Exhibit 2.6
SECOND AMENDMENT TO
FIRST RESTATEMENT OF AGREEMENT AND
PLAN OF REORGANIZATION
This SECOND AMENDMENT TO FIRST RESTATEMENT OF AGREEMENT AND
PLAN OF REORGANIZATION (the "Second Amendment") is dated as of April 12, 1999
and entered into by and between Valley Bank (the "Bank") and Pacific Community
Banking Group (the "Company").
WHEREAS, the Bank and the Company entered into a First
Restatement of Agreement and Plan of Reorganization dated as of January 5, 1999
(the "Agreement"); and a First Amendment to the Agreement dated as of March 4,
1999.
WHEREAS, the parties hereto desire to amend the Agreement and
the First Amendment as provided in this Second Amendment.
NOW, THEREFORE, in consideration of the premises and mutual
promises of the parties set forth below, the parties hereto agree as follows:
1. Capitalized terms used herein and not otherwise defined
shall have the same meaning as set forth in the Agreement.
2. Recital C of the Agreement is hereby amended to read in its
entirety as follows:
"C. At the Effective Time (hereinafter defined below) of the
Merger, all of the issued and outstanding shares of Bank Stock, except for
shares of Bank Stock held by Dissenting Shareholders (as hereinafter defined
below), shall be converted into and exchanged for a combination of shares of
Company Stock and Warrants exercisable into shares of Company Stock, all upon
the terms and subject to the conditions hereinafter set forth;"
3. Recital E of the Agreement is hereby amended by the
addition, at the end thereof, of the following clause:
"and the Bank, the Company and Interim Valley Bank will each
be "a party to a reorganization," within the meaning of Section 368(b) of the
Code, with respect to the Merger;"
4. The definition of Bank Shareholder is hereby added to read
in its entirety as follow:
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"'Bank Shareholder' shall mean any holder of Bank Stock or an
option to purchase Bank Stock immediately prior to the Merger."
5. The definition of "Cash Election" is hereby deleted.
6. The definition of "Combination Election" is hereby deleted.
7. The definition of Expected Net Proceeds" is hereby deleted.
8. The definition of "Offering" is hereby amended to read in
its entirety as follows:
"'Offering' shall mean a public offering underwritten by the
Underwriters (as defined below), as determined by the Company in its sole
discretion, of a certain number of shares of Company Stock as determined by the
Company in its sole discretion, of shares of the Company held by shareholders of
the Bank and The Bank of Hemet, and newly issued shares, at a gross offering
price of not less than $15.00 per share, as described in Section 7.14."
9. The definition of "S-1" is hereby amended in its entirety
as follows:
"'S-1' means the registration statement on Form S-1 to be
filed with the SEC relating to the registration under the Securities Act of the
shares of Company Stock held by shareholders of the Bank and The Bank of Hemet
to be sold, and shares of Company Stock to be issued, in the Offering."
10. The definition of "Selling Shareholder" is hereby added to
read in its entirety as follows:
"'Selling Shareholder" shall mean any Bank shareholder or
holder of a Bank stock option who elects to sell his or her shares of Bank Stock
or to exchange his or her options and sell the Company Stock received in
exchange therefore in the Offering."
11. The definition of "Total Acquisition Costs" is hereby
deleted.
12. The definition of "Undesignated Shares" is hereby amended
to read in its entirety as follows:
"'Undesignated Shares' shall have the meaning given such term
in Section 2.10."
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13. The second sentence of Section 2.1(b) is hereby amended to
read in its entirety as follows:
"Subject to proration by the Company in its absolute and sole
discretion to ensure that the number of shares of Company Stock sold by the Bank
Shareholders of the Bank in the Offering is equal to 60% of the aggregate number
of shares of Company Stock received by the Bank Shareholders of the Bank,
holders of Bank Stock shall be provided the opportunity to sell in the Offering
all the shares of Company Stock received in exchange for Bank Stock, as provided
in Section 2.10. If more or less than 60% of the shares of Company Stock
received by the Bank Shareholders (including, for this purpose, holders of Bank
stock options, as provided in Section 2.8) of the Bank is elected to be sold in
the Offering, then the shares of Company Stock sold in the Offering by each
Selling Shareholder so electing shall be increased or decreased, ratably in
proportion to the number of shares requested to be sold, so that the total
number of shares sold in the Offering by the Bank Shareholders in the aggregate
is equal to 60% of the shares of Company Stock received by the Bank
Shareholders. The Selling Shareholders shall receive, for each share of Company
Stock sold in the Offering, the price at which shares are sold in the Offering,
without reduction for expenses or commissions of the Offering, it being
understood that the Company shall bear such expenses and commissions."
14. Section 2.1(e) is hereby amended to read in its entirety
as follows:
(e) The Charter Documents of the Company as in effect
immediately prior to the Effective Time shall continue in effect after the
Merger until thereafter amended in accordance with applicable law and the
members of the Board of Directors and the Executive Officers of the Company
immediately prior to the Merger shall continue in their respective positions
after the Merger and be the Board of Directors and the Executive Officers of the
Company, except that the Company shall have taken prior to the Effective Time
all necessary steps so that, (i) two (2) individuals from the Board of Directors
of the Bank, which are intended to be Mr. Marion Ashley and Mr. N. Douglas
Mills, shall be appointed to the Board of Directors of the Company, (ii) two (2)
individuals from the Board of Directors or executive staff of The Bank of Hemet
shall be appointed to the Board of Directors of the Company, and (iii) the
individuals elected to fill such four (4) directorships shall be annual
appointments as selected in the sole discretion of the Company, and (iv) the
Company shall appoint at the Effective Time, and the Company shall continue to
propose for election at each successive Company annual shareholder meeting
thereafter, the ratio of that number of directors from the Bank's Board of
Directors bears to the total number of directors to be elected, compared to the
ratio of the number of former Bank's shares bears to the total number of shares
of the Company, with a minimum of two to be appointed or elected from the Bank's
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Board of Directors, subject to the approval of the Company (clauses (i) - (iv)
being hereinafter collectively referred to as the "Company Corporate Governance
Changes").
15. Section 2.4 is hereby amended to read in its entirety as
follows:
"2.4 THE AGGREGATE PURCHASE CONSIDERATION AND PER SHARE
CONSIDERATION. The Aggregate Purchase Consideration shall be equal to the sum of
(i) the product of 1,171,906 and the Per Share Consideration and (ii) the
Aggregate Option Price. The Per Share Consideration shall be equal to 2/3 share
of Company Stock for each share of Bank Stock, plus one-third (1/3) Warrant."
16. Section 2.5 is hereby amended to read in its entirety as
follows:
"2.5 DELIVERY OF CONSIDERATION. At the Closing, the Company
will deliver to the Exchange Agent an amount of Company Stock and Warrants equal
to the Aggregate Purchase Consideration, plus any cash payment for a fractional
share of Company Stock. In the case of shares of Company Stock to be sold in the
Offering, as provided in Section 2.1(b), the Exchange Agent shall deliver such
shares to, or pursuant to the direction of, the Underwriters. In the case of all
other shares of Company Stock, and the cash and Warrants, the Exchange Agent
shall deliver the same to the Selling Shareholders, provided that share
certificates formerly evidencing Bank Stock (duly executed and in proper form
for transfer), or a lost certificate affidavit acceptable to the Company) shall
have been delivered to the Exchange Agent in accordance with this Section 2.5,
Section 2.10 and an agreement to be entered into between the Company and the
Exchange Agent."
17. Section 2.8 is hereby amended to read in its entirety as
follows:
"2.8 STOCK OPTIONS. Immediately prior to the Effective Time of
the Merger, all stock options will be fully vested and each holder of a Bank
Option will be given the opportunity to, in whole or in part, cancel such option
and receive Company Stock equal to the number of shares of Bank Stock covered by
such option multiplied by the number obtained by subtracting the exercise price
of such option from the Per Share Consideration in effect on the Closing Date
(i.e., shares subject to option times ($10.00 minus exercise price of option),
all divided by $15.00) (the total of sum of such payments for all Bank Options
so cancelled shall be defined as the "Aggregate Option Price"). For each 2/3
share of Company Stock paid by the Company in exchange for options on Bank Stock
as provided in the previous sentence, each holder of a bank option will also
receive one-third (1/3) Warrant. Each such option holder shall be afforded an
election to have the shares so received sold in the Offering, upon substantially
identical terms as the Selling Shareholders, and subject to proration together
with and on the same terms as the Selling Shareholders. All remaining Bank
Options which are entitled to participate
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in the Aggregate Option Price but the holder of a Bank Option elects not to
participate in the Aggregate Option Price shall be cancelled immediately prior
to the Effective Time of the Merger."
18. Section 2.9 is hereby amended to read in its entirety as
follows:
"2.9 SHAREHOLDERS' AGREEMENTS. The Shareholders' Agreements
previously entered into by each of the Directors of the Bank continue to be in
full force and effect, and shall apply to the Agreement as amended pursuant to
this Second Amendment. By signing this Second Amendment, each of the Directors
of the Bank so agrees."
19. Section 2.10 is hereby amended to read in its entirety as
follows:
"2.10 (a) TRANSMITTAL LETTER. On or about the mailing date of
the Joint Proxy Statement/Prospectus, the Company, the Bank or the Company's
Exchange Agent shall mail appropriate transmittal materials to the stockholders
of Bank Stock, in form acceptable to the Company. The transmittal materials
shall include documentation by which stockholders may indicate their election
regarding the sale of shares in the Offering, subject to the possible adjustment
as provided in Section 2.1(b), and shall provide that sale in the Offering will
be contingent on the completion of the Offering. The transmittal letter shall
also contain a power of attorney authorizing an authorized representative of the
Company to exchange the Bank's shares for Company shares, and then immediately
deliver the Company shares to the Underwriter for sale in the Offering. The
transmittal letter shall also require a signature guarantee, from a bank or
brokerage with medallion capability. The holder of Bank Stock shall be
instructed to send to the Company, or to the entity designated by the Company
(which may be the Bank or the Exchange Agent), the holder's Bank Stock
certificates with the properly completed letter of transmittal. The transmittal
letter shall contain an election box which permits the holder to elect to sell
all of his or her shares of PCBG for cash or 60% of such shares (subject to
adjustment as elsewhere herein provided), and other appropriate and customary
transmittal materials (which shall specify that delivery shall be effected, and
risk of loss and title to the certificates theretofore representing shares of
Bank Stock shall pass, only upon proper delivery of such certificates to the
Exchange Agent in such form as Company requires. The transmittal materials shall
identify the Election Deadline established by the Company, which shall not be
less than 30 days from the date of mailing of such transmittal letter to the
holder (or such shorter time as the Bank may approve), and shall state that any
share of Bank Stock (other than Dissenting Common Stock) with respect to which
the holder (or the Beneficial Owner, as the case may be) shall not have
submitted an effective, properly completed letter of transmittal together with
the Bank Stock certificates (or customary affidavits and indemnification
regarding the loss or destruction of
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such certificates or the guaranteed delivery of such certificates) prior to the
Election Deadline shall be deemed to be "Undesignated Shares" hereunder, and
shall not sell Company Stock in the Offering. The Bank shall provide to the
Exchange Agent all information reasonably necessary for it to perform its
obligations as specified herein.
(b) PROPER AND TIMELY ELECTION. Any Election shall have been
properly made and effective only if the Company or its designee shall have
actually received a properly completed letter of transmittal by the date and
time established by the Company and specified in the transmittal materials, as
such date and time may be extended by the Company in its discretion (the
"Election Deadline"). A letter of transmittal shall be deemed properly completed
only if an Election is indicated for each share of Bank Stock covered by such
letter of transmittal and if accompanied by one or more certificates (or
customary affidavits and indemnification regarding the loss or destruction of
such certificates or the guaranteed delivery of such certificates) representing
all shares of Bank Stock owned by the holder of Bank Stock, together with duly
executed transmittal materials included in or required by the letter of
transmittal. Any Election may be revoked or changed by the person submitting a
revised, properly completed letter of transmittal at or prior to the Election
Deadline. In the event a letter of transmittal is revoked prior to the Election
Deadline, the shares of Bank Stock represented by such Election shall
automatically become Undesignated Shares unless and until a new Election is
properly made with respect to such shares on or before the Election Deadline,
and the Company shall cause the certificates representing such shares of Bank
Stock to be promptly returned without charge to the person submitting the
revoked Election upon written request to that effect from the holder who
submitted such Election Form. Subject to the terms of this Agreement and of the
Election, the Company or the Exchange Agent shall have reasonable discretion to
determine whether any election, revocation or change has been properly or timely
made and to disregard immaterial defects in the letter of transmittal, and any
decisions of the Company and Bank required by the Exchange Agent and made in
good faith in determining such matters shall be binding and conclusive. Neither
the Company nor the Exchange Agent shall be liable for the failure to notify any
person of any defect in an Election or the letter of transmittal, provided that
the Company uses its reasonable best efforts promptly to notify (or cause the
Exchange Agent promptly to notify) any holder of Bank Stock of any defect in an
Election or the Letter of Transmittal.
(c) If the aggregate number of shares of Bank Stock as to
which Elections to sell shall have effectively been made would, absent
proration, result in the sale in the Offering of fewer or more shares than are
permitted pursuant to Section 2.1(b), then the sales in the Offering shall be
increased or decreased pro rata as provided in Section 2.1(b) in order to ensure
that the shares sold by Selling
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Shareholders in the Offering equal 60% of all shares received by Selling
Shareholders (including, for this purpose, option holders).
(d) CALCULATIONS. The calculations required by this Section
2.1 shall be prepared by the Company prior to the Effective Time and shall be
set forth in a certificate executed by the Chief Financial Officer or Chief
Executive Officer of the Company and furnished to the Bank at least two Business
Days prior to the Closing Date showing the manner of calculation in reasonable
detail. Any cash payment shall be rounded to the nearest cent.
(e) NO FRACTIONAL SHARES OR WARRANTS. Notwithstanding any
other provisions of this Agreement, each holder of shares of Bank Stock
exchanged pursuant to the Merger who would otherwise have been entitled to
receive a fraction of a share of Company Stock (after taking into account all
certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional part of a share of
Company Stock multiplied by $15.00. Notwithstanding any other provision of this
Agreement, no fractional Warrants shall be issued, and no cash or other
consideration shall be paid in lieu of fractional Warrants. No holder will be
entitled to dividends, voting rights or any other rights as a shareholder in
respect of any fractional share of Company Stock."
20. Section 2.11 is hereby deleted, and Sections 3.4 and 3.5
are hereby amended in full as follows:
"3.4 EXCHANGE PROCEDURES.
(a) EXCHANGE AGENT. Prior to the Effective Time, the
Company shall deposit with the Exchange Agent shares of Company Stock and
Warrants to be issued to selling shareholders of the Bank, such shares being the
number of shares of Company Stock equal to the Aggregate Purchase Consideration
issuable in the Merger. The Exchange Agent shall deliver or cause to be
delivered to the Underwriter those of such shares to be sold in the Offering.
Upon completion of the Offering, the Underwriter will deposit with the Exchange
Agent the proceeds of the sale of shares by selling shareholders in the
Offering. The Exchange Agent shall distribute to each selling shareholder the
cash proceeds, shares of Company Stock and Warrants to which such selling
shareholder is entitled, provided that the selling shareholder shall have
delivered the requisite letter of transmittal and Bank share certificates (or
customary affidavits and indemnification regarding the loss or destruction of
such certificates or the guaranteed delivery of such certificates). The Exchange
Agent shall not be entitled to vote or exercise any rights of ownership with
respect to Company Stock held by it from time to time hereunder, except that it
shall receive and hold all dividends or other distributions paid or distributed
with respect to such shares for the account of the persons entitled thereto.
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(b) EXCHANGE OF CERTIFICATES. Each holder of a
certificate formerly representing Bank Stock (other than Dissenting Common
Stock) who surrenders or has surrendered such certificate (or customary
affidavits and indemnification regarding the loss or destruction of such
certificate), together with duly executed transmittal materials required by
Section 2.10, to the Exchange Agent shall, upon acceptance thereof, be entitled
to the Per Share Consideration of a certificate representing Company Stock or
the proceeds of the sale of such stock in the Offering and Warrants into which
the shares of Bank Stock shall have been converted pursuant hereto, as well as
cash in lieu of any fractional shares of Company Stock to which such holder
would otherwise be entitled. The Exchange Agent shall accept such Bank
certificate upon compliance with such reasonable and customary terms and
conditions as the Exchange Agent may impose to effect an orderly exchange
thereof in accordance with normal practices. Until surrendered as contemplated
by this Section 3.4, each certificate representing Bank Stock shall be deemed
from and after the Effective Time to evidence only the right to receive the Per
Share Consideration Company Stock and a Warrant, as the case may be, upon such
surrender. The Company shall not be obligated to deliver the consideration to
which any former holder of Bank Stock is entitled as a result of the Merger
until such holder surrenders his certificate or certificates representing shares
of Bank Stock for exchange as provided in this Article III. If any certificate
for shares of Company Stock, or any check representing declared but unpaid
dividends, is to be issued in a name other than that in which a certificate
surrendered for exchange is issued, the certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer and the person
requesting such exchange shall affix any requisite stock transfer tax stamps to
the certificate surrendered or provide funds for their purchase or establish to
the satisfaction of the Exchange Agent that such taxes are not payable.
(c) PAYMENT TO HOLDERS OF A BANK OPTION. Each holder
of a Bank Option who presents a demand for cancellation and payment of such Bank
Option as provided in Section 2.8 of the Agreement to the Exchange Agent prior
to the Closing shall, upon acceptance thereof, be entitled to the per share
equivalent of the Aggregate Option Price. Upon receipt of the Aggregate Purchase
Consideration and as soon as reasonably possible after the Closing, the Exchange
Agent shall deliver to each holder of a Bank Option the consideration due each
such holder under Section 2.8, or if applicable, Section 2.10, of the Agreement,
in the form of shares of Company Stock, Cash and Warrants as provided therein.
The Exchange Agent shall be entitled to rely upon the records of the Bank and
the information provided in such demand for cancellation documentation provided
by any such holder of a Bank Option, as verified by the Company as to the method
and means of payment and disposition of such consideration.
(d) AFFILIATES. Certificates surrendered for exchange
by any
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person constituting an "affiliate" of Bank for purposes of Rule 144(a) under the
Securities Act shall not be exchanged for certificates representing whole shares
of Company Stock until the Company has received a written agreement from such
person as provided in Section 6.25.
3.5 VOTING AND DIVIDENDS. Former shareholders of record of
Bank shall not be entitled to vote after the Effective Time at any meeting of
Company shareholders the number of whole shares of Company Stock into which
their respective shares of Bank Stock are converted, until such holders have
exchanged their certificates representing Bank Stock for certificates
representing Company Stock in accordance with the provisions of this Agreement.
Until surrendered for exchange in accordance with the provisions of Sections
2.10 and 3.4 of this Agreement, each certificate theretofore representing shares
of Bank Stock shall from and after the Effective Time represent for all purposes
only the right to receive the Per Share Consideration consisting of shares of
Company Stock and a Warrant, and cash in lieu of fractional shares, as set forth
in this Agreement. No dividends or other distributions declared or made after
the Effective Time with respect to Company Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered certificate of
Bank Stock with respect to the shares of Company Stock represented thereby,
until the holder of such certificate of Common Stock shall surrender such
certificate. Subject to the effect of applicable laws, following surrender of
any such certificates of Bank Stock for which shares of Company Stock are to be
issued, there shall be paid to the holder of the certificates, without interest,
(i) the amount of any cash payable with respect to a fractional share of Company
Stock to which such holder is entitled pursuant to Section 2.1 and the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Company Stock, and (ii) at
the appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Time but prior to surrender and a payment
date subsequent to the Effective Time payable with respect to such whole shares
of Company Stock."
21. Section 5.21 is hereby amended to read in its entirety as
follows:
"5.21 CAPITAL OF COMPANY, OFFERING AND COMMITMENTS. The
Company intends to use its best efforts to conduct the Offering in order to
permit stockholders of the Bank and The Bank of Hemet to sell shares of Company
Stock and to provide capital for expenses, growth and operations of the Company.
As of the date of this Agreement, the Company and Sutro have entered into the
Engagement Agreement, a copy of which has been provided to the Bank and which
has not been terminated or materially altered, except that the Company can
change its relationship with Sutro, or increase or decrease the number of
underwriters or co-mangers of the Offering, in the Company's sole discretion.
The Company shall
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not impose any cost or expense of the Offering, including Underwriter costs and
expenses, on any selling shareholder."
22. The first sentence of Section 6.8 is hereby amended to
read in its entirety as follows:
"As soon as practicable, the Company and the Bank shall
prepare the S-4 and the proxy statement ("Proxy Statement") and take all action
necessary in accordance with applicable Rules and its Charter Documents to
submit the Agreement and the transactions contemplated hereby to its
shareholders for approval by June 21, 1999, or as otherwise reasonably directed
by the Company."
23. Section 7.14 is hereby amended to read in its entirety as
follows:
"7.14 THE OFFERING.
(a) The Company intends to conduct the Offering in order to
permit stockholders of the Bank and The Bank of Hemet, to sell shares of Company
Stock and to provide capital for expenses, growth and operations of the Company.
All shareholders of the Bank will be given the opportunity to sell shares of the
Company (whether in exchange for Bank Stock or Bank Options) in the Offering,
subject to proration as provided in Section 2.1(b). Shares of Company Stock sold
by the selling shareholders will not incur any cost and expenses of the
Offering, and pursuant to the terms of this Section 7.14, the net proceeds from
the Offering will not be less than $15.00 per share.
(b) All holders of Bank Options who exchange their options for
shares Company Stock and elect to sell the shares of Company Stock so received
may do so without having to first exercise such options. Such option holders
wishing to sell shares of Company Stock underlying their options to be received
in exchange for the Bank Options may do so by depositing with the Exchange Agent
the options with respect to the shares of Bank Stock to be exchanged prior to
the Offering, together with appropriate Letters of Transmittal properly
completed and executed. At the time of the Merger, the Bank Options will be
deemed exchanged for the number of shares of Company Stock and Warrants as
provided in Section 2.8, and upon completion of the Offering, the Exchange Agent
will distribute to each former option holder (a) the proceeds of sale of those
of such shares that are sold in the Offering, and (b) the shares and cash to
which the former option holder is entitled.
(c) All Directors and executive officers of the Company and
the Surviving Bank, except Willow Decker and Mark Nugent, have undertaken in
writing with the Underwriters not to sell any Warrants or shares of Company
Stock held by
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them for a period of six months following the completion of the Offering unless
specifically granted permission to do so by the Underwriters, such undertaking
is in full force and effect. It is understood that the Underwriters will (a)
reduce the period from six months to ninety (90) days and (b) exclude from the
effect of these undertakings those shares sold in the Offering. Mark Nugent will
execute similar undertakings within 15 days of the day of the Second Amendment.
The Bank will use its best efforts to have Willow Decker execute similar
undertakings.
(d) Simultaneously with, and upon the condition of, the
consummation of the acquisition of the Bank, the Company through the
Underwriters intends to consummate the Offering at a gross public offering price
of at least $15.00 per share. If the Offering cannot be consummated at a gross
public offering price of at least $15.00 per share, the Company will not be
obligated to proceed with the Offering and the acquisition of the Bank , and the
Bank shall not be obligated to consummate the Merger."
24. Section 9.4 is hereby amended to read in its entirety as
follows:
"9.4 STOCK OFFERING. An election to sell shares in the
Offering shall have been made, and proper documentation submitted, so that,
after application of the proration provisions of Section 2.1(b), if necessary,
60% of Company Stock received by holders of Bank Stock are available for sale in
the Offering. The Company shall have entered into a firm commitment underwriting
agreement for the Offering (at an offering price of at least $15.00 per share by
Selling Shareholders of 60% of the Bank Stock), and all conditions to the
consummation of the Offering contained in the Underwriting Agreement, other than
the completion of the mergers of Interim Valley Bank with the Bank and of PCBG
Merger Corporation with The Bank of Hemet, shall have been satisfied or waived,
and the Company and the Bank shall have received evidence thereof reasonably
satisfactory to them."
25. Section 9.8 is hereby amended to read in its entirety as
follows:
"9.8 TAX OPINION. The Company shall have received from its
accountants an opinion for the benefit of the holders of Bank Stock reasonably
satisfactory to the Company and the Bank to the effect that the Merger shall not
result in the recognition of gain or loss for federal income tax purposes to the
Company or the Bank, the issuance of Company Stock or Warrants, and the
subsequent sale thereof in the Offering, shall not result in the recognition of
gain or loss by the holders of Bank Stock who receive Company Stock and Warrants
in connection with the Merger and which are not sold in the Offering, and shall
state that the holding period for Company Stock, for purposes of capital gains
taxation, shall include the period during which Bank Stock was held. This
opinion shall be dated prior to the date the Proxy Statement is first mailed to
the shareholders of
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the Company and the Bank and such opinions shall not have been withdrawn or
modified in any respect."
26. Section 14.1(a)(vi) is hereby amended to read in its
entirety as follows:
"(vi) by the Company or the Bank by June 28, 1999, unless
regulatory approvals and/or completion of the Offering is relatively imminent
and is expected to be completed within 30 days of July 2, 1999, in which case
the date in this subsection shall be automatically extended for up to an
additional 30 days."
27. Section 14.1(e)(iv) is hereby added to read in its
entirety as follows:
"(iv) If this Agreement is terminated by the Company before
the Closing as a result of a default by the Company in the performance of
Sections 5.18 and 7.14, no costs, expenses, fees or other liability or damages
will be accrued or incurred by the Company."
28. This Second Amendment may be entered into in one or more
counterparts, all of which shall be considered one in the same instrument, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
29. Except as herein amended, the Agreement and the First
Amendment shall remain in full force and effect.
30. This Second Amendment shall be governed by and construed
in accordance with the laws of the State of California.
31. The execution and delivery of this Second Amendment by the
directors and officers executing the Second Amendment have been duly authorized
by the Boards of Directors of the Bank and the Company, and this Second
Amendment constitutes a legal, valid and binding agreement of the parties in
accordance with its respective terms.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the day and year first above written.
PACIFIC COMMUNITY BANKING GROUP
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By:
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E. Lynn Caswell
Chairman and Chief Executive Officer
By:
--------------------------------------
Alfred Jannard
Secretary
VALLEY BANK
By:
--------------------------------------
Marion V. Ashley
By:
--------------------------------------
N. Douglas Mills
By:
--------------------------------------
Juan P. Renteria
By:
--------------------------------------
Jesse Washington
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By:
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George E. Wilson
By:
--------------------------------------
Helga Wolf
By:
--------------------------------------
Eugene H. Wood