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Exhibit 2.1
Execution Copy
AGREEMENT AND PLAN OF REORGANIZATION
Among
VALLICORP HOLDINGS, INC.,
VALLIWIDE BANK
And
WESTAMERICA BANCORPORATION
DATED AS OF
NOVEMBER 11, 1996
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TABLE OF CONTENTS
Page
ARTICLE 1 Definitions...................................................................................1
ARTICLE 2 The Merger....................................................................................7
2.1 Effective Date................................................................................7
2.2 Effect of the Merger..........................................................................7
2.3 Conversion of ValliCorp Common Stock..........................................................8
2.4 Fractional Shares.............................................................................9
2.5 Surrender of Shares of ValliCorp Common Stock.................................................9
2.6 No Further Transfers of Shares of ValliCorp Common Stock.................................... 10
2.7 Adjustments................................................................................. 10
2.8 Treatment of Stock Options.................................................................. 11
ARTICLE 3 Representations and Warranties of ValliCorp and ValliWide................................... 11
3.1 Capital Structure of ValliCorp.............................................................. 12
3.2 Organization, Standing and Authority of ValliCorp........................................... 13
3.3 Ownership of Subsidiaries; Capital Structure of Subsidiaries................................ 13
3.4 Authorized and Effective Agreement.......................................................... 14
3.5 SEC Documents; Regulatory Filings........................................................... 15
3.6 Financial Statements; Books and Records..................................................... 15
3.7 Material Adverse Change..................................................................... 16
3.8 Absence of Undisclosed Liabilities.......................................................... 16
3.9 Properties.................................................................................. 17
3.10 Tax Matters................................................................................. 20
3.11 Employee Benefit Plans...................................................................... 21
3.12 Certain Contracts........................................................................... 23
3.13 Legal Actions and Proceedings............................................................... 24
3.14 Compliance with Laws, Regulations and Decrees............................................... 24
3.15 Brokers and Finders......................................................................... 25
3.16 Insurance................................................................................... 26
3.17 Pooling of Interests........................................................................ 26
3.18 Certificate or Articles, Bylaws, Books and Records.......................................... 26
3.19 Loans and Other Assets...................................................................... 26
3.20 Restrictions on Investments................................................................. 27
3.21 Collective Bargaining and Employment Agreements............................................. 27
3.22 Compensation of Officers and Employees...................................................... 28
3.23 Loan Loss Reserves.......................................................................... 28
3.24 Transactions With Affiliates................................................................ 28
3.25 Information in Registration Statement....................................................... 28
3.26 No Brokered Deposits........................................................................ 29
3.27 Ownership of WABC Common Stock.............................................................. 29
3.28 Delaware Takeover Laws Inapplicable......................................................... 29
3.29 Derivatives Contracts; Structured Notes; Etc................................................ 29
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3.30 Fairness Opinion............................................................................ 29
ARTICLE 4 Representations and Warranties of WABC...................................................... 30
4.1 Capital Structure of WABC................................................................... 30
4.2 Organization, Standing and Authority of WABC................................................ 30
4.3 Ownership of WABC Subsidiaries; Capital Structure of WABC
Subsidiaries................................................................................ 30
4.4 Organization, Standing and Authority of WABC Subsidiaries................................... 31
4.5 Authorized and Effective Agreement.......................................................... 31
4.6 SEC Documents; Regulatory Filings........................................................... 32
4.7 Financial Statements; Books and Records..................................................... 32
4.8 Material Adverse Change..................................................................... 33
4.9 Absence of Undisclosed Liabilities.......................................................... 33
4.10 Legal Proceedings........................................................................... 33
4.11 Compliance with Laws........................................................................ 34
4.12 Brokers and Finders......................................................................... 35
4.13 Information in Registration Statement....................................................... 35
4.14 Pooling of Interests........................................................................ 35
4.15 Tax Matters................................................................................. 35
4.16 Employee Benefit Plans...................................................................... 37
4.17 Loans and Other Assets...................................................................... 39
4.18 Loan Loss Reserves.......................................................................... 40
4.19 Derivatives Contracts; Structured Notes; Etc................................................ 40
ARTICLE 5 Covenants................................................................................... 41
5.1 Covenants of WABC........................................................................... 41
(a) Approval by WABC's Shareholders.................................................... 41
(b) Reservation, Issuance and Registration of WABC Common
Stock.............................................................................. 41
(c) Government Approvals............................................................... 41
(d) Press Releases..................................................................... 42
(e) Takeover Proposals................................................................. 42
(f) ValliCorp Employees; Directors and Management;
Indemnification.................................................................... 42
(g) Financial Statements............................................................... 45
(h) Stock Exchange Listing............................................................. 46
5.2 Covenants of ValliCorp...................................................................... 46
(a) Approval by ValliCorp's Shareholders............................................... 46
(b) Shareholder Lists and Other Information............................................ 46
(c) Government Approvals............................................................... 46
(d) Financial Statements............................................................... 46
(e) Compensation....................................................................... 47
(f) Conduct of Business in the Ordinary Course......................................... 48
(g) Press Releases..................................................................... 52
(h) No Merger or Solicitation.......................................................... 52
(i) ValliCorp 401(k) Plan, Profit Sharing Plan and Benefit Plans....................... 56
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(j) ValliCorp Accruals and Reserves.................................................... 56
(k) Asset Review....................................................................... 58
(l) Changes in Capital Stock; ValliCorp Dividends...................................... 59
(m) Indebtedness....................................................................... 60
(n) Execution and Delivery of Stock Option Agreement................................... 60
(o) Noncompetition Agreements.......................................................... 60
5.3 Covenants of WABC and ValliCorp............................................................. 60
(a) Proxy Statement; Registration Statement............................................ 60
(b) Commercially Reasonable Efforts.................................................... 61
(c) Investigation...................................................................... 61
(d) Access to Properties, Books and Records; Confidentiality........................... 62
(e) Accounting Methods................................................................. 62
(f) Affiliates......................................................................... 62
(g) Structural Changes to Certain ValliWide Branches................................... 63
(h) FHLB Advances and Security Agreement............................................... 63
(i) Available for Sale Investment Securities Portfolio of ValliCorp.................... 64
(j) Retention Bonus Payments........................................................... 64
(k) Notification re: Book Value Test................................................... 64
5.4 Closing..................................................................................... 64
(a) Closing Date....................................................................... 64
(b) Delivery of Documents.............................................................. 64
(c) Filings............................................................................ 64
ARTICLE 6 Conditions Precedent........................................................................ 65
6.1 Conditions Precedent - WABC and ValliCorp................................................... 65
6.2 Conditions Precedent - ValliCorp............................................................ 66
6.3 Conditions Precedent - WABC................................................................. 67
ARTICLE 7 Termination, Waiver and Amendment........................................................... 70
7.1 Termination................................................................................. 70
(a) Termination........................................................................ 70
(b) Notice............................................................................. 72
(c) Breach of Obligations.............................................................. 72
(d) Termination and Expenses........................................................... 72
7.2 Survival of Representations, Warranties and Covenants....................................... 72
7.3 Amendment or Supplement..................................................................... 72
ARTICLE 8 Miscellaneous............................................................................... 73
8.1 Fees and Expenses........................................................................... 73
8.2 Entire Agreement; Severability.............................................................. 73
8.3 Binding Agreement........................................................................... 74
8.4 No Assignment............................................................................... 74
8.5 Notices..................................................................................... 74
8.6 Captions.................................................................................... 75
8.7 Counterparts................................................................................ 75
8.8 Governing Law............................................................................... 76
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8.9 Attorneys' Fees............................................................................. 76
8.10 Specific Performance........................................................................ 76
8.11 Waivers..................................................................................... 76
Annexes
Annex A - Plan of Merger
Exhibits
Exhibit 5.2(a) Form of Shareholder Agreement
Exhibit 5.2(o)(i) Form of Noncompetition Agreement (Directors)
Exhibit 5.2(o)(ii) Noncompetition Agreement Signatories
Exhibit 5.3(f)(i) Form of Affiliates Agreement (ValliCorp)
Exhibit 5.3(f)(ii) Form of Affiliates Agreement (WABC)
Exhibit 6.2(d) Opinion of Pillsbury Madison & Sutro LLP
Exhibit 6.3(g) Opinion of ValliCorp Counsel
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION ("Reorganization Agreement" or
"Agreement") dated as of November 11, 1996, among ValliCorp Holdings, Inc., a
Delaware corporation having its principal executive office at 8405 North Fresno
Street, Fresno, California ("ValliCorp"), ValliWide Bank, a California chartered
bank having its principal executive office at 8401 North Fresno Street, Fresno,
California ("ValliWide"), and Westamerica Bancorporation, a California
corporation having its principal executive office at 1108 Fifth Avenue, San
Rafael, California ("WABC").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of the parties hereto deem it
advisable and in their best interests and the interests of their respective
shareholders that ValliCorp shall be merged with and into WABC ("Merger")
pursuant to an Agreement and Plan of Merger substantially in the form attached
hereto as Annex A ("Plan of Merger");
WHEREAS, the Merger is intended to qualify as a tax-free reorganization
within the meaning of the provisions of Section 368 of the Internal Revenue Code
of 1986, as amended; and
WHEREAS, the parties hereto desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein and intending to be
legally bound hereby, the parties hereto do hereby agree as follows:
ARTICLE 1
Definitions
1.1 "Acquisition Event" shall have the meaning set forth in Section
5.2(h)(4).
1.2 "Acquisition Proposal" shall have the meaning set forth in Section
5.2(h)(5).
1.3 "Affiliates" shall mean, with respect to any Person, any Person
that, directly or indirectly, controls or is controlled by or is under common
control with such Person.
1.4 "Amended Rights Agreement" shall mean that certain Amended and
Restated Rights Agreement between WABC and Chemical Trust Company of California,
as Rights Agent, dated as of March 23, 1995.
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1.5 "Applications" shall have the meaning set forth in Section 3.25.
1.6 "Associates" means associates as defined in Rule 405 under the
Securities Act.
1.7 "Average Price" means the average of the closing prices of WABC
Common Stock as quoted on the Nasdaq for the 20 consecutive trading days
immediately preceding five trading days prior to the Effective Date, rounded to
four decimal places, whether or not trades occurred on those days (subject to
adjustment as provided below). The term "trading day" shall mean a day on which
trading generally takes place on the Nasdaq and on which trading in WABC Common
Stock has not been halted or suspended. In the event WABC pays, declares or
otherwise effects a stock split, reverse stock split, reclassification or stock
dividend or distribution with respect to the WABC Common Stock between the date
of this Agreement and the Effective Time, appropriate adjustments will be made
to the Average Price of WABC Common Stock.
1.8 "Bank Holding Company Act" shall mean the Bank Holding Company Act
of 1956, as amended.
1.9 "Business Combination" shall have the meaning set forth in Section
5.2(h)(5).
1.10 "Business Day" shall mean a day on which commercial banks are open
for business in California and which is not a Saturday or Sunday.
1.11 "Call Reports" shall have the meaning set forth in Section 3.5.
1.12 "Capital Transactions" shall have the meaning set forth in Section
6.3(l).
1.13 "Claim" shall mean any and all actions, causes of action, claims,
costs, counterclaims, cross-claims, damages, debts, demands, expenses,
liabilities, losses, obligations, proceedings and suits of every kind and
nature, liquidated or unliquidated, fixed or contingent, in law, equity or
otherwise, and whether presently known or unknown.
1.14 "Closing" shall have the meaning set forth in Section 5.4(a).
1.15 "Closing Date" shall mean the date specified pursuant to Section
5.4(a) hereof as the date on which the parties hereto shall close the
transactions contemplated herein.
1.16 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.17 "Commission" or "SEC" shall mean the Securities and Exchange
Commission.
1.18 "Convertible Debentures" shall have the meaning set forth in
Section 3.1(a).
1.19 "Covered Parties" shall have the meaning set forth in Section
5.1(f)(3).
1.20 "Derivatives Contract" shall have the meaning set forth in Section
3.29.
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1.21 "Determination Date" shall have the meaning set forth in Section
7.1(a)(7).
1.22 "Determination Letters" shall have meaning set forth in Section
3.11(j).
1.23 "DGCL" shall mean the Delaware General Corporation Law.
1.24 "DPC Shares" shall have the meaning set forth in Section
2.3(b)(2).
1.25 "Effective Date" shall have the meaning set forth in Section 2.1.
1.26 "Effective Time" shall have the meaning set forth in Section 2.1.
1.27 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.28 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.29 "Exchange Agent" shall have the meaning set forth in Section
2.5(a).
1.30 "Exchange Ratio" shall have the meaning set forth in Section
2.3(a)(i).
1.31 "FDIA" shall mean the Federal Deposit Insurance Act.
1.32 "FDIC" shall mean the Federal Deposit Insurance Corporation.
1.33 "Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System.
1.34 "GAAP" shall have the meaning set forth in Section 3.6.
1.35 "GCL" shall have the meaning set forth in Section 2.1.
1.36 "Government Approvals" shall have the meaning set forth in Section
5.1(c).
1.37 "Governmental Entity" shall have the meaning set forth in Section
3.4(d).
1.38 "Independent Appraiser" or "Independent Loan Reviewer" shall have
the meaning set forth in Section 5.2(k).
1.39 "IRS" shall mean the Internal Revenue Service.
1.40 "Letter Agreement" shall have the meaning set forth in Section
5.3(d).
1.41 "Material Adverse Effect" shall mean, with respect to ValliCorp or
WABC, as the case may be, a material adverse effect on the financial condition,
assets, business or results of operations of such party and its subsidiaries
taken as a whole, or on the ability of
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such party to consummate the transactions contemplated hereby. For purposes of
this Agreement, the parties agree that if any action is or actions are taken by
ValliCorp or ValliWide solely at WABC's request or by WABC solely at ValliCorp's
request (or with the consent of the other party or pursuant to this Agreement)
which results in a condition or occurrence, or result in conditions or
occurrences, which would otherwise constitute a Material Adverse Effect (but for
this sentence), said action(s), condition(s) or occurrence(s) shall not be
considered in determining whether a Material Adverse Effect has occurred, unless
said action(s), condition(s) or occurrence(s) had been planned by the party
impacted thereby prior to the date hereof or it was or they were required by
applicable law, regulation, GAAP, RAP or order of a regulatory agency.
1.42 "Merger" shall have the meaning set forth in the Recitals.
1.43 "Minimum Price" shall have the meaning set forth in Section
7.1(a)(7).
1.44 "Nonperforming Assets" shall mean all Nonperforming Loans and
OREO.
1.45 "Nonperforming Loans" shall mean all loans, leases, other
extensions of credit or commitments of ValliCorp and the ValliCorp Subsidiaries
finally classified by ValliCorp, the ValliCorp Subsidiaries, any bank regulatory
agency, or ValliCorp's independent auditors as "Doubtful," "Loss" or words of
similar import in the case of loans (or that would have been so classified in
the case of other interest-bearing assets which would be subject to a provision
for loan and lease losses) or any loans or extensions of credit which are on
nonaccrual or accruing and 90 days or more past due in the payment of principal
or interest.
1.46 "OCC" shall have the meaning set forth in Section 5.1(g)(3).
1.47 "Ordinary Course of Business" shall have the meaning set forth in
Section 5.2(f)(1).
1.48 "OREO" shall have the meaning set forth in Section 3.19(a).
1.49 "Person" or "person" shall mean any individual, corporation,
association, partnership, limited liability company, group (as defined in
section 13(d)(3) of the Exchange Act), joint venture, trust or unincorporated
organization, or a government or any agency or political subdivision thereof.
1.50 "Plan of Merger" shall have the meaning set forth in the Recitals.
1.51 "Previously Disclosed" shall mean disclosed in a letter from the
party making such disclosure and delivered to the other party. The disclosure of
any matter by one party to the other for any purpose in the aforesaid letter
shall be deemed to be disclosure for all purposes thereunder; provided that each
party shall attempt to disclose matters therein wherever relevant. The inclusion
of any matter in information Previously Disclosed shall not be deemed an
admission or otherwise to imply that any such matter is material for purposes of
this Agreement.
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1.52 "Proxy Statement" shall mean the joint proxy statement/prospectus
(or similar documents), together with any supplements thereto, sent to the
shareholders of ValliCorp and WABC to solicit their respective approvals of the
Agreement, the Plan of Merger and any other matters properly before said
shareholders.
1.53 "RAP" shall have the meaning set forth in Section 3.7.
1.54 "Registration Statement" shall mean the registration statement
with respect to the WABC Common Stock to be issued in connection with the Merger
as declared effective by the Commission under the Securities Act.
1.55 "Rights" shall mean warrants, options, rights, convertible
securities and other arrangements or commitments which obligate an entity or its
subsidiaries to issue, sell, pledge, assign or otherwise encumber, or to
purchase, redeem or otherwise acquire, any of its or their capital stock, and
stock appreciation rights, performance units and other similar stock-based
rights whether they obligate the issuer thereof to issue stock or other
securities or to pay cash.
1.56 "SEC Documents" shall mean all reports and registration statements
filed by a party hereto pursuant to the Securities Laws.
1.57 "Securities Act" shall mean the Securities Act of 1933, as
amended.
1.58 "Securities Laws" shall mean the Securities Act; the Exchange Act;
the Investment Company Act of 1940, as amended; the Investment Advisers Act of
1940, as amended; the Trust Indenture Act of 1939, as amended; the rules and
regulations of the Commission promulgated thereunder; and applicable state
securities laws, rules and regulations.
1.59 "Standstill Termination Date" shall have the meaning set forth in
Section 5.2(h)(5).
1.60 "Stock Option Agreement" shall mean the Stock Option Agreement
dated of even date herewith granted by ValliCorp to WABC to induce WABC to enter
into this Agreement.
1.61 "Superintendent" shall mean the California Superintendent of
Banks.
1.62 "Superior Proposal" shall have the meaning set forth in Section
5.2(h)(2).
1.63 "Surviving Corporation" shall have the meaning set forth in
Section 2.2.
1.64 "Takeover Proposal" shall have the meaning set forth in Section
5.2(h)(1).
1.65 "Termination Fee" shall have the meaning set forth in Section
5.2(h)(4).
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1.66 "Trust Account Shares" shall have the meaning set forth in Section
2.3(b)(2).
1.67 "ValliCorp Certificate" shall have the meaning set forth in
Section 2.3(b)(1).
1.68 "ValliCorp Common Stock" shall have the meaning set forth in
Section 3.1(a).
1.69 "ValliCorp Financial Statements" shall mean (i) the consolidated
balance sheets of ValliCorp as of September 30, 1996 and as of December 31,
1995, 1994, 1993, 1992 and 1991 and the related consolidated statements of
income, cash flows and changes in shareholders' equity (including related notes,
if any) for the period ended September 30, 1996 and each of the five years ended
December 31, 1995, 1994, 1993, 1992 and 1991 as filed by ValliCorp in SEC
Documents and (ii) the consolidated balance sheets of ValliCorp and related
consolidated statements of income, cash flows and changes in shareholders'
equity (including related notes, if any) as filed by ValliCorp in SEC Documents
with respect to periods ended subsequent to September 30, 1996.
1.70 "ValliCorp Plans" shall have the meaning set forth in Section
3.11(j).
1.71 "ValliCorp Preferred Stock" shall have the meaning set forth in
Section 3.1(a).
1.72 "ValliCorp Rights Agreement" shall have the meaning set forth in
Section 3.1(a).
1.73 "ValliCorp Subsidiary" or "ValliCorp Subsidiaries" shall have the
meaning set forth in Section 3.3.
1.74 "ValliCorp Trusts" shall have the meaning set forth in Section
3.11(j).
1.75 "Violation" shall have the meaning set forth in Section 3.4(c).
1.76 "Voting Equity" shall have the meaning set forth in Sections
5.2(h)(5).
1.77 "Voting Securities" shall have the meaning set forth in Section
5.2(h)(5).
1.78 "WABC Common Stock" shall mean the common stock, no par value, of
WABC.
1.79 "WABC Financial Statements" shall mean (i) the consolidated
balance sheets of WABC as of September 30, 1996 and as of December 31, 1995,
1994, 1993, 1992 and 1991 and the related consolidated statements of income,
cash flows and changes in shareholders' equity (including related notes, if any)
for the periods ended September 30, 1996 and each of the five years ended
December 31, 1995, 1994, 1993, 1992 and 1991 as filed by WABC in SEC Documents
and (ii) the consolidated balance sheets of WABC and related consolidated
statements of income, cash flows and changes in shareholders' equity (including
related notes, if any) as filed by WABC in SEC Documents with respect to periods
ended subsequent to September 30, 1996.
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1.80 "WABC Plans" shall have the meaning set forth in Section 4.16(j).
1.81 "WABC Rights" shall have the meaning set forth in Section 2.5(a).
1.82 "WABC Subsidiary" or "WABC Subsidiaries" shall have the meaning
set forth in Section 4.3.
1.83 "WABC Trusts" shall have the meaning set forth in Section 4.16(j).
ARTICLE 2
The Merger
2.1 Effective Date. Subject to the terms and conditions of this
Agreement, the Merger shall become effective upon the filing with the California
Secretary of State and the Delaware Secretary of State of a duly executed Plan
of Merger and officers' certificates prescribed by section 1103 of the
California General Corporation Law (the "GCL") and/or other documents as
required by the DGCL, or at such time thereafter as is provided by mutual
agreement in the Plan of Merger (the "Effective Time"). The date on which the
Effective Time occurs as specified in the Plan of Merger shall be referred to
herein as the "Effective Date."
2.2 Effect of the Merger. Subject to the terms and conditions of this
Agreement and the Plan of Merger, at the Effective Time, ValliCorp shall be
merged with and into WABC and WABC shall be the surviving corporation (the
"Surviving Corporation") in the Merger. All assets, rights, goodwill,
privileges, immunities, powers, franchises and interests of ValliCorp and WABC
in and to every type of property (real, personal and mixed) and choses in
action, as they exist as of the Effective Time, including appointments,
designations and nominations and all other rights and interests as trustee,
executor, administrator, registrar of stocks and bonds, guardian of estate,
assignee, receiver and in every other fiduciary capacity, shall pass and be
transferred to and vest in the Surviving Corporation by virtue of the Merger at
the Effective Time without any deed, conveyance or other transfer; the separate
existence of ValliCorp shall cease and the corporate existence of WABC as the
Surviving Corporation shall continue unaffected and unimpaired by the Merger;
and the Surviving Corporation shall be deemed to be the same entity as each of
ValliCorp and WABC and shall be subject to all of their duties and liabilities
of every kind and description. The Surviving Corporation shall be responsible
and liable for all the liabilities and obligations of each of WABC and
ValliCorp; and any claim existing or action or proceeding pending by or against
WABC or ValliCorp may be prosecuted as if the Merger had not taken place, or the
Surviving Corporation may be substituted in its place. Neither the rights of
creditors nor any liens upon the property of either WABC or ValliCorp shall be
impaired by reason of the Merger.
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2.3 Conversion of ValliCorp Common Stock. At the Effective Time,
subject to Sections 2.3(c) and 2.4 hereof, by virtue of the Merger and without
any action on the part of WABC, ValliCorp or the holder of any ValliCorp Common
Stock:
(a) Each share of ValliCorp Common Stock issued and outstanding prior
to the Effective Time (other than shares of ValliCorp Common Stock held (x) in
ValliCorp's treasury or (y) directly or indirectly by WABC or ValliCorp or any
of their respective Subsidiaries (except for Trust Account Shares and DPC
Shares) shall be converted into the right to receive per share consideration in
the amount calculated as set forth hereinbelow in the form of WABC Common Stock,
unless said Exchange Ratio is further adjusted pursuant to Section 6.3(l) or
7.1(a)(7), as follows:
(i) If the Average Price of WABC Common Stock is not less than
$48.69 and is not more than $53.81, the Exchange Ratio shall be
determined by dividing $21.00 by the Average Price (the "Exchange
Ratio");
(ii) Subject to Section 7.1(a)(7), if the Average Price is
less than $48.69, the Exchange Ratio shall be .4313; and
(iii) If the Average Price is greater than $53.81, the
Exchange Ratio shall be adjusted, as follows:
---------- ----------
Exchange Ratio = $21.00 - $21.00 x 40% + $21.00
-------- ---------- --------
$53.81 Average Price Average Price
---------- ----------
(b)(1) All of the shares of ValliCorp Common Stock converted into WABC
Common Stock pursuant to this Article 2 shall no longer be outstanding and shall
automatically be canceled and shall cease to exist as of the Effective Time, and
each certificate (each a "ValliCorp Certificate") previously representing any
such shares of ValliCorp Common Stock shall thereafter represent the right to
receive (i) a certificate representing the number of whole shares of WABC Common
Stock and (ii) cash in lieu of fractional shares into which the shares of
ValliCorp Common Stock represented by such ValliCorp Certificate have been
converted pursuant to this Section 2.3 and Section 2.4 hereof.
(b)(2) At the Effective Time, all shares of ValliCorp Common Stock that
are owned by ValliCorp as treasury stock and all shares of ValliCorp Common
Stock that are owned directly or indirectly by WABC or ValliCorp or any of their
respective Subsidiaries (other than shares of ValliCorp Common Stock held
directly or indirectly in trust accounts, managed accounts and the like or
otherwise held in a fiduciary capacity that are beneficially owned by third
parties (any such shares, and shares of WABC Common Stock that are similarly
held, whether held directly or indirectly by WABC or ValliCorp, as the case may
be, being referred to herein as "Trust Account Shares") and other than any
shares of ValliCorp Common Stock held by WABC or ValliCorp or any of their
respective Subsidiaries in respect of a debt previously contracted (any such
shares of ValliCorp
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Common Stock, and shares of WABC Common Stock that are similarly held, whether
held directly or indirectly by WABC or ValliCorp or any of their respective
Subsidiaries, being referred to herein as "DPC Shares")) shall be canceled and
shall cease to exist and no stock of WABC or other consideration shall be
delivered in exchange therefor. All shares of WABC Common Stock that are owned
by ValliCorp or any of its Subsidiaries (other than Trust Account Shares and DPC
Shares) shall become authorized but unissued stock of WABC. Subject to Section
2.3(c), each share of WABC Common Stock issued and outstanding immediately prior
to the Effective Time shall remain an issued and outstanding share of common
stock of the Surviving Corporation and shall not be converted or otherwise
affected by the Merger.
(c) From and after the Effective Date, the holders of ValliCorp
Certificates formerly representing shares of ValliCorp Common Stock shall cease
to have any rights with respect thereto other than any dissenters' rights they
have perfected pursuant to Chapter 262 of the DGCL. All shareholders of WABC
Common Stock shall be entitled to dissenters' rights under the GCL to the extent
set forth in Chapter 13 of the GCL.
2.4 Fractional Shares. Notwithstanding any other provision hereof, no
fractional shares of WABC Common Stock shall be issued to holders of shares of
ValliCorp Common Stock. In lieu thereof, each such holder entitled to a fraction
of a share of WABC Common Stock shall receive, at the time of surrender of the
ValliCorp Certificates, an amount in cash equal to the Average Price, multiplied
by the fraction of a share of WABC Common Stock to which such holder otherwise
would be entitled. No such holder shall be entitled to dividends, voting rights,
interest on the value of, or any other rights in respect of a fractional share.
2.5 Surrender of Shares of ValliCorp Common Stock.
(a) Prior to the Effective Date, WABC shall appoint Chemical Trust
Company of California or its successor, or any other bank or trust company
(having capital of at least $50 million) mutually acceptable to ValliCorp and
WABC, as exchange agent (the "Exchange Agent") for the purpose of exchanging
certificates representing the WABC Common Stock, and at and after the Effective
Date, WABC shall issue and deliver to the Exchange Agent certificates
representing the shares of WABC Common Stock, as shall be required to be
delivered to holders of shares of ValliCorp Common Stock pursuant to Section 2.3
of this Agreement. As soon as practicable after the Effective Date, each holder
of shares of ValliCorp Common Stock converted pursuant to Section 2.3, upon
surrender to the Exchange Agent of one or more ValliCorp Certificates for
cancellation, will be entitled to receive a certificate representing the number
of shares of WABC Common Stock determined in accordance with Section 2.3 and a
payment in cash with respect to fractional shares, if any, determined in
accordance with Section 2.4. All references in this Agreement and the Plan of
Merger to WABC Common Stock shall be deemed to include the corresponding rights
("WABC Rights") to purchase shares of WABC Common Stock pursuant to the Amended
Rights Agreement, except where the context otherwise requires, and each
certificate representing shares of WABC Common Stock will bear a notation
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incorporating the Amended Rights Agreement by reference. Certificates issued for
shares of WABC Common Stock shall be deemed to be certificates for the WABC
Rights.
(b) No dividends or other distributions of any kind which are declared
payable to shareholders of record of the shares of WABC Common Stock after the
Effective Date will be paid to persons entitled to receive such certificates for
shares of WABC Common Stock until such persons surrender their ValliCorp
Certificates. Upon surrender of such ValliCorp Certificate, the holder thereof
shall be paid, without interest, any dividends or other distributions with
respect to the shares of WABC Common Stock as to which the record date and
payment date occurred on or after the Effective Date and on or before the date
of surrender.
(c) If any certificate for shares of WABC Common Stock is to be issued
in a name other than that in which the ValliCorp Certificate surrendered in
exchange therefor is registered, it shall be a condition of such exchange that
the person requesting such exchange shall pay to the Exchange Agent any transfer
costs, taxes or other expenses required by reason of the issuance of
certificates for such shares of WABC Common Stock in a name other than the
registered holder of the ValliCorp Certificate surrendered, or such persons
shall establish to the satisfaction of WABC and the Exchange Agent that such
costs, taxes or other expenses have been paid or are not applicable.
(d) All dividends or distributions, and any cash to be paid in lieu of
fractional shares pursuant to Section 2.4, if held by the Exchange Agent for
payment or delivery to the holders of unsurrendered ValliCorp Certificates
representing shares of ValliCorp Common Stock and unclaimed at the end of one
year from the Effective Date, shall (together with any interest earned thereon)
at such time be paid or redelivered by the Exchange Agent to WABC, and after
such time any holder of a ValliCorp Certificate who has not surrendered such
ValliCorp Certificate to the Exchange Agent shall, subject to applicable law,
look as a general creditor only to WABC for payment or delivery of such
dividends or distributions or cash, as the case may be.
2.6 No Further Transfers of Shares of ValliCorp Common Stock. At the
Effective Date, the stock transfer books of ValliCorp shall be closed and no
transfer of shares of ValliCorp Common Stock theretofore outstanding shall
thereafter be made.
2.7 Adjustments. If, between the date of this Agreement and the
Effective Date, the outstanding shares of WABC Common Stock shall have been
changed into a different number of shares or a different class by reason of any
reclassification, recapitalization, split up, combination, exchange of shares or
readjustment, or a stock dividend thereon shall be declared with a record date
within such period, the number of shares of WABC Common Stock to be issued and
delivered in the Merger in exchange for each outstanding share of ValliCorp
Common Stock shall be correspondingly adjusted.
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2.8 Treatment of Stock Options.
(a) On the Effective Date, the obligations under any stock option plans
of ValliCorp shall be assumed by WABC. On the Effective Date, options to
purchase shares of ValliCorp Common Stock issued pursuant to ValliCorp's stock
option plans or stock option plans of companies acquired by ValliCorp that are
outstanding shall be converted, without any action on the part of the holders
thereof, into options to acquire, upon payment of the adjusted exercise price
(which shall equal the exercise price per share for the options immediately
prior to the Merger, divided by the Exchange Ratio), the number of shares of
WABC Common Stock the option holder would have received pursuant to the Merger
if he or she had exercised all his or her options immediately prior thereto.
WABC acknowledges that the transactions contemplated hereby will accelerate the
vesting of all stock options outstanding under the Key Employees Stock Option
Plan and the Directors Stock Option Plan, and WABC agrees that all such options
under the Key Employees Stock Option Plan and Directors Stock Option Plan shall
be immediately exercisable in full from and after the Effective Date. Except as
noted above each ValliCorp stock option shall otherwise continue on terms and
conditions that are consistent with those that were applicable on the Effective
Date.
(b) The ValliCorp Directors Stock Option Plan shall be deemed to be
amended by ValliCorp to the effect that a non-officer Director's service does
not terminate as long as he remains a Director or advisory Director of ValliWide
or its successors on and after the Effective Date. WABC covenants that it will,
for purposes of the Directors Stock Option Plan, at or immediately following the
Effective Date, offer each current non-officer Director of ValliCorp (who does
not become a director of WABC) a position as Director or advisory Director of
ValliWide and that should ValliWide be merged into any other subsidiary of WABC
each current non-officer Director shall be offered a position, for purposes of
the Directors Stock Option Plan, as an advisory Director of the successor in
interest to ValliWide.
(c) Subject to the mutual intent of the parties that the Merger will be
accounted for under the pooling-of-interests method, ValliCorp shall otherwise
amend its option plans and obtain any required shareholder approval of such
option plan amendments and shall amend, as necessary, any and all option
agreements (including obtaining any required participant consents) prior to the
Effective Date to make them consistent with this Section 2.8.
ARTICLE 3
Representations and Warranties of ValliCorp and ValliWide
ValliCorp, with respect to ValliCorp, and ValliWide, with respect to
ValliWide, hereby represent and warrant to WABC as follows, except, in the case
of each representation and warranty contained in this Article 3, as Previously
Disclosed:
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3.1 Capital Structure of ValliCorp.
(a) The authorized capital stock of ValliCorp consists of (i)
40,000,000 shares of common stock, $.01 par value ("ValliCorp Common Stock"),
13,984,039 shares of which, as of the date hereof, are issued and outstanding
and no shares are held in treasury, and (ii) 5,000,000 shares of preferred
stock, par value $.01 per share ("ValliCorp Preferred Stock"), none of which are
issued and outstanding. No other equity securities of ValliCorp have been issued
or are outstanding. As of the date hereof, no shares of ValliCorp Preferred
Stock or ValliCorp Common Stock were reserved for issuance, except that (i)
886,689 shares of ValliCorp Common Stock were reserved for issuance upon the
exercise of stock options, at a weighted average exercise price of $12.2642 per
share, all of which have been granted pursuant to ValliCorp's stock option plans
or stock option plans of companies acquired by ValliCorp (as Previously
Disclosed), (ii) 250,000 shares of ValliCorp Preferred Stock were reserved for
issuance upon exercise of rights pursuant to the Rights Agreement dated as of
March 25, 1996, between ValliCorp and First Interstate Bank of California, as
amended (the "ValliCorp Rights Agreement"), and (iii) 152,939 shares of
ValliCorp Common Stock were reserved for issuance pursuant to ValliCorp's
Mandatory Convertible Subordinated Debentures due 1998 and Optional Convertible
Subordinated Debentures due 1998 (collectively, "Convertible Debentures").
Otherwise, there are no outstanding (i) options, agreements, calls or
commitments of any character which would obligate ValliCorp or the ValliCorp
Subsidiaries to issue, sell, pledge, assign or otherwise encumber or dispose of,
or to purchase, redeem or otherwise acquire, any ValliCorp Common Stock or any
other equity security of ValliCorp or the ValliCorp Subsidiaries; or (ii)
warrants or options relating to, rights to acquire, or debt or equity securities
convertible into, shares of ValliCorp Common Stock or any other equity security
of ValliCorp or the ValliCorp Subsidiaries. The outstanding common stock of
ValliCorp has been duly and validly registered with the Commission pursuant to
the Exchange Act, to the extent required thereunder. As of the date hereof,
neither ValliCorp nor the ValliCorp Subsidiaries have any bonds, debentures,
notes or other indebtedness the holders of which have the right to vote (or
which are convertible into or exercisable for securities having the right to
vote) with the shareholders of ValliCorp (or the ValliCorp Subsidiaries) on any
matter or to approve the transactions contemplated hereby, other than the
Convertible Debentures. All outstanding shares of ValliCorp Common Stock have
been duly authorized and validly issued and are fully paid and nonassessable.
Said stock has been issued in compliance with all applicable Securities Laws.
The stock options described in clause (i) of the fourth sentence of this Section
3.1(a) were granted and, upon issuance in accordance with the terms of the
outstanding options, such shares shall be issued, in compliance with all
applicable laws. ValliCorp does not have and is not bound by any Rights which
are authorized, issued or outstanding with respect to the capital stock of
ValliCorp or any ValliCorp Subsidiary and except for rights issued pursuant to
the ValliCorp Rights Agreement. None of the shares of ValliCorp's capital stock
has been issued in violation of the preemptive rights of any person. ValliCorp
has taken all action necessary so that the approval, execution and delivery of
this Reorganization Agreement, the Stock Option Agreement and the Plan of Merger
and the consummation of the transactions contemplated hereby and thereby,
including, without limitation, the acquisition of shares of ValliCorp Common
Stock by WABC pursuant to the Stock Option Agreement, do not and will not result
in the grant of
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any Rights to any person under the ValliCorp Rights Agreement or enable, require
or otherwise cause the Rights thereunder to be exercised, distributed or
triggered and in no event will WABC become an Acquiring Person within the
meaning of the ValliCorp Rights Agreement.
(b) The authorized capital stock of ValliWide consists of 6,000,000
shares of common stock, $2.00 par value, 50 shares of which, as of the date
hereof, are issued and outstanding. No other equity securities of ValliWide have
been issued or are outstanding. No shares of equity securities of ValliWide were
reserved for issuance. All outstanding shares of common stock of ValliWide have
been duly authorized and validly issued and are fully paid and nonassessable
(except pursuant to the California Financial Code). Said stock has been issued
in compliance with all applicable Securities Laws.
3.2 Organization, Standing and Authority of ValliCorp. Each of
ValliCorp and its Subsidiaries is a bank or corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization. Through its banking subsidiary, ValliWide,
ValliCorp holds current valid licenses to engage in the commercial banking
business in California at its banking offices in California and, along with
ValliWide, ValliCorp is in material compliance with all agreements,
understandings or orders of the Federal Reserve Board, the FDIC, the
Superintendent or any other regulatory authority having jurisdiction over its or
their business or any of its or their assets or properties. Neither the scope of
the business of ValliCorp or its Subsidiaries nor the location of their
properties requires any of them to be licensed to do business in any
jurisdiction other than the State of California. The deposits of ValliWide are
insured by the FDIC to the maximum extent permitted by applicable law and
regulation. ValliCorp is a bank holding company registered under the Bank
Holding Company Act. ValliWide is a member of the Federal Reserve System.
3.3 Ownership of Subsidiaries; Capital Structure of Subsidiaries.
Except as listed below, neither ValliCorp nor ValliWide owns, directly or
indirectly, a five percent or greater equity interest or interest convertible
into a five percent or greater equity interest in any corporation, bank or other
Person (collectively, the "ValliCorp Subsidiaries" and, individually, a
"ValliCorp Subsidiary").
Name of Subsidiary Ownership
------------------ ---------
ValliWide Bank Wholly Owned
Commerce Securities Corporation Wholly Owned by ValliWide
California Valley Securities Corporation Wholly Owned by ValliWide
The outstanding shares of capital stock of each ValliCorp Subsidiary
have been duly authorized and validly issued and are fully paid and, except for
ValliWide, nonassessable, and all such shares are directly or indirectly owned
by ValliCorp free and clear of all liens, claims and encumbrances. No ValliCorp
Subsidiary has or is bound by any Rights which
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are authorized, issued or outstanding with respect to the capital stock of any
ValliCorp Subsidiary, and there are no agreements, understandings or commitments
relating to the right of ValliCorp to vote or to dispose of said shares. None of
the shares of capital stock of any ValliCorp Subsidiary has been issued in
violation of the preemptive rights of any person.
3.4 Authorized and Effective Agreement.
(a) Each of ValliCorp and ValliWide, as applicable, has all requisite
corporate power and authority to enter into this Agreement, the Plan of Merger
and the Stock Option Agreement and, subject to the adoption of this Agreement
and the Plan of Merger by the holders of ValliCorp Common Stock, to consummate
the transactions contemplated hereby and thereby. The execution and delivery of
this Agreement, the Plan of Merger and the Stock Option Agreement and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action in respect thereof on
the part of ValliCorp or ValliWide, as applicable (including without limitation
the approval of this Agreement by the unanimous vote of all members of
ValliCorp's Board of Directors, which approval includes a resolution directing,
subject to Sections 5.2(a) and 5.2(h) hereof, that the Proxy Statement contain a
recommendation by the Board of Directors that the shareholders of ValliCorp
approve this Agreement and the transactions contemplated hereby), subject in the
case of this Agreement only to the provisions of Section 5.2(h) and the
affirmative vote of the holders of a majority of the outstanding shares of
ValliCorp Common Stock as required under the DGCL and ValliCorp's Restated
Certificate of Incorporation and Bylaws. The Board of Directors of ValliCorp has
directed that this Agreement and the Plan of Merger be submitted to ValliCorp's
shareholders for approval at a special meeting to be held as soon as
practicable. This Agreement has been duly executed and delivered by ValliCorp
and ValliWide, and the Stock Option Agreement has been duly executed and
delivered by ValliCorp.
(b) Assuming the accuracy of the representation contained in Section
4.5(b) hereof, this Agreement, the Plan of Merger and the Stock Option Agreement
constitute legal, valid and binding obligations of ValliCorp and ValliWide, as
applicable, enforceable against ValliCorp and ValliWide, as applicable, in
accordance with their respective terms, subject, as to enforceability, to
bankruptcy, insolvency and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(c) Neither the execution and delivery of this Agreement, the Plan of
Merger or the Stock Option Agreement, nor consummation of the transactions
contemplated hereby or thereby, nor compliance by ValliCorp and ValliWide, as
applicable, with any of the provisions hereof or thereof shall (i) conflict with
or result in any violation of, or default (with or without notice or lapse of
time, or both) under or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a material benefit under, or the
creation of a lien, pledge, security interest, charge or other encumbrance on
assets (any such conflict, violation, default, right of termination,
cancellation or acceleration, loss or creation, a "Violation") pursuant to any
provision of the articles or certificate of incorporation or association,
charter or by-laws of ValliCorp or any ValliCorp Subsidiary, (ii) cause a
Violation of any loan or credit agreement, note, bond, mortgage, indenture,
license, lease or
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other agreement, instrument or obligation, or (iii) assuming the consents which
are Previously Disclosed are duly obtained, result in any Violation of any
order, writ, injunction, decree, statute, law, ordinance, rule or regulation
applicable to ValliCorp or any ValliCorp Subsidiary.
(d) No consent, approval, order or authorization of, or declaration,
notice, filing or registration with, any court, administrative agency or
commission or other governmental or regulatory authority, or instrumentality,
foreign or domestic (each, a "Governmental Entity"), is required by or with
respect to ValliCorp or any ValliCorp Subsidiary in connection with the
execution, delivery and performance of this Agreement, the Plan of Merger and
the Stock Option Agreement or the consummation by ValliCorp and ValliWide, as
applicable, of the transactions contemplated hereby or thereby.
3.5 SEC Documents; Regulatory Filings. ValliCorp has filed all SEC
Documents and other documents required by the Securities Laws and such SEC
Documents and other documents complied, as of their respective dates, in all
material respects with the Securities Laws. As of their respective dates, none
of such SEC Documents and other documents contained, as of the date hereof, or
will contain, as to documents filed after the date hereof, any untrue statement
of material fact or omitted or will 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 or will be made, not misleading;
provided, however, that information as of a later date shall be deemed to modify
information as of any earlier date. ValliCorp and each of the ValliCorp
Subsidiaries has filed all material documents and reports relating to ValliCorp
and the ValliCorp Subsidiaries required to be filed by them with the SEC,
Federal Reserve Board, FDIC, Superintendent or any other governmental authority
having jurisdiction over their businesses or any of their assets or properties,
and such documents and reports conformed in all material respects with the
applicable statutes, regulations and instructions (including regulatory
accounting practices) in existence as of the date of filing of such documents
and reports. ValliWide has delivered to WABC true and complete copies of its
most recent annual and quarterly Consolidated Reports of Condition and Income
filed with the Federal Reserve Board and Superintendent and will promptly
deliver to WABC true and complete copies of such reports after the filing
thereof with the Federal Reserve Board and Superintendent (as such reports have
since the time of their filing been amended, or may after their filing, if after
the date hereof, be amended, the "Call Reports").
3.6 Financial Statements; Books and Records. The ValliCorp Financial
Statements fairly present the consolidated financial position of ValliCorp and
its consolidated subsidiaries as of the dates indicated and the consolidated
results of operations, changes in shareholders' equity and cash flows of
ValliCorp and its consolidated subsidiaries for the periods then ended in
conformity with generally accepted accounting principles ("GAAP") applicable to
financial institutions applied on a consistent basis except as disclosed
therein. Such consolidated financial statements as of any fiscal year end have
been audited by independent auditors and include an unqualified opinion(s) of
such auditing firm(s) to the effect that such financial statements have been
prepared in accordance with GAAP and present fairly, in all material respects,
the consolidated financial position, results of
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operations and cash flows of ValliCorp at the dates indicated and for the
periods then ending. The books and records (including ValliCorp Financial
Statements) of ValliCorp and each ValliCorp Subsidiary fairly reflect in all
material respects the transactions to which it is a party or by which its
properties are subject or bound and such books and records have been properly
kept and maintained. The financial records of ValliCorp and the ValliCorp
Subsidiaries have been, and are being and shall be, maintained in all material
respects in accordance with all applicable legal and accounting requirements
sufficient to insure that all transactions reflected therein are, in all
material respects, executed in accordance with management's general or specific
authorization and recorded in conformity with GAAP at the time in effect.
Management of ValliCorp believes that the data processing equipment, data
transmission equipment, related peripheral equipment and software used by
ValliCorp in the operation of its business to generate and retrieve its
financial records are adequate for the current needs of ValliCorp.
3.7 Material Adverse Change. ValliCorp has not, on a consolidated
basis, suffered any material adverse change in its financial condition, assets,
business or results of operations from the financial condition, assets, business
or results of operations indicated in the financial statements of ValliCorp at
December 31, 1995, which financial statements have heretofore been provided to
WABC. For purposes of this Section, the parties agree that if any action is or
actions are taken by ValliCorp or ValliWide solely at WABC's request (or with
the consent of WABC or pursuant to this Agreement) which results in a condition
or occurrence, or results in conditions or occurrences, which would otherwise
constitute a Material Adverse Effect (but for this sentence), said action(s),
condition(s) or occurrence(s) shall not be considered in determining whether a
Material Adverse Effect has occurred, unless said action(s), condition(s) or
occurrence(s) had been planned by ValliCorp prior to the date hereof or it was
or they were required by applicable law, regulation, GAAP, regulatory accounting
practices ("RAP") or order of a regulatory agency.
3.8 Absence of Undisclosed Liabilities. Neither ValliCorp nor any
ValliCorp Subsidiary has incurred or discharged, and is legally obligated with
respect to, any material indebtedness, liability (including, without limitation,
a liability arising out of an indemnification, guarantee, hold harmless or
similar arrangement) or obligation (accrued or contingent, whether due or to
become due, and whether or not subordinated to the claims of its general
creditors), that is material to ValliCorp on a consolidated basis, or that, when
combined with all similar liabilities, would be material to ValliCorp on a
consolidated basis, except for items reflected on or for which reserves have
been established in the unaudited balance sheets of ValliCorp and the ValliCorp
Subsidiaries as of September 30, 1996 in accordance with GAAP, and except for
liabilities incurred in the ordinary course of business subsequent to September
30, 1996. No agreement pursuant to which any loans or other assets have been or
will be sold by ValliCorp entitled the buyer of such loans or other assets,
unless there is material breach of a representation or covenant by ValliCorp, to
cause ValliCorp or the ValliCorp Subsidiaries to repurchase such loan or other
asset or the buyer to pursue any other form of recourse against ValliCorp or the
ValliCorp Subsidiaries. No cash, stock or other dividend or any other
distribution with respect to (i) the stock of ValliCorp, or (ii) except as
disclosed in writing to WABC as of the date hereof or hereafter, the ValliCorp
Subsidiaries, has been declared, set aside or paid. Except as Previously
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Disclosed, no shares of the stock of ValliCorp or the ValliCorp Subsidiaries
have been purchased, redeemed or otherwise acquired, directly or indirectly, by
ValliCorp since December 31, 1994, and no agreements have been made to do the
foregoing.
3.9 Properties.
(a) ValliCorp or the ValliCorp Subsidiaries have good, marketable and
insurable title, free and clear of all liens, encumbrances, charges, defaults,
equitable interests and the right of possession, subject to existing leaseholds
as heretofore disclosed to WABC, to all real properties and good title to all
other property and assets, tangible and intangible, which are reflected on the
ValliCorp Financial Statements as of December 31, 1995, or acquired after such
date (except property held as lessee under leases disclosed in writing to WABC
prior to the date hereof and except personal property sold or otherwise disposed
of since December 31, 1995, in the ordinary course of ValliCorp's business),
except (i) liens for taxes or assessments not yet due and payable, (ii) pledges
to secure deposits and other liens incurred in the ordinary course of banking
business, (iii) such other liens and encumbrances and imperfections of title, if
any, as do not materially affect the value of such property as reflected in
ValliCorp's balance sheet as of December 31, 1995, or as currently shown on the
books and records of ValliCorp and the ValliCorp Subsidiaries and which do not
interfere with or impair its present and continued use, or (iv) exceptions
disclosed in title reports and preliminary title reports, copies of which have
heretofore been provided to WABC. To ValliCorp's knowledge, all tangible
properties of ValliCorp and the ValliCorp Subsidiaries conform in all material
respects with all applicable ordinances, regulations and zoning laws. All
tangible properties of ValliCorp and the ValliCorp Subsidiaries with book values
of $250,000 or more are in a good state of maintenance and repair (reasonable
wear and tear excepted) and are adequate for the current business of ValliCorp
or the ValliCorp Subsidiaries.
(b)(1) For purposes of this Section 3.9(b) only, the following terms
shall have the indicated meaning:
"Business" means the business conducted at any Real Property
(as defined below).
"Environmental Law" means any and all applicable federal,
state and local laws (whether under common law, statute, rule,
regulation or otherwise), requirements under permits issued with
respect thereto, and other orders, decrees, judgments, directives or
other requirements of any governmental authority relating to the
environment, or to any Hazardous Substances (as defined below).
"Hazardous Substances" means any chemical, compound, material,
mixture, living organism or substance that is now defined or listed in,
or otherwise classified or regulated in any way pursuant to, any
Environmental Laws as a "hazardous waste," "hazardous substance,"
"hazardous material," "extremely hazardous waste," "infectious waste,"
"toxic substance," or "toxic
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pollutants," such materials, including without limitation, oil, waste
oil, petroleum, waste petroleum, polychlorinated biphenyls ("PCBs"),
asbestos, radon, natural gas, natural gas liquids, liquefied natural
gas, or synthetic gas usable for fuel (or mixtures of natural gas and
such synthetic gas).
"Real Property" means all interests in real property of
ValliCorp or the ValliCorp Subsidiaries, including without limitation,
interests in fee, lease-hold, interest as mortgagee or secured party,
or option or contract to purchase or acquire.
"Reportable Quantity" means the quantity set forth in 40
C.F.R. Part 302 as it is in effect on the effective date of this
Agreement for the particular Hazardous Substances set forth therein.
With respect to Hazardous Substances not listed in that part, if any,
"reportable quantity" means one (1) pound. "Reportable Quantity" shall
be determined based on a single release or series of related releases
or threatened releases.
"To ValliCorp's knowledge" shall mean to the best knowledge,
after reasonable inquiry, of the following officers of ValliCorp or
ValliWide: Chief Executive Officer, Chief Operating Officer, Chief
Financial Officer, Chief Credit Officer, and General Counsel.
(2) Except as Previously Disclosed, to ValliCorp's knowledge, there are
no pending or threatened claims, actions or proceedings against ValliCorp or any
person relating to:
(i) any asserted liability of ValliCorp or any of its
Affiliates or any current or prior owner, operator, occupier or user of
any Real Property under any Environmental Law, including without
limitation, the terms and conditions of any permit, license, authority,
settlement or other obligation arising under any Environmental Law;
(ii) any handling, storage, use or disposal of Hazardous
Substances on, under or within any Real Property or any transportation
or removal of Hazardous Substances to or from any Real Property;
(iii) any actual or threatened discharge, release or emission
of Hazardous Substances from, on, under or within any Real Property
into the air, water, surface water, groundwater, land surface or
subsurface strata; or
(iv) any actual or asserted claims for personal injuries,
illness or damage to real or personal property related to or arising
out of exposure to Hazardous Substances discharged, released or emitted
from, on, under, within or into, or transported from or to, any Real
Property.
(3) Except as Previously Disclosed, to ValliCorp's knowledge, no
Hazardous Substances are present on, under or within any Real Property (except
those Hazardous
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Substances used in the normal course of operating or maintaining the business of
ValliCorp or any ValliCorp Subsidiary) and, except as Previously Disclosed, the
presence of these Hazardous Substances does not violate any Environmental Law.
Except as Previously Disclosed, to ValliCorp's knowledge, there are no storage
tanks underground or otherwise present on any Real Property and all such tanks
Previously Disclosed comply with applicable law, all permits in respect thereof
are in full force and effect and there have been no releases or discharges of
Hazardous Substances from such tanks to the environment.
(4) To ValliCorp's knowledge, no Hazardous Substances have been, or
have been threatened to be, discharged, released or emitted in a Reportable
Quantity into the air, water, surface water, groundwater, land surface or
subsurface strata or transported to or from the Real Property except in
accordance with Environmental Laws (in particular, but without limitation, in
accordance with any permits issued pursuant thereto) and as Previously
Disclosed. To ValliCorp's knowledge all notifications, remediation, removal or
other response actions of any kind whatsoever, in respect of such discharges,
releases and emissions which are required by Environmental Laws, and by
applicable agreements with third parties, have been made within the time limits
prescribed by such Environmental Laws and such third party agreements. Copies of
all such notifications or documents relating to any remediation,removal or
response action have previously been provided to WABC.
(5) To ValliCorp's knowledge, except as Previously Disclosed, ValliCorp
and its Affiliates are in compliance, in all material respects, with all
Environmental Laws related to the ownership, operation, use and occupation of
the Real Property.
(6) To ValliCorp's knowledge, except as Previously Disclosed, no part
of any Real Property is listed on CERCLIS or the National Priorities List
created pursuant to the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as
amended, as a site containing Hazardous Substances.
(7) ValliCorp has provided WABC with copies of all material notices
required under any Environmental Law with respect to the Real Property at which
the business of ValliCorp or ValliCorp's Subsidiaries is conducted, including
without limitation, notices required under California Health & Safety Code
section 25359.7.
(8) All properties held by ValliCorp or the ValliCorp Subsidiaries
under leases are held by them under valid, binding and enforceable leases, with
such exceptions as are not material and do not interfere with the conduct of the
business of ValliCorp, and ValliCorp enjoys quiet and peaceful possession of
such leased property. ValliCorp and the ValliCorp Subsidiaries are not in
default in any material respect under any material lease, agreement or
obligation regarding their properties to which they are a party or by which they
are bound.
(9) Except as Previously Disclosed, all of ValliCorp's and the
ValliCorp Subsidiaries' rights and obligations under the leases referred to in
Section 3.9(b)(8) above do not require the consent of any other party to the
transactions contemplated by this Agreement.
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3.10 Tax Matters.
(a) ValliCorp and each ValliCorp Subsidiary have timely filed federal
income tax returns for each year through December 31, 1995 and have timely
filed, or caused to be filed, all other federal, state, county, local and
foreign tax returns (including, without limitation, estimated tax returns,
returns required under sections 1441-1446 and 6031-6060 of the Code and the
regulations thereunder and any comparable state, foreign and local laws, any
other information returns, withholding tax returns, FICA and FUTA returns and
back up withholding returns required under section 3406 of the Code and any
comparable state, foreign and local laws) required to be filed with respect to
ValliCorp or any ValliCorp Subsidiary, including, without limitation, estimated
tax, use tax, excise tax, real property and personal property tax reports and
returns, employer's withholding tax returns, other withholding tax returns and
Federal Unemployment Tax Returns, and all other reports or other information
required to be filed by each of them, and each such return, report or other
information is complete and accurate in all material respects. All taxes, fees
and other governmental charges, including any interest and penalties thereon,
due in respect of the periods covered by such tax returns have been paid or
adequate reserves have been established for the payment of such amounts, except
where any such failure to pay or establish adequate reserves, except those that
are being contested in good faith, which contested matters existing as of the
date hereof have been disclosed to WABC in writing and through the Effective
Date any other contested matters will have been disclosed to WABC in writing,
and, as of the Effective Date, all taxes due in respect of any subsequent
periods ending on or prior to the Closing Date will have been paid or adequate
reserves will have been established for the payment thereof. ValliCorp or the
ValliCorp Subsidiaries have not been requested to give any currently effective
waivers extending the statutory period of limitation applicable to any tax
return required to be filed by any of them for any period and, as of the date of
this Agreement and the Effective Date (except as disclosed to WABC in writing
with respect to occurrences after the date hereof) (A) there are no claims
pending against ValliCorp and the ValliCorp Subsidiaries for any alleged
deficiency in the payment of any taxes, and ValliCorp does not know of any
pending or threatened audits, investigations or claims for unpaid taxes or
relating to any liability in respect of any taxes; and (B) to the knowledge of
ValliCorp, there have been no events, including a change in ownership, that
would result in a reappraisal and establishment of a new base-year full value
for purposes of Articles XIII.A of the California Constitution, of any real
property with a book value in excess of $250,000 owned in whole or in part by
ValliCorp and the ValliCorp Subsidiaries or to the best of ValliCorp's
knowledge, of any real property with aggregate remaining lease payments of
$250,000 or more leased by ValliCorp and the ValliCorp Subsidiaries. Neither
ValliCorp nor any ValliCorp Subsidiary will have any liability for any such
taxes in excess of the amounts so paid or reserves or accruals so established.
(b) Neither ValliCorp nor any ValliCorp Subsidiary is delinquent in the
payment of any material tax, assessment or governmental charge, and, except as
Previously Disclosed, none of them has requested any extension of time within
which to file any tax returns in respect of any fiscal year or portion thereof
which have not since been filed. No material deficiencies for any tax,
assessment or governmental charge have been proposed, asserted or
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assessed (tentatively or otherwise) against ValliCorp or any ValliCorp
Subsidiary which have not been settled and paid.
(c) ValliCorp has made available to WABC copies of all its and the
ValliCorp Subsidiaries' tax returns with respect to taxes payable to the United
States of America and the State of California for the fiscal years ended
December 31, 1995, 1994, 1993, 1992 and 1991.
(d) No consent has been filed relating to ValliCorp pursuant to section
341(f) of the Code.
3.11 Employee Benefit Plans.
(a) ValliCorp has heretofore delivered to WABC an accurate list setting
forth all qualified pension or profit-sharing plans, any deferred compensation,
stock option, consulting, bonus or group insurance contract, severance,
hospitalization, medical, dental, vision, group insurance, death benefits,
disability and other material fringe benefit plans, trust agreements,
arrangements and commitments of ValliCorp and the ValliCorp Subsidiaries, if
any, or any other material incentive, welfare or employee benefit plan or
agreement maintained or contributed to by ValliCorp or any ValliCorp Subsidiary
for the benefit of employees or former employees of ValliCorp or any ValliCorp
Subsidiary, together with copies of all such plans, agreements, arrangements and
commitments that are documented, and any and all written contracts of
employment. ValliCorp has also made available to WABC any Board of Directors'
minutes (or committee minutes) authorizing, approving or guaranteeing such plans
and contracts and will make available to WABC upon request (i) the most recent
actuarial and financial reports prepared with respect to any qualified plans,
(ii) the most recent annual reports filed with any government agency and (iii)
all rulings and determination letters and any open requests for rulings or
letters that pertain to any qualified plan. None of such plans is a
multiemployer plan (within the meaning of section 3(37) of ERISA).
(b) Neither ValliCorp nor any ValliCorp Subsidiary (nor any pension
plan maintained by any of them) has incurred or reasonably expects to incur any
material liability to the Pension Benefit Guaranty Corporation or to the IRS
with respect to any pension plan qualified under section 401 of the Code except
liabilities to the Pension Benefit Guaranty Corporation pursuant to section 4007
of ERISA, all of which have been fully paid. No reportable event under section
4043(b) of ERISA has occurred with respect to any such pension plan, other than
a reportable event that occurs by reason of the transactions contemplated by
this Agreement or an event for which the 30-day notice requirement has been
waived by the Pension Benefit Guaranty Corporation.
(c) Neither ValliCorp nor any ValliCorp Subsidiary participates in, or
has incurred any liability under section 4201 of ERISA for a complete or partial
withdrawal from a multiemployer plan (as such term is defined in ERISA).
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(d) With respect to each employee benefit plan (as defined in section
3(3) of ERISA) of ValliCorp which is subject to the reporting, disclosure and
record retention requirements set forth in the Code and Part 1 of Subtitle B of
Title I of ERISA and the regulations thereunder, each of such requirements has
been fully met on a timely basis in all material respects.
(e) With respect to each employee benefit plan (as defined in section
3(3) of ERISA) of ValliCorp which is subject to Part 4 of Subtitle B of Title I
of ERISA, none of the following now exists or has existed within the six-year
period ending on the date hereof:
(1) Any act or omission by ValliCorp, a ValliCorp Subsidiary
or any of their employees constituting a material violation of section
402 of ERISA;
(2) Any act or omission by ValliCorp, a ValliCorp Subsidiary
or any of their employees constituting a violation of section 403 of
ERISA;
(3) Any act or omission by ValliCorp or any of the ValliCorp
Subsidiaries, or by any director, officer or employee thereof,
constituting a violation of sections 404 and 405 of ERISA;
(4) To the knowledge of ValliCorp or any of the ValliCorp
Subsidiaries, any act or omission by any other person constituting a
violation of section 404 or 405 of ERISA;
(5) Any act or omission by ValliCorp, a ValliCorp Subsidiary
or any of their employees which constitutes a violation of sections 406
or 407 of ERISA and is not exempted by section 408 of ERISA or which
constitutes a violation of section 4975(c) of the Code and is not
exempted by section 4975(d) of the Code; or
(6) Any act or omission by ValliCorp, a ValliCorp Subsidiary
or any of their employees constituting a violation of section 503, 510
or 511 of ERISA.
(f) All contributions, premiums or other payments due from ValliCorp
and the ValliCorp Subsidiaries to (or under) any plan listed in subsection (a)
have been fully paid or adequately provided for to the extent required by GAAP,
on the audited financial statements for the year ended December 31, 1995 and
period ended September 30, 1996. All accruals thereon (including, where
appropriate, proportional accruals for partial periods) have been made in
accordance with GAAP consistently applied on a reasonable basis.
(g) Each plan of ValliCorp complies in all material respects with the
applicable requirements of (i) the Age Discrimination in Employment Act of 1967,
as amended, and the regulations thereunder; (ii) Title VII of the Civil Rights
Act of 1964, as amended, and the regulations thereunder; and (iii) the Americans
with Disabilities Act.
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(h) Each plan of ValliCorp complies in all material respects with the
applicable requirements of the health care continuation coverage provisions of
the Consolidated Omnibus Budget Reconciliation Act of 1985, and the regulations
thereunder. ValliCorp does not sponsor or contribute to any retiree medical
plan.
(i) ValliCorp has heretofore made available to WABC the names of each
director, officer and employee of ValliCorp and the ValliCorp Subsidiaries as of
September 30, 1996.
(j) With respect to each employee pension plan (within the meaning of
section 3(2) of ERISA) that is sponsored or maintained by ValliCorp or a
ValliCorp Subsidiary and that is intended to be "qualified" under section 401(a)
of the Code (the "ValliCorp Plans") and their related trusts (the "ValliCorp
Trusts"), as of the Effective Time (i) the ValliCorp Plans will in all material
respects be (and currently are) in compliance with all the applicable
requirements of section 401(a) of the Code; (ii) the ValliCorp Plans and
ValliCorp Trusts have received favorable determination letters from the IRS
("Determination Letters") with respect to their initial qualification and, if
applicable, covering the Tax Equity and Fiscal Responsibility Act of 1982, the
Tax Reform Act of 1984, the Retirement Equity Act of 1984 and the Tax Reform Act
of 1986; (iii) ValliCorp shall not have amended the ValliCorp Plans or
administered the ValliCorp Plans in such a manner since receipt of the most
recent Determination Letter that would preclude the issuance of a favorable
Determination Letter to the ValliCorp Plans and ValliCorp Trusts and if the
ValliCorp Plans and ValliCorp Trusts were terminated they could be amended as
necessary to receive a favorable Determination Letter; (iv) no contributions
have exceeded the limitations set forth in section 415 of the Code; (v) all
material filings required to be filed by ValliCorp or the ValliCorp Plan
administrator with the IRS, Department of Labor and any other governmental
agencies with respect to the ValliCorp Plans and the ValliCorp Trusts for all
periods ending at or prior to the Effective Time will have been made on a timely
basis by ValliCorp or the ValliCorp Plan administrator; (vi) there shall have
been no material violation of Parts 1 and 4 of Subtitle B of Title I of ERISA or
of section 4975 of the Code; and (vii) there shall have been no action, claim or
demand of any kind known to ValliCorp brought or threatened by any potential
claimant or representative of such claimant (other than routine claims for
benefits) under the ValliCorp Plans or ValliCorp Trusts where ValliCorp may be
either (A) liable directly on such action, claim or demand, or (B) obligated to
indemnify any person, group of persons or entity with respect to such action,
claim or demand, unless such action, claim or demand is covered by adequate
reserves reflected in ValliCorp's September 30, 1996 financial statements or an
insurer of ValliCorp has agreed to defend against and pay the amount of any
resulting liability without reservation.
3.12 Certain Contracts. As of the date of this Agreement and the
Effective Date (except as Previously Disclosed), neither ValliCorp nor any
ValliCorp Subsidiary is a party to, or is bound by, any contract or other
agreement made in the ordinary course of business which involves aggregate
future payments by or to ValliCorp or the ValliCorp Subsidiaries of more than
$100,000 and which is made for a fixed period expiring more than one year from
the date hereof, and ValliCorp and the ValliCorp Subsidiaries are not parties to
or bound by any agreement not made in the ordinary course of business which is
to be performed at or after the date hereof (in each case, excluding loans,
lines of credit, loan
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commitments, letters of credit or deposits to which ValliCorp or the ValliCorp
Subsidiaries are a party). Each of the contracts and agreements disclosed to
WABC pursuant to this Section 3.12 is a legal and binding obligation of
ValliCorp or the ValliCorp Subsidiary which is a party thereto (subject to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally and subject, as to enforceability, to equitable principles of general
applicability), and no breach or default (and no condition which, with notice or
passage of time, or both, could become a breach or default) on the part of
ValliCorp or the ValliCorp Subsidiary which is a party thereto exists with
respect thereto. Except as Previously Disclosed, no power of attorney or similar
authorization given directly or indirectly by ValliCorp or the ValliCorp
Subsidiaries is currently outstanding.
3.13 Legal Actions and Proceedings. Except as disclosed to WABC in
writing with respect to occurrences after the date hereof, to the knowledge of
the Chief Executive Officer, the Chief Operating Officer, the Chief Financial
Officer, the Chief Credit Officer or the General Counsel or other in-house
lawyers at the date of this Agreement and the Effective Date, there are no
actions, suits, proceedings, investigations or claims instituted, pending or, to
the knowledge of such officers of ValliCorp, threatened against ValliCorp or any
ValliCorp Subsidiary or against any asset, interest or right of ValliCorp or any
ValliCorp Subsidiary or to which ValliCorp or any ValliCorp Subsidiary is a
party before any court, any arbitrator of any kind or any government agency, and
ValliCorp and the ValliCorp Subsidiaries are not subject to any potential
adverse claim, the outcome of which could reasonably be expected to involve the
payment or receipt of any amount in excess of $50,000, unless an insurer of
ValliCorp has agreed to defend against and pay the amount of any resulting
liability without reservation, or, if any such legal action, proceeding,
investigation or claim will not involve the payment by ValliCorp or the
ValliCorp Subsidiaries of a monetary amount, which could materially adversely
affect ValliCorp or the ValliCorp Subsidiaries or their business or property or
the transactions contemplated hereby. To the knowledge of ValliCorp, there are
no actual or threatened actions, suits or proceedings which present a claim to
restrain or prohibit the transactions contemplated herein or to impose any
material liability in connection therewith. ValliCorp has no knowledge of any
pending or threatened claims or charges under the Community Reinvestment Act,
before the Equal Employment Opportunity Commission, the California Department of
Fair Housing and Economic Development, the California Unemployment Appeals
Board, or any human relations commission. There is no labor dispute, strike,
slow-down or stoppage pending or, to the best of the knowledge of ValliCorp,
threatened against ValliCorp or the ValliCorp Subsidiaries.
3.14 Compliance with Laws, Regulations and Decrees.
(a) ValliCorp and each ValliCorp Subsidiary have the corporate power to
own or lease their properties and to conduct their businesses as currently
conducted, is in compliance with and is not in default of any statutes and
regulations applicable to the conduct of its business and the ownership of their
properties, including but not limited to all federal and state laws (including
but not limited to the Bank Secrecy Act), rules and regulations relating to the
offer, sale or issuance of securities, and the operation of a commercial bank,
other than where such noncompliance or default is not likely to result in a
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material limitation on the conduct of the business of ValliCorp or the ValliCorp
Subsidiaries or is not likely to otherwise have a Material Adverse Effect on
ValliCorp or the ValliCorp Subsidiaries, considered individually or taken as a
whole.
(b) ValliCorp and the ValliCorp Subsidiaries have all approvals,
authorizations, consents, licenses, clearances and orders of, and have currently
effective all registrations with, all governmental and regulatory authorities
which are necessary to the business and operations of ValliCorp and the
ValliCorp Subsidiaries as now being conducted. All compliance or corrective
action relating to ValliCorp and the ValliCorp Subsidiaries required by
governmental authorities and regulatory agencies having jurisdiction over
ValliCorp and the ValliCorp Subsidiaries have been taken within the times
specified by said authorities or agencies. As of the date of this Agreement and
the Effective Date (except as disclosed to WABC in writing with respect to
occurrences after the date hereof), ValliCorp and the ValliCorp Subsidiaries
have received no notification, formally or informally, from any agency or
department of any federal, state or local government or any regulatory agency or
the staff thereof (A) asserting that ValliCorp and the ValliCorp Subsidiaries
are not in compliance with any of the statutes, regulations or ordinances which
such government or regulatory authority enforces, or (B) threatening to revoke
any license, franchise, permit or governmental authorization of ValliCorp or any
ValliCorp Subsidiary.
(c) Except as Previously Disclosed, neither ValliCorp nor any ValliCorp
Subsidiary is a party to any written agreement or memorandum of understanding
with, or a party to any commitment letter or similar undertaking to, or is
subject to any order or directive by, or is a recipient of any supervisory
letter from, any bank regulator which requires notification of the board of
directors or action or responses by the board of directors or which restricts
the conduct of its business, or in any manner relates to its capital adequacy,
its credit policies or its management, nor has ValliCorp or any ValliCorp
Subsidiary been advised by any bank regulator that it is contemplating issuing
or requesting (or is considering the appropriateness of issuing or requesting)
any such order, decree, agreement, memorandum of understanding, supervisory
letter, commitment letter or similar submission. ValliCorp and the ValliCorp
Subsidiaries have paid all assessments made or imposed by any governmental
agency.
(d) ValliCorp and each of the ValliCorp Subsidiaries have undergone
full regulatory compliance examinations, including Community Reinvestment Act
compliance, in 1996, have taken all corrective action required as a result of
such examinations and as of the date hereof are in compliance with all
requirements arising from such examinations.
3.15 Brokers and Finders. Neither ValliCorp nor any ValliCorp
Subsidiary, nor any of their respective officers, directors or employees, has
employed any broker, agent, finder, consultant, financial advisor or other party
or incurred any liability for any fees or commissions in connection with the
transactions contemplated herein or the Plan of Merger, other than outside
counsel and independent auditors and except for ValliCorp's retention of
Montgomery Securities to perform certain financial advisory services. ValliCorp
has provided WABC with a true and accurate copy of its agreement(s) with
Montgomery Securities.
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3.16 Insurance. ValliCorp has Previously Disclosed a list identifying
all insurance policies maintained on behalf of ValliCorp and the ValliCorp
Subsidiaries. All of the material insurance policies and bonds maintained by
ValliCorp and the ValliCorp Subsidiaries are in full force and effect, ValliCorp
and the ValliCorp Subsidiaries are not in default thereunder and all material
claims thereunder have been filed in due and timely fashion. In the best
judgment of the management of ValliCorp, such insurance coverage is adequate for
ValliCorp and the ValliCorp Subsidiaries. Since December 31, 1995, there has not
been any damage to, destruction of, or loss of any assets of ValliCorp and the
ValliCorp Subsidiaries (whether or not covered by insurance) that could have a
Material Adverse Effect on ValliCorp. Neither ValliCorp nor any ValliCorp
Subsidiary has received any notice of a premium increase or cancellation with
respect to any of its insurance policies or bonds, and within the last three
years, neither ValliCorp nor any ValliCorp Subsidiary has been refused any
insurance coverage sought or applied for, and ValliCorp has no reason to believe
that existing insurance coverage cannot be renewed as and when the same shall
expire, upon terms and conditions as favorable as those presently in effect,
other than possible increases in premiums or unavailability in coverage that
have not resulted from any extraordinary loss experience of ValliCorp or any
ValliCorp Subsidiary. The deposits of ValliWide are insured by the FDIC in
accordance with the FDIA, and ValliWide has paid all assessments and filed all
reports required by the FDIA.
3.17 Pooling of Interests. ValliCorp knows of no reason relating to it
or any of the ValliCorp Subsidiaries which would reasonably cause it to believe
that the Merger will not qualify as a pooling of interests for financial
accounting purposes.
3.18 Certificate or Articles, Bylaws, Books and Records. The copies of
the Certificate or Articles of Incorporation or Articles of Association and
Bylaws of ValliCorp and the ValliCorp Subsidiaries that have been provided to
WABC are complete and accurate copies thereof as in effect on the date hereof.
The minute books of ValliCorp and the ValliCorp Subsidiaries which have been
made available to WABC contain a complete and accurate record of all meetings of
the respective Boards of Directors (and committees thereof) and shareholders.
The Certificate or Articles of Incorporation or Association and Bylaws of
ValliCorp and the ValliCorp Subsidiaries and all amendments thereto have been
duly approved by all requisite corporate action and by the appropriate regulator
to the extent required by law.
3.19 Loans and Other Assets.
(a) ValliCorp has disclosed to WABC prior to the date hereof and the
Effective Date the amounts of all loans, leases, other extensions of credit,
commitments or other interest-bearing assets presently owned by ValliCorp and
the ValliCorp Subsidiaries that have been finally classified by any bank
regulatory agency, ValliCorp's independent auditors, or the management of
ValliCorp or any ValliCorp Subsidiary as "Other Loans Especially Mentioned,"
"Substandard," "Doubtful," or "Loss" or classified using categories with similar
import. All such assets or portions thereof classified "Loss" have been charged
off on a timely basis in full, collected or otherwise placed in a bankable
condition. ValliCorp regularly reviews and appropriately classifies its and the
ValliCorp Subsidiaries'
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loans and other assets in accordance with all applicable legal and regulatory
requirements and GAAP. ValliCorp has disclosed to WABC the amounts and
identities of all other real estate owned ("OREO") that have been finally
classified as of the date hereof or hereafter (with respect to subsequent
occurrences) by ValliCorp's independent auditors, management or any bank
regulatory agency. As of the date hereof and the last day of the month preceding
the month during which the Effective Date occurs, the recorded values of all
OREO on the books of ValliCorp and the ValliCorp Subsidiaries do or will
accurately reflect the net realizable values of each OREO parcel thereof in
compliance with GAAP and applicable RAP. ValliCorp and the ValliCorp
Subsidiaries have recorded on a timely basis all expenses associated with or
incidental to its OREO including but not limited to taxes, maintenance and
repairs as required by GAAP and RAP.
(b) All loans, leases, other extensions of credit, commitments or other
interest-bearing assets and investments of ValliCorp and the ValliCorp
Subsidiaries are legal, valid and binding obligations enforceable in accordance
with their respective terms and are not subject to any setoffs, counterclaims or
disputes known to ValliCorp (subject to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally and subject, as to
enforceability, to equitable principles of general applicability), except as
Previously Disclosed to WABC or reserved for in the unaudited balance sheet of
ValliCorp as of September 30, 1996 in accordance with GAAP, and were duly
authorized under and made in compliance with applicable federal and state laws
and regulations. ValliCorp and the ValliCorp Subsidiaries do not have any
extensions or letters of credit, investments, guarantees, indemnification
agreements or commitments for the same (including without limitation commitments
to issue letters of credit, to create acceptances, or to repurchase securities,
federal funds or other assets) other than those documented on the books and
records of ValliCorp and the ValliCorp Subsidiaries.
3.20 Restrictions on Investments. Except for pledges to secure public
and trust deposits and repurchase agreements in the ordinary course of business,
none of the investments reflected in the ValliCorp balance sheet as of September
30, 1996, and none of the investments made by ValliCorp and the ValliCorp
Subsidiaries since September 30, 1996, is subject to any restriction, whether
contractual or statutory, which materially impairs the ability of ValliCorp or
the ValliCorp Subsidiaries freely to dispose of such investment at any time.
3.21 Collective Bargaining and Employment Agreements. Except as
Previously Disclosed, ValliCorp and the ValliCorp Subsidiaries do not have any
union or collective bargaining or written employment agreements, contracts or
other agreements with any labor organization or with any member of management or
its board of directors, or any management or consultation agreement not
terminable at will by ValliCorp or the ValliCorp Subsidiaries without liability
and no such contract or agreement has been requested by, or is under discussion
by management or its directorate with, any group of employees relating to their
employment, any member of management or any other Person. There are no material
controversies pending between ValliCorp or the ValliCorp Subsidiaries and any
current or former employees relating to their employment, and, to the best of
ValliCorp's knowledge,
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there are no efforts presently being made by any labor union seeking to organize
any of such employees.
3.22 Compensation of Officers and Employees. Except as Previously
Disclosed to WABC, (i) no officer or employee of ValliCorp or the ValliCorp
Subsidiaries is receiving aggregate direct remuneration at a rate exceeding
$50,000 per annum, and (ii) the consummation of the transactions contemplated by
this Agreement will not (either alone or upon the occurrence of any additional
or further acts or events) result in any payment (whether of severance pay or
otherwise) becoming due from ValliCorp or the ValliCorp Subsidiaries or WABC to
any employee or consultant of ValliCorp and the ValliCorp Subsidiaries.
3.23 Loan Loss Reserves. The reserve for loan losses in ValliCorp's
balance sheets dated September 30, 1996, December 31, 1996 and as of the
Effective Date are or will be adequate in all material respects under the
requirements of all applicable state and federal laws and regulations to provide
for possible loan losses on outstanding loans.
3.24 Transactions With Affiliates. Except as may arise in the ordinary
course of business, ValliCorp has not extended credit, committed itself to
extend credit, or transferred any asset to or assumed or guaranteed any
liability of the employees or directors of ValliCorp and the ValliCorp
Subsidiaries, or any spouse or child of any of them, or to any of their
Affiliates or Associates. ValliCorp has not entered into any other transactions
with the employees or directors of ValliCorp and the ValliCorp Subsidiaries or
any spouse or child of any of them, or any of their Affiliates or Associates, in
any case that would be required to be disclosed under Item 404 of Regulation S-K
except as Previously Disclosed to WABC. Any such transactions have been on terms
no less favorable than those which would prevail in an arm's-length transaction
with an independent third party.
3.25 Information in Registration Statement. The information pertaining
to ValliCorp and the ValliCorp Subsidiaries which has been or will be furnished
to WABC for or on behalf of ValliCorp for inclusion in the Registration
Statement or the Proxy Statement does not and will not contain any untrue
statement of any material fact or omit or will not omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they are made, not misleading;
provided, however, that information as of a later date shall be deemed to modify
information as of any earlier date. All financial statements of ValliCorp
included in the Proxy Statement will present fairly the consolidated financial
condition and results of operations of ValliCorp and its consolidated
subsidiaries at the dates and for the periods covered by such statements in
accordance with GAAP consistently applied throughout the periods covered by such
statements. ValliCorp shall promptly advise WABC in writing if prior to the
Effective Time ValliCorp shall obtain knowledge of any facts that would make it
necessary to amend the Registration Statement, the Proxy Statement or any
Application, or to supplement the prospectus, in order to make the statements
therein not misleading or to comply with applicable law. The information
pertaining to ValliCorp and the ValliCorp Subsidiaries which has been or will be
furnished to WABC on behalf of ValliCorp for inclusion in the applications to be
filed to obtain the Government Approvals (the "Applications") was or will
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be prepared in all material respects in accordance with applicable statutes,
regulations and instructions (including regulatory accounting practices) in
existence as of the date of filing of the Applications.
3.26 No Brokered Deposits. Except as Previously Disclosed, ValliCorp
and ValliWide do not now have and shall not accept prior to or have on the
Effective Date any "brokered deposits" as such deposits are defined by
applicable regulations of the FDIC as of the date hereof.
3.27 Ownership of WABC Common Stock. As of the date hereof, neither
ValliCorp nor any ValliCorp Subsidiary (i) beneficially owns, directly or
indirectly, or (ii) is a party to any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of, in each case, any
shares of capital stock of WABC.
3.28 Delaware Takeover Laws Inapplicable. The Board of Directors of
ValliCorp has taken all actions required to be taken by it to provide that this
Agreement and any amendment or revision thereto, and the transactions
contemplated hereby or thereby, shall be exempt from the requirements of section
203 of the DGCL.
3.29 Derivatives Contracts; Structured Notes; Etc. Except as Previously
Disclosed, neither ValliCorp nor any ValliCorp Subsidiary is a party to or has
agreed to enter into an exchange traded or over-the-counter equity, interest
rate, foreign exchange or other swap, forward, future, option, cap, floor or
collar or any other contract that is not included on the balance sheet and is a
derivatives contract (including various combinations thereof) (each, a
"Derivatives Contract") or owns securities that (1) are referred to generically
as "structured notes," "high risk mortgage derivatives," "capped floating rate
notes" or "capped floating rate mortgage derivatives" or (2) are likely to have
changes in value as a result of interest or exchange rate changes that
significantly exceed normal changes in value attributable to interest or
exchange rate changes, except for those Derivatives Contracts and other
instruments legally purchased or entered into in the ordinary course of
business, consistent with safe and sound banking practices and regulatory
guidance, and Previously Disclosed. All of such Derivatives Contracts or other
instruments are legal, valid and binding obligations of ValliCorp or one of the
ValliCorp Subsidiaries enforceable in accordance with their terms (except as
enforcement may be limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally), and are in full force and
effect. ValliCorp and each of the ValliCorp Subsidiaries have duly performed in
all material respects all of their material obligations thereunder to the extent
that such obligations to perform have accrued; and, to ValliCorp's knowledge,
there are no breaches, violations or defaults or allegations or assertions of
such by any party thereunder which would have or would reasonably be expected to
have a Material Adverse Effect on ValliCorp.
3.30 Fairness Opinion. The Board of Directors of ValliCorp has received
an opinion of Montgomery Securities dated the date hereof to the effect that the
Exchange Ratio is fair, from a financial point of view, to ValliCorp's
shareholders.
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ARTICLE 4
Representations and Warranties of WABC
WABC hereby represents and warrants to ValliCorp and ValliWide as
follows, except, in the case of each representation and warranty contained in
this Article 4, as Previously Disclosed:
4.1 Capital Structure of WABC. All outstanding shares of WABC capital
stock have been duly issued and are validly outstanding, fully paid and
nonassessable. None of the shares of WABC's capital stock has been issued in
violation of the preemptive rights of any person. The shares of WABC Common
Stock to be issued in connection with the Merger have been duly authorized and,
when issued in accordance with the terms of this Agreement and the Plan of
Merger, will be validly issued, fully paid, nonassessable and free and clear of
any preemptive rights.
4.2 Organization, Standing and Authority of WABC. Each of WABC and its
Subsidiaries is a bank or corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or
organization. Through its banking subsidiaries, Westamerica Bank and Bank of
Lake County, WABC holds current valid licenses to engage in the commercial
banking business in California at its banking offices in California and, along
with both Westamerica Bank and Bank of Lake County, WABC is in material
compliance with all agreements, understandings or orders of the Federal Reserve
Board, the FDIC, the Superintendent or any other regulatory authority having
jurisdiction over its or their business or any of its or their assets or
properties. Neither the scope of the business of WABC or its Subsidiaries nor
the location of their properties requires any of them to be licensed to do
business in any jurisdiction other than the State of California. The deposits of
Westamerica Bank and Bank of Lake County are insured by the FDIC to the maximum
extent permitted by applicable law and regulation. WABC is a bank holding
company registered under the Bank Holding Company Act. Westamerica Bank is a
member of the Federal Reserve System.
4.3 Ownership of WABC Subsidiaries; Capital Structure of WABC
Subsidiaries. WABC does not own, directly or indirectly, 25% or more of the
outstanding capital stock or other voting securities of any corporation, bank or
other organization except as Previously Disclosed (collectively, the "WABC
Subsidiaries" and, individually, a "WABC Subsidiary"). The outstanding shares of
capital stock of the WABC Subsidiaries are validly issued and outstanding, fully
paid and (except as provided in the California Financial Code) nonassessable and
all such shares are directly or indirectly owned by WABC free and clear of all
liens, claims and encumbrances. No WABC Subsidiary has or is bound by any Rights
which are authorized, issued or outstanding with respect to the capital stock of
any WABC Subsidiary and, there are no agreements, understandings or commitments
relating to the right of WABC to vote or to dispose of said shares. None of the
shares of capital stock of any WABC Subsidiary has been issued in violation of
the preemptive rights of any person.
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4.4 Organization, Standing and Authority of WABC Subsidiaries. Each
WABC Subsidiary is a duly organized corporation or banking association, validly
existing and in good standing under applicable laws. Each WABC Subsidiary (i)
has full power and authority to carry on its business as now conducted, and (ii)
is duly licensed or qualified to do business in the states of the United States
and foreign jurisdictions where its ownership or leasing of property or the
conduct of its business requires such licensing or qualification and where
failure to be licensed or qualified would have a Material Adverse Effect on
WABC.
4.5 Authorized and Effective Agreement.
(a) WABC has all requisite corporate power and authority to enter into
and perform all of its obligations under this Reorganization Agreement, the Plan
of Merger and the Stock Option Agreement. The execution and delivery of this
Reorganization Agreement, the Plan of Merger and the Stock Option Agreement and
the consummation of the transactions contemplated hereby and thereby have been
duly and validly authorized by all necessary corporate action in respect thereof
on the part of WABC, except that the affirmative vote of the holders of a
majority of the outstanding shares eligible to vote is required to approve the
principle terms of the Merger and the Plan of Merger in accordance with
California law. The Board of Directors of WABC has directed that this Agreement,
the Plan of Merger and the transactions contemplated hereby and thereby be
submitted to WABC's shareholders for approval at a special meeting to be held as
soon as practicable.
(b) Assuming the accuracy of the representation contained in Section
3.4(b) hereof, this Agreement, the Plan of Merger and the Stock Option Agreement
constitute legal, valid and binding obligations of WABC, enforceable against it
in accordance with their respective terms, subject to applicable bankruptcy,
insolvency and civil laws affecting creditors' rights generally, and subject, as
to enforceability, to equitable principles of general applicability.
(c) Neither the execution and delivery of this Agreement, the Plan of
Merger and the Stock Option Agreement, nor consummation of the transactions
contemplated hereby or thereby, nor compliance by WABC with any of the
provisions hereof or thereof shall (i) conflict with or result in a breach of
any provision of the articles of incorporation or by-laws of WABC or any WABC
Subsidiary, (ii) assuming the consents and approvals contemplated by Section
5.3(b)(1) hereof and which are Previously Disclosed are duly obtained,
constitute or result in a breach of any term, condition or provision of, or
constitute a default under, or give rise to any right of termination,
cancellation or acceleration with respect to, or result in the creation of any
lien, charge or encumbrance upon any property or asset of WABC or any WABC
Subsidiary pursuant to, any note, bond, mortgage, indenture, license, agreement
or other instrument or obligation, or (iii) assuming the consents and approvals
contemplated by Section 5.3(b)(1) hereof and which are Previously Disclosed are
duly obtained, violate any order, writ, injunction, decree, statute, rule or
regulation applicable to WABC or any WABC Subsidiary, except (in the case of
clauses (ii) and (iii) above) for such violations, rights, conflicts, breaches,
creations or defaults which, either individually or in the aggregate, will not
have a Material Adverse Effect on WABC.
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(d) Except for approvals specified in Section 5.3(b)(1) hereof, except
as Previously Disclosed and except as expressly referred to in this Agreement,
no consent, approval or authorization of, or declaration, notice, filing or
registration with, any governmental or regulatory authority, or any other
person, is required to be made or obtained by WABC on or prior to the Closing
Date in connection with the execution, delivery and performance of this
Agreement and the Plan of Merger or the consummation of the transactions
contemplated hereby or thereby.
4.6 SEC Documents; Regulatory Filings. WABC has filed all SEC Documents
and other documents required by the Securities Laws and such SEC Documents and
other documents complied, as of their respective dates, in all material respects
with the Securities Laws. As of their respective dates, none of such SEC
Documents and other documents contained, as of the date hereof, or will contain,
as to documents filed after the date hereof, any untrue statement of material
fact or omitted or will 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 or will be made, not misleading;
provided, however, that information as of a later date shall be deemed to modify
information as of any earlier date. WABC and each of the WABC Subsidiaries has
filed all material documents and reports relating to WABC and the WABC
Subsidiaries required to be filed by them with the SEC, Federal Reserve Board,
FDIC, Superintendent or any other governmental authority having jurisdiction
over their businesses or any of their assets or properties, and such documents
and reports conformed in all material respects with the applicable statutes,
regulations and instructions (including regulatory accounting practices) in
existence as of the date of filing of such documents and reports.
4.7 Financial Statements; Books and Records. The WABC Financial
Statements fairly present the consolidated financial position of WABC and its
consolidated subsidiaries as of the dates indicated and the consolidated results
of operations, changes in shareholders' equity and cash flows of WABC and its
consolidated subsidiaries for the periods then ended in conformity with GAAP
applicable to financial institutions applied on a consistent basis except as
disclosed therein. Such consolidated financial statements as of any fiscal year
end have been audited by independent auditors and include an unqualified
opinion(s) of such auditing firm(s) to the effect that such financial statements
have been prepared in accordance with GAAP and present fairly, in all material
respects, the consolidated financial position, results of operations and cash
flows of WABC at the dates indicated and for the periods then ending. The books
and records (including the WABC Financial Statements) of WABC and each WABC
Subsidiary fairly reflect in all material respects the transactions to which it
is a party or by which its properties are subject or bound and such books and
records have been properly kept and maintained. The financial records of WABC
and the WABC Subsidiaries have been, and are being and shall be, maintained in
all material respects in accordance with all applicable legal and accounting
requirements sufficient to insure that all transactions reflected therein are,
in all material respects, executed in accordance with management's general or
specific authorization and recorded in conformity with GAAP at the time in
effect. Management of WABC believes that the data processing equipment, data
transmission equipment, related peripheral equipment and software used by WABC
in the
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operation of its business to generate and retrieve its financial records are
adequate for the current needs of WABC.
4.8 Material Adverse Change. WABC has not, on a consolidated basis,
suffered any material adverse change in its financial condition, assets,
business or results of operations indicated in the financial statements of WABC
at December 31, 1995, which financial statements have heretofore been provided
to ValliCorp. For purposes of this Section, the parties agree that if any action
is or actions are taken by WABC solely at ValliCorp's request (or with the
consent of ValliCorp) which results in a condition or occurrence, or results in
conditions or occurrences, which would otherwise constitute a Material Adverse
Effect (but for this sentence), said action(s), condition(s) or occurrence(s)
shall not be considered in determining whether a Material Adverse Effect has
occurred, unless said action(s), condition(s) or occurrence(s) had been planned
by WABC prior to the date hereof or it was or they were required by applicable
law, regulation, GAAP, RAP or order of a regulatory agency.
4.9 Absence of Undisclosed Liabilities. Neither WABC nor any WABC
Subsidiary has incurred or discharged, and is legally obligated with respect to,
any material indebtedness, liability (including, without limitation, a liability
arising out of an indemnification, guarantee, hold harmless or similar
arrangement) or obligation (accrued or contingent, whether due or to become due,
and whether or not subordinated to the claims of its general creditors), that is
material to WABC on a consolidated basis, or that, when combined with all
similar liabilities, would be material to WABC on a consolidated basis, except
for items reflected on or for which reserves have been established in the
unaudited balance sheets of WABC and the WABC Subsidiaries as of September 30,
1996 in accordance with GAAP, and except for liabilities incurred in the
ordinary course of business subsequent to September 30, 1996. No agreement
pursuant to which any loans or other assets have been or will be sold by WABC
entitled the buyer of such loans or other assets, unless there is material
breach of a representation or covenant by WABC, to cause WABC or the WABC
Subsidiaries to repurchase such loan or other asset or the buyer to pursue any
other form of recourse against WABC or the WABC Subsidiaries. No cash, stock or
other dividend or any other distribution with respect to (i) the stock of WABC,
or (ii) except as disclosed in writing to ValliCorp as of the date hereof or
hereafter, the WABC Subsidiaries, has been declared, set aside or paid. Except
as Previously Disclosed, no shares of the stock of WABC or the WABC Subsidiaries
have been purchased, redeemed or otherwise acquired, directly or indirectly, by
WABC since December 31, 1994, and no agreements have been made to do the
foregoing.
4.10 Legal Proceedings. There are no actions, suits or proceedings
instituted, pending or, to the knowledge of WABC, threatened against WABC or any
WABC Subsidiary or against any asset, interest or right of WABC or any WABC
Subsidiary as to which there is a reasonable probability of an unfavorable
outcome and which, if such an unfavorable outcome was rendered, would,
individually or in the aggregate, have a Material Adverse Effect on WABC. To the
knowledge of WABC, there are no actual or threatened actions, suits or
proceedings which present a claim to restrain or prohibit the transactions
contemplated herein or to impose any material liability in connection therewith
as to which
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there is a reasonable probability of an unfavorable outcome and which, if such
an unfavorable outcome was rendered, would, individually or in the aggregate,
have a Material Adverse Effect on WABC.
4.11 Compliance with Laws.
(a) WABC and each WABC Subsidiary have the corporate power to own or
lease their properties and to conduct their businesses as currently conducted,
is in compliance with and is not in default of any statutes and regulations
applicable to the conduct of its business and the ownership of their properties,
including but not limited to all federal and state laws (including but not
limited to the Bank Secrecy Act), rules and regulations relating to the offer,
sale or issuance of securities, and the operation of a commercial bank, other
than where such noncompliance or default is not likely to result in a material
limitation on the conduct of the business of WABC or the WABC Subsidiaries or is
not likely to otherwise have a Material Adverse Effect on WABC or the WABC
Subsidiaries, considered individually or taken as a whole.
(b) Except as Previously Disclosed, WABC and the WABC Subsidiaries have
all approvals, authorizations, consents, licenses, clearances and orders of, and
have currently effective all registrations with, all governmental and regulatory
authorities which are necessary to the business and operations of WABC and the
WABC Subsidiaries as now being conducted. All compliance or corrective action
relating to WABC and the WABC Subsidiaries required by governmental authorities
and regulatory agencies having jurisdiction over WABC and the WABC Subsidiaries
have been taken within the times specified by said authorities or agencies. As
of the date of this Agreement and the Effective Date (except as disclosed to
ValliCorp in writing with respect to occurrences after the date hereof), WABC
and the WABC Subsidiaries have received no notification, formally or informally,
from any agency or department of any federal, state or local government or any
regulatory agency or the staff thereof (A) asserting that WABC and the WABC
Subsidiaries are not in compliance with any of the statutes, regulations or
ordinances which such government or regulatory authority enforces, or (B)
threatening to revoke any license, franchise, permit or governmental
authorization of WABC or any WABC Subsidiary.
(c) Except as Previously Disclosed, neither WABC nor any WABC
Subsidiary is a party to any written agreement or memorandum of understanding
with, or a party to any commitment letter or similar undertaking to, or is
subject to any order or directive by, or is a recipient of any supervisory
letter from, any bank regulator which requires notification of the board of
directors or action or responses by the board of directors or which restricts
the conduct of its business, or in any manner relates to its capital adequacy,
its credit policies or its management, nor has WABC or any WABC Subsidiary been
advised by any bank regulator that it is contemplating issuing or requesting (or
is considering the appropriateness of issuing or requesting) any such order,
decree, agreement, memorandum of understanding, supervisory letter, commitment
letter or similar submission. WABC and the WABC Subsidiaries have paid all
assessments made or imposed by any governmental agency.
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(d) WABC and each of the WABC Subsidiaries have undergone full
regulatory compliance examinations, including Community Reinvestment Act
compliance, in 1996, have taken all corrective action required as a result of
such examinations and as of the date hereof are in compliance with all
requirements arising from such examinations.
4.12 Brokers and Finders. Neither WABC nor any WABC Subsidiary, nor any
of their respective officers, directors or employees, has employed any broker,
agent, finder, consultant, financial advisor or other party or incurred any
liability for any fees or commissions in connection with the transactions
contemplated herein or the Plan of Merger, other than outside counsel and
independent auditors and except for WABC's retention of Hoefer & Arnett, Inc. to
perform certain financial advisory services.
4.13 Information in Registration Statement. The information pertaining
to WABC and the WABC Subsidiaries which will be included in the Registration
Statement or the Proxy Statement, excluding any information in the Registration
Statement or Proxy Statement provided by ValliCorp, will not contain any untrue
statement of any material fact and will not omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not misleading; provided,
however, that information as of a later date shall be deemed to modify
information as of any earlier date. All financial statements of WABC included in
the Proxy Statement will present fairly the consolidated financial condition and
results of operations of WABC and its consolidated subsidiaries at the dates and
for the periods covered by such statements in accordance with GAAP consistently
applied throughout the periods covered by such statements. WABC shall promptly
advise ValliCorp in writing if, prior to the Effective Time, WABC shall obtain
knowledge of any facts that would make it necessary to amend the Registration
Statement, the Proxy Statement or any Application, or to supplement the
prospectus, in order to make the statements therein not misleading or to comply
with applicable law. The information pertaining to WABC and the WABC
Subsidiaries which will be included in the Applications, excluding any
information in the Applications provided by ValliCorp, was or will be prepared
in all material respects in accordance with applicable statutes, regulations and
instructions (including regulatory accounting practices) in existence as of the
date of filing of the Applications.
4.14 Pooling of Interests. WABC knows of no reason relating to it or
any of its Subsidiaries which would reasonably cause it to believe that the
Merger will not qualify as a pooling of interests for financial accounting
purposes.
4.15 Tax Matters.
(a) WABC and each WABC Subsidiary have timely filed federal income tax
returns for each year through December 31, 1995 and have timely filed, or caused
to be filed, all other federal, state, county, local and foreign tax returns
(including, without limitation, estimated tax returns, returns required under
sections 1441-1446 and 6031-6060 of the Code and the regulations thereunder and
any comparable state, foreign and local laws, any other information returns,
withholding tax returns, FICA and FUTA returns and back up withholding returns
required under section 3406 of the Code and any comparable state,
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foreign and local laws) required to be filed with respect to WABC or any WABC
Subsidiary, including, without limitation, estimated tax, use tax, excise tax,
real property and personal property tax reports and returns, employer's
withholding tax returns, other withholding tax returns and Federal Unemployment
Tax Returns, and all other reports or other information required to be filed by
each of them, and each such return, report or other information is complete and
accurate in all material respects. All taxes, fees and other governmental
charges, including any interest and penalties thereon, due in respect of the
periods covered by such tax returns have been paid or adequate reserves have
been established for the payment of such amounts, except where any such failure
to pay or establish adequate reserves, except those that are being contested in
good faith, which contested matters existing as of the date hereof have been
disclosed to ValliCorp in writing and through the Effective Date any other
contested matters will have been disclosed to ValliCorp in writing, and, as of
the Effective Date, all taxes due in respect of any subsequent periods ending on
or prior to the Closing Date will have been paid or adequate reserves will have
been established for the payment thereof. WABC or the WABC Subsidiaries have not
been requested to give any currently effective waivers extending the statutory
period of limitation applicable to any tax return required to be filed by any of
them for any period and, as of the date of this Agreement and the Effective Date
(except as disclosed to ValliCorp in writing with respect to occurrences after
the date hereof) (A) there are no claims pending against WABC and the WABC
Subsidiaries for any alleged deficiency in the payment of any taxes, and, except
as Previously Disclosed, WABC does not know of any pending or threatened audits,
investigations or claims for unpaid taxes or relating to any liability in
respect of any taxes; and (B) to the knowledge of WABC, there have been no
events, including a change in ownership, that would result in a reappraisal and
establishment of a new base-year full value for purposes of Articles XIII.A of
the California Constitution, of any real property with a book value in excess of
$250,000 owned in whole or in part by WABC and the WABC Subsidiaries or to the
best of WABC's knowledge, of any real property with aggregate remaining lease
payments of $250,000 or more leased by WABC and the WABC Subsidiaries. Neither
WABC nor any WABC Subsidiary will have any liability for any such taxes in
excess of the amounts so paid or reserves or accruals so established.
(b) Neither WABC nor any WABC Subsidiary is delinquent in the payment
of any material tax, assessment or governmental charge, and, except as
Previously Disclosed, none of them has requested any extension of time within
which to file any tax returns in respect of any fiscal year or portion thereof
which have not since been filed. No material deficiencies for any tax,
assessment or governmental charge have been proposed, asserted or assessed
(tentatively or otherwise) against WABC or any WABC Subsidiary which have not
been settled and paid.
(c) WABC has made or will make available to ValliCorp copies of all its
and the WABC Subsidiaries' tax returns with respect to taxes payable to the
United States of America and the State of California for the fiscal years ended
December 31, 1995, 1994, 1993, 1992 and 1991.
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(d) No consent has been filed relating to WABC pursuant to section
341(f) of the Code.
4.16 Employee Benefit Plans.
(a) WABC has made or will make available to ValliCorp an accurate list
setting forth all qualified pension or profit-sharing plans, any deferred
compensation, stock option, consulting, bonus or group insurance contract,
severance, hospitalization, medical, dental, vision, group insurance, death
benefits, disability and other material fringe benefit plans, trust agreements,
arrangements and commitments of WABC and the WABC Subsidiaries, if any, or any
other material incentive, welfare or employee benefit plan or agreement
maintained or contributed to by WABC or any WABC Subsidiary for the benefit of
employees or former employees of WABC or any WABC Subsidiary, together with
copies of all such plans, agreements, arrangements and commitments that are
documented, and any and all written contracts of employment. WABC has made or
will make available to ValliCorp any Board of Directors' minutes (or committee
minutes) authorizing, approving or guaranteeing such plans and contracts and
will make available to ValliCorp upon request (i) the most recent actuarial and
financial reports prepared with respect to any qualified plans, (ii) the most
recent annual reports filed with any government agency and (iii) all rulings and
determination letters and any open requests for rulings or letters that pertain
to any qualified plan. None of such plans is a multiemployer plan (within the
meaning of section 3(37) of ERISA).
(b) Neither WABC nor any WABC Subsidiary (nor any pension plan
maintained by any of them) has incurred or reasonably expects to incur any
material liability to the Pension Benefit Guaranty Corporation or to the IRS
with respect to any pension plan qualified under section 401 of the Code except
liabilities to the Pension Benefit Guaranty Corporation pursuant to section 4007
of ERISA, all of which have been fully paid. No reportable event under section
4043(b) of ERISA has occurred with respect to any such pension plan, other than
a reportable event that occurs by reason of the transactions contemplated by
this Agreement or an event for which the 30 day notice requirement has been
waived by the Pension Benefit Guaranty Corporation.
(c) Neither WABC nor any WABC Subsidiary participates in, or has
incurred any liability under section 4201 of ERISA for a complete or partial
withdrawal from a multiemployer plan (as such term is defined in ERISA).
(d) With respect to each employee benefit plan (as defined in section
3(3) of ERISA) of WABC which is subject to the reporting, disclosure and record
retention requirements set forth in the Code and Part 1 of Subtitle B of Title I
of ERISA and the regulations thereunder, each of such requirements has been
fully met on a timely basis in all material respects.
(e) With respect to each employee benefit plan (as defined in section
3(3) of ERISA) of WABC which is subject to Part 4 of Subtitle B of Title I of
ERISA, none of the following now exists or has existed within the six-year
period ending on the date hereof:
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(1) Any act or omission by WABC, a WABC Subsidiary or any of
their employees constituting a material violation of section 402 of
ERISA;
(2) Any act or omission by WABC, a WABC Subsidiary or any of
their employees constituting a violation of section 403 of ERISA;
(3) Any act or omission by WABC or any of the WABC
Subsidiaries, or by any director, officer or employee thereof,
constituting a violation of sections 404 and 405 of ERISA;
(4) To the knowledge of WABC or any of the WABC Subsidiaries,
any act or omission by any other person constituting a violation of
section 404 or 405 of ERISA;
(5) Any act or omission by WABC, a WABC Subsidiary or any of
their employees which constitutes a violation of section 406 or 407 of
ERISA and is not exempted by section 408 of ERISA or which constitutes
a violation of section 4975(c) of the Code and is not exempted by
section 4975(d) of the Code; or
(6) Any act or omission by WABC, a WABC Subsidiary or any of
their employees constituting a violation of section 503, 510 or 511 of
ERISA.
(f) All contributions, premiums or other payments due from WABC and the
WABC Subsidiaries to (or under) any plan listed in subsection (a) have been
fully paid or adequately provided for to the extent required by GAAP, on the
audited financial statements for the year ended December 31, 1995 and unaudited
Financial Statements for the period ended September 30, 1996. All accruals
thereon (including, where appropriate, proportional accruals for partial
periods) have been made in accordance with generally accepted accounting
principles consistently applied on a reasonable basis.
(g) Each plan of WABC complies in all material respects with the
applicable requirements of (A) the Age Discrimination in Employment Act of 1967,
as amended, and the regulations thereunder; (B) Title VII of the Civil Rights
Act of 1964, as amended, and the regulations thereunder; and (C) the Americans
with Disabilities Act.
(h) Each plan of WABC complies in all material respects with the
applicable requirements of the health care continuation coverage provisions of
the Consolidated Omnibus Budget Reconciliation Act of 1985, and the regulations
thereunder. WABC does not sponsor or contribute to any retiree medical plan.
(i) WABC has made or will make available to ValliCorp the names of each
director, officer and employee of WABC and the WABC Subsidiaries as of September
30, 1996.
(j) With respect to each employee pension plan (within the meaning of
section 3(2) of ERISA) that is sponsored or maintained by WABC or a WABC
Subsidiary and that is
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intended to be "qualified" under section 401(a) of the Code (the "WABC Plans")
and their related trusts (the "WABC Trusts"), as of the Effective Time (i) the
WABC Plans will in all material respects be (and currently are) in compliance
with all the applicable requirements of section 401(a) of the Code; (ii) the
WABC Plans and WABC Trusts have received favorable Determination Letters with
respect to their initial qualification and, if applicable, covering the Tax
Equity and Fiscal Responsibility Act of 1982, the Tax Reform Act of 1984, the
Retirement Equity Act of 1984 and the Tax Reform Act of 1986; (iii) WABC shall
not have amended the WABC Plans or administered the WABC Plans in such a manner
since receipt of the most recent Determination Letter that would preclude the
issuance of a favorable Determination Letter to the WABC Plans and WABC Trusts
and if the WABC Plans and WABC Trusts were terminated they could be amended as
necessary to receive a favorable Determination Letter; (iv) no contributions
have exceeded the limitations set forth in section 415 of the Code; (v) all
filings required to be filed by WABC or the WABC Plan administrator with the
IRS, Department of Labor and any other governmental agencies with respect to the
WABC Plans and the WABC Trusts for all periods ending at or prior to the
Effective Time will have been made on a timely basis by WABC or the WABC Plan
administrator; (vi) there shall have been no material violation of Parts 1 and 4
of Subtitle B of Title I of ERISA or of section 4975 of the Code; and (vii)
there shall have been no action, claim or demand of any kind known to WABC
brought or threatened by any potential claimant or representative of such
claimant (other than routine claims for benefits) under the WABC Plans or WABC
Trusts where WABC may be either (A) liable directly on such action, claim or
demand, or (B) obligated to indemnify any person, group of persons or entity
with respect to such action, claim or demand, unless such action, claim or
demand is covered by adequate reserves reflected in WABC's September 30, 1996,
financial statements or an insurer of WABC has agreed to defend against and pay
the amount of any resulting liability without reservation.
4.17 Loans and Other Assets.
(a) WABC has or will make available to ValliCorp a list disclosing and
will disclose prior to the Effective Date the amounts of all loans, leases,
other extensions of credit, commitments or other interest-bearing assets
presently owned by WABC and the WABC Subsidiaries that have been classified by
any bank regulatory agency, WABC's independent auditor, outside reviewer or the
management of WABC or any WABC Subsidiary as "Other Loans Especially Mentioned,"
"Substandard," "Doubtful," or "Loss" or classified using categories with similar
import. All such assets or portions thereof classified "Loss" have been charged
off on a timely basis in full, collected or otherwise placed in a bankable
condition. WABC regularly reviews and appropriately classifies its and the WABC
Subsidiaries' loans and other assets in accordance with all applicable legal and
regulatory requirements and GAAP. WABC has Previously Disclosed to ValliCorp the
amounts and identities of all OREO that have been classified as of the date
hereof or hereafter (with respect to subsequent occurrences) by WABC's
independent auditor, any outside reviewer, management or any bank regulatory
agency. As of the date hereof and the last day of the month preceding the month
during which the Effective Date occurs, the recorded values of all OREO on the
books of WABC and the WABC Subsidiaries do or will accurately reflect the net
realizable values of each OREO parcel thereof in compliance with
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GAAP and RAP. WABC and the WABC Subsidiaries have recorded on a timely basis all
expenses associated with or incidental to its OREO including but not limited to
taxes, maintenance and repairs as required by GAAP and RAP.
(b) All loans, leases, other extensions of credit, commitments or other
interest-bearing assets and investments of WABC and the WABC Subsidiaries are
legal, valid and binding obligations enforceable in accordance with their
respective terms and are not subject to any setoffs, counterclaims or disputes
(subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and subject, as to enforceability, to equitable
principles of general applicability), except as Previously Disclosed to
ValliCorp or reserved for in the unaudited balance sheet of WABC as of September
30, 1996 in accordance with GAAP, and were duly authorized under and made in
compliance with applicable federal and state laws and regulations. WABC and the
WABC Subsidiaries do not have any extensions or letters of credit, investments,
guarantees, indemnification agreements or commitments for the same (including
without limitation commitments to issue letters of credit, to create
acceptances, or to repurchase securities, federal funds or other assets) other
than those documented on the books and records of WABC and the WABC
Subsidiaries.
4.18 Loan Loss Reserves. The reserve for loan losses in WABC's balance
sheets dated September 30, 1996, December 31, 1996 and as of the Effective Date
are or will be adequate in all material respects under the requirements of all
applicable state and federal laws and regulations to provide for possible loan
losses on outstanding loans.
4.19 Derivatives Contracts; Structured Notes; Etc. Except as Previously
Disclosed, neither WABC nor any WABC Subsidiary is a party to or has agreed to
enter into any Derivatives Contract or owns securities that (1) are referred to
generically as "structured notes," "high risk mortgage derivatives," "capped
floating rate notes" or "capped floating rate mortgage derivatives" or (2) are
likely to have changes in value as a result of interest or exchange rate changes
that significantly exceed normal changes in value attributable to interest or
exchange rate changes, except for those Derivatives Contracts and other
instruments legally purchased or entered into in the ordinary course of
business, consistent with safe and sound banking practices and regulatory
guidance, and Previously Disclosed. All of such Derivatives Contracts or other
instruments are legal, valid and binding obligations of WABC or one of the WABC
Subsidiaries enforceable in accordance with their terms (except as enforcement
may be limited by general principles of equity whether applied in a court of law
or a court of equity and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally), and are in full force and effect.
WABC and each of the WABC Subsidiaries have duly performed in all material
respects all of their material obligations thereunder to the extent that such
obligations to perform have accrued; and, to WABC's knowledge, there are no
breaches, violations or defaults or allegations or assertions of such by any
party thereunder which would have or would reasonably be expected to have a
Material Adverse Effect on WABC.
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ARTICLE 5
Covenants
5.1 Covenants of WABC.
(a) Approval by WABC's Shareholders. WABC shall cause this Agreement
and the Merger to be submitted promptly for the approval of its shareholders at
a special or regular meeting to be called and held in accordance with applicable
laws. WABC shall use all commercially reasonable efforts to cause such meeting
of its shareholders to take place not later than March 17, 1997. WABC and
ValliCorp shall coordinate and cooperate with respect to the timing of said
meeting and the date on which ValliCorp holds its shareholder meeting. In
connection with the call of such meeting, WABC shall cause the Proxy Statement
to be mailed to its shareholders. Subject to section 5 of the Securities Act,
section 14 of the Exchange Act and the fiduciary duties of the Board of
Directors under applicable law, the Board of Directors of WABC shall at all
times prior to and during such meeting of WABC's shareholders recommend that the
transactions contemplated hereby be adopted and approved by WABC's shareholders
and shall, subject to such matters, use its commercially reasonable efforts to
cause such adoption and approval.
(b) Reservation, Issuance and Registration of WABC Common Stock. WABC
shall reserve and make available for issuance in connection with the Merger and
in accordance with the terms of this Agreement (i) the WABC Common Stock; and
(ii) the maximum number of shares of WABC Common Stock to which holders of
Convertible Debentures or the optionholders of ValliCorp may be entitled to
hereunder at or after the Effective Date. All WABC Common Stock will, when
issued and delivered pursuant to and in accordance with the terms of this
Agreement, be duly authorized, legally and validly issued, fully paid and
nonassessable. As promptly as practicable after the date hereof, WABC shall file
and cause to be declared effective pursuant to the Securities Act one or more
registration statements covering all such shares and shall cause all such shares
to be issued in compliance with the Securities Act and in compliance with all
applicable state securities laws and regulations.
(c) Government Approvals. Prior to the Effective Date, WABC, with the
cooperation of ValliCorp and the ValliCorp Subsidiaries, shall use its
commercially reasonable efforts in good faith to take or cause to be taken as
promptly as practicable all such steps as shall be necessary to obtain (i) the
prior approval of the Merger by the Federal Reserve Board under the Bank Holding
Company Act; (ii) the prior approval of the Superintendent under the California
Financial Code; and (iii) all other consents and approvals of government
agencies as are required by law or otherwise (including those required pursuant
to Section 5.3(g)) and shall do any and all acts deemed by WABC to be reasonably
necessary or appropriate in order to cause the Merger to be consummated on the
terms provided in this Agreement as promptly as practicable. All consents or
approvals referred to in clauses (i), (ii) and (iii) of this Section 5.1(c) are
hereinafter referred to as the "Government Approvals." Notwithstanding anything
herein to the contrary, in connection with the Government Approvals, WABC shall
not be obligated to take any action pursuant
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to this Section 5.1(c) if the taking of such action or the obtaining of such
consent or approval or obtaining any authorization, order or exemption would
not, in WABC's reasonable opinion, be required to be taken under Section 6.1(h).
(d) Press Releases. WABC shall not issue any press release or written
statement for general circulation relating to the Merger, this Agreement or the
Plan of Merger unless previously provided to ValliCorp for review and approval
(which approval will not be unreasonably withheld or delayed) and shall
cooperate with ValliCorp in the development and distribution of all news
releases and other public information disclosures with respect to this Agreement
or the Merger; provided that WABC may, without the consent of ValliCorp, make
any disclosures with regard to this Agreement or the Merger which, based on the
advice of its counsel, are required under any applicable law or regulation.
(e) Takeover Proposals. WABC shall not accept any offer from any third
party regarding a Takeover Proposal (as defined in Section 5.2(h)(1), however,
references therein to ValliCorp shall be deemed for purposes of this Section
5.1(e) to refer to WABC) of WABC with any other entity unless such offer is
expressly conditioned upon the performance by WABC or its successor in interest
of its obligations under this Agreement. WABC acknowledges that the restrictions
and agreements contained in this Section 5.1(e) of this Agreement are reasonable
and necessary to protect the legitimate interests of ValliCorp, and that any
violation of this Section 5.1(e) will cause substantial and irreparable injury
to ValliCorp that would not be quantifiable and for which no adequate remedy
would exist at law and agrees and consents to, in addition to all other remedies
which may be available to ValliCorp, the entry of an injunction by any court of
competent jurisdiction against consummation of any transaction involving WABC
and another party which does not comply with this Section 5.1(e) until such
transaction does comply with this Section 5.1(e).
(f) ValliCorp Employees; Directors and Management; Indemnification.
(1) WABC agrees to honor in accordance with their terms all
employment, severance and employee benefit and compensation plans,
contracts, agreements, arrangements, and understandings Previously
Disclosed (collectively, the "ValliCorp Employment Arrangements"), and
ValliCorp agrees to notify WABC substantially concurrently with the
making of any salary increase or bonus payment required due to a
contractual obligation under the terms of any ValliCorp Employment
Arrangement.
(2) Promptly following the Effective Time WABC shall, at a
meeting of its directors (or pursuant to a written consent), take those
actions necessary to cause three (3) persons who are directors of
ValliCorp to become directors of WABC.
(3) From and after the Effective Date, in the event of any
threatened or actual claim, action, suit, proceeding or investigation,
whether civil, criminal or administrative, including, without
limitation, any such claim, action, suit, proceeding or investigation
in which any person who is as of the
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date hereof, or who becomes prior to the Effective Date, a director or
officer of ValliCorp or any ValliCorp Subsidiary (the "Covered
Parties") is, or is threatened to be, made a party based in whole or in
part on, or arising in whole or in part out of, or pertaining to (i)
the fact that he is or was a director, officer, or employee of
ValliCorp, any of the ValliCorp Subsidiaries or any of their respective
predecessors or (ii) this Agreement, the Plan of Merger, or any of the
transactions contemplated hereby or thereby, whether in any case
asserted or arising before or after the Effective Date with respect to
matters occurring prior to the Effective Date, provided the Covered
Party acted in good faith and in a manner he/she believed to be in the
best interests of Vallicorp or the applicable Vallicorp Subsidiary (or
other standard of conduct applicable under the circumstances), WABC
shall indemnify and hold harmless, as and to the fullest extent
permitted by applicable law, subject, however, to any applicable
provisions of federal banking law or regulation, each such Covered
Party against any losses, claims, damages, liabilities, costs, expenses
(including reasonable attorney's fees and expenses in advance of the
final disposition of any claim, suit, proceeding or investigation to
each Covered Party to the fullest extent permitted by applicable law
upon receipt of any undertaking required by applicable law), judgments,
fines and amounts paid in settlement in connection with any such
threatened or actual claim, action, suit, proceeding or investigation
(whether asserted or arising before or after the Effective Date with
respect to matters occurring prior to the Effective Date), the Covered
Parties as a group may retain counsel reasonably satisfactory to them;
provided, however, that (x) WABC shall have the right to assume the
defense thereof and upon such assumption WABC shall not be liable to
any Covered Party for any legal expenses of other counsel or any other
expenses subsequently incurred by any Covered Party in connection with
the defense thereof, except that if WABC elects not to assume such
defense or counsel for the Covered Parties reasonably advises the
Covered Parties that there are issues which raise conflicts of interest
between WABC and the Covered Parties, the Covered Parties may retain
counsel (subject to the following sentence) reasonably satisfactory to
them, and WABC shall pay the reasonable fees and expenses of such
counsel for the Covered Parties, (y) WABC shall not be liable for any
settlement effected without its prior written consent (which consent
shall not be unreasonably withheld) and (z) WABC shall have no
obligation hereunder to any Covered Party when and if a court of
competent jurisdiction shall ultimately determine, and such
determination shall have become final and nonappealable, that
indemnification of such Covered Party in the manner contemplated hereby
is prohibited by applicable law or regulation. For purposes of this
Section, the Covered Parties as a group may retain only one law firm
reasonably acceptable to the group unless there is, under applicable
standards of professional conduct, a conflict on any significant issue
between the positions of any two or more Covered Parties.
Notwithstanding anything to the contrary contained elsewhere herein,
WABC's agreement set forth above shall be limited to cover claims only
to the extent those claims are not covered under Vallicorp's
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directors' and officers' or any other insurance policies. WABC's
obligations under this Section 5.1(f)(3) continue in full force and
effect for a period of six (6) years from the Effective Date; provided,
however, that all rights to indemnification in respect of any Claim
asserted or made within such period shall continue until the final
disposition of such Claim.
(4) WABC agrees that all rights to indemnification and all
limitations on liability existing in favor of the Covered Parties as
provided in their Certificate or Articles of Incorporation, By-Laws or
similar governing document as in effect as of the date of this
Agreement with respect to matters occurring prior to the Effective Date
shall survive the Merger and shall continue in full force and effect,
and shall be honored by WABC or its successors from and after the
Effective Time as if they were the indemnifying party thereunder,
without any amendment thereto, for a period of six (6) years from the
Effective Date; provided, however, that all rights to indemnification
in respect of any Claim asserted or made within such period shall
continue until the final disposition of such Claim. WABC hereby
expressly assumes the indemnification obligations of ValliCorp under
the following agreements: (i) Section 6.8 of the Agreement and Plan of
Reorganization between ValliCorp and Mineral King Bancorp, Inc. dated
as of June 20, 1994; (ii) Section 6.7 of the Agreement and Plan of
Reorganization between ValliCorp and El Capitan Bancshares, Inc. dated
as of May 11, 1995, as amended; (iii) Section 6.6 of the Agreement and
Plan of Reorganization between ValliCorp and CoBank Financial
Corporation dated as of July 20, 1995, as amended; and (iv) Section 6.7
of the Agreement and Plan of Reorganization between ValliCorp and
Auburn Bancorp dated as of March 27, 1996.
(5) WABC, from and after the Effective Date, will directly or
indirectly cause the persons who served as directors or officers of
ValliCorp and the ValliCorp Subsidiaries on or before the Effective
Date to be covered by ValliCorp's existing directors' and officers'
liability insurance policy (provided that WABC may substitute therefor
policies of at least the same coverage and amounts containing terms and
conditions which are not less advantageous than such policy) or
so-called tail coverage obtained in connection with ValliCorp's
directors' and officers' liability insurance policies in effect as of
the Effective Date; provided that WABC shall not be obligated to make
annual premium payments for such insurance to the extent such premiums
exceed 150% of the premiums paid as of the date hereof by ValliCorp for
such insurance. Subject to the preceding sentence, such insurance
coverage, shall commence on the Effective Date and will be provided for
a period of no less than three (3) years after the Effective Date. From
the date hereof through the Effective Date and subject to the
foregoing, ValliCorp shall use its best efforts to arrange for tail
coverage related to its then current policies of directors' and
officers' liability insurance and
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following the Effective Date WABC shall exercise those rights which it
may have to in order to commence such coverage.
(6) In the event WABC or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case, to
the extent necessary, proper provision shall be made so that the
successors and assigns of WABC assume the obligations set forth in this
section.
(7) The provisions of Section 5.1(f)(3), (4), (5) and (6) are
intended to be for the benefit of, and shall be enforceable by, each
Covered Party and their respective heirs and representatives. In the
event any Covered Party brings any action or suit to enforce any rights
under the aforesaid subsections, the prevailing party shall be entitled
to reasonable legal fees and costs pursuant to Section 8.9 (as if he
were a party to this Agreement).
(g) Financial Statements.
(1) WABC has delivered, or shall promptly deliver when
available, to ValliCorp prior to the Effective Date true and correct
copies of the WABC Financial Statements.
(2) WABC and its Subsidiaries have delivered, or shall deliver
promptly when available, to ValliCorp, at or prior to the Effective
Date, copies of all financial statements and proxy statements issued or
to be issued to WABC's shareholders after December 31, 1994.
(3) WABC and its Subsidiaries have delivered, or shall deliver
promptly when available, to ValliCorp true and complete copies of their
respective Annual Report to Shareholders for the years ended December
31, 1995 and 1994, all periodic reports required to be filed by it or
them pursuant to section 13(a) or 15(d) of the Exchange Act since
December 31, 1993, all registration statements filed by WABC with the
SEC since December 31, 1993, all proxy statements and other written
material furnished to WABC's shareholders since December 31, 1994, and
all other material reports, including call reports, relating to WABC
and its Subsidiaries filed by WABC and its Subsidiaries with the SEC,
the FDIC, the Superintendent, the Federal Reserve Board, or Comptroller
of the Currency ("OCC") during 1994 through the date hereof and prior
to the Effective Date. Except where prohibited by law, WABC and its
Subsidiaries shall promptly provide ValliCorp (or its counsel) with
copies of all other filings (other than information or documents
therein as to which WABC is not permitted to disclose said information
or document to third parties) with any state or federal governmental
entity in connection with this Agreement or the transactions
contemplated hereby.
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(h) Stock Exchange Listing. WABC shall use all reasonable efforts to
cause the shares of WABC Common Stock to be issued in the Merger and the shares
of WABC Common Stock to be reserved for issuance upon exercise of former
ValliCorp stock options to be approved for listing on the Nasdaq, subject to
official notice of issuance, prior to the Closing Date.
5.2 Covenants of ValliCorp.
(a) Approval by ValliCorp's Shareholders. ValliCorp shall cause the
Merger, this Agreement and the Plan of Merger to be submitted promptly for the
approval of its shareholders at a regular or special meeting to be called and
held in accordance with applicable laws. ValliCorp shall use all commercially
reasonable efforts to cause such meeting of its shareholders to take place not
later than March 17, 1997. ValliCorp and WABC shall coordinate and cooperate
with respect to the timing of said meeting and the date on the same day on which
WABC holds its shareholder meeting. In connection with the call of such meeting,
ValliCorp shall cause the Proxy Statement to be mailed to its shareholders.
Subject to Section 5.2(h) herein, Section 5 of the Securities Act and Section 14
of the Exchange Act, the Board of Directors of ValliCorp shall at all times
prior to and during such meeting of ValliCorp shareholders recommend that the
transactions contemplated hereby be adopted and approved by the ValliCorp
shareholders and, subject to such matters, use its commercially reasonable
efforts to cause such adoption and approval. At the time of execution and
delivery of this Agreement, individual members of the Board of Directors of
ValliCorp shall have delivered to WABC a Shareholder Agreement substantially in
the form attached hereto as Exhibit 5.2(a). Except with the prior approval of
WABC and except for the election of directors and the ratification of the
selection of independent auditors at a regular meeting, neither ValliCorp nor
any member of its Board of Directors shall, at the ValliCorp shareholders'
meeting, submit any other matters for approval of its shareholders.
(b) Shareholder Lists and Other Information. After execution hereof,
ValliCorp shall from time to time make available to WABC, upon request, a list
of its shareholders and their addresses, a list showing all transfers of
ValliCorp or the ValliCorp Subsidiaries' common stock (and any other classes of
stock) and such other information as WABC shall reasonably request regarding
both the ownership and prior transfers of the common stock of ValliCorp and the
ValliCorp Subsidiaries.
(c) Government Approvals. ValliCorp will (and will take all
commercially reasonable actions to cause the ValliCorp Subsidiaries to)
cooperate in all reasonable respects with WABC in their undertaking in Section
5.1(c) to obtain the Government Approvals.
(d) Financial Statements.
(i) ValliCorp has delivered, or shall promptly deliver when
available, to WABC prior to the Effective Date true and correct copies
of the ValliCorp Financial Statements.
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(ii) ValliCorp and the ValliCorp Subsidiaries have delivered,
or shall deliver promptly when available, to WABC, at or prior to the
Effective Date, copies of all financial statements and proxy statements
issued or to be issued to ValliCorp's shareholders and/or directors
after December 31, 1991.
(iii) ValliCorp and the ValliCorp Subsidiaries have delivered,
or shall deliver promptly when available, to WABC true and complete
copies of their respective Annual Report to Shareholders for the years
ended December 31, 1995 and 1994, all periodic reports required to be
filed by it or them pursuant to section 13(a) or 15(d) of the Exchange
Act since December 31, 1993, all registration statements filed by
ValliCorp with the SEC since December 31, 1993, any final offering
materials filed with the Superintendent by the ValliCorp Subsidiaries
since December 31, 1993, all proxy statements and other written
material furnished to ValliCorp's or the ValliCorp Subsidiaries'
shareholders since December 31, 1993, and all other material reports,
including call reports, relating to ValliCorp and its Subsidiaries
filed by ValliCorp and the ValliCorp Subsidiaries with the SEC, FDIC,
Superintendent, Federal Reserve Board, or OCC during 1993 through the
date hereof and the Effective Date. Except where prohibited by law,
ValliCorp and the ValliCorp Subsidiaries shall promptly provide WABC
(or its counsel) with copies of all other filings with any state or
federal governmental entity in connection with this Agreement or the
transactions contemplated hereby.
(e) Compensation. ValliCorp and the ValliCorp Subsidiaries shall not
make or approve any increase in the compensation payable or to become payable by
ValliCorp to any of its (or the ValliCorp Subsidiaries') directors, officers,
employees or agents with annual base salaries in excess of $50,000 (excluding
compensation through any profit sharing, pension, retirement, severance,
incentive or other employee benefit program or arrangement) except such
increases in compensation or bonuses payable pursuant to the terms of written
agreements between ValliCorp (or the ValliCorp Subsidiaries) and its directors,
officers, employees or agents (which agreements have been Previously Disclosed
and have not been amended on or after the date hereof), nor shall any other
bonus payment or any agreement or commitment to make a bonus payment in excess
of $5,000 be made other than pursuant to incentive plans as set forth in the
next sentence (except with WABC's prior approval which shall not be unreasonably
withheld). Nothing herein shall prevent the payment to ValliCorp or ValliCorp
Subsidiary employees of salary increases or bonus payments approved by the
Compensation Committee of ValliCorp's Board of Directors; provided, however,
that any such proposed salary increases and bonus payments in excess of $5,000
shall be consistent with ValliCorp's present policies, procedures and plans in
effect for the calendar year 1996 (which shall also be applicable to calendar
year 1997 unless and until modified by WABC after the Effective Date), if all
such policies, procedures and plans have been Previously Disclosed to WABC;
provided, further, however, that to enable WABC to have a reasonable opportunity
to verify such consistency, ValliCorp shall notify WABC in writing of any such
intended bonuses or salary increases at least 15 days prior to advising the
employee thereof and WABC shall not within such time have reasonably interposed
an objection based upon the failure of such proposed action to satisfy such
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criteria. Further, no employment agreement (other than any such employment
agreement that may arise by operation of law upon the hiring of any new
employee) or consulting agreement will be entered into by ValliCorp or the
ValliCorp Subsidiaries with any directors, officers, employees or agents, unless
WABC has given its prior written consent (which shall not be unreasonably
withheld). Without the prior written consent of WABC (which shall not be
unreasonably withheld) or except as necessary to comply with the orders,
directives or requests of its regulators, neither ValliCorp nor the ValliCorp
Subsidiaries shall hire any new employee at an annual base salary in excess of
$50,000 per year.
(f) Conduct of Business in the Ordinary Course. Prior to the Effective
Time, ValliCorp and the ValliCorp Subsidiaries:
(1) Shall conduct their respective businesses in the ordinary
course as heretofore conducted except to the extent otherwise
contemplated herein. For purposes of this Agreement, the "Ordinary
Course of Business" of ValliCorp and the ValliCorp Subsidiaries shall
consist of the banking and related businesses as presently conducted by
ValliCorp and the ValliCorp Subsidiaries and permitted under the Bank
Holding Company Act, the California Financial Code and other applicable
laws and, provided ValliCorp has consulted with WABC, shall include the
sale of OREO and real estate held for sale. For purposes of this
Section 5.2(f), if ValliCorp seeks any consent required hereunder from
an officer authorized or designated by WABC for said purpose and WABC
has not approved or disapproved the request within one Business Day
after the consent has been requested, said consent shall be deemed to
have been approved. Unless WABC has given its previous written consent
(subject to the preceding sentence) to any act or omission to the
contrary (which consent shall not be unreasonably withheld), ValliCorp
and the ValliCorp Subsidiaries shall, until the Effective Date, cause
their respective officers to:
(A) use all commercially reasonable efforts to preserve their
respective businesses and business organizations intact;
(B) use all commercially reasonable efforts to preserve the
goodwill of customers and others having business relations with them
and take no action that would impair the benefit to WABC of the
goodwill of ValliCorp and the ValliCorp Subsidiaries or the other
benefits of the Merger;
(C) consult with WABC as to the making of any decisions or the
taking of any actions in matters other than in the Ordinary Course of
Business;
(D) maintain their respective properties in customary repair,
working order and condition (reasonable wear and tear excepted);
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(E) comply in all material respects with all laws, regulations
and decrees applicable to the conduct of their respective businesses;
(F) use all commercially reasonable efforts to keep in force
at not less than their present limits all policies of insurance
(including deposit insurance of the FDIC) to the extent reasonably
practicable in light of the prevailing market conditions in the
insurance industry;
(G) use, in cooperation with WABC, all reasonable efforts to
keep available to WABC the services of their present officers and
employees (it being understood that ValliCorp and the ValliCorp
Subsidiaries shall have the right to terminate the employment of any
officer or employee in accordance with their established employment
procedures);
(H) comply in all material respects with all orders,
agreements and memoranda of understanding with respect to ValliCorp and
the ValliCorp Subsidiaries made by or with the SEC, Federal Reserve
Board, FDIC, or any other regulatory authority of competent
jurisdiction, and promptly forward to WABC all communications received
from any such authority and inform WABC of any material restrictions
imposed by any governmental authority on the business of ValliCorp or
the ValliCorp Subsidiaries;
(I) file in a timely manner (taking into account any
extensions duly obtained) all reports, tax returns and other documents
required to be filed with federal, state, local and other authorities;
(J) conduct such environmental audits as ValliCorp or WABC
deems necessary prior to foreclosure or otherwise (if information is or
becomes available indicating a risk of environmental contamination) on
any property concerning which ValliCorp or any ValliCorp Subsidiary has
knowledge that asbestos or asbestos-containing materials, PCBs or
PCB-contaminated materials, any petroleum product, or hazardous
substance or waste (as defined under any applicable environmental laws)
was or is present, manufactured, recycled, reclaimed, released, stored,
treated, or disposed of, and provide the results of any such audits to
and consult with WABC regarding the significance of the audit prior to
the foreclosure on any such property; provided, however, that if WABC
requests any environmental audit(s) which is (are) not required by
applicable law or regulation or ValliCorp's existing policies, WABC
shall pay the costs of any such audit(s);
(K) not sell, lease, pledge, assign, encumber or otherwise
dispose of any of its assets or stock except in the Ordinary Course of
Business, and only then for adequate value, without recourse and
consistent with its customary practice; provided, however, that
notwithstanding Section 5.2(f)(1) hereof ValliCorp shall not sell or
otherwise transfer all or any portion of its mortgage servicing
portfolio;
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(L) with respect to any extension of credit in excess of
$100,000, not waive or release any right or collateral or cancel or
compromise any debt or claim, except in the Ordinary Course of
Business;
(M) not make, renegotiate, renew, increase, extend or purchase
any loans, advances or loan commitments, in each case to any of its
officers, directors or any affiliated or related persons of such
directors or officers except in the Ordinary Course of Business
consistent with ValliCorp's established loan procedures and in
compliance with Federal Reserve Board Regulation O as applicable to
ValliCorp and the ValliCorp Subsidiaries under relevant state or
federal law;
(N) not take any action to create, relocate or terminate the
operations of any banking office or branch, or to form any new
subsidiary or affiliated entity except pursuant to Section 5.3(g)
hereof; and
(O) shall not settle or otherwise take any action to release
or reduce any of its rights with respect to any litigation involving a
claim of more than $100,000 in which it is a party.
(2) ValliCorp and the ValliCorp Subsidiaries will not, without
first having obtained the written consent (subject to the third
sentence of clause (f)(1) above) of WABC (which consent will not be
unreasonably withheld), cause the officers of ValliCorp or the
ValliCorp Subsidiaries to:
(A) commit to or renew any loan with a principal amount
exceeding $250,000 (subject to the proviso at the end of this
subsection), unless WABC's comments concerning said commitment are
addressed by ValliWide after WABC has been presented with the same
information provided to the relevant loan committee (or loan officer,
if no committee approval is required) and such other information as
WABC may reasonably request has been provided in order to allow WABC to
make an informed judgment; provided, however, that if any new loan
commitment or loan renewal involves a loan to a borrower (or his
Associates and Affiliates) who has (i) any other classified or
criticized asset, (ii) a total lending relationship of $250,000 or
more, or (iii) a renewal involving a classified or criticized asset,
then the relevant loan subject to this subsection shall be $100,000;
(B) purchase any investment security with a maturity in excess
of three years, or, notwithstanding the consent standard in subsection
(ii) above, sell any investment security in which a gain is recognized;
(C) issue any certificate of deposit with a rate of interest
which exceeds the prevailing rates at commercial banks in ValliWide's
market area;
(D) commit to any new capital expenditure in excess of
$50,000;
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(E) commit to make any construction loan if based on existing
construction loans and anticipated fundings such commitment would, with
respect to ValliCorp and the ValliCorp Subsidiaries on an aggregate
basis, cause their respective total construction loans and construction
loan commitments outstanding at the Effective Date to exceed their
respective level of construction loans and construction loan
commitments as of the month end preceding the date hereof; provided,
however, that notwithstanding the foregoing, ValliCorp may make or
commit to make up to an additional $10,000,000 in construction loans
(subject to its existing lending criteria as of the date hereof as
Previously Disclosed to WABC) over the amount of such construction
loans and commitments thereof existing as of the date hereof; provided,
further, however, that any such construction loan which is in excess of
the applicable amount specified in Section 5.2(f)(2)(A) above, shall
not be made or committed to be made unless ValliCorp shall have given
WABC at least one Business Day's advance written notice of the proposal
to make such loan or commitment, which written notice shall provide to
WABC the same information provided to the relevant loan committee (or
loan officer, if no committee approval is required) of ValliCorp or the
applicable ValliCorp Subsidiary, and shall have furnished WABC with
such other information as WABC may reasonably have requested, and
unless the comments of WABC on the proposal shall have thereafter been
addressed by ValliCorp or the applicable ValliCorp Subsidiary. For
purposes of this subsection, the phrase "construction loan commitments"
shall include both disbursed and undisbursed loan commitments. The
construction loans and construction loan commitments of ValliCorp and
the ValliCorp Subsidiaries as of the month end prior to the date of
this Agreement shall have been Previously Disclosed; or
(3) ValliCorp and the ValliCorp Subsidiaries shall promptly
notify WABC in writing if any one of the Chief Executive Officer, the
Chief Operating Officer, the Chief Financial Officer, the Chief Credit
Officer or the General Counsel or any other in-house lawyer becomes
aware of the occurrence of any of the following:
(A) the classification of any loans, leases, other extensions
of credit or commitments, or other interest-bearing assets of ValliCorp
and its Subsidiaries of $100,000 or more by any internal bank examiner,
management, any bank regulatory agency or ValliCorp's independent
auditor(s) as "Other Loans Especially Mentioned," "Substandard,"
"Doubtful," "Loss," or words of similar import in the case of loans (or
that would have been so classified in the case of other assets, had
they been loans) and the placement of any interest-bearing asset on a
watch list whether by said persons or entities; or
(B) the filing or commencement of any legal or regulatory
action or other proceeding or investigation involving ValliCorp or the
ValliCorp Subsidiaries.
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(g) Press Releases. ValliCorp and the ValliCorp Subsidiaries shall not
issue any press release or written statement for general circulation relating to
this Agreement or the Merger unless previously provided to WABC for review and
approval (which approval will not be unreasonably withheld or delayed) and shall
cooperate with WABC in the development and distribution of all news releases and
other public information disclosures with respect to this Agreement or the
Merger; provided that ValliCorp may, without the consent of WABC, make any
disclosure with regard to this Agreement or the Merger which, based on the
advice of its counsel, is required under any applicable law or regulation.
(h) No Merger or Solicitation.
(1) ValliCorp shall not, nor shall it permit any ValliCorp
Subsidiaries, or authorize or permit any of its officers, directors or
employees or any investment banker, financial advisor, attorney,
accountant or other representative or agent retained by it or any
ValliCorp Subsidiaries, to, directly or indirectly, solicit, initiate,
or encourage (including by way of furnishing nonpublic information), 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 Takeover Proposal (as defined below), or agree to or endorse any
Takeover Proposal, or participate in any discussions or negotiations,
or provide third parties with any nonpublic information, relating to
any such inquiry or proposal; provided, however, that prior to receipt
of the ValliCorp shareholder approval described in Section 5.2(a), to
the extent required by the fiduciary obligations of the Board of
Directors of ValliCorp, as determined in good faith by the Board of
Directors based on the advice of independent counsel, ValliCorp may,
(A) in response to an unsolicited Takeover Proposal and subject to
compliance with Section 5.2(h)(3), furnish information with respect to
ValliCorp and its Subsidiaries to any person pursuant to a customary
confidentiality agreement (as determined by ValliCorp's independent
counsel) and answer questions about such information (but not the terms
of any possible Takeover Proposal) with such Person and (B) upon
receipt by ValliCorp of an unsolicited Takeover Proposal and subject to
compliance with Section 5.2(h)(3), participate in negotiations
regarding such Takeover Proposal. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the
preceding sentence by any director or executive officer of ValliCorp or
any of its Subsidiaries or any investment banker, attorney or other
advisor or representative of ValliCorp or any of its Subsidiaries,
whether or not such Person is purporting to act on behalf of ValliCorp
or any of its Subsidiaries or otherwise, shall be deemed to be a breach
of this Section 5.2(h)(1) by ValliCorp. For purposes of this Agreement,
"Takeover Proposal" means any written inquiry, proposal or offer from
any person relating to any direct or indirect acquisition or purchase
of a substantial amount of the assets of ValliCorp or any of its
Subsidiaries, other than the transactions contemplated by this
Agreement and the Stock Option Agreement, or of 50% or more of any
class of equity securities of ValliCorp or any of its Subsidiaries or
any tender offer
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or exchange offer that if consummated would result in any Person
beneficially owning 50% or more of any class of equity securities of
ValliCorp or any of its Subsidiaries, or any merger, consolidation,
business combination, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar transaction
involving ValliCorp or any of its Subsidiaries other than the
transactions contemplated by this Agreement and the Stock Option
Agreement.
(2) Except as set forth herein, neither the Board of Directors
of ValliCorp nor any committee thereof shall (i) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to WABC, the
approval or recommendation by such Board of Directors or any such
committee of this Agreement or the Merger, (ii) approve or recommend,
or propose to approve or recommend, any Takeover Proposal, or (iii)
enter into any agreement with respect to any Takeover Proposal.
Notwithstanding the foregoing, prior to the receipt of the shareholder
approval described in Section 5.2(a), the Board of Directors of
ValliCorp, to the extent required by its fiduciary obligations, as
determined in good faith by the Board of Directors based on the advice
of independent counsel, may (subject to the following sentences)
withdraw or modify its approval or recommendation of this Agreement or
the Merger, approve or recommend any Superior Proposal (as defined
below), enter into an agreement with respect to such Superior Proposal
or terminate this Agreement, in each case at any time after the third
Business Day following WABC's receipt of a written notice advising WABC
that the ValliCorp Board of Directors has received a Superior Proposal,
specifying the material terms and conditions of such Superior Proposal
and identifying the person making such Superior Proposal (it being
understood that any amendment to a Superior Proposal shall necessitate
an additional three Business Day period). In addition, if ValliCorp
proposes to enter into an agreement with respect to any Takeover
Proposal, it shall concurrently with entering into such agreement pay,
or cause to be paid, to WABC the Termination Fee (as defined in Section
5.2(h)(4)) in accordance with the provisions of Section 5.2(h)(4). For
purposes of this Agreement, "Superior Proposal" means any bona fide
written Takeover Proposal made by a third party to acquire, directly or
indirectly, for consideration consisting of cash and/or securities,
more than 50% of the shares of ValliCorp Common Stock then outstanding
or all or substantially all the assets of ValliCorp and otherwise on
the terms which the Board of Directors of ValliCorp determines in its
good faith judgment that said bona fide Takeover Proposal is reasonably
capable of being completed, taking into account all legal, financial,
regulatory and other aspects of the proposal and the Person making the
proposal and (based on the advice of a financial advisor of nationally
recognized reputation) would, if consummated, be more favorable to
ValliCorp's shareholders from a financial point of view than the
Merger.
(3) In addition to the obligation of ValliCorp set forth in
paragraph (2) above, the Company promptly shall advise WABC orally and
in writing of
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any request for information or of any Takeover Proposal, or any inquiry
with respect to or which could lead to any Takeover Proposal, the
material terms and conditions of such request, Takeover Proposal or
inquiry and the identity of the Person making any such request,
Takeover Proposal or inquiry. ValliCorp will keep WABC fully informed
of the status and details (including amendments or proposed amendments)
of any such request, Takeover Proposal or inquiry.
(4) If this Agreement is terminated pursuant to its terms
other than by WABC or ValliCorp solely because the Federal Reserve
Board or Superintendent shall have issued a final order denying
approval of the Merger, a failure of the condition in Section
6.1(a)(ii) occurs, or other than by ValliCorp pursuant to Section
7.1(a)(6)(i) or Section 7.1(c), and an Acquisition Event shall occur
after the date hereof and within 18 months after the date of such
termination, ValliCorp shall pay promptly, but in no event later than
two Business Days after the occurrence of such Acquisition Event, by
wire transfer of immediately available Federal Funds to such account as
WABC shall designate, $6 million (the "Termination Fee") (but only if a
Termination Fee shall not theretofore have been paid under Section
5.2(h)(2) hereof). For purposes of this subsection, the term
"Acquisition Event" shall mean any of the following: (i) any Person
(other than WABC or any Subsidiary thereof) shall have acquired
pursuant to a tender offer or otherwise beneficial ownership of 20% or
more of the outstanding shares of ValliCorp Common Stock; (ii)
ValliCorp or ValliWide shall have authorized, recommended, proposed or
publicly announced an intention to authorize, recommend or propose, or
entered into, an agreement with any Person (other than WABC or a
Subsidiary thereof) to (A) effect a merger, consolidation or similar
transaction (or series of unrelated and non-integrated mergers,
consolidations or similar transactions) involving ValliCorp or
ValliWide (other than a merger, consolidation or similar transaction in
which those holders of ValliCorp Common Stock outstanding immediately
prior to each such transaction continue to own at least 80% of the
ValliCorp Common Stock outstanding immediately after such transaction),
(B) sell, lease or otherwise dispose of assets of ValliCorp or the
ValliCorp Subsidiaries representing 20% or more of the consolidated
assets of ValliCorp and the ValliCorp Subsidiaries, or (C) issue, sell
or otherwise dispose of (including by way of merger, consolidation,
share exchange or any similar transaction) securities representing 20%
or more of the voting power of ValliCorp or the ValliCorp Subsidiaries
(but excluding a series of unrelated and non-integrated issues, sales
or other dispositions).
(5) WABC covenants and agrees that, in the event ValliCorp
makes payment of the Termination Fee to WABC upon the occurrence of an
Acquisition Event in accordance with the terms of paragraph (4) above,
neither WABC nor any of its Affiliates will for a period of five years
after the payment of said Fee (the last day of such period, the
"Standstill
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Termination Date"), unless specifically invited in writing to do so by
ValliCorp and then only to the extent stated therein, in any manner
acquire or agree to acquire or make any proposal to acquire, directly
or indirectly, the beneficial ownership of any common stock, equity
securities or other securities having voting power with respect to the
election of directors of ValliCorp ("Voting Equity"), or any other
securities convertible into Voting Equity or any options, warrants or
other rights to acquire Voting Equity (such convertible securities,
options, warrants or other rights, together with Voting Equities, being
hereinafter called "Voting Securities") of ValliCorp or its Affiliates.
From the date the Termination Fee is paid until the Standstill
Termination Date, neither WABC nor any of its Affiliates will, except
with the express written consent of ValliCorp and then only to the
extent stated in such written consent, make or in any way participate,
directly or indirectly, in any "solicitation" of "proxies" (as such
terms are defined in Regulation 14A under the Exchange Act) to vote or
seek to advise or influence any person with respect to the voting of
any Voting Securities of ValliCorp or its Affiliates. WABC covenants
and agrees that, from the date the Termination Fee is paid until the
Standstill Termination Date, neither it nor any of its Affiliates shall
(i) make any Acquisition Proposal (as defined below) or proposal with
respect to a Business Combination (as defined below), joint venture, or
any other extraordinary business arrangement, including, but not
limited to, a business arrangement which could result in a change of
control of ValliCorp, in each case in respect of ValliCorp or any of
its Affiliates, (ii) take any initiatives involving ValliCorp that
would otherwise require ValliCorp to make a public announcement or make
any public comment or proposal with respect to any Acquisition Proposal
or Business Combination, (iii) join a partnership, limited partnership,
syndicate or other group for the purpose of acquiring, holding, voting
or disposing of Voting Securities of ValliCorp or otherwise become a
"person" within the meaning of section 13(d)(3) of the Exchange Act
with respect to any Voting Securities of ValliCorp or its Affiliates,
(iv) enter into any discussions, negotiations, arrangements or
understandings with any third party with respect to any of the
foregoing, (v) knowingly advise, assist or encourage any third party in
connection with any of the foregoing, or (vi) otherwise seek to control
or influence ValliCorp or its management or Board of Directors.
"Acquisition Proposal" shall mean any tender offer or exchange offer or
proposal to ValliCorp (including, without limitation, any proposal or
offer to stockholders of ValliCorp) with respect to a Business
Combination or involving the purchase of 25% or more of the outstanding
Voting Securities of ValliCorp. "Business Combination" shall mean (a) a
merger, consolidation, acquisition, scheme or other analogous
arrangement in which ValliCorp is a constituent corporation or party
and pursuant to which Voting Securities of ValliCorp are or may be
exchanged for cash, securities or other property or (b) a sale of all
or substantially all of the assets of ValliCorp and its Affiliates.
Notwithstanding anything herein to the contrary, nothing herein shall
prevent or restrict WABC from voting any ValliCorp Common Stock it
beneficially
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owns as of the date hereof or from selling said stock through any
broker/dealer.
(i) ValliCorp 401(k) Plan, Profit Sharing Plan and Benefit Plans. On
and after the Effective Date all persons who are employed by ValliCorp and/or
ValliCorp Subsidiaries on such date shall be eligible for benefits which in the
aggregate are no less favorable with respect to their employment by WABC and its
Subsidiaries after the Effective Date than those generally afforded to other
employees of WABC and its Subsidiaries holding similar positions, subject to the
terms and conditions under which those employee benefits are made available to
such employees and provided that for purposes of determining eligibility for and
vesting of such employee benefits, service with ValliCorp or a ValliCorp
Subsidiary or any predecessor thereto prior to the Effective Date shall be
treated as service with an "employer" to the same extent as if such persons had
been employees of WABC. ValliCorp agrees that the ValliCorp 401(k) Plan or any
other 401(k) plans may be terminated, frozen, modified or merged into the
appropriate WABC qualified plans before or after the Effective Date, as
determined by WABC in its sole discretion and that the ValliCorp Profit Sharing
Plans and other qualified plans may be terminated, frozen, modified or merged
into the appropriate WABC qualified plans after the Effective Time; provided,
however, that Vallicorp shall not be required to take any such action prior to
the Effective Date unless and until WABC acknowledges that all conditions to its
obligation to consummate the Merger in Sections 6.1(a), (b), (g), (h), 6.3(a),
(b), (c), (h), (i), (j), (k) and (l) have been satisfied or waived and WABC
reasonably believes the Merger will close. ValliCorp and any ValliCorp
Subsidiaries will not cash out any unused vacation solely as a result of the
termination of its vacation plan and WABC will recognize the unused, accrued
vacation of ValliCorp's and the ValliCorp Subsidiaries' vacation plans under its
plan subject to the WABC plan's limitations on the accrual of unused vacation;
provided, however, that any employee of ValliCorp or any ValliCorp Subsidiary
who has unused, accrued vacation time which exceeds the amount of such time such
employee would be entitled to accrue under WABC's plans shall be paid for such
excess time as soon as practicable after the Effective Date. ValliCorp's and the
ValliCorp Subsidiaries' severance policy will be amended immediately before the
Effective Date to state that no severance pay will be paid solely as a result of
the transactions contemplated hereunder. Effective as of the Closing Date, WABC
shall assume liability for severance pay payable to any employee of ValliCorp or
ValliWide who is terminated by WABC after the Closing Date. Such payment shall
be made pursuant to WABC's normal severance policy, and WABC shall compute
severance pay by giving all employees of ValliCorp and ValliWide full credit for
all years of service since their date of last hire with ValliCorp or ValliWide,
as the case may be, except that employees of ValliCorp or ValliWide who joined
ValliCorp or ValliWide prior to the date hereof as the result of the acquisition
of another institution will also be given full credit for service with such
institution.
(j) ValliCorp Accruals and Reserves. (1) Prior to the Effective Date,
ValliCorp and the ValliCorp Subsidiaries shall review and, to the extent
determined necessary or advisable by WABC in its sole discretion, consistent
with GAAP and the accounting rules, regulations and interpretations of the SEC
and its staff, modify and change its loan, OREO, accrual and reserve policies
and practices (including loan classifications and levels of tax, loan and
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OREO reserves and accruals) to (i) reflect WABC's plans with respect to the
conduct of ValliCorp's business following the Merger, and (ii) make adequate
provision for the costs and expenses relating thereto so as to be applied
consistently on a mutually satisfactory basis with those of WABC.
(2) Prior to the Effective Date, ValliCorp also will adjust loan loss
and OREO reserves (i) in a manner consistent with its policies and practices as
in effect on the date hereof and (ii) as may be appropriate, consistent with
generally accepted accounting principles and the accounting rules, regulations
and interpretations of the SEC and its staff, to the extent determined by WABC
to be necessary or advisable in its sole discretion in light of the then
anticipated post-closing grading, classification or disposition of certain
ValliCorp assets; provided, however, that ValliCorp agrees in no event shall
ValliCorp's reserve for loan losses constitute less than 100% of total
Nonperforming Loans and 1.6% of total loans as of the close of business on the
last Business Day of the calendar quarter preceding the month during which the
Effective Date occurs.
(3) The parties agree to cooperate in preparing for the implementation
of the adjustments contemplated by this Section 5.2(j). Notwithstanding the
foregoing, ValliCorp shall not be obligated to take in any respect any such
action pursuant to subsections 5.2(j)(1)(i), (1)(ii) or 2(ii) (other than
pursuant to the preceding sentence) unless and until WABC acknowledges that, as
of the date of said acknowledgment, all conditions to its obligation to
consummate the Merger in Sections 6.1(a), (b), (g), (h) and 6.3(a), (b), (c),
(h), (i), (j), (k) and (l) have been satisfied or waived and WABC reasonably
believes the Merger will close.
(4) As of the end of the calendar quarter immediately prior to the
Effective Date, ValliCorp and the ValliCorp Subsidiaries shall create and
maintain on their books one or more reserves and accruals adequate to cover a
reasonable estimate, as mutually agreed to by WABC and ValliCorp, of the loss
contingencies (consistent with GAAP) associated with any of the litigation
matters, claims Previously Disclosed or similar matters arising after the date
hereof or any environmental contamination on any property of ValliCorp or any
ValliCorp Subsidiary as to which environmental audits shall be conducted
pursuant to Section 5.2(f)(1)(J) hereof, unless outside counsel to ValliCorp
shall have rendered its written opinion to the parties hereto that the
likelihood of the incurrence of such loss is remote; provided, however, that if
the parties hereto cannot agree on what constitutes a reasonable estimate of
such amount by 15 days prior to the end of such quarter, then either WABC or
ValliCorp may require that such matter be submitted to counsel independent of
all parties hereto, which shall be satisfactory to both WABC and ValliCorp, for
resolution. Such independent counsel shall be a retired general counsel or
director of litigation of a major publicly-held company in the financial
services industry. Each of WABC and ValliCorp shall be entitled to make, within
five days after such date, one written submission of not more than five pages in
length to such independent counsel and one additional submission of not more
than two pages in length within five days of receipt of the other party's
submission. Such independent counsel shall render a written determination with
respect to the matter not later than 15 days after the end of such calendar
quarter. Such
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determination shall be conclusive and binding on the parties hereto. The fees
and expenses of such independent counsel shall be shared equally by WABC and
ValliCorp.
(5) As of the end of the calendar quarter immediately prior to the
Effective Date, ValliCorp and the ValliCorp Subsidiaries shall create and
maintain on their books such tax reserves and accruals as shall be adequate to
cover a reasonable estimate, as mutually agreed to by WABC and ValliCorp, of tax
accruals, interest and penalties (consistent with GAAP) associated with or
related to any existing or threatened tax audit. If WABC and ValliCorp cannot
agree on what constitutes a reasonable estimate of such tax liability by 15 days
prior to the end of such quarter, then the matter shall be submitted forthwith
to the independent accountants of WABC and ValliCorp for resolution, provided
that if such independent accountants are unable to resolve the matter by
agreement by the end of such quarter, the matter shall be referred to a third
independent accounting firm, selected by the mutual agreement of WABC and
ValliCorp, who shall determine the matter within 15 days of the end of such
calendar quarter. Such determination shall be conclusive and binding on the
parties hereto. The fees and expenses of WABC's accountants shall be borne by
WABC and those of ValliCorp's independent accountants shall be borne by
ValliCorp, and the fees and expenses of any such third independent accounting
firm shall be shared equally by WABC and ValliCorp.
(k) Asset Review. ValliCorp shall continue to engage its internal asset
review examiners to identify potential losses with respect to loans and other
assets on the books of ValliCorp and its Subsidiaries and who shall have
reviewed all Nonperforming Assets and other classified or criticized assets as
of a date within three months preceding the Effective Date. ValliCorp shall
promptly provide a copy of such reports to WABC. Between the date of this
Agreement and January 31, 1997, all assets of ValliCorp and its Subsidiaries,
including classified or criticized and Nonperforming Assets, may be reviewed by
WABC and WABC may provide a report thereon to ValliCorp setting forth WABC's
grading or other assessment thereof (including accounting treatment and loss
recognition) utilizing ValliCorp's regular loan/OREO review criteria consistent
with GAAP and RAP. WABC shall use its commercially reasonable efforts to
complete such review as promptly as practicable but in any event shall complete
such review by January 31, 1997. ValliCorp may either accept and implement
WABC's grading or other assessments (including accounting treatment and loss
recognition) concerning loans or OREO by January 31, 1997, or, if it does not
agree with WABC's conclusions as set forth in the report, refer the matter for
resolution by one or more of the independent loan and appraisal experts
Previously Disclosed by WABC (the "Independent Loan Reviewer" or "Independent
Appraiser") who shall immediately review and/or appraise said loan(s) or OREO
utilizing ValliCorp's regular loan/OREO review criteria consistent with GAAP and
RAP. The parties agree that if the Independent Loan Reviewer believes it
necessary to retain an Independent Appraiser (or if such an Appraiser is
required by the penultimate sentence below), the selection and supervision
thereof of said Appraiser shall be at the discretion and under the control of
the Independent Loan Reviewer. ValliCorp and the ValliCorp Subsidiaries agree to
recognize on their books and records all loan losses and record all OREO at
their net realizable value (and record related OREO expenses) based on the
review/appraisal by the Independent Loan Reviewer or Independent Appraiser no
later than March 15, 1997. WABC agrees to accept
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the views of the Independent Loan Reviewer and Independent Appraiser.
Additionally, ValliCorp agrees that through the Effective Date, it and the
ValliCorp Subsidiaries shall maintain consistent loan grades with respect to any
of their respective loans which have been or are participated to any other
ValliCorp Subsidiary or to ValliCorp. With respect to any OREO, based on all
known information available from time to time, if it appears that the then
current independent appraisals may not be accurate or upon request of and at the
expense of WABC, ValliCorp shall immediately obtain updated independent
appraisals by an Independent Appraiser (utilizing ValliCorp's regular criteria
consistent with GAAP and RAP) and provide copies of all such appraisals to WABC.
Any new or additional write-downs or OREO expenses shall be recorded immediately
upon receiving any updated independent appraisal.
(l) Changes in Capital Stock; ValliCorp Dividends. At or after the date
hereof and at or prior to the Effective Time, except with the prior written
consent of WABC or as otherwise provided in this Agreement:
(1) Neither ValliCorp nor any ValliCorp Subsidiary shall amend
its or their Certificate or Articles of Incorporation or Association,
as the case may be, or Bylaws; make any change in their respective
authorized, issued or outstanding capital stock or any other equity
security; issue, sell, pledge, assign or otherwise encumber or dispose
of, or purchase, redeem or otherwise acquire, any of their shares of
capital stock or other equity securities or enter into any agreement,
call or commitment of any character so to do; grant or issue any stock
option or warrant relating to, right to acquire, or security
convertible into, shares of their capital stock or other equity
security; purchase, redeem, retire or otherwise acquire (other than in
a fiduciary capacity) any shares of, or any security convertible into,
capital stock or other equity security of their respective companies,
or agree to do any of the foregoing except with respect to the exercise
of stock options or voluntary conversion of the Convertible Debentures
currently outstanding on the date hereof.
(2) Neither ValliCorp nor any ValliCorp Subsidiary shall
propose, declare, set aside or pay any dividend or other distribution
in respect of its common stock (including, without limitation, any
stock dividend or distribution) other than regular quarterly cash
dividends on its common stock in amounts substantially equivalent to
dividends paid in the two years prior to the date hereof (it being
understood that declaration of a quarterly dividend equal to the most
recent previous quarterly dividend or pursuant to the last sentence of
Section 5.2(l)(3) below will be deemed to meet this standard), provided
that no ValliCorp Subsidiary shall declare or pay a cash dividend if as
a result thereof the ValliCorp Subsidiary would cease to be adequately
capitalized within the meaning of applicable bank regulations and
except as permitted elsewhere in this Section 5.2(l), ValliCorp shall
not declare, set aside or pay any dividends or other distributions
prior to the Effective Time.
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(3) After the date of this Agreement, each of WABC and
ValliCorp shall coordinate with the other the declaration of any
dividends in respect of WABC Common Stock and ValliCorp Common Stock
and the record dates and payment dates relating thereto, it being the
intention of the parties hereto that holders of WABC Common Stock or
ValliCorp Common Stock shall not receive two dividends, or fail to
receive one dividend, for any single calendar quarter with respect to
their shares of WABC Common Stock and/or ValliCorp Common Stock and any
shares of WABC Common Stock any such holder receives in exchange
therefor in the Merger. ValliCorp agrees not to increase its quarterly
dividend to a level that is greater than .4098 times WABC's then
current dividend, but may increase its dividend to that level without
breaching this Section 5.2(l)(3).
(m) Indebtedness. Neither ValliCorp nor any of the ValliCorp
Subsidiaries shall incur any long-term indebtedness for borrowed money or
guarantee any such long-term indebtedness or issue or sell any long-term debt
securities or warrants or rights to acquire any long-term debt securities of
such party or guarantee any long-term debt securities of others other than in
replacement for existing or maturing debt.
(n) Execution and Delivery of Stock Option Agreement. ValliCorp agrees
that as a condition of and inducement to WABC to enter into this Agreement it
will enter into the Stock Option Agreement dated the date hereof which shall be
executed and delivered to WABC immediately upon the execution and delivery of
this Agreement.
(o) Noncompetition Agreements. On the date of this Agreement, ValliCorp
shall deliver to WABC the director noncompetition agreements in substantially
the form attached hereto as Exhibit 5.2(o)(i), dated the date hereof, from the
directors listed on Exhibit 5.2(o)(ii) (it being agreed by WABC that said
agreements shall not be effective until the Effective Time).
5.3 Covenants of WABC and ValliCorp.
(a) Proxy Statement; Registration Statement. As promptly as practicable
after the date hereof, WABC and ValliCorp shall cooperate in the preparation of
the Proxy Statement to be mailed to the shareholders of ValliCorp and WABC in
connection with the Merger and the transactions contemplated thereby and to be
filed by WABC as part of the Registration Statement. WABC will advise ValliCorp,
promptly after it receives notice thereof, of the time when the Registration
Statement or any post-effective amendment thereto has become effective or any
supplement or amendment has been filed, of the issuance of any stop order, of
the suspension of qualification of the WABC Common Stock issuable in connection
with the Merger for offering or sale in any jurisdiction, or the initiation or
threat of any proceeding for any such purpose, or of any request by the SEC for
the amendment or supplement of the Registration Statement or for additional
information.
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(b) Commercially Reasonable Efforts.
(1) WABC and ValliCorp shall each use all commercially
reasonable efforts in good faith, and each of them shall cause their
respective subsidiaries to use all commercially reasonable efforts in
good faith, to (i) furnish such information as may be required in
connection with the preparation of the documents referred to in Section
5.3(a), and (ii) take or cause to be taken all action necessary or
desirable on its part so as to permit consummation of the Merger at the
earliest possible date, including, without limitation, (1) obtaining
the consent or approval of each individual, partnership, corporation,
association or other business or professional entity whose consent or
approval is required for consummation of the transactions contemplated
hereby, and (2) requesting the delivery of appropriate opinions,
consents and letters from its counsel and independent auditors. No
party hereto shall take or fail to take, or cause or permit its
subsidiaries to take or fail to take, or to the best of its ability
permit to be taken or omitted to be taken by any third persons, any
action that would substantially impair the prospects of completing the
Merger pursuant to this Agreement and the Plan of Merger, that would
materially delay such completion, or that would adversely affect the
qualification of the Merger for pooling of interests accounting
treatment or as a reorganization within the meaning of section 368(a)
of the Code. In the event that either party has taken any action,
whether before, on or after the date hereof, that would adversely
affect such qualification, each party shall take such action as the
other party may reasonably request to cure such effect to the extent
curable without a Material Adverse Effect on either of the parties.
(2) ValliCorp shall give prompt written notice to WABC, and
WABC shall give prompt written notice to ValliCorp, of (i) the
occurrence, impending or threatened occurrence or failure to occur, of
any event which would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material
respect at any time from the date hereof to the Closing Date and (ii)
any material failure of ValliCorp or WABC, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder, and each party shall use
its best efforts to prevent or remedy such failure promptly.
(c) Investigation. ValliCorp and WABC each will keep the other advised
of all material developments relevant to its business and to consummation of the
transactions contemplated herein and in the Plan of Merger. WABC and ValliCorp
each may make or cause to be made such investigation of the financial and legal
condition of the other as such party reasonably deems necessary or advisable in
connection with the transactions contemplated herein and in the Plan of Merger;
provided, however, that such investigation shall be reasonably related to such
transactions and shall not interfere unnecessarily with normal operations. WABC
and ValliCorp agree to furnish the other and the other's advisors with
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such financial data and other information with respect to its business and
properties as such other party shall from time to time reasonably request. No
investigation by WABC or ValliCorp shall affect or be deemed to modify any
representation or warranty made by, or the conditions to the obligations to
consummate the Merger of, any party hereto, and such representations, warranties
and conditions shall survive such investigation.
(d) Access to Properties, Books and Records; Confidentiality. Upon
reasonable notice, WABC and ValliCorp shall each (and shall cause each of their
respective Subsidiaries to) afford to the officers, accountants, counsel and
other representatives of the other, access, during normal business hours during
the period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and all other information concerning its business,
properties and personnel as such other party may reasonably request. ValliCorp
shall also provide to WABC copies of all annual management letters and opinions
and other correspondence and documents in its files prepared by its certified
public accountants since January 1, 1992, and shall use its commercially
reasonable efforts to cause Deloitte & Touche and Ernst & Young to make
available to WABC, its accountants, counsel and other agents, to the extent
reasonably requested in connection with such review, their respective work
papers and documentation relating to its work papers and its audits of the books
and records of ValliCorp and the ValliCorp Subsidiaries. The nonpublic
information provided hereunder shall be held in confidence to the extent
provided in the letter agreement dated June 25, 1996, between WABC and ValliCorp
(the "Letter Agreement"), the terms and provisions of which the parties hereby
reaffirm. Each party shall use its commercially reasonable efforts to cause its
officers, directors, employees, auditors, and attorneys to cooperate with the
other in its reasonable requests for information.
(e) Accounting Methods. Neither ValliCorp nor WABC shall change its
methods of accounting in effect at December 31, 1995, except as required by
changes in GAAP as concurred in by such party's independent auditor.
(f) Affiliates.
(1) ValliCorp and WABC shall cooperate and use their
commercially reasonable efforts to identify those persons who may be
deemed to be "affiliates" of ValliCorp or WABC within the meaning of
Rule 145 promulgated by the Commission under the Securities Act and for
purposes of qualifying the Merger for "pooling of interests" accounting
treatment. ValliCorp and WABC shall use their respective commercially
reasonable efforts to cause each person so identified to deliver to
WABC, no later than 40 days prior to the Effective Date, a written
agreement (which agreement shall be substantially in the form of
Exhibit 5.3(f)(i) (in the case of ValliCorp Affiliates) and 5.3(f)(ii)
(in the case of WABC Affiliates) hereof). Shares of WABC Common Stock
issued to such Affiliates of ValliCorp and WABC in exchange for
ValliCorp Common Stock or previously owned by them shall not be
transferable until such time as financial results covering at least 30
days of combined operations of WABC and ValliCorp have been published
within the meaning of section 201.01 of the Commission's Codification
of
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Financial Reporting Policies, regardless of whether each such Affiliate
has provided the written agreement referred to in this Section. WABC
shall have no obligation to deliver a certificate for WABC Common Stock
in exchange for the ValliCorp Certificates held by any affiliate until
said affiliate has executed and delivered the written agreement
described in this Section 5.3(f).
(2) WABC shall use all commercially reasonable efforts to
publish as soon as practicable after the end of the first month after
the Effective Date in which there are at least thirty (30) days of
post-Merger combined operations (which month may be the month in which
the Effective Date occurs), combined sales and net income figures as
contemplated by and in accordance with the terms of SEC Accounting
Series Release No. 135.
(g) Structural Changes to Certain ValliWide Branches. Attached to the
WABC disclosure letter is a schedule of certain ValliWide branches which (a)
ValliCorp has determined to close or consolidate (the "Category A Branches") and
(b) certain additional branches which ValliCorp has indicated will be sold,
closed or consolidated (the "Category B Branches"). Except as set forth in the
WABC disclosure letter, Vallicorp shall use its commercially reasonable efforts
to effect closure, consolidation or sale (in the case of the branch designated
in such disclosure letter as being offered for sale) of the Categories A and B
Branches prior to the end of the calendar quarter immediately prior to the
Effective Date (which efforts shall include but not be limited to the immediate
preparation and filing of appropriate governmental applications to sell, close
or consolidate all of said branches), provided that as to the Category B
Branches, ValliCorp shall not be required to actually effect closure,
consolidation or sale of any such branches if under the circumstances then
existing it is reasonably likely that any of the conditions to the Merger set
forth in Sections 6.1(a), (b), (c), (g), (h) or 6.2(a), (b) or 6.3(i) or (l)
will not be satisfied. Any costs, expenses or restructuring charges relating to
the consolidation or closure of the Category A Branches shall be reflected on
the books and records of ValliCorp for purposes of determining satisfaction of
the condition set forth in Section 6.3(l) hereof, and any such costs, expenses
or restructuring charges with respect to the sale, consolidation or closure of
the Category B Branches shall be disregarded for such purpose but shall, except
as provided in the WABC disclosure letter, be reflected on the ValliCorp
Financial Statements as of the end of the calendar quarter immediately prior to
the Effective Date. After the date hereof, WABC may designate other branches of
ValliWide in addition to those referred to above in this subsection as WABC may
deem appropriate for structural changes, including sales, consolidations and
closures, for implementation after the Effective Date. Upon WABC's request,
ValliCorp shall promptly cause there to be prepared and submitted to WABC for
review drafts of such filings, notices or applications as may be necessary or
appropriate to obtain any required Governmental Approvals with respect to such
structural changes of the branches described in the immediately preceding
sentence, but ValliCorp shall not be required to file or publish any thereof
prior to the Effective Date.
(h) FHLB Advances and Security Agreement. Following the date hereof,
ValliCorp and ValliWide shall cooperate in all reasonable respects with WABC in
connection with WABC's determination with respect to the assumption of that
certain Advances and Security
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Agreement dated as of January 24, 1994, entered into by and between the Federal
Home Loan Bank of San Francisco and Bank of Fresno, and four confirmations of
advances, dated December 15, 1995.
(i) Available for Sale Investment Securities Portfolio of ValliCorp.
WABC and ValliCorp agree to cooperate in all reasonable respects to minimize
depreciation of ValliCorp's available for sale investment securities portfolio
from and after the date hereof.
(j) Retention Bonus Payments. Subject to the WABC disclosure letter,
ValliCorp shall not make retention bonus payments without WABC's consent (which
shall not be unreasonably withheld). To that end, the parties shall cooperate in
all reasonable respects to, by mutual agreement, identify those persons who
shall receive retention bonus payments. Such retention bonus payments shall be
payable to those persons identified pursuant to the foregoing sentence in
accordance with the terms of retention agreements, which agreements shall be in
a form reasonably acceptable to WABC.
(k) Notification re: Book Value Test. ValliCorp shall notify WABC in
writing immediately if it determines that it will not satisfy the book value
test set forth in Section 6.3(l) hereof as of December 31, 1996. If ValliCorp
sends such a notice, WABC shall have ten (10) Business Days after receipt of
such notice to notify ValliCorp whether it will terminate this Agreement
pursuant to Section 7.1(a).
5.4 Closing.
(a) Closing Date. The closing (the "Closing") shall, unless another
date, time or place is agreed to in writing by WABC and ValliCorp, be a date and
time as soon as practicable, which shall be no later than sixty (60) days after
receipt of all Government Approvals; provided, however, that in no event will
WABC be required to close prior to May 1, 1997; and provided further that WABC
shall provide ValliCorp with at least 10 calendar days' notice of the
anticipated Effective Date. Notwithstanding anything to the contrary contained
in this Agreement, if for any reason the adjustments required under Section
5.2(j), Section 5.2(k) or Section 5.3(g) hereof have not been recorded on
ValliCorp's books for the quarter ended prior to the Effective Date, then WABC
in its sole and absolute discretion may elect to close the Merger on any date up
to and including August 15, 1997. The Closing will be held at the offices of
Pillsbury Madison & Sutro LLP, 235 Montgomery Street, San Francisco, California
or such other place as may be agreed by the parties.
(b) Delivery of Documents. At the Closing, the opinions, certificates
and other documents required to be delivered by this Agreement shall be
delivered.
(c) Filings. At the Closing, WABC and ValliCorp shall instruct their
respective representatives to make or confirm such filings as shall be required
in the opinion of counsel to WABC and ValliCorp to give effect to the Merger.
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ARTICLE 6
Conditions Precedent
6.1 Conditions Precedent - WABC and ValliCorp.
The respective obligations of the parties to effect the Merger shall be
subject to satisfaction or waiver of the following conditions at or prior to the
Closing Date:
(a) This Agreement and the transactions contemplated hereby shall have
been approved and adopted by the requisite affirmative vote of the holders of
(i) ValliCorp Common Stock entitled to vote thereon and (ii) WABC Common Stock
entitled to vote thereon;
(b) The Registration Statement (including any post-effective amendment
thereto) shall be effective under the Securities Act, and no proceeding shall be
pending or to the knowledge of WABC threatened by the Commission to suspend the
effectiveness of such Registration Statement, and WABC shall have received all
state securities or "Blue Sky" permits or other authorizations, or confirmations
as to the availability of an exemption from registration requirements as may be
necessary;
(c) No event shall have occurred that shall preclude, in the opinion of
KPMG Peat Marwick, the Merger from being accounted for as a pooling of
interests, and the parties shall have received a letter from KPMG Peat Marwick
to the effect that the Merger shall qualify for such pooling-of-interests method
of accounting in accordance with generally accepted accounting principles and
all applicable rules, regulations and policies of the Commission;
(d) Neither WABC nor ValliCorp or ValliWide shall be subject to any
order, decree or injunction of a court or agency of competent jurisdiction which
enjoins or prohibits the consummation of the transactions contemplated by this
Agreement and the Plan of Merger;
(e) The shares of WABC Common Stock that may be issued in the Merger
shall have been approved for listing on Nasdaq, subject to official notice of
issuance;
(f) WABC and ValliCorp shall have each received such certificates and
other closing documents as counsel for WABC and ValliCorp shall reasonably
request;
(g) Each party hereto shall have received, or the other party hereto
shall have satisfied itself that such party will receive, all consents of other
parties to and required by material mortgages, notes, leases, franchises,
agreements, licenses and permits applicable to ValliCorp or WABC, as the case
may be, and no such consent or license or permit shall have been withdrawn or
suspended, unless the failure to obtain such consents, individually or in the
aggregate, would not have a Material Adverse Effect on ValliCorp or WABC, as the
case may be; and
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(h) All Government Approvals shall be in effect, and all conditions or
requirements prescribed by law or by any Government Approval shall have been
satisfied; provided, however, that no Government Approval shall be deemed to
have been received if it imposes any condition or requirement or disapproves any
aspect of any Application which, in the reasonable opinion of the Board of
Directors of WABC or ValliCorp so materially and adversely affects the
anticipated economic and business benefits to WABC or ValliCorp of the
transactions contemplated by this Agreement as to render consummation of such
transactions inadvisable (in which case WABC shall promptly notify ValliCorp).
For purposes of this Agreement, no condition, requirement or disapproval shall
be deemed to so adversely affect the anticipated economic and business benefits
to WABC or ValliCorp of the transactions contemplated by this Agreement as to
render consummation of such transactions inadvisable, if such condition does not
materially differ from conditions regularly imposed by the governmental
authority in orders approving transactions of the type contemplated by this
Agreement or compliance with such condition, requirement or disapproval would
not (A) require or prevent the taking of any action inconsistent with the manner
in which WABC or ValliCorp has conducted its business previously or as
contemplated by this Agreement, (B) have a Material Adverse Effect upon WABC or
ValliCorp, or (C) preclude satisfaction of any of the conditions to consummation
of the transactions contemplated by this Agreement. Notwithstanding any other
provision of this subsection, the conditions set forth in this subsection shall
not be deemed to be satisfied if any Governmental Approval or any order relating
thereto shall contain any terms or conditions which shall be such as to prevent
WABC from effecting achievement of the level of operating efficiency
improvements as Previously Disclosed by WABC to ValliCorp.
6.2 Conditions Precedent - ValliCorp. The obligations of ValliCorp to
effect the Merger shall be subject to satisfaction of the following additional
conditions at or prior to the Effective Date unless waived by ValliCorp pursuant
to Section 8.11 hereof:
(a) The representations and warranties of WABC set forth in Article 4
hereof that are qualified as to materiality shall be true and correct and any
representations and warranties that are not so qualified shall be true and
correct in all material respects as of the date of this Reorganization Agreement
and as of the Effective Date as though made on and as of the Effective Date (or
on the date when made in the case of any representation and warranty which
specifically relates to an earlier date) unless the failures or inaccuracies of
such representations and warranties to be so true and correct could not
reasonably be expected to result in or constitute, individually or in the
aggregate, a Material Adverse Effect on WABC;
(b) WABC shall have in all material respects performed all obligations
and complied in all material respects with all covenants required by this
Agreement and the Plan of Merger, unless the failure to perform or comply with
any obligation or covenant relates to an immaterial obligation or covenant
which, taken together with all similar failures, does not constitute a material
failure to perform or a material failure to comply;
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(c) WABC shall have delivered to ValliCorp a certificate, dated the
Closing Date and signed by its respective Chairman, President or Executive Vice
President to the effect that the conditions set forth in paragraphs (a) and (b)
of this Section have been satisfied;
(d) ValliCorp shall have received the opinion of Pillsbury Madison &
Sutro LLP, dated the Closing Date, as to the matters specified in Exhibit 6.2(d)
hereto;
(e) ValliCorp shall have received an opinion of Pillsbury Madison &
Sutro LLP in form and substance reasonably satisfactory to ValliCorp satisfying
Section 6.3(h) herein;
(f) WABC shall not, on a consolidated basis, have suffered any Material
Adverse Effect since September 30, 1996; and
(g) ValliCorp shall have received from KPMG Peat Marwick LLP letters
addressed to ValliCorp not more than two (2) Business Days prior to the
effective date of the Registration Statement and a date not more than ten (10)
Business Days prior to the Effective Date, with respect to certain financial
information regarding WABC, each in form and substance which is customary in
transactions of the nature contemplated by this Agreement.
6.3 Conditions Precedent - WABC. The respective obligations of WABC to
effect the Merger shall be subject to satisfaction of the following additional
conditions at or prior to the Closing Date unless waived by WABC pursuant to
Section 8.11 hereof:
(a) The representations and warranties of ValliCorp and ValliWide set
forth in Article 3 hereof that are qualified as to materiality shall be true and
correct and any representations and warranties that are not so qualified shall
be true and correct in all material respects as of the date of this
Reorganization Agreement and as of the Effective Date as though made on and as
of the Effective Date (or on the date when made in the case of any
representation and warranty which specifically relates to an earlier date)
unless the failures or inaccuracies of such representations and warranties to be
so true and correct could not reasonably be expected to result in or constitute,
individually or in the aggregate, a Material Adverse Effect on ValliCorp;
(b) ValliCorp and ValliWide shall have in all material respects
performed all obligations and complied in all material respects with all
covenants required by this Reorganization Agreement and the Plan of Merger,
unless the failure to perform or comply with any obligation or covenant relates
to an immaterial obligation or covenant which, taken together with all similar
failures, does not constitute a material failure to perform or a material
failure to comply;
(c) ValliCorp shall not, on a consolidated basis, have suffered any
Material Adverse Effect since September 30, 1996;
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(d) ValliCorp shall have delivered to WABC a certificate, dated the
Closing Date and signed by its Chairman, President or any Executive Vice
President to the effect that the conditions set forth in this Section have been
satisfied;
(e) The Rights issued pursuant to the ValliCorp Rights Agreement shall
not have become nonredeemable, exercisable, distributed or triggered pursuant to
the terms of such agreement;
(f) WABC shall have received from Deloitte & Touche LLP letters
addressed to WABC dated not more than two (2) Business Days prior to the
effective date of the Registration Statement and a date not more than ten (10)
Business Days prior to the Closing Date, with respect to certain financial
information regarding ValliCorp, each in form and substance which is customary
in transactions of the nature contemplated by this Agreement;
(g) WABC shall have received opinions of Lillick & Charles and
McCormick, Barstow, Sheppard, Wayte & Carruth or other legal counsel to
ValliCorp satisfactory to WABC, dated the Closing Date, as to the matters
specified in Exhibit 6.3(g) hereto; and
(h) WABC shall have received an opinion of Pillsbury Madison & Sutro
LLP reasonably satisfactory in form and substance to WABC substantially to the
effect that the Merger when consummated in accordance with the terms hereof and
the Plan of Merger will constitute a reorganization within the meaning of
section 368(a) of the Code, and that the exchange of ValliCorp Common Stock to
the extent exchanged for WABC Common Stock will not give rise to recognition of
gain or loss for federal income tax purposes to the shareholders of ValliCorp.
(i) No investigation, legal action, proceeding or legal impediment
pertaining to the Merger or any transactions contemplated hereby or related
thereto or hereto shall have arisen or be pending or threatened which, in the
reasonable opinion of WABC, so adversely affects the anticipated economic and
business benefits to WABC of the transactions contemplated by this Agreement as
to render consummation of such transactions inadvisable.
(j) WABC shall have received executed noncompetition agreements
pursuant to Section 5.2(o) with respect to the directors of ValliCorp.
(k) At least three days prior to Closing, WABC shall have received a
letter from each director of ValliWide and any other ValliCorp Subsidiary
tendering his or her resignation as of the Effective Date.
(l) Prior to March 1, 1997 (unless a later date is necessary due to the
provisions of Section 5.2(k)) WABC shall have received consolidated financial
statements of ValliCorp and the ValliCorp Subsidiaries (which financial
statements shall be accompanied by those footnotes required by GAAP), as of
December 31, 1996. Such financial statements shall be warranted by ValliCorp to
present fairly the information stated therein at the date thereof, in accordance
with GAAP, such accounting principles having been consistently applied (except
for inconsistencies, if any, attributable to changes promulgated by the
Financial Accounting
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Standards Board). Such financial statements shall also have been audited by
Deloitte & Touche, which audit shall have been conducted in accordance with
generally accepted auditing standards; and such financial statements shall be
accompanied by the auditor's report, which shall state that in Deloitte &
Touche's opinion, such financial statements present fairly, in all material
respects, the financial position and results of ValliCorp and the ValliCorp
Subsidiaries as of the date of such financial statements in accordance with
GAAP, and which report and opinion shall not be qualified in a manner not
acceptable to WABC in the exercise of its business judgment. Based on said
audited balance sheet, ValliCorp shall have a consolidated book value as of
December 31, 1996 of at least $138,885,000. Based on said audited balance sheet
and ValliCorp's unaudited consolidated balance sheet as of March 31, 1997,
ValliCorp shall have a consolidated book value as of March 31, 1997 of at least
$138,885,000.
No more than ten (10) Business Days after March 31, 1997 or the quarter
end immediately preceding the Effective Date, whichever shall last occur, WABC
shall have received a consolidated balance sheet of ValliCorp and the ValliCorp
Subsidiaries as of such quarter end. In addition, such balance sheet shall be
warranted by ValliCorp to present fairly the information stated therein at the
date thereof, in accordance with GAAP, such accounting principles having been
consistently applied (except for inconsistencies, if any, attributable to
changes promulgated by the Financial Accounting Standards Board). Based on said
balance sheet, ValliCorp shall have a consolidated book value as of such quarter
end of at least $138,885,000; provided, however, that for purposes of preparing
the preceding calculation for such quarter end any charges, writedowns,
reserves, provisions and similar expenses which are required to be made pursuant
to Section 5.2(j)(2)(i) (including without limitation any charges or reserves
required to achieve compliance with the proviso in Section 5.2(j)(2)), (4) or
(5), or Section 5.2(k) or Section 5.3(g) but not recorded in ValliCorp's books
because not required to be so recorded pursuant to ValliCorp's policies and
practices, shall be recorded on a pro forma basis such that the parties can
determine whether the preceding book value test will be actually satisfied.
Immediately upon the determination of the amount of such items pursuant to
Sections 5.2(j)(2), (4) or (5), 5.2(k) and 5.3(g), ValliCorp shall record (to
the extent not previously recorded) all such charges, writedowns, reserves,
provisions and similar expenses to the extent consistent with GAAP in its March
31, 1997 financial statements if such financial statements have not been
previously issued publicly (or subsequent quarter end financial statements if
the financial statements for the quarter ended March 31, 1997 have previously
been so issued).
The parties agree that all investment banking, legal and accounting
expenses in excess of $1,500,000 that have been or will be incurred by ValliCorp
in connection with the Merger from and after June 25, 1996 and recorded on its
books as of March 31, 1997 shall be excluded for purposes of calculating the
book value tests as set forth in this Section 6.3(l). The parties further agree
that the effect of Capital Transactions (as defined below), losses reflected in
shareholders' equity pursuant to GAAP, if any, existing as of the date hereof,
or which result after the date hereof, in ValliCorp's available for sale
investment portfolio due to rising interest rates, and any adjustments to
ValliCorp's books pursuant to Section 5.2(j)(1) or 2(ii) shall be disregarded
for purposes of calculating the book value tests as set forth in this Section
6.3(l). "Capital Transactions" shall include all ValliCorp stock
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option exercises, debt conversions, ESOP and DRIP share issuances, net of any
ValliCorp share repurchases, to the extent that any such exercises, conversions,
issuances or repurchases shall have occurred after June 30, 1996. The parties
agree that if ValliCorp's consolidated book value (determined in the manner
described above) as of March 31, 1997 (or subsequent quarter end, if applicable)
is less than $138,885,000 but more than $125,000,000, then the Exchange Ratio as
adjusted for all other adjustments provided for in this Agreement shall be
adjusted downward according to the following formula (and no failure of a
condition shall have occurred):
---------- ----------
Book Value (March 31, 1997
Exchange Ratio = Prior Exchange X (or subsequent quarter end, if applicable))
Ratio $138,885,000
--------- ----------
If ValliCorp's consolidated book value (as determined in the manner described
above) as of the end of the calendar quarter preceding the Effective Date is
less than $125,000,000, this Section 6.3(l) shall not be satisfied.
ARTICLE 7
Termination, Waiver and Amendment
7.1 Termination.
(a) Termination. This Agreement and the Plan of Merger may be
terminated as follows:
(1) By the mutual consent of the Boards of Directors of both
WABC and ValliCorp at any time prior to the consummation of the Merger.
(2) By the Board of Directors of WABC on or after August 15,
1997, if (A) any of the conditions in Section 6.3 to which the
obligations of WABC are subject have not been fulfilled, or (B) such
conditions have been fulfilled or waived by WABC and ValliCorp shall
have failed to complete the Merger.
(3) By the Board of Directors of WABC if a Material Adverse
Effect shall have occurred with respect to ValliCorp and the ValliCorp
Subsidiaries taken as a whole since September 30, 1996, or there has
been failure or prospective failure on the part of ValliCorp or
ValliWide to comply with its obligations under this Agreement, or any
failure or prospective failure to comply with any of the conditions set
forth in Section 6.3 hereof.
(4) By WABC if, after the date hereof, any person (other than
WABC or any Subsidiary thereof) shall become and remain for ten
Business Days the beneficial owner of 10% or more of the then
outstanding shares of ValliCorp or any Person (other than WABC or a
subsidiary thereof) shall have commenced a bona fide tender offer or
exchange offer to acquire at least 10% of the then outstanding shares
of ValliCorp.
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(5) By the Board of Directors of ValliCorp on or after August
15, 1997, if (A) any of the conditions contained in Section 6.2 to
which the obligations of ValliCorp are subject have not been fulfilled,
or (B) such conditions have been fulfilled or waived but WABC shall
have failed to complete the Merger; provided, however, that if WABC is
engaged at the time in litigation (including an administrative appeal
procedure) relating to an attempt to obtain one or more of the
Government Approvals or if WABC shall be contesting in good faith any
litigation which seeks to prevent consummation of the transactions
contemplated hereby, such nonfulfillment shall not give ValliCorp the
right to terminate this Agreement until the earlier of (A) twelve (12)
months after the date of this Agreement and (B) sixty (60) days after
the completion of such litigation and of any further regulatory or
judicial action pursuant thereto, including any further action by a
governmental agency as a result of any judicial remand, order or
directive or otherwise or any waiting period with respect thereto.
(6) By the Board of Directors of ValliCorp if (i) a Material
Adverse Effect shall have occurred with respect to WABC and the WABC
Subsidiaries taken as a whole since September 30, 1996, or (ii) there
has been failure or prospective failure on the part of WABC to comply
with its obligations under this Agreement, or (iii) any failure or
prospective failure to comply with any condition set forth in Section
6.2.
(7) By the Board of Directors of ValliCorp, if the Board of
Directors so determines by a vote of a majority of the members of its
entire Board, at any time during the two-day period commencing one day
after the Determination Date, if the Average Price as of the
Determination Date of shares of WABC Common Stock shall be less than
$46.13 (the "Minimum Price"); subject, however, to the following three
sentences. If ValliCorp elects to exercise its termination right
pursuant to the immediately preceding sentence, it shall give prompt
written notice to WABC; provided that such notice of election to
terminate may be withdrawn at any time within the aforementioned
two-day period. During the two-day period commencing on the day after
receipt of such notice, WABC shall have the option in the case of a
failure to satisfy the condition set forth in this clause, of adjusting
the Exchange Ratio to equal a number equal to a quotient (rounded to
the nearest ten thousandth), the numerator of which is the product of
the Minimum Price and .4313 and the denominator of which is the Average
Price. If WABC makes an election contemplated by the preceding
sentence, within such two-day period, it shall give prompt written
notice to ValliCorp of such election and the revised Exchange Ratio,
whereupon no termination shall have occurred pursuant to this Section
and this Reorganization Agreement shall remain in effect in accordance
with its terms (except as the Exchange Ratio shall have been so
modified), and any references in this Agreement to "Exchange Ratio"
shall thereafter be deemed to refer to the Exchange Ratio as adjusted
pursuant to this Section.
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For purposes of this subsection, "Determination Date" shall
mean the last day of the 20 trading day period referred to in the
definition of Average Price.
(b) Notice. The power of termination hereunder may be exercised by WABC
or ValliCorp, as the case may be, only by giving written notice, signed on
behalf of such party by its Chairman of the Board or President, to the other
party.
(c) Breach of Obligations. If there has been a material breach by
either party in the performance of any of the obligations herein which shall not
have been cured within thirty (30) days after written notice thereof has been
given to the defaulting party, the nondefaulting party shall have the right to
terminate this Agreement upon written notice to the other party. In any event,
the nondefaulting party shall have no obligation to consummate any transaction
or take any further steps toward such consummation contemplated hereunder until
such breach is cured.
(d) Termination and Expenses. Termination of this Agreement shall not
terminate or affect the Stock Option Agreement or the representations and
warranties in Article 3 insofar as they relate to the Stock Option Agreement or
the obligations of the parties under Section 5.1(e), 5.2(h) or 8.1 or otherwise
to pay expenses as provided elsewhere herein, to maintain the confidentiality of
the other party's information pursuant to Section 5.3(d), or the provisions of
this Section 7.1(d) or of Section 8.5, 8.8 or 8.9 or the second sentence of
Section 8.3 and shall not affect any agreement after such termination. The
parties agree that any termination of this Agreement shall not in any manner
release or be construed as so releasing the nonterminating party or parties or
their respective officers or directors from any liability or damage to the other
party or parties arising out of, in connection with or otherwise relating to,
directly or indirectly, such parties' willful breach of its covenants,
agreements, representations or warranties hereunder.
7.2 Survival of Representations, Warranties and Covenants. No
investigation by WABC or ValliCorp made before or after the date hereof shall
affect the representations and warranties which are contained in this Agreement;
provided that all representations, warranties, covenants and agreements in this
Reorganization Agreement and the Plan of Merger or in any instrument delivered
pursuant hereto or thereto shall expire on, and be terminated and extinguished
at, the Effective Date other than covenants and agreements that by their terms
are to survive or be performed, in whole or in part, after the Effective Date,
provided that no such representations, warranties or covenants shall be deemed
to be terminated or extinguished so as to deprive WABC or ValliCorp (or any
director, officer or controlling person thereof) of any defense in law or equity
which otherwise would be available against the claims of any person, including,
without limitation, any shareholder or former shareholder of either WABC or
ValliCorp, the aforesaid representations, warranties, covenants and agreements
being material inducements to the consummation by WABC and ValliCorp of the
transactions contemplated herein.
7.3 Amendment or Supplement. This Reorganization Agreement and the Plan
of Merger may be amended or supplemented at any time by mutual agreement of the
parties
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hereto or thereto. Any such amendment or supplement must be in writing and
approved by their respective boards of directors and/or officers authorized
thereby.
ARTICLE 8
Miscellaneous
8.1 Fees and Expenses.
(a) Unless otherwise agreed by the parties in writing or as otherwise
provided herein, each party hereto shall bear and pay all costs and expenses
incurred by it incident to preparing, entering into and carrying out this
Agreement and to consummating the Merger, including fees and expenses of its own
financial consultants, accountants and counsel, except that WABC and ValliCorp
each shall bear and pay 50% of all printing and mailing costs and filing fees
associated with the Registration Statement and the Proxy Statement.
Notwithstanding the foregoing provisions of this Section 8.1, if this Agreement
and the Plan of Merger are terminated by either party pursuant to Section 7.1(c)
hereof because of a willful breach by the other party of any representation,
warranty, covenant or agreement as set forth in Section 7.1(c), and provided
that the terminating party shall not have been in breach of any representation
and warranty (in any material respect), covenant or agreement contained herein
or in the Plan of Merger, then the breaching party shall bear and pay all the
costs and expenses incurred by the parties, with respect to the fees and
expenses of financial and other consultants, investment bankers, accountants,
counsel printers and persons involved in the transactions contemplated by this
Reorganization Agreement, including the preparation of the Registration
Statement and Proxy Statement and the solicitation of proxies, in each case that
are not employees of the party that incurred such fees and expenses. Final
settlement with respect to the payment of such fees and expenses by the parties
shall be made within thirty days of the termination of this Reorganization
Agreement and the Plan of Merger.
(b) Notwithstanding anything to the contrary contained herein, the
aggregate amount of gain realized by WABC pursuant to the Stock Option Agreement
from ValliCorp (or the Substitute Option Seller (as defined in the Stock Option
Agreement)), when added to the Termination Fee, if any, received by WABC shall
not in the aggregate exceed $15,000,000, and, in the event WABC realizes gain in
excess of such amount under the Stock Option Agreement from the Company (or the
Substitute Option Seller), WABC undertakes promptly to pay back to ValliCorp, by
wire transfer of immediately available funds, the amount of such excess.
8.2 Entire Agreement; Severability. This Agreement, the Plan of Merger,
the Stock Option Agreement and the documents, certificates, agreements, letters
and schedules and exhibits attached or required to be delivered pursuant hereto
or thereto and the Letter Agreement set forth the entire agreement and
understanding of the parties with respect to the transactions contemplated
hereunder and thereunder and supersede all prior agreements, arrangements or
understandings with respect thereto. Each provision of this Agreement, the Plan
of Merger and the Stock Option Agreement shall be interpreted in a manner to be
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effective and valid under applicable law, but if any provision hereof or thereof
shall be prohibited or ruled invalid under applicable law, the validity,
legality and enforceability of the remaining provisions shall not, except as
otherwise required by law, be affected or impaired as a result of such
prohibition or ruling.
8.3 Binding Agreement. The terms and conditions of this Agreement and
the Plan of Merger shall inure to the benefit of and be binding upon the parties
hereto and thereto and their respective successors and permitted assigns. This
Agreement is not made for the benefit of any person, firm, corporation or
association not a party hereto, and no other person, firm, corporation or
association shall acquire or have any right under or by virtue of this
Agreement. Except as specifically set forth herein, or in the Plan of Merger,
nothing in this Agreement or the Plan of Merger, expressed or implied, is
intended to confer upon any party, other than the parties hereto and thereto,
and their respective successors and permitted assigns, any rights, remedies,
obligations or liabilities.
8.4 No Assignment. No party hereto may assign this Agreement or any of
its rights, privileges, duties or obligations hereunder (whether by operation of
law or otherwise) to any other Person without the prior written consent of the
other parties to this Agreement. Any such purported assignment or delegation
that is made without the prior written consent of the other parties to this
Agreement shall be void and of no effect.
8.5 Notices. All notices or other communications which are required or
permitted hereunder shall be effective only if in writing and delivered
personally or sent by facsimile transmission or overnight express or by
registered or certified mail, postage prepaid, addressed as follows:
If to ValliCorp or ValliWide:
ValliCorp Holdings, Inc.
8405 North Fresno Street
Fresno, CA 93720
Attention: J. Mike McGowan
Chairman and Chief Executive Officer
Tele. No.: (209) 437-5705
Fax No.: (209) 437-0231
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With a required copy to:
ValliCorp Holdings, Inc.
8405 North Fresno Street
Fresno, California 93720
Attention: E. L. Herbert, Esq.
Tele. No.: (209) 437-5705
Fax No.: (209) 437-0231
and to:
Lillick & Charles
Two Embarcadero Center
San Francisco, California 94111
Attention: Ronald Bachli, Esq.
Tele. No.: (415) 984-8200
Fax No.: (415) 984-8300
If to WABC:
David L. Payne
Chairman of the Board
Westamerica Bancorporation
1108 Fifth Avenue
San Rafael, CA 94901
Tele. No.: (415) 257-8000
Fax No.: (415) 257-8015
With a required copy to:
Pillsbury Madison & Sutro LLP
P.O. Box 7880
San Francisco, CA 94120-7880
Attention: Jonathan D. Joseph, Esq.
Tele. No.: (415) 983-1000
Fax No.: (415) 983-1200
or to such other address as either party may designate by notice to the other,
and shall be deemed to have been given upon receipt.
8.6 Captions. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
8.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original instrument, but
all of which together shall constitute one and the same instrument.
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8.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California applicable to agreements
made and entirely to be performed within such jurisdiction, except to the extent
federal law is mandatorily applicable, and the laws of California shall govern
the validly and interpretation hereof and the performance of the parties hereto
of their respective duties and obligations hereunder.
8.9 Attorneys' Fees. In any action at law or suit in equity in relation
to this Agreement, the prevailing party in such action or suit shall be entitled
to receive a reasonable sum for its attorneys' fees and all other reasonable
costs and expenses incurred in such action or suit.
8.10 Specific Performance. The parties hereby acknowledge and agree
that the failure of either ValliCorp, ValliWide or WABC to fulfill any of its
respective covenants and agreements hereunder, including the failure to take all
such actions as are necessary on its part to cause the consummation of the
Merger, will cause irreparable injury to the other party (or parties) for which
damages, even if available, will not be an adequate remedy. Accordingly, each
party hereto does hereby consent to the issuance of injunctive relief by any
court of competent jurisdiction to compel performance of its obligations and to
the granting by any such court of the remedy of the specific performance by it
of its obligations hereunder.
8.11 Waivers. Prior to or at the Effective Time, except with respect to
any required shareholder or regulatory approval, WABC and ValliCorp,
respectively, by written instrument signed by an executive officer of such
party, may at any time (whether before or after approval of this Reorganization
Agreement and the Plan of Merger by the shareholders of ValliCorp and WABC)
extend the time for the performance of any of the obligations or other acts of
ValliCorp, on the one hand, or WABC, on the other hand, and may waive (i) any
inaccuracies of such parties in the representations or warranties contained in
this Agreement, the Plan of Merger or any document delivered pursuant hereto or
thereto, (ii) compliance with any of the covenants, undertakings or agreements
of such parties, or satisfaction of any of the conditions precedent to its
obligations, contained herein or in the Plan of Merger or (iii) the performance
by such parties of any of its obligations set out herein or therein; provided,
however, that no such waiver executed after approval of this Agreement and the
Plan of Merger by the shareholders of ValliCorp or WABC shall change the number
of shares of WABC Common Stock into which each share of ValliCorp Common Stock
shall be converted pursuant to the Merger. No failure to exercise and no delay
in exercising any right, remedy or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy or power
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy or power provided herein or by law or in equity. The waiver
by any party of the time for performance of any act or condition hereunder does
not constitute a waiver of the act or
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condition itself. Any requests for waivers or waivers granted pursuant to this
Section 8.11 shall be in accordance with the provisions of Section 8.5 hereof.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Agreement to be executed in counterparts by their duly
authorized officers and their corporate seal to be hereunto affixed and attested
by their officers thereunto duly authorized, all as of the day and year first
above written.
Attest VALLICORP HOLDINGS, INC.
/s/ E. L. Herbert By /s/ J. Mike McGowan
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E. L. Herbert J. Mike McGowan
Executive Vice President, General Chairman and Chief Executive Officer
Counsel and Secretary
(SEAL)
Attest VALLIWIDE BANK
/s/ E. L. Herbert By /s/ J. Mike McGowan
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E. L. Herbert J. Mike McGowan
Executive Vice President, General Chairman and Chief Executive Officer
Counsel and Secretary
(SEAL)
Attest WESTAMERICA BANCORPORATION
/s/ Mary Anne Bell By /s/ David L. Payne
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Mary Anne Bell David L. Payne
Assistant Corporate Secretary Chairman, President and Chief
Executive Officer
(SEAL)
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