or qualification
requested;
(e) By the Seller or the Bank if any
conditions set forth in Article IX shall not have been met
by December 31, 1996;
(f) the Bank if any of the conditions set
forth in Article XI shall not have been met, or by the
Seller if any of the conditions set forth in Article X shall
not have been met, by December 31, 1996, or such earlier
time as it becomes apparent that such condition shall not be
met; or
34
(g) By the Bank, if the financial
condition of the Seller, as reflected in the audit to be
performed by Arthur Anderson, as described in Section 5.4,
is not substantially the same as represented by Seller.
13.2 TERMINATION DATE. This Agreement shall be
terminated if the Closing Date shall not have occurred by
December 31, 1996 unless extended in writing by the parties.
13.3 EFFECT OF TERMINATION. In the event of
termination of this Agreement by either the Seller or the
Bank as provided in Section 13.1 or pursuant to Section
13.2, neither the Seller nor the Bank shall have any further
obligation or liability to the other party except (a) with
respect to the last sentence Section 5.3(a), and (b) with
respect to Article XIV, Sections 15.1 and 15.2 and (c) to
the extent such termination results from a party's willful
and material breach of the warranties and representations
made by it, or willful and material failure in performance
of any of its covenants, agreements or obligations
hereunder.
13.4 FORCE MAJEURE. The Seller and the Bank
agree that, notwithstanding anything to the contrary in this
Agreement, in the event this Agreement is terminated as a
result of a failure of a condition, which failure is due to
a natural disaster or other act of God, or an act of war,
and provided neither party has materially failed to observe
the obligations of such party under this Agreement, neither
party shall be obligated to pay to the other party to this
Agreement any expenses or otherwise be liable hereunder.
ARTICLE XIV
INDEMNIFICATION
14.1 INDEMNIFICATION.
(a) Seller hereby agrees to indemnify and
hold Bank and its respective directors, officers, employees,
Affiliates, agents, successors and assigns, (collectively,
the "Bank Indemnified Parties") harmless from and against:
(i) any and all claims, suits,
losses, liabilities, obligations, damages, costs and
expenses based upon, attributable to or resulting from the
failure of any representation or warranty of Seller hereof
to be true and correct in all material respects as of the
date of this Agreement and as of the Closing Date;
(ii) any and all losses,
liabilities, obligations, damages, costs and expenses based
upon, attributable to or resulting from any breach by Seller
of any covenant of Seller;
35
(iii) any and all losses,
liabilities, obligations, damages, costs and expenses based
upon, attributable to or resulting from the transfer of the
Shares; and
(iv) any and all expenses or costs
associated with notices, actions, suits, proceedings,
claims, demands, assessments, judgments and penalties and
all reasonable expenses, including reasonable attorneys' and
other professionals' fees and disbursements (collectively,
"Indemnifiable Expenses") incident to any and all losses,
liabilities, obligations, damages, costs and expenses with
respect to which indemnification is provided hereunder
(collectively, "Losses").
(b) Bank hereby agrees to indemnify and
hold Seller and its respective directors, officers,
employees, Affiliates, agents, successors and assigns
(collectively, the "Seller Indemnified Parties") harmless
from and against:
(i) any and all Losses based upon,
attributable to or resulting from the failure of any
representation or warranty of the Bank to be true and
correct in all respects as of the date made as of the date
of this Agreement and as of the Closing Date;
(ii) any and all Losses based upon,
attributable to or resulting form any breach by Bank of any
covenant of Bank; and
(iii) any and all Expenses incident
to the foregoing.
14.2 LIMITATIONS ON INDEMNIFICATION FOR BREACHES
OF REPRESENTATIONS AND WARRANTIES.
An indemnifying party shall not have any
liability for a breach of a representation or warranty under
Section 14.1(a)(i) or (b)(i) hereof unless the aggregate
amount of Losses and Expenses to the indemnified parties
finally determined to arise thereunder based upon,
attributable to or resulting from the failure of any
representation or warranty to be true and correct, exceeds
$5,000 (the "Basket") and, in such event, the indemnifying
party shall be required to pay the entire amount of such
Losses and Expenses without regard to the Basket.
14.3 INDEMNIFICATION PROCEDURES.
(a) In the event that any legal
proceedings shall be instituted or that any claim or demand
("Claim") shall be asserted by any Person in respect of
which payment may be sought under Section 14.1 hereof
(regardless of the Basket referred to above), the
indemnified party shall reasonably and promptly cause
written notice of the assertion of any Claim of which it has
knowledge which is covered by this indemnity to be forwarded
to the indemnifying party. The indemnifying party shall
have the right, at its sole option and expense, to be
represented by counsel of its choice, which must be
reasonably satisfactory to the indemnified party, and to
defend against, negotiate, settle or otherwise deal with any
Claim which relates to any Losses
36
indemnified against hereunder. If the indemnifying party
elects to defend against, negotiate, settle or otherwise
deal with any Claim which relates to any Losses indemnified
against hereunder, it shall within five (5) days (or sooner,
if the nature of the Claim so requires) notify the
indemnified party of its intent to do so. If the
indemnifying party elects not to defend against, negotiate,
settle or otherwise deal (as provided herein) with any Claim
which relates to any Losses indemnified against hereunder,
fails to notify the indemnified party of its election as
herein provided or contests its obligation to indemnify the
indemnified party against such Losses under this Agreement,
the indemnified party may defend against, negotiate, settle
or otherwise deal with such Claim; PROVIDED, HOWEVER, that
the indemnified party may not settle such Claim without the
consent of the indemnifying party, which consent will not be
unreasonably withheld or delayed. If the indemnified party
defends any Claim, then the indemnifying party shall
reimburse the indemnified party for the Indemnifiable
Expenses of defending such Claim upon submission of periodic
bills; PROVIDED, HOWEVER, that, if the indemnifying party
reasonably contests its obligation to indemnify the
indemnified party against such Losses under this Agreement,
the indemnifying party may defer the reimbursement of the
periodic bills with respect to such Losses until such time
as it is obligated to make payment to the indemnified party
under Section 14.3(b). If the indemnifying party shall
assume the defense of any Claim, the indemnified party may
participate, at his or its own expense, in the defense of
such Claim; PROVIDED, HOWEVER, that such indemnified party
shall be entitled to participate in any such defense with
separate counsel at the expense of the indemnifying party if
(i) so requested by the indemnifying party to participate or
(ii) in the reasonable opinion of counsel to the
indemnified party, a conflict or potential conflict exists
between the indemnified party and the indemnifying party
that would make such separate representation advisable; and
PROVIDED, FURTHER, that the indemnifying party shall not be
required to pay for more than one such counsel for all
indemnified parties in connection with any Claim. The
parties hereto agree to cooperate fully with each other in
connection with the defense, negotiation or settlement of
any such Claim.
(b) After any final judgment or award
shall have been rendered by a court, arbitration board or
administrative agency of competent jurisdiction and the
expiration of the time in which to appeal therefrom, or a
settlement shall have been consummated, or the indemnified
party and the indemnifying party shall have arrived at a
mutually binding agreement with respect to a Claim
hereunder, the indemnified party shall forward to the
indemnifying party notice of any sums due and owing by the
indemnifying party pursuant to this Agreement with respect
to such matter and the indemnifying party shall be required
to pay all of the sums so due and owing to the indemnified
party in accordance with Section 14.3(d).
(c) The failure of the indemnified party
to give reasonably prompt notice of any Claim shall not
release, waive or otherwise affect the indemnifying party's
obligations with respect thereto except to the extent that
the indemnifying party can demonstrate actual loss and
prejudice as a result of such failure.
37
(d) All payments of Claims to an
indemnified party shall be made by wire transfer of
immediately available funds within 10 business days after
the date of the notice of sums due and owing provided for
in Section 14.3(b).
ARTICLE XV
MISCELLANEOUS
15.1 EXPENSES.
(a) The Bank hereby agrees that if this
Agreement is terminated by the Seller pursuant to
Section 13.1(b), the Bank shall promptly and in any event
within 10 days after such termination pay the Seller all
Expenses (as defined in Section 15.1(d) below) of the
Seller, but not to exceed $25,000.
(b) The Seller hereby agrees that if the
Agreement is terminated by the Bank pursuant to Section
13.1(c), the Seller shall promptly and in any event within
10 days after such termination pay the Bank all Expenses of
the Bank, but not to exceed $25,000.
(c) Except as otherwise provided herein,
all Expenses incurred by the Bank or the Seller in
connection with or related to the authorization, preparation
and execution of this Agreement, and all other matters
related to the closing of the transactions contemplated
hereby, including, without limitation of the generality of
the foregoing, all fees and expenses of agents,
representatives, counsel and accountants employed by either
such party or its affiliates, shall be borne solely and
entirely by the party which has incurred the same.
(d) "Expenses" as used in this Agreement
shall include all reasonable out-of-pocket expenses
(including all fees and expenses of attorneys, accountants,
investment bankers, experts and consultants to the party and
its affiliates) incurred by the party or on its behalf in
connection with the consummation of the transactions
contemplated by this Agreement.
15.2 NOTICES. Any notice, request, instruction
or other document to be given hereunder by any party hereto
to another shall be in writing and delivered personally or
by confirmed facsimile transmission or sent by registered or
certified mail, postage prepaid, with return receipt
requested, addressed as follows:
To The Bank: Feather River State Bank
1005 Stafford Way
Yuba City, California 95991
Attention: Robert Mulder
Facsimile Number: (916) 674-4443
38
With a copy to: Manatt, Phelps & Phillips, LLP
11355 West Olympic Boulevard
Los Angeles, California 90064
Attention: William T. Quicksilver, Esq.
Facsimile Number: (213) 312-4224
To the Seller: Ms. Carolyn E. Roth
E.P.I. Leasing Co., Inc.
6929 Sunrise Boulevard, Suite 205
Citrus Heights, California 95610
With a copy to: Brewer, Corrigan & Smith
401 W. A Street
21st Floor
San Diego, California 92101-7908
Attention: William K. Brewer, Esq.
Facsimile Number: (619) 231-3511
Any such notice, request, instruction or
other document shall be deemed received on the date
delivered personally or delivered by confirmed facsimile
transmission, or on the third business day after it was sent
by registered or certified mail, postage prepaid. Any of
the persons shown above may change its address for purposes
of this section by giving notice in accordance herewith.
15.3 SUCCESSORS AND ASSIGNS. All terms and
conditions of this Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their
respective transferees, successors and assigns; provided,
however, that this Agreement and all rights, privileges,
duties and obligations of the parties hereto may not be
assigned or delegated by any party hereto and any such
attempted assignment or delegation shall be null and void.
15.4 COUNTERPARTS. This Agreement and any
exhibit hereto may be executed in one or more counterparts,
all of which, taken together, shall constitute one original
document and shall become effective when one or more
counterparts have been signed by the appropriate parties and
delivered to each party hereto.
15.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The parties hereto hereby agree that the representations and
warranties of Seller and of Bank shall survive the execution
and delivery of this Agreement, and the Closing hereunder,
regardless of any investigation made by the parties hereto.
15.6 THIRD PARTIES. Each party hereto intends
that this Agreement shall not benefit or create any right or
cause of action to any person other than parties hereto. As
used in
39
this Agreement the term "parties" shall refer only to the
Bank or the Seller as the context may require.
15.7 LISTS; EXHIBITS; INTEGRATION. Each List,
exhibit and letter delivered pursuant to this Agreement
shall be in writing and shall constitute a part of the
Agreement, although Lists and letters need not be attached
to each copy of this Agreement. This Agreement, together
with such Lists, exhibits and letters, constitutes the
entire agreement between the parties pertaining to the
subject matter hereof and supersedes all prior agreements
and understandings of the parties in connection therewith.
15.8 KNOWLEDGE. Whenever any statement herein
or in any list, certificate or other document delivered to
any party pursuant to this Agreement is made "to the
knowledge" or "to the best knowledge" of any party or
another Person, such party or other Person shall make such
statement only after conducting an investigation which such
party believes is reasonable under the circumstances of the
subject matter thereof, and each such statement shall
constitute a representation that such investigation has been
conducted.
15.9 GOVERNING LAW. This Agreement is made and
entered into in the State of California, except to the
extent that the provisions of federal law are mandatorily
applicable, and the laws of the State of California shall
govern the validity and interpretation hereof and the
performance of the parties hereto of their respective duties
and obligations hereunder.
15.10 CAPTIONS. The captions contained in this
Agreement are for convenience of reference only and do not
form a part of this Agreement and shall not affect the
interpretation hereof.
15.11 SEVERABILITY. If any portion of this
Agreement shall be deemed by a court of competent
jurisdiction to be unenforceable, the remaining portions
shall be valid and enforceable only if, after excluding the
portion deemed 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.
15.12 WAIVER AND MODIFICATION; AMENDMENT. 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. Except as otherwise required
by law, this Agreement and the Agreement of Consolidation,
when executed and delivered, may be modified or amended by
action of the Boards of Directors of the Bank or by the
Seller. This Agreement may be modified or amended only by
an instrument of equal formality signed by the parties or
their duly authorized agents.
40
15.13 ATTORNEYS' FEES. If any legal action or
any arbitration upon mutual agreement is brought for the
enforcement of this Agreement or because of an alleged
dispute, controversy, breach, or default in connection with
this Agreement, the prevailing party shall be entitled to
recover reasonable attorneys' fees and other costs and
expenses incurred in that action or proceeding, in addition
to any other relief to which it may be entitled.
IN WITNESS WHEREOF, the parties to this Agreement
have duly executed this Agreement as of the day and year
first above written.
FEATHER RIVER STATE BANK
By: /s/ Robert J. Mulder
-------------------------------------
Robert J. Mulder
President and Chief Executive Officer
ATTEST:
Annette Bertolini
- ---------------------
Secretary
CAROLYN E. ROTH
By: /s/ Carolyn E. Roth
--------------------------------------
Carolyn E. Roth
41
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is dated as of 9/16,
1996 by and between E.P.I. Leasing Co., Inc., a California corporation ("EPI"),
Feather River State Bank, a California corporation (the "Bank") and CAROLYN E.
ROTH ("Roth").
RECITALS
WHEREAS, Roth is currently President of EPI;
WHEREAS, the Bank and Roth have entered into that certain Stock
Purchase Agreement (the "Purchase Agreement") by which EPI will become a wholly
owned subsidiary of the Bank; except as otherwise provided herein, each
capitalized term shall have the meaning given such term in the Purchase
Agreement;
WHEREAS, the Bank and EPI desires to engage Roth to perform services
in the capacity as President of EPI and Roth desires to perform such services,
on the terms and conditions set forth in this Agreement, and effective as of the
date of consummation of the transactions contemplated by the Purchase Agreement;
AGREEMENT
1. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become
effective at the Closing, as that term is defined in the Purchase Agreement (the
"Effective Date").
2. DUTIES. EPI employs Roth, and Roth accepts employment, as
President of EPI. Roth shall have such duties as are reasonably consistent with
the duties of President, together with any other duties as may from time to time
be designated by the Chairman of the Board of Directors of EPI and the terms and
conditions of this Agreement. Roth agrees that she shall devote her full time,
attention, and energies to the business and affairs of EPI and to the
performance of her duties, and shall not, without the prior written consent of
the Board of Directors of EPI participate in any other business activity.
3. TERM OF EMPLOYMENT. The term of employment of Roth under this
Agreement shall commence on the Effective Date and shall continue for three
years from such date (the "Expiration Date"), unless terminated sooner pursuant
to Section 6 of this Agreement. The Term of employment of Roth under this
Agreement shall be automatically renewed for an additional one (1) year period
on the Expiration Date and on each anniversary of the Expiration Date
thereafter, subject to earlier termination pursuant to Section 6 of this
Agreement, unless either party notifies the other in writing at least thirty
(30) days prior to the Expiration Date or the end of the one year additional
period that such renewal shall not take place. (the "Term" refers to the time
commencing on the Effective Date until Roth's employment under this agreement
ends, for any reason.)
4. COMPENSATION.
(a) SALARY. During the Term, Roth shall be paid a salary at the
annual rate of $93,000 for the year commencing on the Effective Date (the "First
Year"); $96,000 for the year commencing on the one year anniversary of the
Effective Date (the "Second Year"); and $100,000 for the year commencing on the
two year anniversary of the Effective Date (the "Third Year"). Should this
contract be extended as set forth in Section 2, the salary hereunder shall
continue at an annual rate to be determined by Board of Directors of EPI. Such
salary shall be paid to Roth in equal bi-monthly installments, subject to
applicable withholding and employment taxes.
(b) BONUSES: After the Third Year, Roth shall be entitled to
participate in any executive bonus plan or management incentive program as the
Board of Directors of EPI determines in its sole discretion to make available
generally to other employees of EPI.
During the Term, Roth shall be entitled to receive an incentive bonus
(the "Bonus") which shall be paid based on the Total Lease Volume, as defined
below, generated from all sources by EPI in the First Year, the Second Year and
the Third Year. The Bonus shall be paid in cash in one lump sum, subject to
applicable withholding and employment taxes, within 45 business days after the
end of the respective year for which the Bonus is being paid. In the event
Roth's employment is terminated for any reason pursuant to Section 6 hereof,
Roth shall be entitled to receive a prorated portion of the Bonus she would have
been entitled to based on lesser of (i) the annualized lease volume for the
appropriate year or (ii) the median lease volume Bonus as determined pursuant to
the tables below. In the event Roth's employment is terminated, any Bonus
earned shall be paid within 45 business days of the date of termination. For
purposes of this Agreement, "Total Lease Volume" shall mean the sum of the
total cost of leased equipment advanced by EPI and the total principal amount of
any loans generated by EPI for the Bank during the applicable year of Roth's
employment.
The Bonus shall be calculated in the following manner:
2
FIRST YEAR
Lease Volume ($ in millions) Bonus ($)
1. At least 12- 12.99 25,000
2. 13 to 13.99 28,000
3. 14 to 14.99 33,000
4. 15 to 15.99 (median lease volume) 40,000
5. 16 to 16.99 43,000
6. 17 to 17.99 46,000
7. 18 and above 50,000
3
SECOND YEAR
Lease Volume ($ in millions) Bonus ($)
1. At least 14-14.99 35,000
2. 15 to 15.99 40,000
3. 16 to 16.99 50,000
4. 17 to 17.99 (median lease volume) 70,000
5. 18 to 18.99 80,000
6. 19 to 19.99 90,000
7. 20 and above 100,000
4
THIRD YEAR
Lease Volume ($ in millions) Bonus ($)
1. At least 17 to 17.99 45,000
2. 18 to 18.99 55,000
3. 19 to 19.99 70,000
4. 20 to 20.99 (median lease volume) 90,000
5. 21 to 21.99 110,000
6. 22 to 22.99 130,000
7. 23 and above 150,000
On the understanding that larger transactions are typically written at
lower rates, the parties hereto agree that in the event EPI enters into lease
for loan transactions with a lessee or conditional sales vendee wherein the
aggregate invoice cost of the equipment, excluding sales tax, as advanced by
EPI in any given year with that particular lessee or vendee exceeds $300,000,
Roth shall be credited, for purposes of determining Bonus, up to a maximum of
$300,000 per lessee or vendee per year. By mutual agreement among Roth, the
Bank and EPI, amounts over $300,000 may be credited on a case by case basis.
The Bank hereby acknowledges and agrees that during the Term the Bank
will refer all its lease business to EPI.
(c) CAR ALLOWANCE: During the Term, Roth shall receive a car
allowance in the amount of $500.00 per month payable to Roth in equal bi-monthly
installments subject to applicable withholding and employment taxes.
(d) VACATION: Roth shall be entitled to four (4) weeks of
vacation each 12 month period to be prorated monthly during the Term. In the
event Roth does not utilize vacation in the year ended, it will carry over to
the next year; provided, however, that in the event vacation carryover from
prior years, together with the current year accrual, reaches six (6) weeks, no
further vacation shall accrue until all vacations carryover from prior years is
used by Roth. Roth shall comply in all other respects with the Bank's standard
vacation policy.
5
5. OTHER BENEFITS. Upon meeting all applicable eligibility
requirements, Roth will be able to participate during the Term in the group
health and dental plans, and all other applicable insurance programs the Bank
maintains. In addition, upon meeting all applicable eligibility requirements,
Roth shall also be entitled to receive such other benefits of employment,
including participation in the Bank's 401(k) plan, as may be made available by
the Bank to all Bank employees. For purposes of determining such employment
eligibility and vesting under the employee benefit plans of the Bank, the Bank
shall recognize Roth's years of service with EPI beginning the date Roth
commenced employment with EPI through the Effective Date.
6. TERMINATION OF EMPLOYMENT. Notwithstanding any provision of this
Agreement to the contrary, Roth's employment under this Agreement may be
terminated at any time under the following circumstances:
(a) DEATH. Roth's employment shall terminate automatically upon
Roth's death, and as of the date of death, Roth shall be entitled to no further
payment or benefits under this Agreement, except that Roth's estate shall be
entitled to payment of all accrued but unpaid salary, benefits and Bonus.
(b) DISABILITY. If Roth, because of illness, injury or other
incapacitating condition, is unable to perform, in the reasonable opinion of the
Board of Directors of EPI in consultation with a physician, vocational expert or
other health professional, each of the material duties required to be performed
by her under this Agreement for a period or periods aggregating more than sixty
(60) business days in any twelve (12) consecutive months, EPI, in its sole
discretion, may terminate Roth's employment by giving written notice of
termination to her, and as of the date of termination set forth in such notice,
but no earlier than the date of receipt of such notice, Roth shall be entitled
to no further payments or benefits under this Agreement, except that Roth shall
be entitled to payment of all accrued but unpaid salary, benefits and Bonus.
(c) TERMINATION FOR CAUSE. EPI may terminate Roth's employment
at any time for "cause." For the purposes of this subsection 6(c), "cause"
shall mean:
(i) The conviction of a crime of any kind;
(ii) A reasonable and good faith belief by EPI that Roth has
perpetrated or participated in the perpetration of a fraud, misappropriation or
embezzlement of EPI's property;
(iii)Willful misconduct with respect to the duties or
obligations of Roth under this Agreement which is materially injurious to EPI;
(iv) Breach of any material provision of this Agreement;
6
(v) Failure to perform satisfactorily, properly and/or
promptly her duties under this Agreement as these duties would be reasonably and
customarily performed by a President of a leasing company similarly situated to
that of EPI in the leasing industry; and/or
(vi) A reasonable and good faith belief by EPI that Roth has
engaged in unlawful discriminatory or harassing conduct within the scope of
employment.
Roth's employment may be terminated pursuant to this subsection
6(c) by the giving of written notice to Roth by EPI which sets forth the facts
and circumstances upon which EPI claims the right to terminate for cause, and as
of the date of termination set forth in such notice, unless withdrawn by EPI,
but no earlier than ten days after receipt of such notice, Roth shall be
entitled to no further payments or benefits under this Agreement, except that
Roth shall be entitled to payment of all accrued but unpaid salary, benefits and
Bonus.
(d) TERMINATION WITHOUT CAUSE. Upon written notice to Roth, EPI
may terminate Roth's employment without cause, for any reason. If EPI
terminates Roth's employment pursuant to this subsection 6(d), EPI shall
continue to pay to Roth, as termination pay, the (1) the base salary provided
for in subsection 4(a) of this Agreement for the remainder of the Term. Except
as set forth in this paragraph 6(d), if EPI terminates Roth's employment
pursuant to this Section 6(d), as of the date of termination set forth in the
written notice, but no earlier than the date or receipt of such notice, Roth
shall be entitled to no further payments or benefits under this Agreement,
except that Roth shall be entitled to payment of all accrued but unpaid salary,
benefits and Bonus.
(e) RESIGNATION. Roth may resign from her employment with EPI
with 60 days written notice to EPI. If Roth terminates her employment pursuant
to this Section 6(e), as of the date of termination set forth in the written
notice, but no earlier than the date of receipt of such notice, Roth shall be
entitled to no further payments or benefits under this Agreement, except that
Roth shall be entitled to payment of all accrued but unpaid salary, benefits and
Bonus.
7. CONFIDENTIALITY. All information concerning or pertaining to the
business, plans and prospects of the Bank, EPI, or any of its related or
affiliated entities, which Roth may now possess, or may obtain during the Term,
is understood and agreed to be confidential and to be the property of Bank
and/or EPI. Roth shall not, without prior written consent of the Bank, cause or
permit such information to be published, disclosed, divulged or otherwise made
accessible to any other firm, person or corporation, either during or after the
Term of her employment, except as required by applicable law. Roth further
agrees that such information will at no time be used by her except in connection
with the business of and for the exclusive benefit of EPI and the Bank. Roth
shall return all documents, files, records of other tangible evidence of such
confidential information, including all photocopies, extracts or summaries, to
EPI immediately following the end of the Term. Roth agrees that any violation
of the provisions
7
of this Section will result in irreparable harm to Bank and EPI. The provisions
of this Section shall survive the expiration, suspension or termination of
Roth's employment with EPI.
8. DISPUTE RESOLUTION PROCEDURE. Any and all disputes, claims or
disagreements of any nature between, Bank and Roth or EPI and Roth, including
any disputes arising from employment (or termination of employment) or from this
Agreement, shall be submitted to final and binding arbitration within the county
where Roth is currently employed by EPI, or where Roth was so employed at the
time of termination. Included by way of example, but not limitation, shall be
any claims based on a violation of a state or federal statute, such as claims
based on a violation of a state or federal statute, such as claims for
discrimination (e.g., age, sex, sexual orientation, race, disability, national
origin, religion) or civil rights or public policy violations. This provision
shall not cover, however, any claims Roth may have for workers' compensation or
unemployment compensation benefits. Nor will this provision cover any claims by
Roth for injunctive and/or equitable relief for unfair competition or the use
and/or unauthorized disclosure of trade secrets or confidential information or
claims of fraud by any party. ARBITRATION SHALL BE IN LIEU OF ANY AND ALL OTHER
CIVIL LEGAL PROCEEDINGS, INCLUDING, BUT NOT LIMITED TO, ADMINISTRATIVE
PROCEEDINGS AND LAWSUITS, AND ROTH UNDERSTANDS AND ACKNOWLEDGES THAT SHE IS
WAIVING ANY RIGHT SHE MAY HAVE TO RESOLVE EMPLOYMENT DISPUTES THROUGH TRIAL BY
JURY. This provision may be enforced by a court of competent jurisdiction
through the filing of a petition to compel arbitration or otherwise.
Bank, EPI and Roth agree that any arbitration shall be conducted in
accordance with the rules and requirements of the American Arbitration
Association ("AAA") or a comparable arbitration service before an arbitrator
("Arbitrator") who is licensed to practice law in California and has an
expertise in employment matters, unless mutually agreed otherwise by the
parties.
The Arbitrator shall apply the substantive and procedural law of
California, or federal law, or both, as applicable to the claim(s) asserted.
The Arbitrator, and not any federal, state or local court or agency, shall have
exclusive authority to resolve any dispute relating to the interpretation,
applicability, enforceability or formation of this Agreement, including but not
limited to any claim that all or any part of this Agreement is void or voidable.
The arbitration shall be final and binding upon the parties.
Bank and/or EPI and Roth will equally share the fees and costs of the
Arbitrator. Each party will deposit funds or post other appropriate security
for its share of the Arbitrator's fee, in an amount and manner and at a time
determined by the Arbitrator. Any party may be represented by an attorney at
the arbitration, at its own expense. Either party may, at its own expense,
arrange for and pay the cost of a court reporter to provide a stenographic
record of proceedings. Each party shall also be responsible for the expenses of
any witnesses that it calls.
9. GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of California.
8
10. ATTORNEY'S FEES AND COSTS. Should any party institute any action
or proceeding to enforce any term of this Agreement, or for any damage by reason
of an alleged breach of any term of this Agreement, the parties agree that the
prevailing party shall be entitled to reimbursement by the losing party of
reasonable costs and expenses, including, but not limited to, reasonable
attorney's fees and costs.
11. ASSIGNMENT. This Agreement shall be binding on and inure to the
benefit of the parties and their respective successors and assigns, except that
none of Roth's responsibilities under this Agreement may be assigned by her
(other than in the normal course of her duties) without the prior written
consent of EPI.
12. CONFIDENTIALITY OF THIS AGREEMENT. Roth agrees to maintain the
confidentiality of the terms and conditions of this Agreement and not to reveal
the terms and conditions of this Agreement to any employee of the Bank, except
to the extent such disclosure is (a) necessary to the performance of this
Agreement and in furtherance of the Bank's interests; (b) required by applicable
law; or (c) authorized by the Bank.
13. SEVERABILITY. Should any provision of this Agreement be declared
by any court to be illegal, invalid or unenforceable, the legality, validity and
enforceability of the remaining parts shall remain unaffected.
14. NOTICES. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been given
if personally delivered or if mailed by United States Postal Service certified
or registered mail, pre-paid, to the parties, as follows:
In the case of EPI:
EPI Leasing Co., Inc.
6929 Sunrise Boulevard, Suite 205
Citrus Heights, CA 95610
Attention: Carolyn Roth
With a copy addressed to:
Brewer, Corrigan & Smith
401 W. A Street
21st Floor
San Diego, California 92101-7908
Attention: William K. Brewer
Telecopier: (619) 231-3511
9
In the case of Bank:
Feather River State Bank
1005 Stafford Way
Yuba City, California 95991
Attention: Robert J. Mulder
Telecopier No.: (916) 674-4443
With a copy addressed to:
Manatt, Phelps & Phillips, LLP
11355 West Olympic Blvd.
Los Angeles, CA 90064
Attention: William T. Quicksilver, Esq.
Telecopier No: (310) 312-4224
In the case of Roth:
Carolyn E. Roth
112 Gray Canyon Road
Folsom, California 95630
With a copy addressed to:
Brewer, Corrigan & Smith
401 W. A Street
21st Floor
San Diego, California 92101-7908
Attention: William K. Brewer
Telecopier: (619) 231-3511
15. WAIVER AND MODIFICATION. Any waiver, alteration or modification
of any of the terms of this Agreement shall be valid only if made in writing and
signed by both parties. Each party, from time to time, may waive any of their
rights under this Agreement without effecting a waiver with respect to any
subsequent occurrences or transactions hereunder.
16. LIMITATION OF PAYMENTS. This Agreement is made expressly
subject to the provisions of law codified at 12 U.S.C. Section 1828(k) and 12
C.F.R. Part 359 which regulate and prohibit certain forms of benefits to Roth.
Roth acknowledges that she understands these sections of law and that
obligations to make payments hereunder are expressly relieved if such payments
violate these sections of applicable law or any successors thereto.
10
17. ENTIRE AGREEMENT. This Agreement constitutes and embodies the
entire understanding and agreement of the parties. Except as otherwise provided
for in this Agreement, there are no other agreements or understandings, written
or oral, in effect between the parties, relating to Roth's employment by EPI.
All prior understandings, representations, negotiations or agreements, if any,
between the parties relating to Roth's employment by the EPI are hereby
terminated, rescinded and superseded and Roth agrees that any rights and
remedies, if any, she may have under any such prior understandings,
representations, negotiations or agreements are waived and terminated.
18. ACKNOWLEDGMENTS. The parties acknowledge that they have had the
opportunity to be represented by counsel of their own choosing in the
negotiation and preparation of this Agreement and they enter into this Agreement
freely, without coercion and based on their own judgment and not in reliance
upon any representations or promises made by any other party, other than those
contained in this Agreement.
19. CAPTIONS. Captions and paragraph headings used herein are for
convenience only, are not a part hereto and shall not be used in construing this
Agreement.
IN WITNESS HEREOF, the parties have executed this Agreement as of the
day and year first above written.
EPI LEASING CO., INC.
/s/ Carolyn E. Roth
- -------------------------------------
By: Carolyn E. Roth
President
FEATHER RIVER STATE BANK
/s/ Robert J. Mulder
- --------------------------------------
By: Robert J. Mulder
President
11
CAROLYN E. ROTH
/s/ Carolyn E. Roth
- ---------------------------------------
Carolyn E. Roth
12
NONCOMPETITION AGREEMENT
This NONCOMPETITION AGREEMENT (this "Agreement"), dated as of 9/16,
1996, is entered into by and between Feather River State Bank, a California
banking corporation ("Feather River") and Carolyn E. Roth (the "Executive").
RECITALS
A. Feather River and Executive entered into that certain Stock Purchase
Agreement, dated as of 9/16, 1996 (the "Purchase Agreement") pursuant to which
the Executive would sell all of the stock she owns in and all of the outstanding
stock of E.P.I. Leasing Co., Inc. ("EPI") to Feather River.
B. The Executive is the President and Chief Executive Officer of EPI.
C. As an inducement to Feather River to enter into the Purchase
Agreement, the Executive agrees to refrain from competing with, using trade
secrets or soliciting customers or employees of Feather River or EPI or any of
their respective successors.
D. Except as otherwise provided herein, each capitalized term shall have
the meaning given to such term in the Purchase Agreement. As used in this
Agreement, the following terms shall have the meanings set forth:
"Customer" shall mean any Person with whom EPI has an existing
relationship for Financial or Leasing Services (as defined below) from the date
of the Purchase Agreement until Executive ceases being employed by EPI.
"Enterprises" shall mean any of the businesses conducted by EPI at any
time from the date of the Purchase Agreement until Executive ceases being
employed by EPI.
"Financial Institution" shall mean a "depository institution" as that
term is defined in 12 C.F.R. Section 348.2, and any parent, subsidiary or
affiliate thereof.
"Financial or Leasing Services" shall mean the origination,
purchasing, selling and servicing of commercial, equipment, real estate,
residential, construction and consumer loans or leases.
"Prospective Customer" shall mean any Person with whom Feather River
or EPI have actively pursued a relationship for Financial or Leasing Services at
any time between the date of the Purchase Agreement and the Executive's
termination of employment with EPI.
"Rule" shall mean any statute or law or any judgment, decree,
injunction, order, regulation or rule of any Governmental Entity, including,
without limitation, those relating to disclosure, usury, equal credit
opportunity, equal employment, fair credit reporting and anticompetitive
activities.
"Trade Secrets" shall mean:
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(a) All secrets and other confidential information, ideas, knowledge,
know-how, techniques, secret processes, improvements, discoveries, methods,
inventions, sales, financial information, Customers, lists of Customers and
Prospective Customers, plans, concepts, strategies or products, as well as all
documents, reports, drawings, designs, plans and proposals otherwise pertaining
to same or relating to the business and properties of Feather River or EPI of
which the Executive has acquired, or may hereafter acquire, knowledge and
possession as a shareholder, director, officer or employee or as a result of the
transactions contemplated by the Purchase Agreement.
(b) Notwithstanding any other provisions of this Agreement to the
contrary, "Trade Secrets" shall not include any (i) information which is or has
become available from a third party who learned the information independently
and is not or was not bound by a confidentiality agreement with respect to such
information; (ii) information readily ascertainable from public, trade or other
nonconfidential sources (other than as a result, directly or indirectly, of a
disclosure or other dissemination in contravention of a confidentiality
agreement) or (iii) the general knowledge and skill of Roth pertaining to the
leasing industry.
NOW, THEREFORE, in consideration of the premises and respective
representations, warranties and covenants, agreements and conditions contained
herein and in the Purchase Agreement, and intending to be legally bound hereby,
the Executive and Feather River agree as follows:
ARTICLE I
ACKNOWLEDGMENTS BY THE EXECUTIVE
The Executive acknowledges that:
(a) Feather River would not enter into the Purchase Agreement
unless Executive agrees not to enter into an activity that is competitive with
or similar to the Enterprises and that, accordingly, this Agreement is a
material inducement for Feather River to enter into and to carry out the terms
of the Purchase Agreement. Accordingly, Executive expressly acknowledges that
she is entering into this Agreement to induce Feather River to enter into and
carry out the terms of the Purchase Agreement.
(b) By virtue of her position with EPI, Executive has developed
considerable expertise in the business operations of EPI and has and will
continue to have access to Trade Secrets. Executive recognizes that Feather
River and EPI would be irreparably damaged, and Feather River's substantial
investment in EPI materially impaired, if the Executive were to enter into an
activity that is competitive with or similar to the Enterprises in violation of
the terms of this Agreement, if the Executive were to disclose or make
unauthorized use of any Trade Secrets or if the Executive were to solicit
Customers, Prospective Customers or employees of Feather River or EPI.
Accordingly, the Executive expressly acknowledges that she is voluntarily
entering into this Agreement and that the terms and conditions of this Agreement
are fair and reasonable to the Executive in all respects.
ARTICLE II
NONCOMPETITION AND NONSOLICITATION
2.1. NONCOMPETITION. For a period of three years after the Executive
is no longer employed by EPI or Feather River, the Executive shall not, directly
or indirectly, without the prior written consent of Feather River (i) own,
manage, operate, control, finance or participate in the ownership, management,
operation, control or financing of, or be connected as an officer, director,
employee, partner, principal, agent, representative, consultant or otherwise
with, any business or enterprise engaged in any business which is
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competitive with or similar to, within the counties of Sacramento, Yolo, Butte,
Yuba, Colusa, Placer and Sutter, State of California (the "Territory"), the
Enterprises or (ii) engage in any other manner in any business that is
competitive with or similar to, within the Territory, the Enterprises.
Notwithstanding the above, the Executive shall not be deemed to be engaged
directly or indirectly in any business in contravention of paragraphs (i) or
(ii) above, if (y) the Executive participates in any such business solely (A) as
a director of Feather River or EPI or (B) as a passive investor in up to 5% of
the equity securities or 10% of the debt securities of a company or partnership,
provided such securities are publicly traded or (z) the Executive is employed by
a business or enterprise that is engaged primarily in a business other than that
which is competitive with or similar to the Executive and the Executive does not
apply her expertise at such business or enterprise to that part of such business
or enterprise that is competitive with or similar to the Enterprises.
2.2 NONSOLICITATION. For a period of three years after the Executive
is no longer employed by EPI or Feather River, the Executive shall not, directly
or indirectly, without the prior written consent of Feather River on behalf of
any Financial Institution or any individual or company providing Financial or
Leasing Services, solicit or aid in the solicitation of Customers or
Prospective Customers for Financial or Leasing Services or induce or attempt to
induce immediately any Person who is a Customer, Prospective Customer, supplier,
distributor, officer or employee of Feather River or EPI immediately prior to
Executive's termination of employment with EPI or Feather River to terminate
such person's relationships with, or to take any action that would be
disadvantageous to Feather River or EPI.
2.3 TRADE SECRETS. Without limiting the generality of the foregoing
and at all times after the date hereof, other than for the benefit of Feather
River and EPI and, after the Closing, other than for the benefit of Feather
River or EPI, the Executive (i) shall make no use of the Trade Secrets, or any
other part thereof, (ii) shall not disclose the Trade Secrets, or any part
thereof, to any other Person, and (iii) shall deliver, on and after the Closing,
all documents, reports, drawings, designs, plans, proposals and other tangible
evidence of Trade Secrets, now possessed or hereafter acquired by the Executive,
to Feather River.
2.4 EXCEPTIONS. Notwithstanding any provision of this Agreement to
the contrary, the Executive may disclose or reveal any information, whether
including in whole or in part any Trade Secrets, that:
(a) The Executive is required to disclose or reveal under any
applicable Rule, provided the Executive makes a good faith request that the
confidentiality of the Trade Secrets be preserved and, to the extent not
prohibited by applicable Rules, gives Feather River prompt notice of such
requirement in advance of such disclosure;
(b) The Executive is otherwise required to disclose or reveal by
any Governmental Entity, provided the Executive makes a good faith request that
the confidentiality of the Trade Secrets be preserved and, to the extent not
prohibited by applicable Rules, gives Feather River prompt notice of such
requirement in advance of such disclosure; or
(c) In the opinion of the Executive's counsel, the Executive is
compelled to disclose or else stand liable for contempt or suffer other censure
or penalty imposed by any Governmental Entity, provided the Executive makes a
good faith request that the confidentiality of the Trade Secrets be preserved
and, to the extent not prohibited by applicable Rules, gives Feather River
prompt notice of such requirement in advance of such disclosure.
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ARTICLE III
INDEPENDENCE OF OBLIGATIONS
The covenants of the Executive set forth in this Agreement shall be
construed as independent of any other agreement or arrangement between the
Executive, on the one hand, and Feather River on the other, and the existence of
any claim or cause of action by the Executive against Feather River shall not
constitute a defense to the enforcement of such covenants against the Executive.
ARTICLE IV
COMPENSATION
4.1 COMPENSATION. As consideration for entering into this Agreement, on
the Closing Date, Feather River shall pay to the Executive, whether or not
Executive is an officer, director, employee of or consultant to Feather River,
the sum of $10,000.
4.2 CHARACTER OF PAYMENTS. Feather River and the Executive agree and
acknowledge that the payment due the Executive hereunder is in consideration of
Executive's refraining from competing with Feather River or EPI for the period
specified in this Agreement.
ARTICLE V
GENERAL
5.1 AMENDMENTS. To the fullest extent permitted by law, this
Agreement may be amended by agreement in writing of the parties hereto at any
time.
5.2 INTEGRATION. This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter hereof and supersedes all
prior agreements and understanding of the parties in connection therewith.
5.3 TERMINATION.
(a) This Agreement shall terminate automatically without further
action in the event that the Purchase Agreement is terminated prior to the
Closing in accordance with its terms.
(b) Unless sooner terminated under subsection (a) of this
Section 5.3, the obligations of the Executive under Section 2.1 and 2.2 of this
Agreement shall terminate on the earlier of (i) mutual agreement of the
Executive and Feather River, (ii) in the event Executive's employment with EPI
is terminated by EPI or Feather River other than for "cause," as defined in
section 6(c) of that certain Employment Agreement between EPI, Feather River and
the Executive, dated as of 9/16, 1996; or (iii) on the third anniversary
following the end of Executive's employment with EPI.
5.4 SPECIFIC PERFORMANCE. The Executive and Feather River each
expressly acknowledge that, in view of the uniqueness of the obligations of the
Executive contemplated hereby, Feather River would
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not have an adequate remedy at law for money damages in the event that this
Agreement has not been performed by the Executive in accordance with its terms,
and therefore the Executive and Feather River agree that Feather River shall be
entitled to specific enforcement of the terms hereof in addition to any other
remedy to which they may be entitled at law or in equity.
5.5 SEVERABILITY AND THE LIKE. If any provision of this Agreement
shall be held by a court of competent jurisdiction to be unreasonable as to
duration, activity or subject, it shall be deemed to extend only over the
maximum duration, range of activities or subjects as to which such provision
shall be valid and enforceable under applicable law. If any provisions shall,
for any reason, be held by a court of competent jurisdiction to be invalid,
illegal or unenforceable, such invalidity, illegality or unenforceability shall
not affect any other provision of this Agreement, but this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.
5.6 NOTICES Any notice or communication required or permitted
hereunder, shall be deemed to have been given if in writing and (a) delivered in
person, (b) delivered by confirmed facsimile transmission, (c) sent by overnight
carrier, postage prepaid with return receipt requested or (d) mailed by
certified or registered mail, postage prepaid with return receipt requested,
addressed as follows:
If to Feather River, addressed to:
Feather River State Bank
1005 Stafford Way
Yuba City, California 95991
Attention: Robert J. Mulder
Telecopier No.: (916) 674-4443
With a copy addressed to:
Manatt, Phelps & Phillips, LLP
11355 West Olympic Blvd.
Los Angeles, CA 90064
Attention: William T. Quicksilver, Esq.
Telecopier No: (310) 312-4224
If to Executive, addressed to:
Carolyn E. Roth
112 Gray Canyon Road
Folsom, California 95630
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With a copy addressed to:
Brewer, Corrigan & Smith
401 W. A Street
21st Floor
San Diego, California 92101-7908
Attn: William K. Brewer
Telecopier: (619) 231-3511
or at such other address and to the attention of such other person as a party
may notice to the others in accordance with this Section 5.6. Any such notice
or communication shall be deemed received on the date delivered personally or
delivered by confirmed facsimile transmission, on the next Business Day after it
was sent by overnight carrier, postage prepaid with return receipt requested, or
on the third Business Day after it was sent by certified or registered mail,
postage prepaid with return receipt requested.
5.7 WAIVER OF BREACH. Any failure or delay by Feather River in
enforcing any provision of this Agreement shall not operate as a waiver of this
Agreement. The waiver by Feather River of a breach of any provision of this
Agreement shall not operate as a waiver of this Agreement. The waiver by Feather
River of a breach of any provision of this Agreement by the Executive shall not
operate or be construed as a waiver of any subsequent breach or violation of the
Agreement. All waivers shall be in writing and signed by the party to be bound.
5.8 ASSIGNMENT. This Agreement shall be assignable by Feather
River only in connection with a sale of all or substantially all of its assets
or a merger or reorganization in which it is not the surviving corporation. Any
attempted assignment in violation of this prohibition shall be null and void.
5.9 BINDING EFFECT; BENEFIT TO SUCCESSORS. This Agreement shall be
binding upon the Executive and upon the Executive's successors and
representatives and shall inure to the benefit of Feather River and its
successors, representatives and assigns.
5.10 GOVERNING LAW. This Agreement and the legal relations between the
parties shall be governed by and construed in accordance with the laws of the
State of California applicable to contracts between California parties made and
performed in such State.
5.11 HEADINGS. The descriptive headings of the several Articles and
Sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
5.12 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
party hereto and delivered to each party hereto.
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IN WITNESS WHEREOF, the parties to this Agreement have caused and duly
executed this Agreement as of the day and year first above written.
FEATHER RIVER STATE BANK
/s/ Robert J. Mulder
By:-------------------------------------
Robert J. Mulder
Title:----------------------------------
President
EXECUTIVE
Carolyn E. Roth
/s/ Carolyn E. Roth
----------------------------------------
(Signature)
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