AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
DATED: SEPTEMBER 20, 2000
BY AND BETWEEN
HUMBOLDT BANCORP
AND
TEHAMA BANCORP
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
This AGREEMENT AND PLAN OF REORGANIZATION AND MERGER (the "Agreement")
is entered into as of September 20, 2000 by and between Humboldt Bancorp, a
California corporation ("Humboldt"), and Tehama Bancorp, a California
corporation ("Tehama").
RECITALS:
WHEREAS, the respective Boards of Directors of Tehama and Humboldt have
determined that it is in the best interests of Tehama and Humboldt and their
respective shareholders for Tehama to be merged with Humboldt, upon the terms
and subject to the conditions set forth in this Agreement and in accordance with
the California Corporations Code and other applicable laws;
WHEREAS, Tehama Bank is a wholly-owned subsidiary of Tehama and Humboldt
Bank, Capitol Valley Bank and Capitol Thrift & Loan Association are wholly-owned
subsidiaries of
Humboldt;
WHEREAS, each of the Boards of Directors of Tehama and Humboldt have
approved this Agreement and the transactions contemplated hereby;
WHEREAS, Tehama's and Humboldt's Boards of Directors have resolved to
recommend approval of the merger of Tehama and Humboldt to their respective
shareholders; and
WHEREAS, upon the consummation of the Merger of Tehama with Humboldt,
Tehama Bank shall become a wholly-owned subsidiary of Humboldt.
NOW, THEREFORE, in consideration of these premises and the representations,
warranties and agreements herein contained, Tehama and Humboldt hereby agree as
follows:
ARTICLE 1. DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set forth
below:
"Acquisition Event" shall mean any of the following:
(a) Prior to the termination of this Agreement, either Tehama or
Humboldt shall have authorized, recommended, publicly proposed or publicly
announced an intention to authorize, recommend or propose, or shall have entered
or announced an intention to enter into a letter of intent, an
agreement-in-principle or a definitive agreement with any Person (other than
Tehama, Humboldt or any of their respective Subsidiaries) to effect, an
Acquisition Transaction or failed to publicly oppose a Tender Offer or an
Exchange Offer (as defined below). As used herein, the term "Acquisition
Transaction" shall mean (i) a merger, consolidation or similar transaction
involving Tehama, Humboldt or any of their respective Subsidiaries (other than
internal mergers, reorganizations, consolidations or dissolutions involving only
existing Subsidiaries), (ii) the disposition, by sale, lease, exchange,
dissolution or liquidation, or otherwise, of all or substantially all of the
assets of Tehama or Humboldt or any asset or assets of Tehama or Humboldt the
disposition or lease of which would result in a material change in the business
or business operations of Tehama or Humboldt, a transfer (other than routine or
previously scheduled transactions involving existing Employee Plans or Benefit
Arrangements) of any shares of stock or other securities of Tehama or Humboldt
by Tehama or Humboldt, or a material change in the assets, liabilities or
results of operations or the future prospects of Tehama or Humboldt, including,
but not limited to a grant of an option entitling any Person (other than Tehama
or Humboldt) to acquire any shares of stock of Tehama or Humboldt or any assets
material to the business of Tehama or Humboldt; or (iii) the issuance (other
than pursuant to outstanding stock options or pursuant to Section 8.5) sale or
other disposition by Tehama or Humboldt (including, without limitation, by way
of merger, consolidation, share exchange or any similar transaction) of shares
of Tehama Common Stock or Humboldt Common Stock or other Equity Securities, or
the grant of any option, warrant or other right to acquire shares of Tehama
Common Stock or Humboldt Common Stock or other Equity Securities, representing
directly, or on an as-exercised, as-exchanged or as-converted basis (in the case
of options, warrants, rights or exchangeable or convertible Equity Securities),
15% or more of the voting securities of Tehama or Humboldt;
(b) Prior to termination of this Agreement (i) any Person (other than a
person who is a party to a Director Shareholder Agreement) shall have increased
the number of shares of Tehama Common Stock or Humboldt Common Stock over which
such person has beneficial ownership (as such term is defined in Rule 13d-3
promulgated under the Exchange Act) by a number that is greater than 1% of the
then outstanding shares of Tehama Common Stock or Humboldt Common Stock if,
after giving effect to such increase, such Person owns, beneficially, more than
10% of the outstanding shares of Tehama Common Stock or Humboldt Common Stock,
or (ii) any "group" (as such term is defined under the Exchange Act) shall have
been formed which beneficially owns, or has the right to acquire beneficial
ownership of, more than 10% of the then outstanding shares of Tehama Common
Stock or Humboldt Common Stock; or
(c) The approval by Tehama's or Humboldt's shareholders, or the
consummation by Tehama or Humboldt, of any Acquisition Transaction as described
in Subsection (a) of this Paragraph.
"Acquisition Proposal" shall have the meaning given such term in Section 6.2.5
and 6.4.12.
"Affected Party" shall have the meaning given to it in Section 5.7.
"Affiliate" or "affiliate" shall mean, with respect to any other Person, any
Person that, directly or indirectly, controls or is controlled by or is under
common control with such Person.
"Affiliate Agreements" shall have the meaning given to such term in Section
5.3.3.
"Benefit Arrangement" shall have the meaning given such term in Section 3.21.4.
"BHCA" shall mean the Bank Holding Company Act of 1956, as amended.
"Business Day" shall mean any day, other than a Saturday, Sunday or any other
day, such as a legal holiday, on which California state banks in California are
not open for substantially all their banking business.
"California Corporations Code" shall mean the General Corporation Law of the
State of California.
"California Financial Code" shall mean the Financial Code of the State of
California.
"CDFI" shall mean the California Department of Financial Institutions.
"Classified Assets" shall have the meaning given to such term in Section 6.1.15.
"Closing" shall have the meaning given to such term in Section 2.1.
"Closing Date" shall have the meaning given to such term in Section 2.1.
"Closing Schedules" shall have the meaning given to such term in Section 5.7.
"Commissioner" shall mean the Commissioner of Financial Institutions of the
State of California.
"Conversion Rate" shall mean 1.775 shares of Humboldt Common Stock (except if
the Humboldt Average Trading Price is less than $9.84375 but equal to or greater
than $9.75, the Conversion Rate shall mean the quotient of $17.473 divided by
the Humboldt Average Trading Price, otherwise the Conversion Rate shall remain
at 1.775). If the Humboldt Average Trading Price is less than $9.75, the parties
may renegotiate the Conversion Rate.
"Default" shall mean, as to any party to this Agreement, a failure by such party
to perform, in any material respect, any of the agreements or covenants of such
party contained in Articles 5 or 6.
"Director Shareholder Agreement" shall have the meaning given such term in
Sections 7.2.10 and 7.3.10.
"Dissenting Shares" shall mean shares of Tehama Common Stock or Humboldt Common
Stock which come within all of the descriptions set forth in Subparagraphs (1),
(2), (3) and (4) of Paragraph (b) of Section 1300 of the California Corporations
Code.
"Dissenting Shareholder Notices" shall mean the notice required to be given to
record holders of Dissenting Shares pursuant to Paragraph (a) of Section 1301 of
the California Corporations Code.
"Effective Time" shall have the meaning given such term in Section 2.1.
"Employee Plan" shall have the meaning given such term in Section 3.21.3.
"Environmental Laws" shall mean and include any and all laws, statutes,
ordinances, rules, regulations, orders, or determinations of any Governmental
Entity pertaining to health or to the environment, including, without
limitation, the Clean Air Act, as amended, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), the
Federal Water Pollution Control Act Amendments, the Occupational Safety and
Health Act of 1970, as amended, the Resource Conservation and Recovery Act of
1976, as amended ("RCRA"), the Hazardous Materials Transportation Act of 1975,
as amended, the Safe Drinking Water Act, as amended, and the Toxic Substances
Control Act, as amended.
"Equity Securities" shall have the meaning given to such term in the Exchange
Act.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Exchange Agent" shall mean Illinois Stock Transfer, or such other Person as
Humboldt shall have appointed to perform the duties set forth in Section 2.8.
"Exchange Offer" shall mean the commencement (as such term is defined in Rule
14d-2 under the Exchange Act) of an exchange offer or the filing by any Person
of a registration statement under the Securities Act with respect to an exchange
offer to purchase any shares of Tehama Common Stock or Humboldt Common Stock
such that, upon consummation of such offer, such Person would own or control 15%
or more of the then outstanding shares of Tehama Common Stock or Humboldt Common
Stock.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve Board" shall mean the Board of Governors of the Federal Reserve
System.
"GAAP" shall mean generally accepted accounting principles.
"Governmental Entity" shall mean any court, federal, state, local or foreign
government or any administrative agency or commission or other governmental
authority or instrumentality whatsoever.
"Hazardous Substances" shall have the meaning given such term in Section 3.23.4.
"Humboldt" shall mean Humboldt Bancorp.
"Humboldt Average Trading Price" shall mean shall mean the average closing price
during regular hours for Humboldt Common Stock as reported on the NASDAQ
National Market System during the twenty prior days on which Humboldt Common
Stock traded ending with the end of the fifth day immediately preceding the
Effective Time.
"Humboldt Collateralizing Real Estate" shall have the meaning given to such term
in Section 4.19.1.
"Humboldt Common Stock" shall mean the common stock, no par value per share, of
Humboldt.
"Humboldt Documents" shall have the meaning given to such term in Section 4.6.2.
"Humboldt Fairness Opinion" shall have the meaning given to such term in Section
7.2.9.
"Humboldt Filings" shall have the meanings given such term in Section 4.6.1.
"Humboldt Financial Statements" shall mean the financial statements of Humboldt
for the year ended December 31, 1999.
"Humboldt Market Value Per Share" shall mean the last trade of Humboldt Common
Stock prior to the Effective Time.
"Humboldt Material Adverse Event" shall have the meaning given to such term in
Section 8.1.9
"Humboldt Properties" shall have the meaning given to such term in Section
4.19.1.
"Humboldt Stock Plans" shall have the meaning set forth in Section 4.5.
"Humboldt Superior Proposal" shall have the meaning set forth in Section 6.4.12.
"IRC" shall mean the Internal Revenue Code of 1986, as amended.
"Joint Proxy Statement/Prospectus" shall have the meaning given to such term in
Section 3.7.2.
"Knowledge" shall mean, with respect to any representation or warranty contained
in this Agreement, the actual knowledge, after reasonable inquiry, of any
director or executive officer of Tehama or Humboldt.
"Last Regulatory Approval" shall mean the final Requisite Regulatory Approval
required, from any Governmental Entity under applicable federal laws of the
United States and laws of any state having jurisdiction over the Merger, to
permit the parties to consummate the Merger.
"Material Adverse Effect" shall mean a material adverse effect: (i) on the
business, assets, results of operations, financial condition or prospects of a
Person and its subsidiaries, if any, taken as a whole (unless specifically
indicated otherwise); or (ii) on the ability of a Person that is a party to this
Agreement to perform its obligations under this Agreement or to consummate the
transactions contemplated by this Agreement.
"Merger" shall have the meaning set forth in Section 2.1.
"Merger Agreement" shall have the meaning given to such term in Section 2.1.
"New Certificates" shall have the meaning given to such term in Section 2.8.1.
"OREO" shall have the meaning given such term in Section 3.13.
"Perfected Dissenting Shares" shall mean Dissenting Shares as to which the
recordholder has made demand on Tehama or Humboldt in accordance with Paragraph
(b) of Section 1301 of the California Corporations Code and has not withdrawn
such demand prior to the Effective Time.
"Persons" or "persons" shall mean an individual, corporation, partnership,
limited liability company, joint venture, trust or unincorporated organization,
Governmental Entity or any other legal entity whatsoever.
"Registration Statement" shall have the meaning given to such term in Section
3.7.2.
"Regulatory Authority" shall mean any Governmental Entity, the approval of which
is legally required for consummation of the Merger.
"Requisite Regulatory Approvals" shall have the meaning set forth in Section
7.1.2.
"Returns" shall mean all returns, declarations, reports, statements, and other
documents required to be filed with respect to federal, state, local and foreign
Taxes, and the term "Return" means any one of the foregoing Returns.
"Tehama" shall mean Tehama Bancorp.
"Tehama Certificates" shall have the meaning given such term in Section 2.8.1.
"Tehama Collateralizing Real Estate" shall have the meaning given such term in
Section 3.23.1.
"Tehama Common Stock" shall mean the common stock, no par value, of Tehama.
"Tehama Documents" shall have the meaning given to such term in Section 3.6.2.
"Tehama Fairness Opinion" shall have the meaning given to such term in Section
7.3.7.
"Tehama Filings" shall have the meaning given such term in Section 3.6.1.
"Tehama Financial Statements" shall have the meaning given to such term in
Section 3.7.3.
"Tehama Material Adverse Event" shall have the meaning given such term in
Section 8.1.8.
"Tehama Properties" shall have the meaning given such term in Section 3.23.1.
"Tehama Stock Options" shall mean any options to purchase any shares of Tehama
Common Stock or any other Equity Securities of Tehama granted on or prior to the
Effective Time, whether pursuant to the Tehama Stock Option Plans or otherwise.
"Tehama Stock Option Plans" shall mean Tehama's written 1994 and 1999 Stock
Option Plans as described in Schedule 3.5 hereto.
"Tehama Superior Proposal" shall have the meaning set forth in Section 6.2.5.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Subsidiary" shall mean, with respect to any corporation (the "parent"), any
other corporation, association or other business entity of which more than 50%
of the shares of the Voting Stock are owned or controlled, directly or
indirectly, by the parent or by one or more Subsidiaries of the parent, or by
the parent and one or more of its Subsidiaries.
"Surviving Corporation" shall have the meaning given to such term in Section
2.1.
"Taxes" shall mean all federal, state, local and foreign net income, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
license, lease, service, service use, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, windfall profits, customs,
duties, or other taxes, together with any interest and any penalties, additions
to tax, or additional amounts with respect thereto, and the term "Tax" means any
one of the foregoing Taxes.
"Tax Filings" shall mean any applications, reports, statements or other Returns
required to be filed with any local, state or federal Governmental Entity before
the Merger may become effective, including, but not limited to, any filing
required to be made with the California Franchise Tax Board to obtain a Tax
Clearance Certificate for the Merger.
"Tender Offer" shall mean the commencement (as such term is defined in Rule
14d-2 under the Exchange Act) of a tender offer or the filing by any person of a
registration statement under the Securities Act with respect to, a tender offer
to purchase any shares of Tehama Common Stock or Humboldt Common Stock such
that, upon consummation of such offer, such person would own or control 15% or
more of the then outstanding voting securities of Tehama or Humboldt.
"Understanding" shall have the meaning set forth in Section 6.1.5.
"Voting Securities" or "Voting Stock" shall mean the stock or other securities
or any other interest entitling the holders thereof to vote in the election of
the directors, trustees or Persons performing similar functions of the Person in
question, including, without limitation, nonvoting securities that are
convertible or exchangeable into voting securities, but shall not include any
stock or other interest so entitling the holders thereof to vote only upon the
happening of a contingency (other than a conversion or exchange thereof into
voting securities), whether or not such contingency has occurred.
ARTICLE 2. THE MERGER
Section 2.1 The Merger. Subject to the terms and conditions of this
Agreement, as promptly as practicable following the receipt of the Last
Regulatory Approval and the expiration of all applicable waiting periods, Tehama
shall be merged with Humboldt, with Humboldt being the Surviving Corporation of
the merger, all pursuant to the Agreement of Merger attached to this Agreement
as Exhibit 2.1 (the "Merger Agreement") and in accordance with the applicable
provisions of the California Corporations Code (the "Merger"). The closing of
the Merger (the "Closing") shall take place at a location and time and Business
Day to be designated by Humboldt and reasonably concurred to by Tehama (the
"Closing Date") which shall not, however, unless the parties agree otherwise in
writing, be later than thirty (30) days after the receipt of necessary
shareholder approvals and the Last Regulatory Approval and expiration of all
applicable waiting periods. The Merger shall be effective when the Merger
Agreement (together with any other documents required by law to effectuate the
Merger) shall have been filed with the Secretary of State of the State of
California. When used in this Agreement, the term "Effective Time" shall mean
the time of filing of the Merger Agreement with the Secretary of State, and
"Surviving Corporation" shall mean Humboldt.
Section 2.2 Effect of Merger. By virtue of the Merger and at the
Effective Time, all of the rights, privileges, powers and franchises and all
property and assets of every kind and description of Tehama and Humboldt shall
be vested in and be held and enjoyed by the Surviving Corporation, without
further act or deed, and all the estates and interests of every kind of Tehama
and Humboldt, including all debts due to either of them, shall be as effectively
the property of the Surviving Corporation as they were of Tehama and Humboldt
immediately prior to the Effective Time, and the title to any real estate vested
by deed or otherwise in either Tehama or Humboldt shall not revert or be in any
way impaired by reason of the Merger; and all rights of creditors and liens upon
any property of Tehama and Humboldt shall be preserved unimpaired and all debts,
liabilities and duties of Tehama and Humboldt shall be debts, liabilities and
duties of the Surviving Corporation and may be enforced against it to the same
extent as if such debts, liabilities and duties had been incurred or contracted
by it, and none of such debts, liabilities or duties shall be expanded,
increased, broadened or enlarged by reason of the Merger.
Section 2.3 Articles of Incorporation and Bylaws. The Articles of
Incorporation and Bylaws of Humboldt in effect immediately prior to the
Effective Time shall be the Articles of Incorporation and Bylaws of the
Surviving Corporation until amended and the name of the Surviving Corporation
shall be "Humboldt Bancorp."
Section 2.4 Conversion of Humboldt Stock. The authorized and issued
capital stock of Humboldt immediately prior to the Effective Time, on and after
the Effective Time, pursuant to the Merger Agreement and without any further
action on the part of Humboldt shall remain as the common stock of the Surviving
Corporation.
Section 2.5 Conversion of Tehama Stock Options. At the Effective Time,
all outstanding rights with respect to Tehama Common Stock pursuant to stock
options under the Tehama Stock Option Plans shall be converted into and become
equivalent rights with respect to Humboldt Common Stock at the applicable
Conversion Rate with a corresponding adjustment in the option price, and
Humboldt shall assume each Tehama Stock Option in accordance with the terms of
Tehama Stock Option Plans and the stock option agreement by which it is
evidenced.
Section 2.6 Conversion of Tehama Common Stock. Except as provided in
Section 2.7, each share of Tehama Common Stock shall be converted at the
Effective Time into and become the right to receive that number of shares of
duly authorized, validly issued, fully paid and nonassessable shares of Humboldt
Common Stock equal to the Conversion Rate, subject to adjustment, if any, as
provided in any other section of this Agreement; provided, however, that the
shares held by any shareholder who properly exercises dissenters' rights
provided under the California Corporations Code, shall not be so converted and
in lieu of such conversion shall be treated in accordance with the provisions of
the California Corporations Code.
Section 2.7 Fractional Shares. No fractional shares of Humboldt Common
Stock shall be issued in the Merger. In lieu thereof, each holder of Tehama
Common Stock who would otherwise be entitled to receive a fractional share shall
receive an amount in cash equal to the product (rounded to the nearest
hundredth) obtained by multiplying (a) Humboldt Market Value Per Share by (b)
the fraction of a share of Humboldt Common Stock to which such holder would
otherwise be entitled. No such holder shall be entitled to dividends or other
rights in respect of any such fraction.
Section 2.8 Exchange Procedures. On or as soon as practicable after the
Effective Time, (i) Humboldt will deliver to the Exchange Agent: (i)
certificates representing the number of shares of Humboldt Common Stock issuable
in the Merger; and (ii) cash for the payout of fractional shares.
2.8.1 Upon surrender to the Exchange Agent for cancellation of
one or more certificates for shares of Tehama Common Stock ("Tehama
Certificates"), accompanied by a duly executed letter of transmittal in proper
form, the Exchange Agent shall, as promptly as practicable thereafter, deliver
to each holder of such surrendered Tehama Certificates, certificates
representing the appropriate number of shares of Humboldt Common Stock ("New
Certificates") and/or checks for payment of cash in lieu of fractional shares,
in respect of the Tehama Certificates. In no event shall the holders of Tehama
Certificates be entitled to receive interest on cash amounts due them hereunder.
2.8.2 Until a Tehama Certificate has been surrendered and
exchanged as herein provided, each share of Tehama Common Stock represented by
such Tehama Certificate shall represent, on and after the Effective Time, the
right to receive the Conversion Rate into which each such share of Tehama Common
Stock shown thereon has been converted as provided by Section 2.6, including the
right to vote such shares of Humboldt Common Stock. No dividends or other
distributions that are declared on any shares of Humboldt Common Stock into
which any shares of Tehama Common Stock have been converted at the Effective
Time shall be paid to the holder of such Tehama shares until the Tehama
Certificates evidencing such Tehama shares have been surrendered in exchange for
New Certificates in the manner herein provided, but upon such surrender, such
dividends or other distributions, from and after the Effective Time, will be
paid to such holders. In no event shall the holders entitled to receive such
dividends or other distributions be entitled to receive interest on such
dividends or other distributions.
2.8.3 No transfer taxes shall be payable by any shareholder in
respect to the issuance of New Certificates, except that if any New Certificate
is to be issued in a name other than that in which the Tehama Certificates
surrendered shall have been registered, it shall be a condition of such issuance
that the holder requesting such issuance shall properly endorse the certificate
or certificates and shall pay to Humboldt or the Exchange Agent any transfer
taxes payable by reason thereof, or of any prior transfer of such surrendered
certificate, or establish to the satisfaction of Humboldt or the Exchange Agent
that such taxes have been paid or are not payable.
2.8.4 Any Humboldt Common Stock or cash delivered to the Exchange
Agent and not distributed pursuant to this Section 2.8 at the end of nine months
from the Effective Time, shall be returned to Humboldt, in which event the
Persons entitled thereto shall look only to Humboldt for payment thereof.
2.8.5 Notwithstanding anything to the contrary set forth in
Sections 2.8.2 and 2.8.3 hereof, if any holder of Tehama Common Stock shall be
unable to surrender such holder's Tehama Certificates because such Tehama
Certificates have been lost or destroyed, such holder may deliver in lieu
thereof an affidavit and indemnity undertaking in form and substance and, if
required, with surety satisfactory to the Exchange Agent and Humboldt.
2.8.6 The Exchange Agent shall not be entitled to vote or
exercise any rights of ownership with respect to the shares of Humboldt Common
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 of Humboldt Common Stock for the account of the Persons entitled
thereto.
2.8.7 After the Effective Time, there shall be no further
registration of transfers of the shares of Tehama Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Tehama Certificates representing such shares of Tehama Common Stock are
presented to Humboldt, they shall be canceled and exchanged for Humboldt Common
Stock as provided in this Article 2.
Section 2.9 Board of Directors of Humboldt and Tehama Bank following
the Effective Time. At the Effective Time and thereafter through the end of the
term for which directors are elected at Humboldt's 2001 annual meeting, the
Board of Directors of Humboldt shall total 11 directors of which seven directors
shall be existing directors of Humboldt and four directors shall be existing
directors of Tehama, provided that such number of directors may be modified
during such period by vote of a majority of the seven Humboldt directors and of
a majority of the four Tehama directors. Such directors shall be listed on
Schedule 2.9 and shall be appointed as directors of Humboldt to serve until the
next annual meeting of shareholders of Humboldt and until such successors are
elected and qualified. In the event an individual listed on Schedule 2.9 shall
not be able to serve as a director at the Effective Time and until the next
annual meeting of shareholders of Humboldt, the existing directors of Humboldt
or Tehama depending upon which Board of Directors such individual served, shall
appoint a replacement. At the Effective Time, the then existing Board of
Directors of Tehama Bank shall total 16 directors with 14 existing directors of
Tehama Bank and two persons to be selected by Humboldt.
Section 2.10 Management of Humboldt and Tehama Bank following the
Effective Time. At the Effective Time, the then existing management of Humboldt
shall be the management of the Surviving Corporation and the management of
Tehama Bank shall continue as the management of Tehama Bank after the Effective
Time.
Section 2.11 Expenses. Each party will pay their own expenses except
that the parties will share the costs identified with preparation of the proxy
materials by ▇▇▇▇▇▇ Eng ▇▇▇▇ & ▇▇▇▇▇▇▇▇, including the Registration Statement
and printing related expenses, on the basis of 63% Humboldt and 37% Tehama.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF TEHAMA
Tehama represents and warrants to Humboldt as follows:
Section 3.1 Organization; Corporate Power; Etc. Tehama is a California
corporation duly organized, validly existing and in good standing under the laws
of the State of California and has all requisite corporate power and authority
to own, lease and operate its properties and assets and to carry on its business
substantially as it is being conducted on the date of this Agreement. Tehama is
a bank holding company registered under the BHCA. Each of Tehama's Subsidiaries
has all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business substantially as it is being conducted
on the date of this Agreement, except where the failure to have such power or
authority would not have a Material Adverse Effect on Tehama taken as a whole or
the ability of Tehama to consummate the transactions contemplated by this
Agreement. Tehama has all requisite corporate power and authority to enter into
this Agreement and, subject to obtaining all requisite Regulatory Approvals,
Tehama will have the requisite corporate power and authority to perform its
respective obligations hereunder with respect to the consummation of the
transactions contemplated hereby. Tehama is the sole shareholder of Tehama Bank.
Tehama Bank is a California state-chartered banking institution duly organized,
validly existing and in good standing under the laws of the State of California
and has all requisite corporate power and authority to own, lease and operate
its properties and assets and to carry on its business substantially as it is
being conducted on the date of this Agreement. Tehama Bank is authorized by the
CDFI to conduct a general banking business. Tehama Bank is a member of the
Federal Reserve System. Tehama Bank's deposits are insured by the FDIC in the
manner and to the full extent provided by law. Tehama Bank maintains and
operates branch offices only in the State of California. Neither the scope of
business or Tehama, or any Subsidiary of Tehama, including Tehama Bank, nor the
location of any of their respective properties, requires that Tehama or any of
its respective Subsidiaries be licensed or qualified to conduct business in any
jurisdiction other than the state of California, where the failure to be so
licensed or qualified would, individually or in the aggregate, have a Material
Adverse Effect on Tehama taken as a whole.
Section 3.2 Licenses and Permits. Except as disclosed on Schedule 3.2,
Tehama and its Subsidiaries have all material licenses, certificates,
franchises, rights and permits that are necessary for the conduct of their
respective businesses, and such licenses are in full force and effect, except
for any failure to be in full force and effect that would not, individually or
in the aggregate, have a Material Adverse Effect on Tehama or on the ability of
Tehama to consummate the transactions contemplated by this Agreement. The
properties, assets, operations and businesses of Tehama, and those of its
Subsidiaries, including Tehama Bank, are and have been maintained and conducted,
in all material respects, in compliance with all applicable licenses,
certificates, franchises, rights and permits.
Section 3.3 Subsidiaries. Other than as set forth on Schedule 3.3, there
is no corporation, partnership, joint venture or other entity in which Tehama
owns, directly or indirectly (except as pledgee pursuant to loans or stock or
other interest held as the result of or in lieu of foreclosure pursuant to
pledge or other security arrangement) any equity or other voting interest or
position.
Section 3.4 Authorization of Agreement; No Conflicts.
3.4.1 The execution and delivery of this Agreement and the Merger
Agreement by Tehama, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by all necessary corporate action
on the part of Tehama, subject only to the approval of this Agreement, the
Merger Agreement and the Merger by Tehama's shareholders. This Agreement has
been duly executed and delivered by Tehama and constitutes a legal, valid and
binding obligation of Tehama, enforceable in accordance with its terms, except
as the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting the rights of creditors generally and
by general equitable principles. The Merger Agreement, upon the receipt of all
Requisite Regulatory Approvals and the due execution and filing of such Merger
Agreement in accordance with the applicable provisions of the California
Corporations Code, will constitute a legal, valid and binding obligation of
Tehama, enforceable in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium or other similar
laws affecting the rights of creditors generally and by general equitable
principles.
3.4.2 Except as disclosed on Schedule 3.4, the execution and
delivery of this Agreement and the Merger Agreement, and the consummation of the
transactions contemplated hereby and thereby, do not and will not conflict with,
or result in any violation of or default or loss of a material benefit under,
any provision of the Articles of Incorporation or Bylaws of Tehama, or except
for the necessity of obtaining Requisite Regulatory Approvals, and the approval
of the shareholders of Tehama, any material mortgage, indenture, lease,
agreement or other material instrument or any permit, concession, grant,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Tehama or any of its assets or properties, other than
any such conflict, violation, default or loss which (i) will not have a Material
Adverse Effect on Tehama, or on Humboldt immediately following consummation of
the Merger; or (ii) will be cured or waived prior to the Effective Time. No
material consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required in connection
with the execution and delivery of this Agreement or the Merger Agreement by
Tehama or the performance by Tehama of its obligations hereunder and thereunder,
except for (a) filings required in order to obtain the Requisite Regulatory
Approvals; (b) the filing and approval of the Merger Agreement with the
Secretary of the State of California; and (c) Tax Filings.
Section 3.5 Capital Structure. The authorized capital stock of Tehama
consists of 4,000,0000 shares of Tehama Common Stock, no par value per share and
2,000,000 shares of preferred stock. On the date of this Agreement, 1,896,140
shares of Tehama Common Stock were outstanding, no shares of preferred stock
were outstanding and 241,627 shares of Tehama Common Stock were reserved for
issuance pursuant to outstanding Tehama Stock Options under the Tehama Stock
Option Plans. All outstanding shares of Tehama Common Stock are validly issued,
fully paid and nonassessable and do not possess any preemptive rights and were
not issued in violation of any preemptive rights or any similar rights of any
Person. Except for the Tehama Stock Options and Tehama's obligations under the
Shareholder Protection Rights Plan, both described on Schedule 3.5 to this
Agreement, Tehama does not have outstanding any options, warrants, calls,
rights, commitments, securities or agreements of any character to which Tehama
is a party or by which it is bound obligating Tehama to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of capital stock of
Tehama or obligating Tehama to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement.
Section 3.6 Tehama Filings.
3.6.1 Since January 1, 1997, Tehama and its Subsidiaries have
filed all reports, registrations and statements, together with any amendments
required to be made with respect thereto, that were required to be filed with
(a) the Federal Reserve Board or any Federal Reserve Bank; (b) the CDFI; (c) the
FDIC; (d) the SEC; (e) the California Department of Corporations; and (f) any
other applicable federal, state or local governmental or regulatory authority.
All such reports, registrations and filings, and all reports sent to Tehama's
shareholders during the three-year period ended December 31, 1999 (whether or
not filed with any Regulatory Authority), are collectively referred to as the
"Tehama Filings. Except to the extent prohibited by law, copies of the Tehama
Filings have been made available to Humboldt. As of their respective filing or
mailing dates, each of the past Tehama Filings (a) was true and complete in all
material respects (or was amended so as to be so promptly following discovery of
any discrepancy); and (b) complied in all material respects with all of the
statutes, rules and regulations enforced or promulgated by the governmental or
regulatory authority with which it was filed (or was amended so as to be so
promptly following discovery of any such noncompliance) and none contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Tehama
Financial Statements, together with the financial statements contained in the
Tehama Filings, have been prepared in accordance with GAAP, or applicable
regulatory accounting principles, applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
present (subject, in the case of the unaudited statements, to recurring
adjustments normal in nature and amount) the financial position of Tehama as of
the dates thereof and the results of its operations, cash flows and changes in
shareholders' equity for the periods then ended.
3.6.2 Tehama, or Tehama Bank, as the case may be, has filed each
report, schedule and amendments to each of the foregoing since January 1, 1997
that Tehama or Tehama Bank was required to file with the Federal Reserve Board,
the SEC, the FDIC, the California Department of Corporations or the CDFI (the
"Tehama Documents"), all of which have been made available to Humboldt. As of
their respective dates, the Tehama Documents complied in all material respects
with the applicable requirements of the BHCA, the Exchange Act, the Federal
Deposit Insurance Act and the California Financial Code, as the case may be, and
the rules and regulations of the Federal Reserve Board, the FDIC, the SEC, the
California Department of Corporations and the CDFI thereunder applicable to such
Tehama Documents, and none of the Tehama Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of Tehama included in the Tehama Filings comply in all material
respects with applicable regulatory accounting requirements and with the
published rules and regulations of the Federal Reserve Board, the FDIC, the SEC
or the CDFI (as applicable) with respect thereto, and have been prepared in
accordance with GAAP, or applicable regulatory accounting principles, applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of the unaudited statements, as permitted by
regulations of the Federal Reserve Board, the FDIC or the CDFI) and fairly
present (subject, in the case of the unaudited statements, to recurring
adjustments normal in nature and amount) the financial position of Tehama as of
the dates thereof and the consolidated results of its operations and cash flows
or changes in financial position for the periods then ended.
Section 3.7 Accuracy of Information Supplied.
3.7.1 No representation or warranty of Tehama contained herein or
any statement, schedule, exhibit or certificate given or to be given by or on
behalf of Tehama or any of its Subsidiaries, including Tehama Bank, to Humboldt
in connection herewith and none of the information supplied or to be supplied by
Tehama or its Subsidiaries, including Tehama Bank, to Humboldt hereunder to the
best of Tehama's Knowledge contains or will contain any untrue statement of
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
3.7.2 None of the information supplied or to be supplied by
Tehama or relating to Tehama and approved by Tehama which is included or
incorporated by reference in (i) the Registration Statement on Form S-4 to be
filed with the SEC by Humboldt in connection with the issuance of shares of
Humboldt Common Stock in the Merger (including the Joint Proxy Statement of
Humboldt and Tehama and the Prospectus of Humboldt ("Joint Proxy
Statement/Prospectus") constituting a part thereof, the "Registration
Statement") will, at the time the Registration Statement becomes effective under
the Securities Act, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; (ii) the Joint Proxy Statement/Prospectus and any amendment or
supplement thereto will, at all times from the date of mailing to shareholders
of Tehama through the date of the meeting of shareholders of Tehama to be held
in connection with the Merger, contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading; and (iii) the applications and forms to be filed with
securities or "blue sky" authorities, self regulatory authorities, or any
Governmental Entity in connection with the Merger, the issuance of any shares of
Humboldt Common Stock in connection with the Merger, or any Requisite Regulatory
Approvals will, at the time filed or at the time they become effective, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The Joint
Proxy Statement/Prospectus (except for such portions thereof that relate only to
Humboldt and its Subsidiaries) will comply in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
3.7.3 Tehama has delivered or will deliver to Humboldt copies of:
(a) the audited balance sheets of Tehama Bank as of December 31, 1999, 1998 and
1997 and the related statements of income, changes in shareholders' equity and
cash flows for the years then ended and the related notes to such financial
statements, all as audited by ▇▇▇▇▇-▇▇▇▇▇ LLP, independent public accountants
(the "Tehama Financial Statements"), and Tehama will hereafter until the Closing
Date deliver to Humboldt copies of additional financial statements of Tehama and
its Subsidiaries as provided in Sections 5.1.1(iii) and 6.1.11(iii). The Tehama
Financial Statements have been prepared (and all of said additional financial
statements will be prepared) in accordance with GAAP, or applicable regulatory
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) consistently followed
throughout the periods covered by such statements, and present (and, when
prepared, will present) fairly the financial position of Tehama and its
Subsidiaries, including Tehama Bank, as of the respective dates indicated and
the results of operations, cash flows and changes in shareholders' equity at the
respective dates and for the respective periods covered by such financial
statements (subject, in the case of the unaudited statements, to recurring
adjustments normal in nature and amount). In addition, Tehama has delivered or
made available to Humboldt copies of all management or other letters delivered
to Tehama or Tehama Bank by its independent accountants in connection with any
of the Tehama Financial Statements or by such accountants or any consultant
regarding the internal controls or internal compliance procedures and systems of
Tehama or Tehama Bank issued at any time since January 1, 1997, and will make
available for inspection by Humboldt or its representatives, at such times and
places as Humboldt may reasonably request, reports and working papers produced
or developed by such accountants or consultants.
Section 3.8 Compliance with Applicable Laws. Except as disclosed on
Schedule 3.8, to the best of Tehama's Knowledge the respective businesses of
Tehama and its Subsidiaries are not being conducted in violation of any law,
ordinance or regulation, except for violations which individually or in the
aggregate would not have a Material Adverse Effect on Tehama, or Humboldt at or
following the Effective Time. Except as set forth in Schedule 3.8, to the
Knowledge of Tehama no investigation or review by any Governmental Entity with
respect to Tehama or Tehama Bank is pending or threatened, nor has any
Governmental Entity indicated to Tehama or Tehama Bank an intention to conduct
the same.
Section 3.9 Litigation. Except as set forth in Schedule 3.9, to the
Knowledge of Tehama there is no suit, action or proceeding or investigation
pending or threatened against or affecting Tehama or any of its Subsidiaries
which, if adversely determined, would have a Material Adverse Effect on Tehama
or its Subsidiaries; nor is there any judgment, decree, injunction, rule or
order of any Governmental Entity or arbitrator outstanding against Tehama or any
of its Subsidiaries that has, or which, insofar as reasonably can be foreseen,
in the future would have, any such Material Adverse Effect. Schedule 3.9
contains a true, correct and complete list, including identification of the
applicable insurance policy covering such litigation, if any, subject to
reservation of rights, if any, the applicable deductible and the amount of any
reserve therefor, of all pending litigation in which Tehama or any of its
Subsidiaries is a named party of which Tehama has Knowledge, and except as
disclosed on Schedule 3.9, all of the litigation shown on such Schedule is
adequately covered by insurance in force, except for applicable deductibles, or
has been adequately reserved for in accordance with Tehama's prior business
practices.
Section 3.10 Agreements with Banking Authorities. Neither Tehama nor any
Subsidiary of Tehama is a party to any written agreement or memorandum of
understanding with, or order or directive from, any Governmental Entity.
Section 3.11 Insurance. Tehama and its Subsidiaries have in full force
and effect policies of insurance with respect to their assets and businesses
against such casualties and contingencies and in such amounts, types and forms
as are customarily appropriate for their businesses, operations, properties and
assets. Schedule 3.11 contains a list of all policies of insurance and bonds
carried and owned by Tehama or any Subsidiary. None of Tehama or any of its
Subsidiaries is in default under any such policy of insurance or bond such that
it can be canceled and all material current claims outstanding thereunder have
been filed in timely fashion. Tehama and its Subsidiaries have filed claims
with, or given notice of claim to, their insurers or bonding companies in timely
fashion with respect to all material matters and occurrences for which they
believe they have coverage.
Section 3.12 Title to Assets other than Real Property. Each of Tehama
and its respective Subsidiaries has good and marketable title to or a valid
leasehold interest in all properties and assets (other than real property which
is the subject to Section 3.13), it owns or leases, free and clear of all
mortgages, covenants, conditions, restrictions, easements, liens, security
interests, charges, claims, assessments and encumbrances, except for: (a) rights
of lessors, lessees or sublessees in such matters as are reflected in a written
lease; (b) encumbrances as set forth in the Tehama Financial Statements; (c)
current Taxes (including assessments collected with Taxes) not yet due which
have been fully reserved for; (d) encumbrances, if any, that are not substantial
in character, amount or extent and do not detract materially from the value, or
interfere with present use, or the ability of Tehama or its Subsidiary to sell
or otherwise dispose of the property subject thereto or affected thereby; and
(e) other matters as described in Schedule 3.12. Materially all such properties
and assets are, and require only routine maintenance to keep them, in good
working condition, normal wear and tear excepted.
Section 3.13 Real Property. Schedule 3.13 is an accurate list and
general description of all real property owned or leased by Tehama or any of its
Subsidiaries, including Other Real Estate Owned ("OREO"). Each of Tehama and its
respective Subsidiaries has good and marketable title to the real properties
that it owns, as described in such Schedule, free and clear of all mortgages,
covenants, conditions, restrictions, easements, liens, security interests,
charges, claims, assessments and encumbrances, except for (a) rights of lessors,
lessees or sublessees in such matters as are reflected in a written lease; (b)
current Taxes (including assessments collected with Taxes) not yet due and
payable; (c) encumbrances, if any, that are not substantial in character, amount
or extent and do not materially detract from the value, or interfere with
present use, or the ability of Tehama to dispose, of Tehama's interest in the
property subject thereto or affected thereby; and (d) other matters as described
in Schedule 3.13. Tehama and its Subsidiaries have valid leasehold interests in
the leaseholds they respectively hold, free and clear of all mortgages, liens,
security interests, charges, claims, assessments and encumbrances, except for
(a) claims of lessors, co-lessees or sublessees in such matters as are reflected
in a written lease; (b) title exceptions affecting the fee estate of the lessor
under such leases; and (c) other matters as described in Schedule 3.13. To the
best of Tehama's Knowledge, the activities of Tehama and its Subsidiaries with
respect to all real property owned or leased by them for use in connection with
their operations are in all material respects permitted and authorized by
applicable zoning laws, ordinances and regulations and all laws and regulations
of any Governmental Entity. Except as set forth in Schedule 3.13, Tehama and its
Subsidiaries enjoy quiet possession under all material leases to which they are
the lessees and all of such leases are valid and in full force and effect,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting the rights of creditors generally and
by general equitable principles. Materially all buildings and improvements on
real properties owned or leased by Tehama or any of its Subsidiaries are in good
condition and repair, and do not require more than normal and routine
maintenance, to keep them in such condition, normal wear and tear excepted.
Section 3.14 Taxes.
3.14.1 Filing of Returns. Except as set forth on Schedule 3.14.1,
Tehama and its Subsidiaries have duly prepared and filed or caused to be duly
prepared and filed all federal, state, and local Returns (for Tax or
informational purposes) which were required to be filed by or in respect of
Tehama and its Subsidiaries, or any of their properties, income and/or
operations on or prior to the Closing Date. As of the time they were filed, the
foregoing Returns accurately reflected the material facts regarding the income,
business, assets, operations, activities, status, and any other information
required to be shown thereon. Except as set forth on Schedule 3.14.1, no
extension of time within which Tehama or any of its Subsidiaries may file any
Return is currently in force.
3.14.2 Payment of Taxes. Except as disclosed on Schedule 3.14.2
with respect to all amounts in respect of Taxes imposed on Tehama or any
Subsidiary or for which Tehama or any Subsidiary is or could be liable, whether
to taxing authorities (as, for example, under law) or to other Persons (as, for
example, under Tax allocation agreements), with respect to all taxable periods
or portions of periods ending on or before the Closing Date, all applicable tax
laws and agreements have been or will be fully complied with in all material
respects, and all such amounts required to be paid by or on behalf of Tehama or
any Subsidiary to taxing authorities or others on or before the date hereof have
been paid.
3.14.3 Audit History. Except as disclosed on Schedule 3.14.3,
there is no review or audit by any taxing authority of any Tax liability of
Tehama or any Subsidiary currently in progress of which Tehama has Knowledge.
Except as disclosed on Schedule 3.14.3, Tehama and its Subsidiaries have not
received any written notices within the three years preceding the Closing Date
of any pending or threatened audit, by the Internal Revenue Service or any
state, local or foreign agency, for any Returns or Tax liability of Tehama or
any Subsidiary for any period. Tehama and its Subsidiaries currently have no
unpaid deficiencies assessed by the Internal Revenue Service or any state, local
or foreign taxing authority arising out of any examination of any of the Returns
of Tehama or any Subsidiaries filed for fiscal years ended on or after December
31, 1995 through the Closing Date, nor to the Knowledge of Tehama is there
reason to believe that any material deficiency will be assessed.
3.14.4 Statute of Limitations. Except as disclosed on Schedule
3.14.4, no agreements are in force or are currently being negotiated by or on
behalf of Tehama or any Subsidiaries for any waiver or for the extension of any
statute of limitations governing the time of assessments or collection of any
Tax. No closing agreements or compromises concerning Taxes of Tehama or any
Subsidiaries are currently pending.
3.14.5 Withholding Obligations. Except as set forth on Schedule
3.14.5, Tehama and its Subsidiaries have withheld from each payment made to any
of their respective officers, directors and employees, the amount of all
applicable Taxes, including, but not limited to, income tax, social security
contributions, unemployment contributions, backup withholding and other
deductions required to be withheld therefrom by any Tax law and have paid the
same to the proper taxing authorities within the time required under any
applicable Tax law.
3.14.6 Tax Liens. There are no Tax liens, whether imposed by any
federal, state, local or foreign taxing authority, outstanding against any
assets owned by Tehama or its Subsidiaries, except for liens for Taxes that are
not yet due and payable.
3.14.7 Tax Reserves. Tehama and its Subsidiaries have made full
and adequate provision and reserve for all federal, state, local or foreign
Taxes for the current period for which Tax and information returns are not yet
required to be filed. The Tehama Financial Statements contain fair and
sufficient accruals for the payment of all Taxes for the periods covered by the
Tehama Financial Statements and all periods prior thereto.
3.14.8 IRC Section 382 Applicability. None of Tehama or any of
its Subsidiaries, including any party joining in any consolidated return to
which Tehama is a member, underwent an "ownership change" as defined in IRC
Section 382(g) within the "testing period" (as defined in IRC Section 382)
ending immediately before the Effective Time, and not taking into account any
transactions contemplated by this Agreement.
3.14.9 Disclosure Information. Within 45 days of the date of this
Agreement, Tehama will deliver to Humboldt Schedule 3.14.9 setting forth the
following information with respect to Tehama and as of the most recent
practicable date (as well as on an estimated pro forma basis as of the Closing
giving effect to the consummation of the transactions contemplated hereby): (a)
Tehama's basis in its assets; (b) the amount of any net operating loss, net
capital loss, unused investment or other credit, unused foreign tax, or excess
charitable contribution allocable to Tehama; and (c) the amount of any deferred
gain or loss allocable to Tehama and arising out of any deferred intercompany
transactions.
Section 3.15 Performance of Obligations. Tehama and its Subsidiaries
have performed all material obligations required to be performed by them to date
and none of Tehama or any of its Subsidiaries is in material default under or in
breach of any term or provision of any covenant, contract, lease, indenture or
any other agreement, written or oral, to which any is a party, is subject or is
otherwise bound, and no event has occurred that, with the giving of notice or
the passage of time or both, would constitute such a default or breach, where
such default or breach or failure to perform would have a Material Adverse
Effect on Tehama or its Subsidiaries. To Tehama's Knowledge, and except as
disclosed on Schedule 3.15 or in the portion of Schedule 3.16 that identifies
90-day past due or classified or nonaccrual loans, no party with whom Tehama or
any of its Subsidiaries has an agreement that is of material importance to the
businesses of Tehama or its Subsidiaries is in default thereunder.
Section 3.16 Loans and Investments. Except as set forth on Schedule
3.16, all loans, leases and other extensions of credit, and guaranties, security
agreements or other agreements supporting any loans or extensions of credit, and
investments of Tehama or its Subsidiaries, including Tehama Bank, are, and
constitute, in all material respects, the legal, valid and binding obligations
of the parties thereto and are enforceable against such parties in accordance
with their terms, except as the enforceability thereof may be limited by
applicable law and otherwise by bankruptcy, insolvency, moratorium or other
similar laws affecting the rights of creditors generally and by general
equitable principles. Except as described on Schedule 3.16, as of July 31, 2000,
no loans or investments held by Tehama or any Subsidiary, including Tehama Bank
are: (i) more than ninety days past due with respect to any scheduled payment of
principal or interest, other than loans on a nonaccrual status; (ii) classified
as "loss," "doubtful," "substandard" or "specially mentioned" by Tehama Bank or
any banking regulators; or (iii) on a nonaccrual status in accordance with
Tehama Bank's loan review procedures. Except as set forth on Schedule 3.16, none
of such assets (other than loans) are subject to any restrictions, contractual,
statutory or other, that would materially impair the ability of the entity
holding such investment to dispose freely of any such assets at any time, except
restrictions on the public distribution or transfer of any such investments
under the Securities Act and the regulations thereunder or state securities laws
and pledges or security interests given in connection with government deposits.
All loans, leases or other extensions of credit outstanding, or commitments to
make any loans, leases or other extensions of credit made by Tehama or Tehama
Bank to any Affiliates of Tehama or Tehama Bank are disclosed on Schedule 3.16.
For outstanding loans or extensions of credit where the original principal
amounts are in excess of $50,000 and which by their terms are either secured by
collateral or supported by a guaranty or similar obligation, the security
interests have been duly perfected in all material respects and have the
priority they purport to have in all material respects, other than by operation
of law, and, in the case of each guaranty or similar obligation, each has been
duly executed and delivered to Tehama or any Subsidiary, including Tehama Bank,
and to Tehama's Knowledge, is still in full force and effect.
Section 3.17 Brokers and Finders. Except as set forth on Schedule 3.17,
none of Tehama or any of its Subsidiaries is a party to or obligated under any
agreement with any broker or finder relating to the transactions contemplated
hereby, and neither the execution of this Agreement, the Merger Agreement, nor
the consummation of the transactions provided for herein or therein, will
result in any liability to any broker or finder. Tehama agrees to indemnify and
hold harmless Humboldt and its affiliates, and to defend with counsel selected
by Humboldt and reasonably satisfactory to Tehama, from and against any
liability, cost or expense, including attorneys' fees, incurred in connection
with a breach of this Section 3.17.
Section 3.18 Material Contracts. Schedule 3.18 to this Agreement
contains a complete and accurate written list of all material agreements,
obligations or understandings, written and oral, to which Tehama or any
Subsidiary is a party as of the date of this Agreement, except for loans and
other extensions of credit made by Tehama or Tehama Bank in the ordinary course
of its business and those items specifically disclosed in the Tehama Financial
Statements.
Section 3.19 Absence of Material Adverse Effect. Since January 1, 2000,
the respective businesses of Tehama and its Subsidiaries, including Tehama Bank,
have been conducted only in the ordinary course, in the same manner as
theretofore conducted, and no event or circumstance has occurred or is expected
to occur which to Tehama's Knowledge has had or which, with the passage of time
or otherwise, could reasonably be expected to have a Material Adverse Effect on
Tehama.
Section 3.20 Undisclosed Liabilities. Except as disclosed on Schedule
3.20, none of Tehama or any of its Subsidiaries to Tehama's Knowledge has any
liabilities or obligations, either accrued, contingent or otherwise, that are
material to Tehama and its Subsidiaries and that have not been: (a) reflected or
disclosed in the Tehama Financial Statements; or (b) incurred subsequent to
December 31, 1999 in the ordinary course of business. Tehama has no Knowledge of
any basis for the assertion against Tehama, or any of its Subsidiaries, of any
liability, obligation or claim (including without limitation that of any
Governmental Entity) that will have or cause, or could reasonably be expected to
have or cause, a Material Adverse Effect on Tehama that is not fully and fairly
reflected and disclosed in the Tehama Financial Statements or on Schedule 3.20.
Section 3.21 Employees; Employee Benefit Plans; ERISA.
3.21.1 All material obligations of Tehama or its Subsidiaries for
payment to trusts or other funds or to any Governmental Entity or to any
individual, director, officer, employee or agent (or his or her heirs, legatees
or legal representatives) with respect to unemployment compensation benefits,
profit-sharing, pension or retirement benefits or social security benefits,
whether arising by operation of law, by contract or by past custom, have been
properly accrued for the periods covered thereby on the Tehama Financial
Statements and paid when due. All material obligations of Tehama or its
Subsidiaries, whether arising by operation of law, by contract or by past custom
for vacation or holiday pay, bonuses and other forms of compensation which are
payable to their respective directors, officers, employees or agents have been
properly accrued on the Tehama Financial Statements for the periods covered
thereby and paid when due. Except as set forth on Schedule 3.21.1, there are no
unfair labor practice complaints, strikes, slowdowns, stoppages or other
controversies pending or, to the Knowledge of Tehama, attempts to unionize or
controversies threatened between Tehama or any Subsidiary or Affiliate and or
relating to, any of their employees that are likely to have a Material Adverse
Effect on Tehama and its Subsidiaries, taken as a whole. None of Tehama or any
Subsidiary is a party to any collective bargaining agreement with respect to any
of their employees and, except as set forth on Schedule 3.21.1, none of Tehama
or any Subsidiary is a party to a written employment contract with any of their
respective employees and there are no understandings with respect to the
employment of any officer or employee of Tehama or any Subsidiary which are not
terminable by Tehama or such Subsidiary without liability on not more than
thirty (30) days' notice. Except as disclosed in the Tehama Financial Statements
for the periods covered thereby, all material sums due for employee compensation
have been paid and all employer contributions for employee benefits, including
deferred compensation obligations, and all material benefit obligations under
any Employee Plan (as defined in Section 3.21.3 hereof) or any Benefit
Arrangement (as defined in Section 3.21.4 hereof) have been duly and adequately
paid or provided for in accordance with plan documents. Except as set forth on
Schedule 3.21.1, no director, officer or employee of Tehama or any Subsidiary is
entitled to receive any payment of any amount under any existing agreement,
severance plan or other benefit plan as a result of the consummation of any
transaction contemplated by this Agreement or the Merger Agreement. To Tehama's
Knowledge, Tehama and its Subsidiaries have materially complied with all
applicable federal and state statutes and regulations which govern workers'
compensation, equal employment opportunity and equal pay, including, but not
limited to, all civil rights laws, Presidential Executive Order 11246, the Fair
Labor Standards Act of 1938, as amended, and the Americans with Disabilities
Act.
3.21.2 Tehama has delivered as Schedule 3.21.2 a complete list
of:
(a) All current employees of Tehama or any of its
Subsidiaries together with each employee's tenure with Tehama or such
Subsidiary, title or job classification, and the current annual rate of
compensation anticipated to be paid to each such employee; and
(b) All Employee Plans and Benefit Arrangements,
including all plans or practices providing for current compensation or accruals
for active Employees, including, but not limited to, all employee benefit plans,
all pension, profit-sharing, retirement, bonus, stock option, incentive,
deferred compensation, severance, long-term disability, medical, dental, health,
hospitalization, life insurance or other insurance plans or related benefits.
3.21.3 Except as disclosed on Schedule 3.21.3, none of Tehama or
any of its Subsidiaries maintains, administers or otherwise contributes to any
"employee benefit plan," as defined in Section 3(3) of ERISA, which is subject
to any provisions of ERISA and covers any employee, whether active or retired,
of Tehama or any of its Subsidiaries (any such plan being herein referred to as
an "Employee Plan"). True and complete copies of each such Employee Plan,
including amendments thereto, have been previously delivered or made available
to Humboldt, together with (i) all agreements regarding plan assets with respect
to such Employee Plans, (ii) a true and complete copy of the annual reports for
the most recent three years (Form 5500 Series including, if applicable,
Schedules A and B thereto) prepared in connection with any such Employee Plan,
(iii) a true and complete copy of the actuarial valuation reports for the most
recent three years, if any, prepared in connection with any such Employee Plan
covering any active employee of Tehama or its Subsidiaries, (iv) a copy of the
most recent summary plan description of each such Employee Plan, together with
any modifications thereto, and (v) a copy of the most recent favorable
determination letter (if applicable) from the Internal Revenue Service for each
Employee Plan. Except as disclosed on Schedule 3.21.3 none of the Employee Plans
is a "multiemployer plan" as defined in Section 3(37) of ERISA or a "multiple
employer plan" as covered in Section 412(c) of the IRC, and none of Tehama or
any of its Subsidiaries has been obligated to make a contribution to any such
multiemployer or multiple employer plan within the past five years. None of the
Employee Plans of Tehama or any of its Subsidiaries is, or for the last five
years has been, subject to Title IV of ERISA. Each Employee Plan which is
intended to be qualified under Section 401(a) of the IRC is so qualified and
each trust maintained pursuant thereto is exempt from income tax under Section
501(a) of the IRC, and none of Tehama or any of its Subsidiaries is aware of any
fact which has occurred which would cause the loss of such qualification or
exemption.
3.21.4 Except as disclosed in Schedule 3.21.4, none of Tehama or
any of its Subsidiaries maintains (other than base salary and base wages) any
form of current or deferred compensation, bonus, stock option, stock
appreciation right, severance pay, salary continuation, retirement or incentive
plan or arrangement for the benefit of any director, officer or employee,
whether active or retired, of Tehama or any of its Subsidiaries or for any class
or classes of such directors, officers or employees. Except as disclosed in
Schedule 3.21.4, none of Tehama or any of its Subsidiaries maintains any group
or individual health insurance, welfare or similar plan or arrangement for the
benefit of any director, officer or employee of Tehama or any of its
Subsidiaries, whether active or retired, or for any class or classes of such
directors, officers or employees. Any such plan or arrangement described in this
Section 3.21.4, copies of which have been delivered or made available to
Humboldt, shall be herein referred to as a "Benefit Arrangement."
3.21.5 All Employee Plans and Benefit Arrangements are operated
in material compliance with the requirements prescribed by any and all statutes,
governmental or court orders, or governmental rules or regulations currently in
effect, including but not limited to ERISA and the IRC, applicable to such plans
or arrangements, and plan documents relating to any such plans or arrangements,
materially comply with or will be amended to materially comply with applicable
legal requirements. None of Tehama or any of its Subsidiaries, nor any Employee
Plan, nor any trusts created thereunder, nor any trustee, administrator nor any
other fiduciary thereof, has engaged in a "prohibited transaction," as defined
in Section 406 of ERISA and Section 4975 of the IRC, that could subject Tehama
or any of its Subsidiaries or Humboldt to liability under Section 409 or 502(i)
of ERISA or Section 4975 of the IRC or that would adversely affect the qualified
status of such plans; each "plan official" within the meaning of Section 412 of
ERISA of each Employee Plan is bonded to the extent required by such Section
412; with respect to each Employee Plan, to Tehama's Knowledge, no employee of
Tehama or any Subsidiary, nor any fiduciary of any Employee Plan, has engaged in
any breach of fiduciary duty as defined in Part 4 of Subtitle B of Title I of
ERISA which could subject Tehama or any of its Subsidiaries to liability if
Tehama or any such Subsidiary is obligated to indemnify such Person against
liability. Except as disclosed in Schedule 3.21.5, Tehama and its Subsidiaries
have not failed to make any material contribution or pay any amount due and
owing as required by law or the terms of any Employee Plan or Benefit
Arrangement.
3.21.6 Except as set forth on Schedule 3.21.6, no Employee Plan
or Benefit Arrangement has any material liability of any nature, accrued or
contingent, including, without limitation, liabilities for federal, state, local
or foreign taxes, interest or penalty other than liability for claims arising in
the course of the administration of each such Employee Plan. Except as set forth
on Schedule 3.21.6, to Tehama's Knowledge there is no pending or threatened
legal action, proceeding or investigation against any Employee Plan which could
result in material liability to such Employee Plan, other than routine claims
for benefits, and there is no basis for any such legal action, proceeding or
investigation.
3.21.7 Each Benefit Arrangement which is a group health plan
(within the meaning of such term under IRC Section 4980B(g)(2)) materially
complies and has materially complied with the requirements of Section 601
through 608 of ERISA or Section 4980B of the IRC governing continuation coverage
requirements for employee-provided group health plans.
3.21.8 Except as disclosed in Schedule 3.21.8, none of Tehama or
any of its Subsidiaries maintains any Employee Plan or Benefit Arrangement
pursuant to which any benefit or other payment will be required to be made by
Tehama or any of its Subsidiaries or Affiliates or pursuant to which any other
benefit will accrue or vest in any director, officer or employee of Tehama or
any Subsidiary or Affiliate thereof, in either case as a result of the
consummation of the transactions contemplated by this Agreement or the Merger
Agreement.
Section 3.22 Powers of Attorney. No power of attorney or similar
authorization given by Tehama or any Subsidiary thereof is presently in effect
or outstanding other than powers of attorney given in the ordinary course of
business with respect to routine matters.
Section 3.23 Hazardous Materials. Except as set forth on Schedule
3.23:
3.23.1 Except for ordinary and necessary quantities of cleaning,
pest control and office supplies, and other small quantities of Hazardous
Substances that are used in the ordinary course of the respective businesses of
Tehama and its Subsidiaries and in compliance with applicable Environmental
Laws, or ordinary rubbish, debris and nonhazardous solid waste stored in garbage
cans or bins for regular disposal off-site, or petroleum contained in and de
minimus quantities discharged from motor vehicles in their ordinary operation on
any of the Tehama Properties (as defined below), Tehama and its Subsidiaries
have not engaged in the generation, use, manufacture, treatment, transportation,
storage (in tanks or otherwise), or the disposal, of Hazardous Substances other
than as permitted by and only in compliance with applicable law. To Tehama's
Knowledge, no material amount of Hazardous Substances have been released,
emitted or disposed of, or otherwise deposited, on, in or from any real property
which is now or has been previously owned since January 1, 1997, or which is
currently or during the past three years was leased, by Tehama or any of its
Subsidiaries, including OREO (collectively, the "Tehama Properties"), or to
Tehama's Knowledge, on or in any real property in which Tehama or any of its
Subsidiaries now holds any security interest, mortgage or other lien or interest
with an underlying obligation in excess of $25,000 ("Tehama Collateralizing Real
Estate"), except for (i) matters disclosed on Schedule 3.23; (ii) ordinary and
necessary quantities of cleaning, pest control and office supplies used and
stored in compliance with applicable Environmental Laws, or ordinary rubbish,
debris and nonhazardous solid waste stored in garbage cans or bins for regular
disposal off-site, or petroleum contained in, and de minimus quantities
discharged from, motor vehicles in their ordinary operation on such Tehama
Properties; and (iii) such releases, emissions, disposals or deposits which
constituted a violation of an Environmental Law but did not have a Material
Adverse Effect on the Tehama Property involved and would not result in the
incurrence or imposition of any liability, expense, penalty or fine against
Tehama or any of its Subsidiaries in excess of $25,000 individually or in the
aggregate. To Tehama's Knowledge, no activity has been undertaken on any of the
Tehama Properties since January l, 1997, and to the Knowledge of Tehama no
activities have been or are being undertaken on any of the Tehama
Collateralizing Real Estate, that would cause or contribute to:
(a) any of the Tehama Properties or Tehama Collateralizing Real Estate
becoming a treatment, storage or disposal facility within the meaning of RCRA or
any similar state law or local ordinance;
(b) a release or threatened release of any Hazardous Substances under
circumstances which would violate any Environmental Laws; or
(c) the discharge of Hazardous Substances into any soil, subsurface water
or ground water or into the air, or the dredging or filling of any waters, that
would require a permit or any other approval under the Federal Water Pollution
Control Act, 33 U.S.C. ss.1251 et seq., the Clean Air Act, as amended, 42 U.S.C.
ss.7401 et seq., or any similar federal or state law or local ordinance; the
cumulative effect of which would have a material adverse effect on the Tehama
Property or Tehama Collateralizing Real Estate involved.
3.23.2 To Tehama's Knowledge, there are not, and never have been,
any underground storage tanks located in or under any of the Tehama Properties
or the Tehama Collateralizing Real Estate.
3.23.3 None of Tehama or any of its Subsidiaries has received any
written notice of, and to Tehama's Knowledge none has received any verbal notice
of, any pending or threatened claims, investigations, administrative
proceedings, litigation, regulatory hearings or requests or demands for remedial
or responsive actions or for compensation, with respect to any of the Tehama
Properties or Tehama Collateralizing Real Estate, alleging noncompliance with or
violation of any Environmental Law or seeking relief under any Environmental Law
and none of the Tehama Properties or Tehama Collateralizing Real Estate is
listed on the United States Environmental Protection Agency's National
Priorities List of Hazardous Waste Sites, or, to Tehama's Knowledge any other
list, schedule, log, inventory or record of hazardous waste sites maintained by
any federal, state or local agency.
3.23.4 "Hazardous Substances" shall mean any hazardous, toxic or
infectious substance, material, gas or waste which is regulated by any local,
state or federal Governmental Entity, or any of their agencies.
Section 3.24 Stock Options. Schedule 3.5 to this Agreement contains a
description of the Tehama Stock Option Plans and list of all Tehama Stock
Options outstanding, indicating for each: (a) the grant date; (b) whether vested
or unvested; (c) exercise price; and (d) a vesting schedule by optionee.
Section 3.25 Effective Date of Representations, Warranties, Covenants
and Agreements. Each representation, warranty, covenant and agreement of Tehama
set forth in this Agreement shall be deemed to be made on and as of the date
hereof and as of the Effective Time.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF HUMBOLDT
Humboldt represents and warrants to Tehama that:
Section 4.1 Organization; Corporate Power; Etc. Humboldt is a California
corporation duly organized, validly existing and in good standing under the laws
of the State of California and has all requisite corporate power and authority
to own, lease and operate its properties and assets and to carry on its business
substantially as it is being conducted on the date of this Agreement. Humboldt
is a bank holding company registered under the BHCA. Each of Humboldt's
Subsidiaries has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business substantially as it is being
conducted on the date of this Agreement, except where the failure to have such
power or authority would not have a Material Adverse Effect on Humboldt taken as
a whole or the ability of Humboldt to consummate the transactions contemplated
by this Agreement. Humboldt has all requisite corporate power and authority to
enter into this Agreement and, subject to obtaining all Requisite Regulatory
Approvals, Humboldt will have the requisite corporate power and authority to
perform its respective obligations hereunder with respect to the consummation of
the transactions contemplated hereby. Humboldt is the sole shareholder of
Humboldt Bank, Capitol Valley Bank and Capitol Thrift & Loan. Humboldt Bank and
Capitol Valley Bank are California state-chartered banking institutions duly
organized, validly existing and in good standing under the laws of the State of
California and each has all requisite corporate power and authority to own,
lease and operate its properties and assets and to carry on its business
substantially as it is being conducted on the date of this Agreement. Humboldt
Bank and Capitol Valley Bank are authorized by the CDFI to conduct general
banking businesses. Humboldt Bank is not a member of the Federal Reserve System
and Capitol Valley Bank is not a member of the Federal Reserve System. Both
Humboldt Bank's and Capitol Valley Bank's deposits are insured by the FDIC in
the manner and to the full extent provided by law. Humboldt Bank and Capitol
Valley Bank each maintains and operates branch offices only in the State of
California. Capitol Thrift & Loan is a California state-chartered industrial
loan company duly organized, validly existing and in good standing under the
laws of the State of California and has all requisite corporate power and
authority to own, lease and operate its properties and assets and to carry on
its business substantially as it is being conducted on the date of this
Agreement. Capitol Thrift & Loan is authorized by the CDFI to conduct a general
industrial loan business. Capitol Thrift & Loan is not a member of the Federal
Reserve System. Capitol Thrift & Loan's deposits are insured by the FDIC in the
manner and to the full extent provided by law. Capitol Thrift & Loan maintains
and operates branch offices only in the State of California. Neither the scope
of business of Humboldt or any Subsidiary, nor the location of any of their
respective properties, requires that Humboldt or any of its respective
Subsidiaries be licensed to conduct business in any jurisdiction other than
those jurisdictions in which they are licensed or qualified to do business as a
foreign corporation, where the failure to be so licensed or qualified would,
individually or in the aggregate, have a Material Adverse Effect on Humboldt
taken as a whole.
Section 4.2 Licenses and Permits. Except as disclosed on Schedule 4.2,
Humboldt and its Subsidiaries have all material licenses, certificates,
franchises, rights and permits that are necessary for the conduct of their
respective businesses, and such licenses are in full force and effect, except
for any failure to be in full force and effect that would not, individually or
in the aggregate, have a Material Adverse Effect on Humboldt taken as a whole,
or on the ability of Humboldt to consummate the transactions contemplated by
this Agreement. The properties, assets, operations and businesses of Humboldt
and those of its Subsidiaries, are and have been maintained and conducted, in
all material respects, in compliance with all applicable licenses, certificates,
franchises, rights and permits.
Section 4.3 Subsidiaries. Other than as set forth on Schedule 4.3, there
is no corporation, partnership, joint venture or other entity in which Humboldt
owns, directly or indirectly (except as pledgee pursuant to loans or stock or
other interest held as the result of or in lieu of foreclosure pursuant to
pledge or other security arrangement) any equity or other voting interest or
position.
Section 4.4 Authorization of Agreement; No Conflicts.
4.4.1 The execution and delivery of this Agreement and the Merger
Agreement and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the part
of Humboldt, subject only to the approval of this Agreement and the Merger
Agreement by Humboldt's shareholders. This Agreement has been duly executed and
delivered by Humboldt and constitutes a legal, valid and binding obligation of
Humboldt, enforceable in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium or other similar
laws affecting the rights of creditors generally and by general equitable
principles. The Merger Agreement, upon the receipt of all Requisite Regulatory
Approvals and the due execution and filing of such Merger Agreement in
accordance with the applicable provisions of the California Corporations Code,
will constitute a legal, valid and binding obligation of Humboldt, enforceable
in accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting
the rights of creditors generally or by general equitable principles.
4.4.2 Except as discussed on Schedule 4.4, the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby does not and will not conflict with, or result in any violation of or
default or loss of a material benefit under, any provision of the Articles of
Incorporation or Bylaws of Humboldt, or except for the necessity of obtaining
the Requisite Regulatory Approvals, and the approval of the shareholders of
Humboldt, any material mortgage, indenture, lease, agreement or other material
instrument, or any permit, concession, grant, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
Humboldt or any of its assets or properties or any of its Subsidiaries, other
than any such conflict, violation, default or loss which (i) will not have a
Material Adverse Effect on Humboldt taken as a whole; or (ii) will be cured or
waived prior to the Effective Time. No material consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required in connection with the execution and delivery of this
Agreement by Humboldt or the performance by Humboldt of its obligations
hereunder, except for (a) filings required in order to obtain Requisite
Regulatory Approvals; (b) the filing of the Registration Statement (including
the Joint Proxy Statement/Prospectus constituting a part thereof) with the SEC
relating to the Merger and the declaration of effectiveness of the Registration
Statement by the SEC and any applicable state securities law regulatory
authorities; (c) the filing and approval of the Merger Agreement with the
Secretary of the State of California; (d) any approvals required to be obtained
pursuant to the BHCA or the Federal Deposit Insurance Act or any other required
governmental approval for the execution and delivery of this Agreement by
Humboldt or the consummation of the Merger; and (e) any consents,
authorizations, approvals, filings or exemptions required to be made or obtained
under the securities or "blue sky" laws of various jurisdictions in connection
with the issuance of shares of Humboldt Common Stock contemplated by this
Agreement.
Section 4.5 Capital Structure of Humboldt. The authorized capital stock
of Humboldt consists of 50,000,000 shares of Humboldt Common Stock, no par value
per share. On the date of this Agreement 5,916,343 shares of Humboldt Common
Stock were outstanding, 1,017,920 shares of Humboldt Common Stock were reserved
for issuance pursuant to employee stock option and other employee stock plans
(the "Humboldt Stock Plans"). All outstanding shares of Humboldt Common Stock
are validly issued, fully paid and nonassessable and do not possess any
preemptive rights and were not issued in violation of any preemptive rights or
any similar rights of any Person. The issuance of the shares of Humboldt Common
Stock proposed to be issued pursuant to this Agreement at the Effective Time
will have been duly authorized by all requisite corporate action of Humboldt,
and such shares, when issued as contemplated by this Agreement, will constitute
duly authorized, validly issued, fully paid and nonassessable shares of Humboldt
Common Stock, and will not have been issued in violation of any preemptive or
similar rights of any Person. As of the date of this Agreement, and except for
this Agreement, the Humboldt Stock Plans and as disclosed in Schedule 4.5,
Humboldt does not have outstanding any options, warrants, calls, rights,
commitments, securities or agreements of any character to which Humboldt is a
party or by which it is bound obligating Humboldt to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock of
Humboldt or obligating Humboldt to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement. Humboldt also has outstanding
$5,310,000 in 10 7/8% Fixed Rate Junior Subordinate Deferrable Interest
Debentures due 2030 pursuant to an Indenture dated March 23, 2000.
Section 4.6 Humboldt Filings.
4.6.1 Since January 1, 1997, Humboldt and its Subsidiaries have
filed all reports, registrations and statements, together with any amendments
required to be made with respect thereto, that were required to be filed with
(a) the Federal Reserve Board or any Federal Reserve Bank; (b) the CDFI; (c) the
FDIC; (d) the SEC; (e) the California Department of Corporation and (f) any
other applicable federal, state or local governmental or regulatory authority.
All such reports, registrations and filings including the Humboldt Financial
Statements are collectively referred to as the "Humboldt Filings". Except to the
extent prohibited by law, copies of the Humboldt Filings have been made
available to Tehama. As of their respective filing or mailing dates, each of the
past Humboldt Filings (a) was true and complete in all material respects (or was
amended so as to be so promptly following discovery of any discrepancy); and (b)
complied in all material respects with all of the statutes, rules and
regulations enforced or promulgated by the governmental or regulatory authority
with which it was filed (or was amended so as to be so promptly following
discovery of any such noncompliance) and none contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Humboldt Financial
Statements, together with the financial statements contained in the Humboldt
Filings, have been prepared in accordance with GAAP, or applicable regulatory
accounting principles, applied on a consistent basis during the period involved
(except as may be indicated in the notes thereto) and fairly present (subject,
in the case of the unaudited statements, to recurring adjustments normal in
nature and amount) the consolidated financial position of Humboldt as of the
dates thereof and the consolidated results of its operations, cash flows and
changes in shareholders' equity for the period then ended.
4.6.2 Humboldt and its Subsidiaries, have filed each report,
schedule, and amendments to each of the foregoing since January 1, 1997 that
Humboldt, or its Subsidiaries were required to file with the Federal Reserve
Bank, the FDIC, the California Department of Corporations or the CDFI (the
"Humboldt Documents"), all of which have been made available to Tehama. As of
their respective dates, the Humboldt Documents complied in all material respects
with the applicable requirements of the BHCA, the Federal Deposit Insurance Act
and the California Financial Code, as the case may be, and the rules and
regulations of the Federal Reserve Bank, the FDIC, the California Department of
Corporations and the CDFI thereunder applicable to such Humboldt Documents, and
none of the Humboldt Documents contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The financial statements of Humboldt included in the
Humboldt Filings comply in all material respects with applicable accounting
requirements and have been prepared in accordance with GAAP, or applicable
regulatory accounting principles, applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto, or in the
case of the unaudited statements, as permitted by regulations of the Federal
Reserve Bank, the FDIC, or the CDFI), and fairly present (subject, in the case
of the unaudited statements, to recurring adjustments normal in nature and
amount) the consolidated financial position of Humboldt as of the dates thereof
and the consolidated results of its operations and cash flows or changes in
financial position for the periods then ended.
Section 4.7 Accuracy of Information Supplied.
4.7.1 No representation or warranty of Humboldt contained herein
or any statement, schedule, exhibit or certificate given or to be given by or on
behalf of Humboldt or any of its Subsidiaries, including Humboldt Bank, Capitol
Valley Bank and Capitol Thrift & Loan, to Tehama in connection herewith and none
of the information supplied or to be supplied by Humboldt or any of its
Subsidiaries, including Humboldt Bank, Capitol Valley Bank and Capitol Thrift &
Loan, to Tehama hereunder to the best of Humboldt's Knowledge contains or will
contain any untrue statement of material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
4.7.2 None of the information supplied or to be supplied by
Humboldt or relating to Humboldt and Humboldt Bank, Capitol Valley Bank and
Capitol Thrift & Loan, which is included or incorporated by reference in (i) the
Registration Statement on Form S-4 to be filed with the SEC by Humboldt in
connection the issuance of shares of Humboldt Common Stock in the Merger will,
at the time the Registration Statement becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading; (ii)
the Joint Proxy Statement/Prospectus and any amendment or supplement thereto
will, at all times from the date of mailing to shareholders of Humboldt through
the date of the meeting of shareholders of Humboldt to be held in connection
with the Merger, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; and (iii) the applications and forms to be filed with securities
or "blue sky" authorities, self regulatory authorities, or any Governmental
Entity in connection with the Merger, the issuance of any shares of
Humboldt Common Stock in connection with the Merger, or any Requisite Regulatory
Approvals will, at the time filed or at the time they become effective, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
Registration Statement (except for such portions thereof that relate only to
Tehama and its Subsidiaries) will comply in all material respects with the
applicable provisions of the Securities Act and the Exchange Act and the rules
and regulations thereunder.
4.7.3 Humboldt has delivered or will deliver to Tehama copies of:
(a) the audited balance sheets of Humboldt and its Subsidiaries as of December
31, 1999, 1998 and 1997 and the related statements of income, changes in
shareholders' equity and cash flows for the years then ended and the related
notes to such financial statements, all as audited by ▇▇▇▇▇▇▇▇▇▇ & Co.,
independent public accountants (the "Humboldt Financial Statements"), and
Humboldt will hereafter until the Closing Date deliver to Tehama copies of
additional financial statements of Humboldt as provided in Section 5.1.1(iii).
The Humboldt Financial Statements have been prepared (and all of said additional
financial statements will be prepared) in accordance with GAAP, or applicable
regulatory accounting principles, applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) consistently
followed throughout the periods covered by such statements, and present (and,
when prepared, will present) fairly the financial position of Humboldt and its
Subsidiaries as of the respective dates and for the respective periods covered
by such financial statements (subject, in the case of the unaudited statements,
to recurring adjustments normal in nature and amount). In addition, Humboldt has
delivered or made available to Tehama copies of all management or other letters
delivered to Humboldt by its independent accountants in connection with any of
the Humboldt Financial Statements or by such accountants or any consultant
regarding the internal controls or internal compliance procedures and systems of
Humboldt issued at any time since January 1, 1997, and will make available for
inspection by Tehama or its representatives, at such times and places as Tehama
may reasonably request, reports and working papers produced or developed by such
accountants or consultants.
Section 4.8 Compliance With Applicable Laws. Except as disclosed on
Schedule 4.8, to the best of Humboldt's Knowledge, the respective businesses of
Humboldt and its Subsidiaries are not being conducted in violation of any law,
ordinance or regulation, except for violations which individually or in the
aggregate would not have a Material Adverse Effect on Humboldt and its
Subsidiaries, taken as a whole. No investigation or review by any Governmental
Entity with respect to Humboldt is pending or, to the Knowledge of Humboldt,
threatened, nor has any Governmental Entity indicated to Humboldt an intention
to conduct the same, other than those the outcome of which, as far as can be
reasonably foreseen, will not have a Material Adverse Effect on Humboldt and its
Subsidiaries, taken as a whole.
Section 4.9 Litigation. Except as disclosed on Schedule 4.9, there is no
suit, action or proceeding or investigation pending or, to the Knowledge of
Humboldt, threatened against or affecting Humboldt or any of its Subsidiaries
which, if adversely determined, would have a Material Adverse Effect on Humboldt
and its Subsidiaries, taken as a whole; nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against Humboldt or any of its Subsidiaries that has, or which, insofar as
reasonably can be foreseen, in the future would have, any such Material Adverse
Effect. Schedule 4.9 contains a true, correct and complete list, including
identification of the applicable insurance policy covering such litigation, if
any, subject to reservation of rights, if any, the applicable deductible and the
amount of any reserve therefor, of all pending litigation in which Humboldt or
any of its Subsidiaries is a named party of which Humboldt has Knowledge, and
except as disclosed on Schedule 4.9, all of the litigation shown on such
Schedule is adequately covered by insurance in force, except for applicable
deductibles, or has been adequately reserved for in accordance with Humboldt's
prior business practices.
Section 4.10 Agreements with Banking Authorities. Except at set forth on
Schedule 4.10, neither Humboldt nor any Subsidiary of Humboldt is a party to any
written agreement or memorandum of understanding with, or order or directive
from, any Governmental Entity.
Section 4.11 Insurance. Humboldt and its Subsidiaries have in full force
and effect policies of insurance with respect to their assets and businesses
against such casualties and contingencies and in such amounts, types and forms
as are customarily appropriate for their businesses, operations, properties and
assets. Schedule 4.11 contains a list of all policies of insurance and bonds
carried and owned by Humboldt or any Subsidiary. None of Humboldt or any of its
Subsidiaries is in default under any such policy of insurance or bond such that
it can be canceled and all material current claims thereunder have been filed in
timely fashion. Humboldt and its Subsidiaries have filed claims outstanding
with, or given notice of claim to, their insurers or bonding companies in timely
fashion with respect to all material matters and occurrences for which they
believe they have coverage.
Section 4.12 Title to Assets other than Real Property. Each of Humboldt
and its respective Subsidiaries has good and marketable title to or a valid
leasehold interest in all properties and assets (other than real property which
is the subject to Section 4.13), it owns or leases, free and clear of all
mortgages, covenants, conditions, restrictions, easements, liens, security
interests, charges, claims, assessments and encumbrances, except for: (a) rights
of lessors, lessees or sublessees in such matters as are reflected in a written
lease; (b) encumbrances as set forth in the Humboldt Financial Statements; (c)
current Taxes (including assessments collected with Taxes) not yet due which
have been fully reserved for; (d) encumbrances, if any, that are not substantial
in character, amount or extent and do not detract materially from the value, or
interfere with present use, or the ability of Humboldt or its Subsidiary to sell
or otherwise dispose of the property subject thereto or affected thereby; and
(e) other matters as described in Schedule 4.12. Materially all such properties
and assets are, and require only routine maintenance to keep them, in good
working condition, normal wear and tear excepted.
Section 4.13 Real Property. Schedule 4.13 is an accurate list and
general description of all real property owned or leased by Humboldt or any of
its Subsidiaries, including OREO. Each of Humboldt and its respective
Subsidiaries has good and marketable title to the real properties that it owns,
as described in such Schedule, free and clear of all mortgages, covenants,
conditions, restrictions, easements, liens, security interests, charges, claims,
assessments and encumbrances, except for (a) rights of lessors, lessees or
sublessees in such matters as are reflected in a written lease; (b) current
Taxes (including assessments collected with Taxes) not yet due and payable; (c)
encumbrances, if any, that are not substantial in character, amount or extent
and do not materially detract from the value, or interfere with present use, or
the ability of Humboldt to dispose, of Humboldt's interest in the property
subject thereto or affected thereby; and (d) other matters as described in
Schedule 4.13. Humboldt and its Subsidiaries have valid leasehold interests in
the leaseholds they respectively hold, free and clear of all mortgages, liens,
security interests, charges, claims, assessments and encumbrances, except for
(a) claims of lessors, co-lessees or sublessees in such matters as are reflected
in a written lease; (b) title exceptions affecting the fee estate of the lessor
under such leases; and (c) other matters as described in Schedule 4.13. To the
best of Humboldt's Knowledge, the activities of Humboldt and its Subsidiaries
with respect to all real property owned or leased by them for use in connection
with their operations are in all material respects permitted and authorized by
applicable zoning laws, ordinances and regulations and all laws and regulations
of any Governmental Entity. Except as set forth in Schedule 4.13, Humboldt and
its Subsidiaries enjoy quiet possession under all material leases to which they
are the lessees and all of such leases are valid and in full force and effect,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting the rights of creditors generally and
by general equitable principles. Materially all buildings and improvements on
real properties owned or leased by Humboldt or any of its Subsidiaries are in
good condition and repair, and do not require more than normal and routine
maintenance, to keep them in such condition, normal wear and tear excepted.
Section 4.14 Performance of Obligations. Humboldt and its Subsidiaries
have performed all material obligations required to be performed by them to date
and none of Humboldt or any of its Subsidiaries is in material default under or
in breach of any term or provision of any covenant, contract, lease, indenture
or any other agreement, written or oral, to which any is a party, is subject or
is otherwise bound, and no event has occurred that, with the giving of notice or
the passage of time or both, would constitute such a default or breach, where
such default or breach or failure to perform would have a Material Adverse
Effect on Humboldt and its Subsidiaries, taken as a whole. To Humboldt's
Knowledge, and except as disclosed on Schedule 4.14, no party with whom Humboldt
or any of its Subsidiaries has an agreement that is of material importance to
the business of Humboldt and its Subsidiaries, taken as a whole, is in default
thereunder.
Section 4.15 Brokers and Finders. Except as set forth on Schedule 4.15,
none of Humboldt or any of its Subsidiaries is a party to or obligated under any
agreement with any broker or finder relating to the transactions contemplated
hereby, and neither the execution of the Agreement, the Merger Agreement, nor
the consummation of the transactions provided for herein and therein, will
result in any liability to any broker or finder. Humboldt agrees to indemnify
and hold harmless Tehama and its affiliates, and to defend with counsel
reasonably satisfactory to Tehama, from and against any liability, cost or
expense, including attorneys' fees, incurred in connection with a breach of this
Section 4.15.
Section 4.16 Absence of Material Adverse Effect. Since January 1, 2000,
the respective businesses of Humboldt and its Subsidiaries have been conducted
only in the ordinary course, in substantially the same manner as theretofore
conducted, and no event or circumstance has occurred or is expected to occur
which to Humboldt's Knowledge has had or which, with the passage of time or
otherwise, could reasonably be expected to have a Material Adverse Effect on
Humboldt and its Subsidiaries, taken as a whole.
Section 4.17 Undisclosed Liabilities. Except as disclosed on Schedule
4.17, none of Humboldt or any of its Subsidiaries to Humboldt's Knowledge has
any liabilities or obligations, either accrued, contingent or otherwise, that
are material to Humboldt and its Subsidiaries, taken as a whole, and that have
not been: (a) reflected or disclosed in the Humboldt Financial Statements; or
(b) incurred subsequent to December 31, 1999 in the ordinary course of business.
Humboldt has no Knowledge of any basis for the assertion against Humboldt or any
of its Subsidiaries, of any liability, obligation or claim (including without
limitation that of any Governmental Entity) that will have or cause, or could
reasonably be expected to have or cause, a Material Adverse Effect on Humboldt
and its Subsidiaries, taken as a whole, that is not fairly reflected in the
Humboldt Financial Statements or on Schedule 4.17.
Section 4.18 Taxes.
4.18.1 Filing of Returns. Except as set forth on Schedule 4.18.1,
Humboldt and its Subsidiaries have duly prepared and filed or caused to be duly
prepared and filed all federal, state, and local Returns (for Tax or
informational purposes) which were required to be filed by or in respect of
Humboldt and its Subsidiaries, or any of their properties, income and/or
operations on or prior to the Closing Date. As of the time they were filed, the
foregoing Returns accurately reflected the material facts regarding the income,
business, assets, operations, activities, status, and any other information
required to be shown thereon. Except as set forth on Schedule 4.18.1, no
extension of time within which Humboldt or any of its Subsidiaries may file any
Return is currently in force.
4.18.2 Payment of Taxes. Except as disclosed on Schedule 4.18.2
with respect to all amounts in respect of Taxes imposed on Humboldt or any
Subsidiary or for which Humboldt or any Subsidiary is or could be liable,
whether to taxing authorities (as, for example, under law) or to other Persons
(as, for example, under Tax allocation agreements), with respect to all taxable
periods or portions of periods ending on or before the Closing Date, all
applicable tax laws and agreements have been or will be fully complied with in
all material respects, and all such amounts required to be paid by or on behalf
of Humboldt or any Subsidiary to taxing authorities or others on or before the
date hereof have been paid.
4.18.3 Audit History. Except as disclosed on Schedule 4.18.3,
there is no review or audit by any taxing authority of any Tax liability of
Humboldt or any Subsidiary currently in progress of which Humboldt has
Knowledge. Except as disclosed on Schedule 4.18.3, Humboldt and its Subsidiaries
have not received any written notices within the three years preceding the
Closing Date of any pending or threatened audit, by the Internal Revenue Service
or any state, local or foreign agency, for any Returns or Tax liability of
Humboldt or any Subsidiary for any period. Humboldt and its Subsidiaries
currently have no unpaid deficiencies assessed by the Internal Revenue Service
or any state, local or foreign taxing authority arising out of any examination
of any of the Returns of Humboldt or any Subsidiaries filed for fiscal years
ended on or after December 31, 1995 through the Closing Date, nor to the
Knowledge of Humboldt is there reason to believe that any material deficiency
will be assessed.
4.18.4 Statute of Limitations. Except as disclosed on Schedule
4.18.4, no agreements are in force or are currently being negotiated by or on
behalf of Humboldt or any Subsidiaries for any waiver or for the extension of
any statute of limitations governing the time of assessments or collection of
any Tax. No closing agreements or compromises concerning Taxes of Humboldt or
any Subsidiaries are currently pending.
4.18.5 Withholding Obligations. Humboldt and its Subsidiaries
have withheld from each payment made to any of their respective officers,
directors and employees, the amount of all applicable Taxes, including, but not
limited to, income tax, social security contributions, unemployment
contributions, backup withholding and other deductions required to be withheld
therefrom by any Tax law and have paid the same to the proper taxing authorities
within the time required under any applicable Tax law.
4.18.6 Tax Liens. There are no Tax liens, whether imposed by any
federal, state, local or foreign taxing authority, outstanding against any
assets owned by Humboldt or its Subsidiaries, except for liens for Taxes that
are not yet due and payable.
4.18.7 Tax Reserves. Humboldt and its Subsidiaries have made full
and adequate provision and reserve for all federal, state, local or foreign
Taxes for the current period for which Tax and information returns are not yet
required to be filed. The Humboldt Financial Statements contain fair and
sufficient accruals for the payment of all Taxes for the periods covered by the
Humboldt Financial Statements and all periods prior thereto.
4.18.8 IRC Section 382 Applicability. None of Humboldt or any of
its Subsidiaries, including any party joining in any consolidated return to
which Humboldt is a member, underwent an "ownership change" as defined in IRC
Section 382(g) within the "testing period" (as defined in IRC Section 382)
ending immediately before the Effective Time, and not taking into account any
transactions contemplated by this Agreement.
Section 4.19 Hazardous Materials. Except as set forth on Schedule
4.19:
4.19.1 Except for ordinary and necessary quantities of cleaning,
pest control and office supplies, and other small quantities of Hazardous
Substances that are used in the ordinary course of the respective businesses of
Humboldt and its Subsidiaries and in compliance with applicable Environmental
Laws, or ordinary rubbish, debris and nonhazardous solid waste stored in garbage
cans or bins for regular disposal off-site, or petroleum contained in, and de
minimus quantities discharged from, motor vehicles in their ordinary operation
on any of the Humboldt Properties (as defined below), Humboldt and its
Subsidiaries have not engaged in the generation, use, manufacture, treatment,
transportation, storage (in tanks or otherwise), or the disposal, of Hazardous
Substances other than as permitted by and only in compliance with applicable
law. To Humboldt's Knowledge, no material amount of Hazardous Substances have
been released, emitted or disposed of, or otherwise deposited, on, in or from
any real property which is now or has been previously owned since January 1,
1997, or which is currently or during the past three years was leased, by
Humboldt or any of its Subsidiaries, including OREO (collectively, the "Humboldt
Properties"), or to Humboldt's Knowledge, on or in any real property in which
Humboldt or any of its Subsidiaries now holds any security interest, mortgage or
other lien or interest with an underlying obligation in excess of $25,000
("Humboldt Collateralizing Real Estate"), except for (i) matters disclosed on
Schedule 4.19; (ii) ordinary and necessary quantities of cleaning, pest control
and office supplies used and stored in compliance with applicable Environmental
Laws, or ordinary rubbish, debris and nonhazardous solid waste stored in garbage
cans or bins for regular disposal off-site, or petroleum contained in, and de
minimus quantities discharged from, motor vehicles in their ordinary operation
on such Humboldt Properties; and (iii) such releases, emissions, disposals or
deposits which constituted a violation of an Environmental Law but did not have
a Material Adverse Effect on the Humboldt Property involved and would not result
in the incurrence or imposition of any liability, expense, penalty or fine
against Humboldt or any of its Subsidiaries in excess of $25,000 individually or
in the aggregate. To Humboldt's Knowledge, no activity has been undertaken on
any of the Humboldt Properties since January l, 1997, and to the Knowledge of
Humboldt no activities have been or are being undertaken on any of the Humboldt
Collateralizing Real Estate, that would cause or contribute to:
(a) any of the Humboldt Properties or Humboldt Collateralizing Real Estate
becoming a treatment, storage or disposal facility within the meaning of RCRA or
any similar state law or local ordinance;
(b) a release or threatened release of any Hazardous Substances under
circumstances which would violate any Environmental Laws; or
(c) the discharge of Hazardous Substances into any soil, subsurface water
or ground water or into the air, or the dredging or filling of any waters, that
would require a permit or any other approval under the Federal Water Pollution
Control Act, 33 U.S.C. ss.1251 et seq., the Clean Air Act, as amended, 42 U.S.C.
ss.7401 et seq., or any similar federal or state law or local ordinance; the
cumulative effect of which would have a material adverse effect on the Humboldt
Property or Humboldt Collateralizing Real Estate involved.
4.19.2 To Humboldt's Knowledge, there are not, and never have
been, any underground storage tanks located in or under any of the Humboldt
Properties or the Humboldt Collateralizing Real Estate.
4.19.3 None of Humboldt or any of its Subsidiaries has received
any written notice of, and to Humboldt's Knowledge none has received any verbal
notice of, any pending or threatened claims, investigations, administrative
proceedings, litigation, regulatory hearings or requests or demands for remedial
or responsive actions or for compensation, with respect to any of the Humboldt
Properties or Humboldt Collateralizing Real Estate, alleging noncompliance with
or violation of any Environmental Law or seeking relief under any Environmental
Law and none of the Humboldt Properties or Humboldt Collateralizing Real Estate
is listed on the United States Environmental Protection Agency's National
Priorities List of Hazardous Waste Sites, or, to Humboldt's Knowledge, any other
list, schedule, log, inventory or record of hazardous waste sites maintained by
any federal, state or local agency.
Section 4.20 Employees.
4.20.1 Except as set forth in Schedule 4.20.1, there are no
material controversies pending or threatened between Humboldt or any of its
Subsidiaries and any of their employees.
4.20.2 Except as disclosed in the Humboldt Financial Statements
at December 31, 1999, or in Schedule 4.20.2, all material sums due for employee
compensation and benefits have been duly and adequately paid or provided for,
and all deferred compensation obligations are fully funded. Neither Humboldt nor
Humboldt Bank, Capitol Valley Bank and Capitol Thrift & Loan, is a party
to any collective bargaining agreement with respect to any of its employees or
any labor organization to which its employees or any of them belong.
4.20.3 To Humboldt's Knowledge, no governmental agency or
claimant or representative of such claimant has alleged a material violation of
ERISA by Humboldt, the liability of which, if adversely determined would result
in a material adverse change in the capital or earnings of Humboldt.
Section 4.21 Powers of Attorney. No power of attorney or similar
authorization given by Humboldt or any Subsidiary thereof is presently in effect
or outstanding other than powers of attorney given in the ordinary course of
business with respect to routine matters.
Section 4.22 Loans and Investments. Except as set forth on Schedule
4.22, all loans, leases and other extensions of credit, and guaranties, security
agreements or other agreements supporting any loans or extensions of credit, and
investments of Humboldt or its Subsidiaries, are, and constitute, in all
material respects, the legal, valid and binding obligations of the parties
thereto and are enforceable against such parties in accordance with their terms,
except as the enforceability thereof may be limited by applicable law and
otherwise by bankruptcy, insolvency, moratorium or other similar laws affecting
the rights of creditors generally and by general equitable principles. Except as
described on Schedule 4.22, as of July 31, 2000, no loans or investments held by
Humboldt or any Subsidiary, are: (i) more than ninety days past due with respect
to any scheduled payment of principal or interest, other than loans on a
nonaccrual status; (ii) classified as "loss," "doubtful," "substandard" or
"specially mentioned" by Humboldt Bank, Capitol Valley Bank and Capitol Thrift &
Loan, or any banking regulators; or (iii) on a nonaccrual status in accordance
with Humboldt Bank's, Capitol Valley Bank's and Capitol Thrift & Loan's, loan
review procedures. Except as set forth on Schedule 4.22, none of such assets
(other than loans) are subject to any restrictions, contractual, statutory or
other, that would materially impair the ability of the entity holding such
investment to dispose freely of any such assets at any time, except restrictions
on the public distribution or transfer of any such investments under the
Securities Act and the regulations thereunder or state securities laws and
pledges or security interests given in connection with government deposits. All
loans, leases or other extensions of credit outstanding, or commitments to make
any loans, leases or other extensions of credit made by Humboldt or Humboldt
Bank, Capitol Valley Bank and Capitol Thrift & Loan, to any Affiliates of
Humboldt or Humboldt Bank, Capitol Valley Bank and Capitol Thrift & Loan, are
disclosed on Schedule 4.22. For outstanding loans or extensions of credit where
the original principal amounts are in excess of $100,000 and which by their
terms are either secured by collateral or supported by a guaranty or similar
obligation, the security interests have been duly perfected in all material
respects and have the priority they purport to have in all material respects,
other than by operation of law, and, in the case of each guaranty or similar
obligation, each has been duly executed and delivered to Humboldt or any
Subsidiary, and to Humboldt's Knowledge, is still in full force and effect.
Section 4.23 Material Contracts. Schedule 4.23 to this Agreement
contains a complete and accurate written list of all material agreements,
obligations or understandings, written and oral, to which Humboldt or any
Subsidiary is a party as of the date of this Agreement, except for loans and
other extensions of credit made by Humboldt or its Subsidiaries, in the ordinary
course of its business and those items specifically disclosed in the Humboldt
Financial Statements.
Section 4.24 Effective Date of Representations, Warranties, Covenants
and Agreements. Each representation, warranty, covenant and agreement of
Humboldt set forth in this Agreement shall be deemed to be made on and as of the
date hereof and as of the Effective Time.
ARTICLE 5. ADDITIONAL AGREEMENTS
Section 5.1 Access to Information, Due Diligence, etc.
5.1.1 Upon reasonable notice, each party shall permit the other
party and its accountants, counsel and other representatives reasonable access
to their officers, employees, properties, books, contracts, commitments and
records and from the date hereof through the Effective Time, and shall furnish
or provide access to each other as soon as practicable, (i) a copy of each of
Tehama's Filings or Humboldt's Filings filed subsequent to the date of this
Agreement promptly after such document has been filed with the appropriate
Governmental Entity, provided, however, that copies of any Returns relating to
Taxes of Tehama or any of its Subsidiaries shall be furnished to Humboldt at
least 15 Business Days prior to the proposed date of filing thereof and shall
not be filed without the prior reasonable approval of Humboldt, which approval
shall not be unreasonably withheld or delayed; (ii) unless otherwise prohibited
by law, a copy of each report, schedule and other documents filed or received by
it during such period with any Regulatory Authority or the Internal Revenue
Service, as to documents other than related to employees or customers and other
than those distributed to banks generally; (iii) as promptly as practicable
following the end of each calendar month after the date hereof, a balance sheet
of Tehama or Humboldt as of the end of such month; and (iv) all other
information concerning its business, properties, assets, financial condition,
results of operations, liabilities, personnel and otherwise as Tehama or
Humboldt may reasonably request.
5.1.2 Until the Effective Time, a representative of Humboldt
shall be entitled and shall be invited to attend meetings of the Board of
Directors of Tehama or Tehama Bank and of the Loan and Audit Committees of
Tehama and Tehama Bank, and at least five (5) days' prior written notice of the
dates, times and places of such meetings shall be given to Humboldt except that
in the case of special meetings Humboldt shall receive the same number of days'
prior notice as Tehama's directors receive for such meetings; provided, however,
that such representative shall excuse himself or herself from any portion of any
such meetings that (i) relate to approval of, or the exercise of any rights
under, this Agreement by Tehama, (ii) involve discussions between such Board of
Directors or such Loan or Audit Committee and legal counsel for Tehama that are
entitled to be protected from disclosure under an attorney-client privilege
which would be lost due to the presence of such representative of Humboldt, or
(iii) constitute the Executive Session of any Board of Directors meeting.
5.1.3 Until the Effective Time, a representative of Tehama shall
be entitled and shall be invited to attend meetings of the Boards of Directors
of Humboldt and Humboldt Bank, and of the Loan and Audit Committees of Humboldt
and Humboldt Bank, at least five (5) days' prior to written notice of the dates,
times and places of such meetings shall be given to Tehama except that in the
case of special meetings Tehama shall receive the same number of days' prior
notice as Humboldt's directors receive for such meetings; provided, however,
that such representative shall excuse himself or herself from any portion of any
such meetings that (i) relate to approval of, or the exercise of any rights
under, this Agreement by Humboldt, (ii) involve discussions between such Boards
of Directors or such Loan or Audit Committees and legal counsel for Humboldt
that are entitled to be protected from disclosure under an attorney-client
privilege which would be lost due to the presence of such representative of
Tehama, or (iii) constitute the Executive Session of any Board of Directors
meeting.
5.1.4 Humboldt and Tehama each agrees to keep confidential and
not divulge to any other party or Person (other than to the employees,
attorneys, accountants and consultants of each who have a need to receive such
information and other than as may be required by law) any information received
from the other, unless and until such documents and other information otherwise
becomes publicly available or unless the disclosure of such information is
authorized by each party. In the event of termination of this Agreement for any
reason, the parties shall promptly return, or at the election of the other party
destroy, all nonpublic documents obtained from the other and any copies or notes
of such documents (except as otherwise required by law) and, upon the request of
the other party, confirm such destruction to the other in writing.
Section 5.2 Shareholder Approval.
5.2.1 Tehama and Humboldt each shall promptly call a meeting of
its respective shareholders to be held at the earliest practicable date after
the date on which the initial Registration Statement is filed with the SEC, but
in no event later than December 31, 2000, for the purpose of approving this
Agreement and authorizing the Merger Agreement and the Merger. Each of the
respective Boards of Directors will recommend to the respective shareholders
approval of this Agreement, the Merger Agreement and the Merger; provided,
however, that Tehama's Board of Directors or Humboldt's Board of Directors may
withdraw its recommendation if such Board of Directors believes in good faith
(based on a written opinion of a financial advisor that is experienced in
evaluating the fairness of Acquisition Proposals) that a Tehama Superior
Proposal or Humboldt Superior Proposal, as applicable (defined below) has been
made and shall have determined in good faith, after consultation with and based
on written advice of its outside legal counsel, that the withdrawal of such
recommendation is necessary for such Board of Directors to comply with its
fiduciary duties under applicable law.
5.2.2 If the Merger is approved by vote of the shareholders of
Humboldt and Tehama, then, within ten (10) days thereafter Humboldt and Tehama
shall send a Dissenting Shareholder Notice to each recordholder of any
Dissenting Shares.
Section 5.3 Taking of Necessary Action.
5.3.1 Subject to the terms and conditions of this Agreement, each
of the parties hereto agrees, subject to applicable laws and the fiduciary
duties of Tehama's or Humboldt's Boards of Directors, as advised in writing by
their respective counsel, to use all reasonable efforts promptly to take or
cause to be taken all action and promptly to do or cause to be done all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Merger Agreement, including, without limitation, the delivery of any
certificate or other document reasonably requested by counsel to a
party to this Agreement. Without limiting the foregoing, Humboldt and Tehama
will use their reasonable efforts to obtain all consents of third parties and
Government Entities necessary or, in the reasonable opinion of Humboldt or
Tehama advisable for the consummation of the transactions contemplated by this
Agreement. Without limiting the foregoing, Humboldt shall take all actions
necessary to execute and file the Merger Agreement and to effect all
transactions contemplated by this Agreement and Tehama shall take all actions
necessary to effect all transactions contemplated by this Agreement and the
Merger Agreement. In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the Merger Agreement, or to vest the Surviving Corporation with full title to
all properties, assets, rights, approvals, immunities and franchises of Tehama,
the proper officers or directors of Humboldt or Tehama, as the case may be,
shall take all such necessary action. Notwithstanding the foregoing, nothing in
this Agreement shall be construed to require Tehama to take any action (or omit
to take any action) which may affect the Conversion Rate, except as may be
specifically provided for or required by this Agreement.
5.3.2 The obligations of Tehama or Humboldt contained in Section
6.2.5 of this Agreement shall continue to be in full force and effect despite
any Default thereof by reason of receipt of a Tehama Superior Proposal or
Humboldt Superior Proposal, as applicable (defined below) and any Default
thereof by the defaulting party shall entitle either Tehama or Humboldt to such
legal or equitable remedies as may be provided in this Agreement or by law
notwithstanding that any action or inaction of the Board of Directors or
officers of the defaulting party which is required to enable such party to
fulfill such obligations may be excused based on the continuing fiduciary
obligations of such party's Board of Directors and officers to its shareholders.
Notwithstanding the foregoing, however, in the event of a termination of this
Agreement by Humboldt or Tehama and the actual payment of the liquidated damages
to the other party as provided for in Section 8.5 of this Agreement, neither
Humboldt, Tehama or their respective directors or officers shall have any
obligations or liabilities of any kind under this Agreement by reason of any
such Default, and Humboldt or Tehama shall have no further obligations of any
kind under this Agreement.
5.3.3 Tehama shall use its best efforts to cause each director,
executive officer and other Person who is an "Affiliate" of Tehama (for purposes
of Rule 145 under the Securities Act) to deliver to Humboldt, on the date of
this Agreement, a written agreement in the form attached hereto as Exhibit 5.3
(the "Affiliate Agreements").
Section 5.4 Registration Statement and Applications.
5.4.1 Humboldt and Tehama will cooperate and jointly prepare and
file as promptly as practicable the Registration Statement, the statements,
applications, correspondence or forms to be filed with appropriate State
securities law regulatory authorities, and the statements, correspondence or
applications to be filed to obtain the Requisite Regulatory Approvals to
consummate the transactions contemplated by this Agreement. Each of Humboldt and
Tehama shall use all reasonable efforts to have the S-4 Registration Statement
declared effective under the Securities Act as promptly as practicable after
such filing, and thereafter mail the Joint Proxy Statement/Prospectus to the
shareholders of Tehama. Each party will furnish all financial or other
information, including accountant comfort letters relating thereto,
certificates, consents and opinions of counsel concerning it and its
Subsidiaries received by such party.
5.4.2 Each party shall provide to the other at the request of the
other party: (i) immediately prior to the filing thereof, copies of all material
statements, applications, correspondence or forms to be filed with state
securities law regulatory authorities, the SEC and other appropriate regulatory
authorities to obtain the Requisite Regulatory Approvals to consummate the
transactions contemplated by this Agreement; provided, however, that no approval
need be obtained from any party to which such materials are provided; and (ii)
promptly after delivery to, or receipt from, such regulatory authorities all
written communications, letters, reports or other documents relating to the
transactions contemplated by this Agreement.
Section 5.5 Expenses.
5.5.1 Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring the same, including,
without limitation, all costs associated with any resales of Humboldt Common
Stock by Affiliates of Tehama; provided, however, that Humboldt will file on a
timely basis at its own expense the reports required by Rule 144(c) of the
Securities Act.
5.5.2 Tehama and Humboldt shall use their best efforts to ensure
that their attorneys, accountants, financial advisors, investment bankers and
other consultants engaged by them in connection with the transaction
contemplated by this Agreement submit full and final bills on or before the
Closing Date and that all such expenses are paid or properly accrued prior to
the Closing Date.
Section 5.6 Notification of Certain Events.
5.6.1 Tehama shall provide to Humboldt, as soon as practicable,
written notice (sent via facsimile and overnight mail or courier) of the
occurrence or failure to occur of any of the events, circumstances or conditions
that are the subject of Sections 6.1 and 6.2, which notice shall provide
reasonable detail as to the subject matter thereof.
5.6.2 Humboldt shall provide to Tehama, as soon as practicable,
written notice (sent via facsimile and overnight mail or courier) of the
occurrence or failure to occur of any of the events, circumstances or conditions
that are the subject of Section 6.3 and 6.4, which notice shall provide
reasonable detail as to the subject matter thereof.
5.6.3 Each party shall promptly advise the others in writing of
any change or event which could reasonably be expected to have a Material
Adverse Effect on the business, properties, assets, financial condition, results
of operations, liabilities or personnel of such party or on its ability to
consummate the transactions contemplated by this Agreement or the Merger
Agreement.
5.6.4 Tehama and Humboldt shall immediately notify the other in
writing in the event that such party becomes aware that the Registration
Statement or Joint Proxy Statement/Prospectus at any time contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statement therein, in light of
the circumstances under which they were made, not misleading or that the
Registration Statement or the Joint Proxy Statement/Prospectus otherwise is
required to be amended and supplemented, which notice shall specify, in
reasonable detail, the circumstances thereof. Humboldt shall promptly amend and
supplement such materials and disseminate the new or modified information so as
to fully comply with the Securities Act. If the amendment or supplement so
required relates to information concerning Tehama, the out-of-pocket costs and
expenses of preparing, filing and disseminating such amendment or supplement
shall be borne by Tehama.
Section 5.7 Closing Schedules. Tehama has delivered to Humboldt on or
before the date of this Agreement all of the Schedules to this Agreement which
Tehama is required to deliver to Humboldt hereunder (the "Tehama Schedules").
Humboldt has delivered to Tehama on or before the date of this Agreement all of
the Schedules to this Agreement which Humboldt is required to deliver to Tehama
hereunder ( the "Humboldt Schedules"). Immediately prior to the Closing Date,
Tehama shall have prepared updates of the Tehama Schedules provided for in this
Agreement and shall deliver to Humboldt revised schedules containing the updated
information (or a certificate signed by Tehama's Chief Executive Officer stating
that there have been no changes on the applicable schedules); and Humboldt shall
have prepared updates of the Humboldt Schedules provided for in this Agreement
and shall deliver to Tehama revised Schedules containing updated information (or
a certificate signed by Humboldt's Chief Executive Officer stating that there
has been no change on the applicable schedules). Such updated schedules shall
sometimes be referred to collectively, as the "Closing Schedules." The Closing
Schedules shall be dated as of the day prior to the Closing Date and shall
contain information as of the day prior to the Closing Date or as of such
earlier date as is practicable under the circumstances. In the event the Closing
Schedules disclose an event, occurrence or circumstance that has had or could
reasonably be expected to have a Material Adverse Effect on Tehama, on the one
hand, or on Humboldt, on the other hand, or on consummation of the transactions
contemplated by this Agreement, that was not disclosed in the previously
delivered Schedules hereto, the party delivering such Closing Schedules (the
"Affected Party") shall so notify the other party in the letter of transmittal
for such Closing Schedules, the Closing Date shall be delayed for seven (7)
Business Days and such other party shall be entitled to terminate this Agreement
within five (5) Business Days after receiving such Closing Schedules that
disclose such event, occurrence or circumstance. In the event of any such
termination, the terminating party shall have no liability for such termination.
The Affected Party shall have no liability to the terminating party in such an
event unless (i) as a result of the existence of such event, occurrence or
circumstance so disclosed in the Closing Schedules any of the representations or
warranties of the Affected Party contained in this Agreement are found to have
been untrue in any material respect as of the date of this Agreement, or (ii)
the event, occurrence or circumstance could have been prevented in the exercise
of reasonable diligence by any officers or directors of the Affected Party, in
either of which cases the Affected Party shall be liable to the terminating
party for Liquidated Damages as provided in Section 8.5 hereof.
Section 5.8 Additional Accruals/Appraisals. Immediately prior to the
Closing Date, at Humboldt's request, Tehama and/or Tehama Bank shall, consistent
with GAAP and applicable banking regulations, establish such additional accruals
and reserves as may be necessary to conform Tehama's or Tehama Bank's accounting
and credit and OREO loss reserve practices and methods to those of Humboldt,
provided, however, that no accrual or reserve made by Tehama or Tehama Bank
pursuant to this Section 5.8, or any litigation or regulatory proceeding arising
out of any such accrual or reserve, or any other effect on Tehama or Tehama Bank
resulting from Tehama's or Tehama Bank's compliance with this Section 5.8, shall
constitute or be deemed to be a breach, violation of or failure to satisfy any
representation, warranty, covenant, condition or other provision of this
Agreement or otherwise be considered in determining whether any such breach,
violation or failure to satisfy shall have occurred.
ARTICLE 6. CONDUCT OF BUSINESS
Section 6.1 Affirmative Conduct of Tehama. During the period from the
date of execution of this Agreement through the Effective Time, Tehama shall
carry on its business, and shall cause each of its respective Subsidiaries to
carry on its business, in the ordinary course in substantially the manner in
which heretofore conducted, subject to changes in law applicable to all
California state- chartered banks or all member banks insured by the FDIC and
directives from regulators, and use all commercially reasonable efforts to
preserve intact its business organization, keep available the services of its
officers and employees, (other than terminations in the ordinary course of
business) and preserve its relationships with customers, depositors, suppliers
and others having business dealings with it; and, to these ends, shall fulfill
each of the following:
6.1.1 Use its commercially reasonable efforts, or cooperate with
others, to expeditiously bring about the satisfaction of the conditions
specified in Article 7 which are within its ability to influence or control;
6.1.2 Advise Humboldt promptly in writing of any change that
would have a Material Adverse Effect on its capital structure, financial
condition, assets, results of operations, business or prospects or of any matter
which would make the representations and warranties set forth in Article 3
hereof not true and correct in any material respect as of the effective date of
the Registration Statement and at the Effective Time;
6.1.3 Keep in full force and effect all of its existing material
permits and licenses and those of its Subsidiaries;
6.1.4 Use its commercially reasonable efforts to maintain
insurance or bonding coverage on all material properties for which it is
responsible and on its business operations, and carry not less than the same
coverage for fidelity, public liability, personal injury, property damage and
other risks equal to that which is in effect as of the date of this Agreement;
and notify Humboldt in writing promptly of any facts or circumstances which
could affect its ability, or that of any of its Subsidiaries, to maintain such
insurance or bonding coverage;
6.1.5 Perform its contractual obligations and not breach or come
into default on any of such obligations, and not amend, modify, or, except as
they may be terminated in accordance with their terms, terminate any material
contract, agreement, understanding, commitment, or offer, whether written or
oral, (collectively referred to as an "Understanding") or materially default in
the performance of any of its obligations under any Understanding where such
default would have a Material Adverse Effect on Tehama;
6.1.6 Duly observe and conform to all legal requirements
applicable to its business, except for any failure to so observe and conform
that would not, individually or in the aggregate, and, in the future will not,
have a Material Adverse Effect on Tehama;
6.1.7 Duly and timely file as and when due all reports and
Returns required to be filed with any Governmental Entity;
6.1.8 Maintain its tangible assets and properties in good
condition and repair, normal wear and tear excepted in accordance with prior
practices;
6.1.9 Promptly advise Humboldt in writing of any event or any
other transaction within the Knowledge of Tehama, whereby any Person or related
group of Persons acquires, after the date of this Agreement, directly or
indirectly, record or beneficial ownership (as defined in Rule 13d-3 promulgated
by the SEC pursuant to the Exchange Act) or control of 5% or more of the
outstanding shares of Tehama Common Stock either prior to or after the record
date fixed for the Tehama shareholders' meeting or any adjourned meeting thereof
to approve the transactions contemplated herein;
6.1.10 (a) Maintain a reserve for loan and lease losses ("Loan
Loss Reserve") at a level which is adequate to provide for all known and
reasonably expected losses on loans, leases and other extensions of credit
outstanding and other inherent risks in Tehama's or Tehama Bank's portfolio of
loans and leases, in accordance with GAAP and applicable regulatory accounting
principles and banking laws and regulations;
(b) Charge off all loans, receivables and other assets,
or portions thereof, deemed uncollectible in accordance with GAAP, regulatory
accounting principles, and applicable law or regulation, or which have been
classified as "loss" or as directed by any regulatory authority, unless such
classification or direction has been disregarded in good faith by Tehama or
Tehama Bank, Tehama or Tehama Bank has submitted in writing to such regulatory
authority the basis upon which it has so disregarded such classification or
direction, and such regulatory authority retracts its direction requiring such
charge-off;
6.1.11 Furnish to Humboldt, as soon as practicable, and in any
event within fifteen days after it is prepared: (i) a copy of any report
submitted to the Board of Directors of Tehama or Tehama Bank and access to the
working papers related thereto, provided, however, that Tehama need not furnish
Humboldt any materials relating to deliberations of Tehama's Board of Directors
or Tehama Bank's Board of Directors with respect to its approval of this
Agreement, communications of Tehama's legal counsel with the Board of Directors
or officers of Tehama regarding Tehama's rights against or obligations to
Humboldt or its Subsidiaries under this Agreement, or books, records and
documents covered by the attorney-client privilege or which are attorneys' work
product; (ii) copies of all material reports, renewals, filings, certificates,
statements, correspondence and other documents specific to Tehama or Tehama Bank
or filed with or received from any Federal Reserve Bank, the FDIC, the SEC, the
CDFI or any Governmental Entity; (iii) monthly unaudited balance sheets,
statements of income and changes in shareholders' equity for Tehama and Tehama
Bank and quarterly unaudited balance sheets, statements of income and changes in
shareholders' equity for Tehama and Tehama Bank, in each case prepared on a
basis consistent with past practice; and (iv) such other reports as Humboldt may
reasonably request (which are otherwise deliverable under this Section 6.1.11)
relating to Tehama. Each of the financial statements of Tehama or Tehama Bank
delivered pursuant to this Section 6.1.11 shall be accompanied by a certificate
of the Chief Financial Officer of Tehama or Tehama Bank to the effect that such
financial statements fairly present the financial information presented therein
of Tehama or Tehama Bank, for the periods covered, subject to recurring
adjustments normal in nature and amount, necessary for a fair presentation and
are prepared on a basis consistent with past practice;
6.1.12 Tehama agrees that through the Effective Time, as of their
respective dates, (i) each Tehama Filing will be true and complete in all
material respects; and (ii) each Tehama Filing will comply in all material
respects with all of the statutes, rules and regulations enforced or promulgated
by the Governmental Entity with which it will be filed and none will contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they will be made, not misleading. Any financial
statement contained in any of such Tehama Filings that is intended to present
the financial position of Tehama during the periods involved to which it relates
will fairly present in all material respects the financial position of Tehama
and will be prepared in accordance with GAAP or consistent with applicable
regulatory accounting principles and banking law and banking regulations, except
as stated therein;
6.1.13 Maintain reserves for contingent liabilities in accordance
with GAAP or applicable regulatory accounting principles and consistent with
past practices;
6.1.14 Promptly notify Humboldt of the filing, or threatened
filing, of any litigation, or the filing or threatened filing of any government
or regulatory action, including an investigation or notice of investigation, or
similar proceeding or notice of any material claims against Tehama or any of its
assets;
6.1.15 Inform Humboldt of the amounts and categories of any
loans, leases or other extensions of credit, or other assets, that have been
classified by any bank regulatory authority or by any unit of Tehama Bank as
"Specially Mentioned," "Renegotiated," "Substandard," "Doubtful," "Loss" or any
comparable classification ("Classified Assets"). Tehama will furnish to
Humboldt, as soon as practicable, and in any event within fifteen days after the
end of each calendar month, schedules including the following: (i) Classified
Assets by type (including each credit or other asset in an amount equal to or
greater than $10,000), and its classification category; (ii) nonaccrual credits
by type (including each credit in an amount equal to or greater than $10,000);
(iii) renegotiated loans by type (loans on which interest has been renegotiated
to lower than market rates because of the financial condition of the borrowers);
(iv) delinquent credits by type (including each delinquent credit in an amount
equal to or greater than $10,000), including an aging into 30-89 and 90+ day
categories; (v) loans or leases or other assets charged off, in whole or in
part, during the previous month by type (including each such loan or lease or
other asset in an amount equal to or greater than $10,000); and (vi) OREO or
assets owned stating with respect to each its type;
6.1.16 Furnish to Humboldt, upon Humboldt's request, schedules
with respect to the following: (i) participating loans and leases, stating, with
respect to each, whether it is purchased or sold and the loan or lease type;
(ii) loans or leases (including any commitments) by Tehama to any director or
officer (at or above the Vice President level) of Tehama or any of its
Subsidiaries, or to any Person holding 5% or more of the capital stock of
Tehama, including, with respect to each such loan or lease, the identity and, to
the best Knowledge of Tehama, the relation of the borrower to Tehama or Tehama
Bank, the loan or lease type and the outstanding and undrawn amounts; and (iii)
standby letters of credit, by type, (including each letter of credit in a face
amount equal to or greater than $10,000); and
6.1.17 Make available to Humboldt copies of each credit
authorization package, consisting of all applications for and financial
information regarding loans, renewals of loans or other extensions of credit of
$150,000 or more (on a noncumulative basis) for secured loans or secured
extensions of credit and $50,000 in the case of unsecured loans or unsecured
extensions of credit, which are approved by Tehama after the date of this
Agreement, within ten Business Days of preparation of such packages.
Section 6.2 Negative Covenants of Tehama. During the period from the
date of execution of this Agreement through the Effective Time, Tehama agrees
that without Humboldt's prior written consent, it shall not and its Subsidiaries
shall not:
6.2.1 (a) Declare or pay any dividend on, other than regular cash
dividends consistent with past practices, or make any other distribution in
respect of any of its capital stock; (b) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock; or
(c) repurchase or otherwise acquire (except pursuant to any Employee Plan,
Benefit Arrangement or the Tehama Stock Option Plans) any shares of its capital
stock;
6.2.2 Take any action that would or might result in any of the
representations and warranties of Tehama set forth in the Agreement becoming
untrue in any material respect or any of the conditions to the Merger set forth
in Article 7 not being satisfied, except to the extent such actions are required
to be undertaken by applicable law, regulation or at the direction of any
Regulatory Authority;
6.2.3 Issue, deliver, sell, or grant, or authorize the issuance,
delivery, sale or grant of, or purchase, any shares of the capital stock of
Tehama or any securities convertible or exercisable into or exchangeable for
such capital stock, or any rights, warrants or options, including options under
any stock option plans or enter into any agreements to do any of the foregoing,
except in connection with the issuance of Tehama Common Stock pursuant to the
exercise of Tehama Stock Options;
6.2.4 Amend its Articles of Incorporation or Bylaws, except as
required by applicable law or by the terms of this Agreement;
6.2.5 Authorize or knowingly permit any of its representatives,
directly or indirectly, to solicit or encourage any Acquisition Proposal (as
hereinafter defined) or participate in any discussions or negotiations with, or
provide any nonpublic information to, any Person or group of persons (other than
Humboldt, and its representatives) concerning any such solicited Acquisition
Proposal. Tehama shall notify Humboldt immediately if any inquiry regarding an
Acquisition Proposal is received by Tehama, including the terms thereof. For
purposes of this Section 6.2.5, "Acquisition Proposal" shall mean any (a)
proposal pursuant to which any Person other than Humboldt would acquire or
participate in a merger or other business combination or reorganization
involving Tehama or any of its Subsidiaries; (b) proposal by which any Person or
group, other than Humboldt, would acquire the right to vote ten percent (10%) or
more of the capital stock of Tehama entitled to vote for the election of
directors; (c) acquisition of the assets of Tehama other than in the ordinary
course of business; or (d) acquisition in excess of ten percent (10%) of the
outstanding capital stock of Tehama, other than as contemplated by this
Agreement. Notwithstanding the foregoing, nothing contained in this Agreement
shall prevent Tehama or Tehama's Board of Directors from (i) furnishing
nonpublic information to, or entering into discussions or negotiations with, any
Person or entity in connection with an unsolicited bona fide written Acquisition
Proposal by such Person or entity, or recommending an unsolicited bona fide
written Acquisition Proposal to the shareholders of Tehama, if and only to the
extent that (A) the Board of Directors of Tehama has determined and believes in
good faith (after consultation with and the concurrence of its financial
advisor) that such Acquisition Proposal would, if consummated, result in a
transaction materially more favorable, from a financial point of view, to
Tehama's shareholders than the transaction contemplated by this Agreement (any
such more favorable Acquisition Proposal being referred to in this Agreement as
a "Tehama Superior Proposal") and Tehama's Board of Directors has determined in
good faith, after consultation with and based on written advice from its outside
legal counsel, that such action is necessary for Tehama to comply with its
fiduciary duties to shareholders under applicable law, and (B) prior to
furnishing such nonpublic information to, or entering into discussions or
negotiations with, such Person or entity, Tehama's Board of Directors has
received from such Person or entity an executed confidentiality agreement, with
terms no more favorable to such party than those contained in the
Confidentiality Agreement between Tehama and Humboldt, or (ii) complying with
Rule 14e-2 promulgated under the Exchange Act with regard to an Acquisition
Proposal, if such Rule is applicable thereto;
6.2.6 Acquire or agree to acquire by merging, consolidating with,
or by purchasing all or a substantial portion of the assets of, or in any other
manner, any business or any Person or otherwise acquire or agree to acquire any
assets which are material to Tehama, other than in the ordinary course of
business consistent with prior practice;
6.2.7 Sell, lease or otherwise dispose of any of its assets which
are material, individually or in the aggregate, to Tehama, except in the
ordinary course of business consistent with prior practice;
6.2.8 Incur any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities of Tehama or any of its
Subsidiaries or guarantee any debt securities of others other than in the
ordinary course of business consistent with prior practice;
6.2.9 Enter into any Understanding, except: (a) deposits
incurred, and short-term debt securities (obligations maturing within one year)
issued, in its ordinary course of business consistent with prior practice, and
liabilities arising out of, incurred in connection with, or related to
the consummation of this Agreement; (b) commitments to make loans or other
extensions of credit in the ordinary course of business consistent with prior
practice; and (c) loan sales in the ordinary course of business, without any
recourse, provided that no commitment to sell loans shall extend beyond the
Effective Time;
6.2.10 Make or enter into a commitment to make any loan or other
extension of credit to any director, officer or employee of Tehama or any of its
Subsidiaries, except in accordance with practice or policy in existence on the
date of this Agreement and in compliance with all applicable laws and all
applicable regulations and directives of any Governmental Entity;
6.2.11 Except in the ordinary course of business consistent with
prior practice or as required by an existing contract, and provided prior
disclosure thereof has been made in Schedule 6.2.11, grant any general or
uniform increase in the rates of pay of employees or employee benefits or any
increase in salary or employee benefits of any officer, employee or agent or pay
any bonus to any Person;
6.2.12 Sell, transfer, mortgage, encumber or otherwise dispose of
any assets or other liabilities except in the ordinary course of business
consistent with prior practice or as required by any existing contract;
6.2.13 Make the credit underwriting policies, standards or
practices relating to the making of loans and other extensions of credit, or
commitments to make loans and other extensions of credit, or the Loan Loss
Reserve policies, less stringent than those in effect on June 30, 2000 or reduce
the amount of the Loan Loss Reserves or any other reserves for potential losses
or contingencies;
6.2.14 Make any capital expenditures, or commitments with respect
thereto, except those in the ordinary course of business which do not exceed
$25,000 individually or $50,000 in the aggregate;
6.2.15 Renew, extend or amend any existing employment contract or
agreement, enter into any new employment contract or agreement or make any bonus
or any special or extraordinary payments to any Person except for payments under
Tehama's 2000 bonus program for employees, such amount not to exceed $400,000 in
the aggregate;
6.2.16 Except in the ordinary course of business consistent with
prior practice, and in compliance with applicable laws and regulations, make any
material investments, by purchase of stock or securities, contributions of
capital, property transfers, purchases of any property or assets or otherwise,
in any other individual, corporation or other entity;
6.2.17 Except as otherwise required to correct a prior filing,
compromise or otherwise settle or adjust any assertion or claim of a deficiency
in Taxes (or interest thereon or penalties in connection therewith) or file any
appeal from an asserted deficiency except in a form previously approved by
Humboldt, which approval will not be unreasonably withheld, in writing, or file
or amend any federal, foreign, state or local Tax Return or report or make any
tax election or change any method or period of accounting unless required by
GAAP or applicable law and, then, only after submitting such Tax return or
report or proposed Tax election or change in any method or period of accounting,
to Humboldt for its approval, which it shall not unreasonably withhold or delay;
6.2.18 Except as contemplated in this Agreement, terminate any
Employee Plan or Benefit Arrangement;
6.2.19 Change its fiscal year or methods of accounting in effect
at December 31, 1999, except as required by changes in GAAP or regulatory
accounting principles as concurred to by Tehama's independent public
accountants;
6.2.20 Take or cause to be taken any action which would
disqualify the Merger as a "reorganization" within the meaning of Section 368(a)
of the IRC as a tax-free reorganization;
6.2.21 Take or cause to be taken into OREO any commercial
property without an environmental report reporting no adverse environmental
condition on such property, with a copy of such report delivered to Humboldt
prior to taking such property into OREO; or
6.2.22 Take or cause to be taken any action which would
disqualify the Merger from being accounted for on a "pooling of interest" basis;
or
6.2.23 Make any new elections with respect to Taxes or any
changes in current elections with respect to Taxes affecting the assets owned by
Tehama or its Subsidiaries. Humboldt shall be deemed to have consented in
writing to any election Tehama or its Subsidiaries shall desire to make if: (i)
the electing Person shall have notified the Chief Executive Officer of Humboldt
in writing of its desire to make such election, including in such notice a
reasonably complete summary of the election it desires to make and the reasons
it desires to make such election at least 20 Business Days prior to the due date
(including extensions thereof) for filing such election; and (ii) Humboldt shall
not have responded in writing to such notice by the fifth Business Day prior to
the due date (including extensions thereof) for filing such election.
Section 6.3 Affirmative Conduct of Humboldt. During the period from the
date of execution of this Agreement through the Effective Time, Humboldt shall
carry on its business, and shall cause each of its respective Subsidiaries to
carry on its business, in the ordinary course in substantially the manner in
which heretofore conducted, subject to changes in law applicable to all
California state- chartered banks, industrial loan companies or all member
and/or nonmember banks insured by the FDIC, as applicable, and directives from
regulators (except to the extent Tehama shall otherwise consent in writing), and
use all commercially reasonable efforts to preserve intact its business
organization, keep available the services of its officers and employees, (other
than terminations in the ordinary course of business) and preserve its
relationships with customers, depositors, suppliers and others having business
dealings with it; and, to these ends, shall fulfill each of the following:
6.3.1 Use its commercially reasonable efforts, or cooperate with
others, to expeditiously bring about the satisfaction of the conditions
specified in Article 7 hereof;
6.3.2 Advise Tehama promptly in writing of any change that would
have a Material Adverse Effect on its capital structure, consolidated financial
condition, consolidated assets, consolidated results of operations, business or
prospects or of any matter which would make the representations and warranties
set forth in Article 4 hereof not true and correct in any material respect as of
the effective date of the Registration Statement and at the Effective Time;
6.3.3 Keep in full force and effect all of its existing material
permits and licenses and those of its Subsidiaries;
6.3.4 Use its commercially reasonable efforts to maintain
insurance or bonding coverage on all material properties for which it is
responsible and on its business operations, and carry not less than the same
coverage for fidelity, public liability, personal injury, property damage and
other risks equal to that which is in effect as of the date of this Agreement;
and notify Tehama in writing promptly of any facts or circumstances which could
affect its ability, or that of any of its Subsidiaries, to maintain such
insurance or bonding coverage;
6.3.5 Perform its contractual obligations and not breach or come
into default on any of such obligations, and not amend, modify, or, except as
they may be terminated in accordance with their terms, terminate any
Understanding or materially default in the performance of any of its obligations
under any Understanding where such default would have a Material Adverse Effect
on Humboldt;
6.3.6 Duly observe and conform to all legal requirements
applicable to its business, except for any failure to so observe and conform
that would not, individually or in the aggregate, and, in the future will not,
have a Material Adverse Effect on Humboldt;
6.3.7 Duly and timely file as and when due all reports and
Returns required to be filed with any Governmental Entity;
6.3.8 Maintain its tangible assets and properties in good
condition and repair, normal wear and tear excepted in accordance with prior
practices;
6.3.9 Promptly advise Tehama in writing of any event or any other
transaction within the Knowledge of Humboldt, whereby any Person or related
group of Persons acquires, after the date of this Agreement, directly or
indirectly, record or beneficial ownership (as defined in Rule 13d-3 promulgated
by the SEC pursuant to the Exchange Act) or control of 5% or more of the
outstanding shares of Humboldt Common Stock either prior to or after the record
date fixed for the Humboldt shareholders' meeting or any adjourned meeting
thereof to approve the transactions contemplated herein;
6.3.10 (a) Maintain a Loan Loss Reserve at a level which is
adequate to provide for all known and reasonably expected losses on loans,
leases and other extensions of credit outstanding and other inherent risks in
Humboldt's or Humboldt Bank's, Capitol Valley Bank's and Capitol Thrift &
Loan's, portfolio of loans and leases, in accordance with GAAP and applicable
regulatory accounting principles and banking laws and regulations;
(b) Charge off all loans, receivables and other assets,
or portions thereof, deemed uncollectible in accordance with GAAP, regulatory
accounting principles, and applicable law or regulation, or which have been
classified as "loss" or as directed by any regulatory authority, unless such
classification or direction has been disregarded in good faith by Humboldt or
Humboldt Bank, Capitol Valley Bank and Capitol Thrift & Loan, Humboldt or
Humboldt Bank, Capitol Valley Bank and Capitol Thrift & Loan, has submitted in
writing to such regulatory authority the basis upon which it has so disregarded
such classification or direction, and such regulatory authority retracts its
direction requiring such charge-off;
6.3.11 Furnish to Tehama, as soon as practicable, and in any
event within fifteen days after it is prepared: (i) a copy of any report
submitted to the Board of Directors of Humboldt or Humboldt Bank, Capitol Valley
Bank and Capitol Thrift & Loan, and access to the working papers related
thereto, provided, however, that Humboldt need not furnish Tehama any materials
relating to deliberations of Humboldt's Board of Directors with respect to its
approval of this Agreement, communications of Humboldt's legal counsel with the
Board of Directors or officers of Humboldt regarding Humboldt's rights against
or obligations to Tehama or its Subsidiaries under this Agreement, or books,
records and documents covered by the attorney-client privilege or which are
attorneys' work product; (ii) copies of all material reports, renewals, filings,
certificates, statements, correspondence and other documents specific to
Humboldt or it Subsidiaries, or filed with or received from any Federal Reserve
Bank, the FDIC, the SEC, the CDFI or any Governmental Entity; (iii) monthly
unaudited balance sheets, statements of income and changes in shareholders'
equity for Humboldt and its Subsidiaries, and quarterly unaudited balance
sheets, statements of income and changes in shareholders' equity for Humboldt
and its Subsidiaries, in each case prepared on a basis consistent with past
practice; and (iv) such other reports as Tehama may reasonably request (which
are otherwise deliverable under this Section 6.3.11) relating to Humboldt. Each
of the financial statements of Humboldt or its Subsidiaries, delivered pursuant
to this Section 6.3.11 shall be accompanied by a certificate of the Chief
Financial Officer of Humboldt or its Subsidiaries, to the effect that such
financial statements fairly present the financial information presented therein
of Humboldt or its Subsidiaries, for the periods covered, subject to recurring
adjustments normal in nature and amount, necessary for a fair presentation and
are prepared on a basis consistent with past practice;
6.3.12 Humboldt agrees that through the Effective Time, as of
their respect dates, (i) each Humboldt Filing will be true and complete in all
material respects; and (ii) each Humboldt Filing will comply in all material
respects with all of the statutes, rules and regulations enforced or promulgated
by the Governmental Entity with which it will be filed and none will contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they will be made, not misleading. Any financial
statement contained in any of such Humboldt Filings that is intended to present
the financial position of Humboldt, on a consolidated basis, during the periods
involved to which it relates will fairly present in all material respects the
financial position of Humboldt, on a consolidated basis, and will be prepared in
accordance with GAAP or consistent with applicable regulatory accounting
principles and banking law and regulations, except as stated therein;
6.3.13 Maintain reserves for contingent liabilities in accordance
with GAAP or applicable regulatory accounting principles and consistent with
past practices;
6.3.14 Promptly notify Tehama of the filing, or threatened
filing, of any litigation, or the filing or threatened filing of any government
or regulatory action, including an investigation or notice of investigation, or
similar proceeding or notice of any material claims against Humboldt or any of
its assets, which is expected to have a Material Adverse Effect on Humboldt and
its Subsidiaries taken as a whole;
6.3.15 Inform Tehama of the amounts and categories of any loans,
leases or other extensions of credit, or other assets, that have been classified
by any bank regulatory authority or by any subsidiary of Humboldt, as Classified
Assets. Humboldt will furnish to Tehama, as soon as practicable, and in any
event within fifteen days after the end of each calendar month, schedules
including the following: (i) Classified Assets by type (including each credit or
other asset in an amount equal to or greater than $10,000), and its
classification category; (ii) nonaccrual credits by type (including each credit
in an amount equal to or greater than $10,000); (iii) renegotiated loans by type
(loans on which interest has been renegotiated to lower than market rates
because of the financial condition of the borrowers); (iv) delinquent credits by
type (including each delinquent credit in an amount equal to or greater than
$10,000), including an aging into 30-89 and 90+ day categories; (v) loans or
leases or other assets charged off, in whole or in part, during the previous
month by type (including each such loan or lease or other asset in an amount
equal to or greater than $10,000); and (vi) OREO or assets owned stating with
respect to each its type; and
6.3.16 Furnish to Tehama, upon Tehama's request, schedules with
respect to the following: (i) participating loans and leases, stating, with
respect to each, whether it is purchased or sold and the loan or lease type;
(ii) loans or leases (including any commitments) by Humboldt to any director or
officer (at or above the Vice President level) of Humboldt or any of its
Subsidiaries, or to any Person holding 5% or more of the capital stock of
Humboldt, including, with respect to each such loan or lease, the identity and,
to the best Knowledge of Humboldt, the relation of the borrower to Humboldt or
its subsidiary, the loan or lease type and the outstanding and undrawn amounts;
and (iii) standby letters of credit, by type, (including each letter of credit
in a face amount equal to or greater than $10,000).
Section 6.4 Negative Covenants of Humboldt. During the period from the
date of execution of this Agreement through the Effective Time, Humboldt agrees
that without Tehama's prior written consent, it shall not and its Subsidiaries
shall not:
6.4.1 (a) Declare or pay any dividend on, other than regular cash
dividends consistent with past practices, or make any other distribution in
respect of any of its capital stock; (b) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock; or
(c) repurchase or otherwise acquire any shares of its capital stock;
6.4.2 Take any action that would or might result in any of the
representations and warranties of Humboldt set forth in the Agreement becoming
untrue in any material respect or any of the conditions to the Merger set forth
in Article 7 not being satisfied, except to the extent such actions are required
to be undertaken by applicable law, regulation or at the direction of any
Regulatory Authority;
6.4.3 Issue, deliver, sell, or grant, or authorize the issuance,
delivery, sale or grant of, or purchase, any shares of the capital stock of
Humboldt or any securities convertible or exercisable into or exchangeable for
such capital stock, or any rights, warrants or options, including options under
any stock option plans or enter into any agreements to do any of the foregoing,
except in connection with the issuance of Humboldt Common Stock pursuant to the
exercise of Humboldt Stock Options or pursuant to the proposed acquisition of
another financial entity identified by Humboldt in writing to Tehama prior to
the execution of the Agreement;
6.4.4 Amend its Articles of Incorporation or Bylaws, except as
required by applicable law or by the terms of this Agreement;
6.4.5 Sell, lease or otherwise dispose of any of its assets which
are material, individually or in the aggregate, to Humboldt, except in the
ordinary course of business consistent with prior practice;
6.4.6 Incur any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities of Humboldt or any of its
Subsidiaries or guarantee any debt securities of others other than in the
ordinary course of business consistent with prior practice;
6.4.7 Sell, transfer, mortgage, encumber or otherwise dispose of
any assets or other liabilities except in the ordinary course of business
consistent with prior practice or as required by any existing contract;
6.4.8 Make the credit underwriting policies, standards or
practices relating to the making of loans and other extensions of credit, or
commitments to make loans and other extensions of credit, or the Loan Loss
Reserve policies, less stringent than those in effect on June 30, 2000 or reduce
the amount of the Loan Loss Reserves or any other reserves for potential losses
or contingencies;
6.4.9 Except in the ordinary course of business consistent with
prior practice, and in compliance with applicable laws and regulations, make any
material investments, by purchase of stock or securities, contributions of
capital, property transfers, purchases of any property or assets or otherwise,
in any other individual, corporation or other entity;
6.4.10 Except as otherwise required to correct a prior filing,
compromise or otherwise settle or adjust any assertion or claim of a deficiency
in Taxes (or interest thereon or penalties in connection therewith) or file any
appeal from an asserted deficiency except in a form previously approved by
Tehama, in writing, or file or amend any federal, foreign, state or local Tax
Return or report or make any tax election or change any method or period of
accounting unless required by GAAP or applicable law and, then, only after
submitting such Tax return or report or proposed Tax election or change in any
method or period of accounting, to Tehama for its approval, which it shall not
unreasonably withhold or delay;
6.4.11 Change its fiscal year or methods of accounting in effect
at December 31, 1999, except as required by changes in GAAP or regulatory
accounting principles as concurred to by Humboldt's independent public
accountants;
6.4.12 Authorize or knowingly permit any of its representatives,
directly or indirectly, to solicit or encourage any Acquisition Proposal (as
hereinafter defined) or participate in any discussions or negotiations with, or
provide any nonpublic information to, any Person or group of persons (other than
Tehama, and its representatives) concerning any such solicited Acquisition
Proposal. Humboldt shall notify Tehama immediately if any inquiry regarding an
Acquisition Proposal is received by Humboldt, including the terms thereof. For
purposes of this Section 6.4.12, "Acquisition Proposal" shall mean any (a)
proposal pursuant to which any Person other than Tehama would acquire or
participate in a merger or other business combination or reorganization
involving Humboldt; (b) proposal by which any Person or group, other than
Tehama, would acquire the right to vote ten percent (10%) or more of the capital
stock of Humboldt entitled to vote for the election of directors; (c)
acquisition of the assets of Humboldt other than in the ordinary course of
business; or (d) acquisition in excess of ten percent (10%) of the outstanding
capital stock of Humboldt other than as contemplated by this Agreement.
Notwithstanding the foregoing, nothing contained in this Agreement shall prevent
Humboldt or its Board of Directors from (i) furnishing nonpublic information to,
or entering into discussions or negotiations with, any Person or entity in
connection with an unsolicited bona fide written Acquisition Proposal by such
Person or entity, or recommending an unsolicited bona fide written Acquisition
Proposal to the shareholders of Humboldt, if and only to the extent that (A) the
Board of Directors of Humboldt has determined and believes in good faith (after
consultation with and the concurrence of its financial advisor) that such
Acquisition Proposal would, if consummated, result in a transaction materially
more favorable, from a financial point of view, to Humboldt's shareholders than
the transaction contemplated by this Agreement (any such more favorable
Acquisition Proposal being referred to in this Agreement as a "Humboldt Superior
Proposal") and Humboldt's Board of Directors has determined in good faith, after
consultation with and based on written advice from its outside legal counsel,
that such action is necessary for Humboldt to comply with its fiduciary duties
to shareholders under applicable law, and (B) prior to furnishing such nonpublic
information to, or entering into discussions or negotiations with, such Person
or entity, Humboldt's Board of Directors received from such Person or entity an
executed confidentiality agreement, with terms no more favorable to such party
than those contained in the Confidentiality Agreement between Tehama and
Humboldt, or (ii) complying with Rule 14e-2 promulgated under the Exchange Act
with regard to an Acquisition Proposal, if such Rule is applicable thereto;
6.4.13 Take or cause to be taken any action which would
disqualify the Merger as a "reorganization" within the meaning of Section 368(a)
of the IRC as a tax-free reorganization;
6.4.14 Take or cause to be taken into OREO any commercial
property without an environmental report reporting no adverse environmental
condition on such property, with a copy of such report delivered to Tehama prior
to taking such property into OREO; or
6.4.15 Take or cause to be taken any action which would
disqualify the Merger from being accounted for on a "pooling of interest" basis;
or
6.4.16 Make any new elections with respect to Taxes or any
changes in current elections with respect to Taxes affecting the assets owned by
Humboldt or its Subsidiaries. Tehama shall be deemed to have consented in
writing to any election Humboldt or its Subsidiaries shall desire to make if:
(i) the electing Person shall have notified the Chief Executive Officer of
Tehama in writing of its desire to make such election, including in such notice
a reasonably complete summary of the election it desires to make and the reasons
it desires to make such election at least 20 Business Days prior to the due date
(including extensions thereof) for filing such election; and (ii) Tehama shall
not have responded in writing to such notice by the fifth Business Day prior to
the due date (including extensions thereof) for filing such election.
6.4.17 Humboldt agrees to file a registration statement for or
otherwise register with the Securities and Exchange Commission the stock options
of Tehama outstanding at the Closing and the related common stock of Humboldt
promptly after the Closing.
ARTICLE 7. CONDITIONS PRECEDENT TO CLOSING
Section 7.1 Conditions to the Parties' Obligations. The obligations of
all the parties to this Agreement to effect the Merger shall be subject to the
fulfillment of the following conditions:
7.1.1 This Agreement, the Merger Agreement and the Merger shall
have been validly approved by the holders of a majority of the outstanding
shares of Tehama Common Stock and Humboldt Common Stock entitled to vote;
7.1.2 All permits, approvals and consents required to be
obtained, and all waiting periods required to expire, prior to the consummation
of the Merger under applicable federal laws of the United States or applicable
laws of any state having jurisdiction over the transactions contemplated by this
Agreement and the Merger Agreement shall have been obtained or expired, as the
case may be (all such permits, approvals and consents and the lapse of all such
waiting periods being referred to as the "Requisite Regulatory Approvals"),
without the imposition of any condition which in the reasonable judgment of any
party to be affected by such condition is materially burdensome upon such party
or its respective Affiliates or the Surviving Corporation;
7.1.3 There shall not be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the
Merger, by any Governmental Entity which: (i) makes the consummation of the
Merger illegal; (ii) requires the divestiture by Humboldt of any material asset
or of a material portion of the business of Humboldt; or (iii) imposes any
condition upon Humboldt or its Subsidiaries (other than general provisions of
law applicable to all banks and bank holding companies) which in the judgment of
Humboldt would be materially burdensome;
7.1.4 The Registration Statement shall have become effective
under the Securities Act and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and shall remain in effect. No
legal, administrative, arbitration, investigatory or other proceeding by any
Governmental Entity or any other Person shall have been instituted and, at what
otherwise would have been the Effective Time, remain pending by or before any
Governmental Entity to restrain or prohibit the transactions contemplated
hereby;
7.1.5 Humboldt and Tehama shall have received an opinion from
▇▇▇▇▇▇ Eng ▇▇▇▇ & ▇▇▇▇▇▇▇▇, dated the Effective Time, subject to assumptions and
exceptions normally included, and in form and substance reasonably satisfactory
to Humboldt and Tehama, to the effect that the Merger will be treated for
federal income tax purposes as a reorganization within the meaning of Section
368(a) of the IRC and that Humboldt and Tehama will each be a party to that
reorganization within the meaning of Section 368(b) of the IRC;
7.1.6 Humboldt and Tehama shall have received from ▇▇▇▇▇▇▇▇▇▇ &
Co., who are the independent public accountants of Humboldt, letters, dated at
the effective date of the Registration Statement and at the Effective Time, in
form and substance satisfactory to Humboldt and Tehama that the Merger may be
accounted for as a pooling of interests;
7.1.7 Humboldt and Tehama shall have received opinions of counsel
for the other party in substantially the forms previously agreed to by the
parties as set forth in Exhibits 7.1.7A and 7.1.7B, respectively, dated as of
the Closing Date;
7.1.8 No action, suit or proceeding shall have been instituted or
threatened before any court or governmental body seeking to challenge or
restrain the transactions contemplated by this Agreement or the Merger Agreement
which presents a substantial risk that such transactions will be restrained or
that either party hereto may suffer material damages or other relief as a result
of consummating such transactions; and
7.1.9 The holders of less than 10% of the outstanding shares of
Tehama Common Stock shall have exercised dissenters' rights. Dissenters of
Humboldt shall be included in such calculation. Dissenters' rights shall be
deemed to be exercised to the extent at the Effective Time the holder of such
shares have complied with the California Corporations Code concerning
dissenters' rights.
Section 7.2 Conditions to Humboldt's Obligations. The obligations of
Humboldt to effect the Merger shall be subject to the fulfillment (or waiver, in
writing, by Humboldt) of the following conditions:
7.2.1 Except as otherwise provided in this Section 7.2, (a) the
representations and warranties of Tehama contained in Article 3 shall be true in
all material respects as of the Effective Time as though made at the Effective
Time, except to the extent they expressly refer to an earlier time and except
where the failure to be true, individually or in the aggregate, would not have
or would not be reasonably likely to have, a Material Adverse Effect on the
Surviving Corporation or Tehama Bank, or upon the consummation of the
transactions contemplated hereby; (b) Tehama shall have duly performed and
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it prior to or at the
Effective Time, except where the failure to so perform and comply, individually
or in the aggregate, would not have or would not be reasonably likely to have a
Material Adverse Effect on Tehama or Tehama Bank, or upon the consummation of
the transactions contemplated hereby; (c) none of the events or conditions
entitling Humboldt to terminate this Agreement under Article 8 shall have
occurred and be continuing; and (d) Tehama shall have delivered to Humboldt
certificates dated the date of the Effective Time and signed by the President
and Chief Executive Officer to the effect set forth in Subsections 7.2.1(a), (b)
and (c);
7.2.2 There shall have been obtained, without the imposition of
any material burden or restriction on any of the parties hereto not in existence
on the date hereof, each consent to the consummation of the Merger required to
be obtained from any Person under any agreement, contract or license to which
Tehama is a party or by or under which it is bound or licensed, the withholding
of which might have a Material Adverse Effect on Tehama, the Surviving
Corporation or Humboldt at or following the Effective Time, or on the
transactions contemplated by this Agreement;
7.2.3 Tehama shall have delivered its Closing Schedules to
Humboldt on the day immediately preceding the Closing Date and none of such
Closing Schedules shall reflect any item that was not on the Tehama Schedules
(or in the Tehama Financial Statements) delivered on the date of execution of
this Agreement that has had, would have, or could be reasonably likely to have,
a Material Adverse Effect on Tehama, the Surviving Corporation or Humboldt at or
after the Effective Time, or on the consummation of the transactions
contemplated hereby;
7.2.4 Between the date of this Agreement and the Effective Time,
no event or circumstance shall have occurred which has had or could reasonably
be expected to have a Material Adverse Effect on Tehama, or its Subsidiaries,
and Humboldt shall have received a certificate signed on behalf of Tehama by the
President and Chief Executive Officer of Tehama to such effect;
7.2.5 Counsel for Humboldt shall have approved, in the exercise
of counsel's reasonable discretion, the validity of all transactions herein
contemplated, as well as the form and substance of all opinions, certificates,
instruments of transfer and other documents to be delivered to Humboldt
hereunder or that are reasonably requested by such counsel;
7.2.6 The sale of the Humboldt Common Stock resulting from the
Merger shall have been qualified or registered with the appropriate State
securities law or "blue sky" regulatory authorities of all States in which
qualification or registration is required under the State securities laws, and
such qualifications or registration shall not have been suspended or revoked;
7.2.7 Tehama shall have delivered to Humboldt not later than the
date of this Agreement all of the executed Affiliate Agreements in the form
attached hereto as Exhibit 5.3;
7.2.8 None of Tehama or any of its Subsidiaries shall be subject
to any memorandum of understanding, cease and desist order, or other agreement
with any Governmental Entity restricting the conduct of any of their respective
businesses, prospects and operations, so as to have a Material Adverse Effect;
7.2.9 The fairness opinion (the "Humboldt Fairness Opinion") to
be commissioned by Humboldt's Board of Directors shall provide that the terms of
the Merger, from a financial standpoint, are fair to the shareholders of
Humboldt, and shall not have been revoked, at any time prior to the meeting of
Humboldt's shareholders at which the Merger is to be voted on;
7.2.10 All of Tehama's director-shareholders shall have delivered
to Humboldt on the date of this Agreement the Director-Shareholder Agreements in
the form attached hereto as Exhibit 7.2.10.
Section 7.3 Conditions to Tehama's Obligations. The obligations of
Tehama to effect the Merger shall be subject to the fulfillment (or waiver, in
writing, by Tehama) of the following conditions:
7.3.1 Except as otherwise provided in this Section 7.3, (a) the
representations and warranties of Humboldt contained in Article 4 shall be true
in all material respects as of the Effective Time as though made at the
Effective Time, except to the extent they expressly refer to an earlier time and
except where the failure to be true, individually or in the aggregate, would not
have or would not be reasonably likely to have, a Material Adverse Effect on
Humboldt and its Subsidiaries, taken as a whole, or upon consummation of the
transactions contemplated hereby; (b) Humboldt shall have duly performed and
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with it prior to or at the Effective
Time, except where the failure to so perform and comply, individually or in the
aggregate, would not have or would not be reasonably likely to have a Material
Adverse Effect on Humboldt and its Subsidiaries, taken as a whole, or upon the
consummation of the transactions contemplated hereby; (c) none of the events or
conditions entitling Tehama to terminate this Agreement under Article 8 shall
have occurred and be continuing; and (d) Humboldt shall have delivered to Tehama
certificates dated the date of the Effective Time and signed by a duly
authorized officer to the effect set forth in Subsections 7.3.1(a), (b) and (c);
7.3.2 Counsel for Tehama shall have approved, in the exercise of
counsel's reasonable discretion, the validity of all transactions herein
contemplated, as well as the form and substance of all opinions, certificates,
instruments of transfer and other documents to be delivered to Tehama hereunder
or that are reasonably requested by such counsel;
7.3.3 There shall not have been any change in the consolidated
financial condition, aggregate consolidated net assets, shareholders' equity,
business, or consolidated operating results of Humboldt and its Subsidiaries,
taken as a whole, from December 31, 1999 to the Effective Time that results in a
Material Adverse Effect as to Humboldt and its Subsidiaries, taken as a whole;
7.3.4 Humboldt has taken such action as appropriate to convert
Tehama Stock Options to Humboldt Stock Options adjusted for the Conversion Rate;
7.3.5 Prior to the Closing Date, Humboldt shall have taken all
corporate action required to effectuate the appointment of the four individuals
named on Schedule 2.9 hereto to its Board of Directors effective immediately
after the Effective Time and to place in nomination such individuals as
directors of Humboldt for election at Humboldt's annual meeting of shareholders
in 2001;
7.3.6 Humboldt shall have delivered its Closing Schedules to
Tehama on the day immediately preceding the Closing Date and none of such
Closing Schedules shall reflect any item that was not on the Humboldt Schedules
(or in the Humboldt Financial Statements) delivered on the date of execution of
this Agreement that has had, or would have a Material Adverse Effect on Humboldt
and its Subsidiaries, taken as a whole, at or after the Effective Time, or on
the consummation of the transactions contemplated hereby;
7.3.7 The fairness opinion (the "Tehama Fairness Opinion") to be
commissioned by Tehama's Board of Directors shall provide that the terms of the
Merger, from a financial standpoint, are fair to the shareholders of Tehama, and
shall not have been revoked, at any time prior to the meeting of Tehama's
shareholders at which the Merger is to be voted on;
7.3.8 The sale of the Humboldt Common Stock resulting from the
Merger shall have been qualified or registered with the appropriate State
securities law or "blue sky" regulatory authorities of all States in which
qualification or registration is required under the State securities laws, and
such qualifications or registration shall not have been suspended or revoked;
and
7.3.9 None of Humboldt or any of its Subsidiaries shall be
subject to any memorandum of understanding, cease and desist order, or other
agreement with any Governmental Entity restricting the conduct of any of their
respective businesses, prospects and operations, so as to have a Material
Adverse Effect.
7.3.10 All of Humboldt's director-shareholders shall have
delivered to Tehama on the date of this Agreement the Director-Shareholder
Agreements in the form attached hereto as Exhibit 7.3.10.
ARTICLE 8. TERMINATION, AMENDMENTS AND WAIVERS
Section 8.1 Termination. This Agreement may be terminated at any time prior
to the
Effective Time:
8.1.1 By mutual consent of the Boards of Directors of Humboldt
and Tehama;
8.1.2 By Humboldt or Tehama upon the failure to satisfy any
conditions specified in Section 7.1, if such failure is not caused by any action
or inaction of the party requesting termination of this Agreement;
8.1.3 By Humboldt or Tehama if an Acquisition Event involving
the other party shall have occurred;
8.1.4 By Tehama if there shall have been a material breach of any
of the representations or warranties of Humboldt set forth in this Agreement,
which breach, in the reasonable opinion of Tehama, by its nature cannot be cured
or is not cured prior to the Closing and which breach would, in the reasonable
opinion of Tehama, individually or in the aggregate, have, or be reasonably
likely to have, a Material Adverse Effect on Humboldt and its Subsidiaries,
taken as a whole, or upon the consummation of the transactions contemplated
hereby;
8.1.5 By Humboldt if there shall have been a material breach of
any of the representations or warranties of Tehama set forth in this Agreement,
which breach, in the reasonable opinion of Humboldt, by its nature cannot be
cured or is not cured prior to the Closing and which breach would, in the
reasonable opinion of Humboldt, individually or in the aggregate, have, or be
reasonably likely to have, a Material Adverse Effect on Tehama and its
Subsidiaries, taken as a whole, or upon the consummation of the transactions
contemplated hereby;
8.1.6 By Tehama after the occurrence of a Default by Humboldt and
the continuance of such Default for a period of 20 Business Days after written
notice of such Default, if such Default, in the reasonable opinion of Tehama,
cannot be cured prior to the Closing or, even though curable by the Closing, it
is not cured prior to the Closing;
8.1.7 By Humboldt after the occurrence of a Default by Tehama and
the continuance of such Default for a period of 20 Business Days after written
notice of such Default, if such Default, in the reasonable opinion of Humboldt,
cannot be cured prior to the Closing or, even though curable by the Closing, it
is not cured prior to the Closing;
8.1.8 By Humboldt if the Closing Schedules delivered by Tehama
disclose the occurrence of an event or the existence of any facts or
circumstances, not disclosed in the Schedules or the Tehama Financial Statements
delivered to Humboldt on or before the date hereof, that has had or could
reasonably be expected to have a Material Adverse Effect on Tehama and its
Subsidiaries, taken as a whole, or after the Effective Time, on Humboldt, or on
the consummation of the transactions contemplated hereby (a "Tehama Material
Adverse Event");
8.1.9 By Tehama if the Closing Schedules delivered by Humboldt
disclose the occurrence of an event or the existence of any facts or
circumstances, not disclosed in the Schedules or the Humboldt Financial
Statements delivered to Tehama on or before the date hereof, that has had or
could reasonably be expected to have a Material Adverse Effect on Humboldt and
its Subsidiaries, taken as a whole, or on the consummation of the transactions
contemplated hereby (a "Humboldt Material Adverse Event");
8.1.10 By Tehama upon the failure of any of the conditions
specified in Section 7.3 to have been satisfied prior to March 31, 2001;
8.1.11 By Humboldt upon the failure of any of the conditions
specified in Section 7.2 to have been satisfied prior to March 31, 2001; or
8.1.12 By Humboldt or Tehama in the event the Humboldt Average
Trading Price is below $9.75 and the parties do not renegotiate the Conversion
Rate.
Section 8.2 Effect of Termination; Survival. Except as provided in
Section 8.5, no termination of this Agreement as provided in Section 8.1 for any
reason or in any manner shall release, or be construed as so releasing, any
party hereto from its obligations pursuant to Sections 5.1.4, 5.5, 8.5 or 9.5
hereof or from any liability or damage to any other party hereto arising out of,
in connection with, or otherwise relating to, directly or indirectly, said
party's material breach, Default or failure in performance of any of its
covenants, agreements, duties or obligations arising hereunder, or any breaches
of any representation or warranty contained herein arising prior to the date of
termination of this Agreement.
Section 8.3 Amendment. This Agreement may be amended by the parties
hereto, at any time before or after approval hereof by the shareholders of
Tehama and Humboldt; provided, however, that after any such approval by such
shareholders, no amendments shall be made which by law require further approval
by such shareholders without such further approval.
Section 8.4 Waiver. Any term or provision of this Agreement, other than
regulatory approval or any of the provisions required by law, may be waived in
writing at any time by the party which is, or whose shareholders are, entitled
to the benefits thereof.
Section 8.5 Liquidated Damages; Cancellation Fee.
8.5.1 In the event of the occurrence of (i) an Acquisition Event
involving Tehama, then Tehama shall pay to Humboldt the sum of One Million Five
Hundred Thousand Dollars ($1,500,000) in cash and Tehama shall issue to Humboldt
shares of Tehama Common Stock pursuant to the Tehama Stock Option Agreement
dated September 12, 2000; or (ii) an Acquisition Event involving Humboldt then
Humboldt shall pay to Tehama the sum of One Million Five Hundred Thousand
Dollars ($1,500,000) in cash and Humboldt shall issue to Tehama shares of
Humboldt Common Stock pursuant to the Humboldt Stock Option Agreement dated
September 12, 2000.
8.5.2 In the event of termination of this Agreement by Tehama
pursuant to Section 8.1.10 as a result of the revocation of the Tehama Fairness
Opinion; or a termination of this Agreement by Humboldt pursuant to Section
8.1.5 (breach of representations or warranties of Tehama) or Section 8.1.7
(Default) or Section 8.1.8 (disclosure in the Closing Schedules of a Tehama
Material Adverse Event), where such breach of representation or warranty,
Default or Tehama Material Adverse Event shall have been caused in whole or in
material part by any action or inaction within the control of Tehama or any of
its Subsidiaries, or any of their directors or executive officers (it being
understood that any breach or Default or Tehama Material Adverse Event that
occurred after the date of this Agreement and was outside of the control of
Tehama and its Subsidiaries, and the directors and executive officers thereof,
such as, by way of example only, the filing of a lawsuit against Tehama, shall
not come within this Section 8.5.2), then, Tehama shall pay to Humboldt the sum
of Five Hundred Thousand Dollars ($500,000), in cash; provided, however, that if
an Acquisition Event occurs involving Tehama within one hundred eighty (180)
days following any termination by Humboldt to which this Section 8.5.2 applies,
Tehama shall pay to Humboldt an additional Two Hundred Fifty Thousand Dollars
($250,000).
8.5.3 In the event of the termination of this Agreement by
Humboldt pursuant to Section 8.1.11 as a result of the revocation of the
Humboldt Fairness Opinion; or a termination of this Agreement by Tehama pursuant
to Section 8.1.4 (breach of representations and warranties of Humboldt) or
Section 8.1.6 (Default), or Section 8.1.9 (disclosure in Closing Schedules of a
Humboldt Material Adverse Event), where such breach of representation or
warranty, or such Default or Humboldt Material Adverse Event shall have been
caused in whole or in material part by any action or inaction within the control
of Humboldt or any of its Subsidiaries, or any of their directors or executive
officers (it being understood that any action or inaction outside of the control
of Humboldt, its Subsidiaries and their directors and executive officers, such
as, by way of example only, the filing of a lawsuit against Humboldt, shall not
come within this Section 8.5.3), then, Humboldt shall pay to Tehama the sum of
Five Hundred Thousand Dollars ($500,000), in cash; provided, however, that if an
Acquisition Event occurs involving Humboldt within one hundred eighty (180) days
following any termination by Tehama to which this Section 8.5.3 applies,
Humboldt shall pay to Tehama an additional Two Hundred Fifty Thousand Dollars
($250,000).
8.5.4 The parties have determined that the occurrence of any of
the events or circumstances set forth in Sections 8.5.1, 8.5.2 and 8.5.3 would
cause a substantial damage and loss and lost business opportunities to the party
terminating this Agreement as a result thereof and that the payments
contemplated by Sections 8.5.1, 8.5.2 and 8.5.3 above provide reasonable and
fair compensation for such damage, loss and lost business opportunities and are
not intended to be and do not constitute a penalty or forfeiture. Such payments
will be made within 10 Business Days following a termination of the Agreement
that gives rise to the payment of such liquidated damages pursuant to Sections
8.5.1, 8.5.2 or 8.5.3, as applicable. Upon the making and receipt of payments
due under this Section 8.5, neither party, nor any Affiliates of any party,
shall have any further obligation or liability of any kind under this Agreement
to the other party, except pursuant to Section 5.1.4, 5.5 and 9.5.
8.5.5 In the event of the termination of this Agreement by
Humboldt or Tehama for any reason other than as specified in Sections 8.5.1,
8.5.2 or 8.5.3 above, none of the parties hereto, nor any Affiliates of any such
parties, shall have any further obligation or liability of any kind to the other
party, except pursuant to Sections 5.1.4, 5.5 and 9.5.
ARTICLE 9. GENERAL PROVISIONS
Section 9.1 Nonsurvival of Representations and Warranties. None of the
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for those covenants and agreements contained herein and therein
which by their terms apply in whole or in part after the Effective Time or to a
termination of this Agreement.
Section 9.2 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally, mailed by
registered or certified mail (return receipt requested), sent by confirmed
overnight courier or telecopied (with electronic confirmation and verbal
confirmation for the person to whom such telecopy is addressed), on the date
such notice is so delivered, mailed or sent, as the case may be, to the parties
at the following addresses (or any such other address for a party as shall be
specified by like notice):
If to Tehama at:
Tehama Bancorp
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Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President/CEO
with a copy to:
Shapiro, Buchman, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
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Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
If to Humboldt at:
Humboldt Bancorp
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Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President/CEO
with a copy to:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates
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Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Section 9.3 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 9.4 Entire Agreement/No Third Party Rights/Assignment. This
Agreement (including the documents and instruments referred to herein): (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof; (b) except as expressly set forth herein, is not intended
to confer upon any person other than the parties hereto any rights or remedies
hereunder; (c) shall not be assigned by a party, by operation of law or
otherwise, without the consent of the other parties; and (d) subject to the
foregoing, shall be binding upon and shall inure to the benefit of the parties
hereto and their permitted successors and assigns.
Section 9.5 Nondisclosure of Agreement. Humboldt and Tehama agree,
except as required by law or the rules of the NASDAQ, so long as this Agreement
is in effect, not to issue any public notice, disclosure or press release with
respect to the transactions contemplated by this Agreement without seeking the
consent of the other party, which consent shall not be unreasonably withheld.
Section 9.6 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of California, without regard
to any applicable conflicts of law.
Section 9.7 Headings/Table of Contents. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
Section 9.8 Enforcement of Agreement. The parties hereto agree that
irreparable damage will occur in the event that any of the provisions of this
Agreement or the Merger Agreement is not performed in accordance with its
specific terms or is otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof in
any court of the State of California or any state having jurisdiction, this
being in addition to any remedy to which they are entitled at law or in equity.
Section 9.9 Severability. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
Section 9.10 Attorneys' Fees. If any legal action or any arbitration
upon mutual agreement is brought for the enforcement of this Agreement or
because of an alleged dispute, breach or default in connection with this
Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs and expenses incurred in that action or
proceeding, in addition to any other relief to which it may be entitled.
IN WITNESS WHEREOF, Humboldt and Tehama have caused this Agreement to be signed
by their respective officers thereunto duly authorized, all as of the date first
above written.
HUMBOLDT BANCORP TEHAMA BANCORP
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: ---------------------------- By: -------------------------
Name: ---------------------------- Name: -------------------------