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AGREEMENT AND PLAN OF MERGER
dated as of April 22, 1998
between
Scripps Bank
and
Pacific Commerce Bank
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, is entered into as of
April 22, 1998 (this "AGREEMENT"), by and between Scripps Bank, a California
banking corporation ("Scripps"), and Pacific Commerce Bank, a California banking
corporation ("PCB"), with reference to the following facts:
WHEREAS, the Boards of Directors of Scripps and PCB have approved,
and deem it advisable and in the best interests of their respective companies
and their shareholders to consummate, the business combination transaction
provided for herein in which PCB will, subject to the terms and conditions set
forth herein, merge with and into Scripps (the "MERGER"), all as pursuant to and
as set forth in the Agreement of Merger (the "MERGER AGREEMENT"), the form of
which is attached hereto as EXHIBIT A;
WHEREAS, Scripps and PCB desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
various conditions to the Merger.
WHEREAS, for Federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization under the provisions of Section 368 of
the Internal Revenue Code of 1986, as amended (the "CODE"); and
WHEREAS, for accounting purposes, it is intended that the Merger
shall be accounted for as a "pooling of interests."
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
THE MERGER
1.1 EFFECTIVE TIME OF THE MERGER. Subject to the provisions of this
Agreement, the Merger Agreement (as amended, if necessary to conform to any
requirements of any governmental agency or authority having jurisdiction over
any of the transactions contemplated herein, as long as such requirements are
not materially in contravention of any of the substantive terms hereof) shall be
executed by the parties thereto. The Merger Agreement, together with all
requisite certificates as required by applicable law, shall be submitted for
filing to the Secretary of State of the State of California, as provided in the
California General Corporation Law (the "CGCL") and the California Financial
Code (the "CFC"), as soon as practicable on or after the
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Closing Date (as defined in Section 1.2). The Merger shall become effective
upon the filing of the Merger Agreement and said requisite certificates with the
Secretary of State of the State of California or at such time thereafter as
Scripps and PCB may agree in writing to provide in the Merger Agreement (the
"EFFECTIVE TIME").
1.2 CLOSING. Subject to the terms and conditions hereof, the closing
of the Merger (the "CLOSING") will take place at 10:00 a.m. on a date to be
specified by the parties, which shall be on the fifth (5th) business day
following the Valuation Date (as defined in Section 2.1(c)) subject to the
satisfaction or waiver (subject to applicable law) of the conditions set forth
in Sections 6.1, 6.2 and 6.3 hereof (the "CLOSING DATE"), at the offices of ▇▇▇▇
▇▇▇▇ ▇▇▇▇ & Freidenrich LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, unless another time, date or place is agreed to in writing by the
parties hereto.
1.3 EFFECTS OF THE MERGER.
(a) At the Effective Time, the separate corporate existence of
PCB shall cease and PCB shall be merged with and into Scripps, which shall be
the surviving corporation. As used in this Agreement, the term "CONSTITUENT
CORPORATIONS" shall mean Scripps and PCB.
(b) At the Effective Time, the Articles of Incorporation,
Bylaws and banking charter (as issued by the California Department of Financial
Institutions ("CDFI")) of Scripps, as in effect immediately prior to the
Effective Time, shall be and remain the Articles of Incorporation, Bylaws and
banking charter of Scripps following the Effective Time until altered, or
amended as provided by law. Likewise, the insurance of deposits coverage by the
Federal Deposit Insurance Corporation ("FDIC") as maintained by Scripps prior to
the Effective Time, shall be and remain the deposit insurance of Scripps
following the Effective Time.
(c) At and after the Effective Time, the Merger will have the
effects set forth in Section 1107 of the CGCL. At the Effective Time, Scripps
shall succeed to the properties, rights, privileges, powers, immunities,
franchises and interests of PCB, and shall succeed to and be liable for all of
the debts, liabilities and other obligations, known or unknown, contingent or
otherwise, of PCB of any nature whatsoever. All rights of creditors and all
liens upon the property of PCB shall be preserved unimpaired. All savings and
demand accounts of PCB, including without limitation, passbook accounts, fixed
term accounts, money market deposit accounts and negotiable order of withdrawal
accounts, as of the Effective Time, shall be and become accounts of Scripps
without change in the terms and conditions thereof.
(d) The directors and officers of Scripps in office prior to
the Effective Time shall remain in office after the Effective Time.
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ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE CERTIFICATES
2.1 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of PCB
stock or Scripps stock:
(a) DISSENTERS' RIGHTS. The shares of Scripps Common Stock
issued and outstanding at the Effective Time shall not be changed or converted
as a result of the Merger, but shall remain outstanding as shares of Scripps
Common Stock.
(b) CONVERSION OF PCB COMMON STOCK. Subject to Section 2.2(e),
each issued and outstanding share of PCB Common Stock (other than shares to
which dissenters' rights are exercised in accordance with Section 2.3) shall be
converted into that number of validly issued, fully paid and nonassessable
shares of Scripps Common Stock equal to the CONVERSION NUMBER, which shall be
determined as follows:
The "Conversion Number" shall be the ratio, carried
to the fourth decimal place (rounded upward or
downward, as applicable) of:
(i) the Final PCBDABVPS, as defined below in Section 2.1(c),
multiplied by a factor of five and divided by
(ii) Twenty Dollars ($20.00) per share.
All such shares of PCB Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
certificate (each a "CERTIFICATE") previously representing any such shares shall
thereafter represent (i) the whole shares of Scripps Common Stock and (ii) the
right to receive cash in lieu of fractional shares into which such Scripps
Common Stock has been converted pursuant to this Section 2.1(b). Certificates
previously representing shares of PCB Common Stock shall be exchanged for
certificates representing whole shares of Scripps Common Stock and cash in lieu
of fractional shares issued in consideration therefor upon the surrender of such
Certificates in accordance with Section 2.2, without any interest thereon. In
the event that, subsequent to the date of this Agreement but prior to the
Effective Time, the outstanding shares of Scripps Common Stock shall have been
increased, decreased, changed into or exchange for a different number or kind of
shares or securities through a reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, or other
similar change in Scripps's capitalization, then an appropriate and
proportionate adjustment shall be made to the Conversion Number.
(c) DETERMINATION OF CONVERSION NUMBER. As used herein, the
term "FINAL PCBDABVPS" shall mean PCB's Diluted Adjusted Book Value Per Share
(as defined below), calculated as of the last business day of the month
preceding the Closing Date (the "VALUATION DATE") using PCB's unaudited
financial statements as of that month end. As used herein, the term "DILUTED
ADJUSTED BOOK VALUE PER SHARE" shall mean, as of the Valuation Date, the
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Adjusted Book Value (as defined below) per share of PCB Common Stock assuming
full exercise or conversion of all rights to acquire PCB Common Stock, whether
or not currently exercisable or convertible. As used herein, the term "ADJUSTED
BOOK VALUE" shall mean, as of the Valuation Date, the book value of PCB,
determined in accordance with generally accepted accounting principles
consistently applied, including incorporation of any reserves or adjustments
recommended by Regulatory Agencies (as defined in Section 3.1) and any costs
related to the Merger or the transactions contemplated herein, as decreased (or
increased) by the Adjustment Factors (as defined below). As used herein, the
term "ADJUSTMENT FACTORS" shall mean, the Profit Sharing Termination Factor (as
defined below) and the Finder's Fee Factor (as defined below). As used herein,
"PROFIT SHARING TERMINATION FACTOR" means a decrease in the book value of PCB of
$25,000 to account for one-half of the discounted after-tax value of certain
payments made to terminate the existing profit sharing arrangements of PCB. As
used herein, "FINDER'S FEE FACTOR" means a deduction from the book value of PCB
to account for a finder's fee liability incurred by PCB in connection with this
transaction, which shall be deemed to have a value equal to Twenty Thousand
Dollars ($20,000).
2.2 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. As of the Effective Time, Scripps shall
deposit, or shall cause to be deposited, with Norwest Bank Minnesota, N.A. or
such other bank or trust company acceptable to the parties (the "EXCHANGE
AGENT"), for the benefit of the holders of shares of PCB Common Stock, for
exchange in accordance with this Article II, certificates representing the
shares of Scripps Common Stock and the cash in lieu of fractional shares (such
cash and certificates for shares of PCB Common Stock, together with any
dividends or distributions with respect thereto, being hereinafter referred to
as the "EXCHANGE FUND") to be issued pursuant to Section 2.1 and paid pursuant
to Section 2.2 in exchange for outstanding shares of PCB Common Stock.
(b) EXCHANGE PROCEDURES. Promptly after the Effective Time,
Scripps shall cause the Exchange Agent to mail to each holder of record of a
Certificate or Certificates (i) a letter of transmittal which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Exchange Agent and shall be
in such form and have such other provisions as Scripps and PCB may reasonably
specify and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of Scripps Common
Stock and cash in lieu of fractional shares. Upon surrender of a duly executed
Certificate for cancellation to the Exchange Agent together with such letter of
transmittal, the holder of such Certificate shall be entitled to receive in
exchange therefor (x) a certificate representing that number of whole shares of
Scripps Common Stock and (y) a check representing the amount of cash in lieu of
fractional shares, if any, and unpaid dividends and distributions, if any, which
such holder has the right to receive in respect of the Certificate surrendered
pursuant to the provisions of this Article II, and the Certificate so
surrendered shall forthwith be canceled. No interest will be paid or accrued on
the cash in lieu of fractional shares and unpaid dividends and distributions, if
any, payable to holders of Certificates. In the event of a transfer of
ownership of PCB Common Stock which is not registered in the transfer records of
PCB, a certificate representing the proper number of shares of
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Scripps Common Stock, together with a check for the cash to be paid in lieu of
fractional shares, may be issued to such a transferee if the Certificate
representing such PCB Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
to evidence that any applicable stock transfer taxes have been paid.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES; VOTING.
Whenever a dividend or other distribution is declared by Scripps on the Scripps
Common Stock, the record date for which is at or after the Effective Time, the
declaration shall include dividends or other distributions on all shares
issuable pursuant to this Agreement, PROVIDED that no dividends or other
distributions declared or made with respect to the Scripps Common Stock with a
record date that is six months or more after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to the shares of
Scripps Common Stock represented thereby until the holder of such Certificate
shall surrender such certificate in accordance with this Article II. Subject to
the effect of applicable laws, following surrender of any such Certificate,
there shall be paid to the holder of the certificates representing whole shares
of Scripps Common Stock issued in exchange therefor, without interest, (i) at
the time of such surrender, the amount of dividends or other distributions with
a record date after the Effective Time theretofore payable with respect to such
whole shares of Scripps Common Stock and not paid, and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of Scripps Common Stock.
Holders of unsurrendered Certificates shall be entitled to vote after the
Effective Time at any meeting of Scripps shareholders the number of whole shares
of Scripps Common Stock represented by such Certificates, regardless of whether
such holders have exchanged their Certificates.
(d) TRANSFERS. After the Effective Time, there shall be no
transfers on the stock transfer books of PCB of the shares of PCB Common Stock
which were outstanding immediately prior to the Effective Time. If after the
Effective Time, Certificates are presented to Scripps, they shall be canceled
and exchanged for the shares of Scripps Common Stock and cash in lieu of
fractional shares, if any, deliverable in respect thereof pursuant to this
Agreement in accordance with the procedures set forth in this Article II.
Certificates surrendered for exchange by any person constituting an "affiliate"
of PCB under the Securities Act of 1933, as amended (the "SECURITIES ACT"),
shall not be exchanged until PCB has received a written agreement from such
person as provided in Section 5.5.
(e) FRACTIONAL SHARES. No fractional shares of Scripps Common
Stock shall be issued pursuant hereto. In lieu of the issuance of any
fractional share of Scripps Common Stock pursuant to Section 2.1(b), cash
adjustments will be paid to holders in respect of any fractional share of
Scripps Common Stock that would otherwise be issuable, and the amount of such
cash adjustment shall be equal to such fractional proportion of the deemed value
of $20.00 of a share of Scripps Common Stock.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund (including the proceeds of any investments thereof and any Scripps Common
Stock) that remains unclaimed by the shareholders of PCB for six months after
the Effective Time shall be paid to
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Scripps. Any shareholders of PCB who have not theretofore complied with this
Article II shall thereafter look to Scripps for payment of their shares of
Scripps Common Stock, cash in lieu of fractional shares and unpaid dividends and
distributions on the Scripps Common Stock deliverable in respect of each share
of PCB Common Stock such shareholder holds as determined pursuant to this
Agreement, in each case, without any interest thereon. Notwithstanding the
foregoing, none of Scripps, the Exchange Agent or any other person shall be
liable to any former holder of shares of PCB Common Stock for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(g) NO LIABILITY. In the event any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by Scripps, the posting by such person of a bond in such amount as
Scripps may direct as indemnity against any claim that may be made against it
with respect to such Certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed Certificate the shares of Scripps Common Stock
and cash in lieu of fractional shares deliverable in respect thereof pursuant to
this Agreement.
2.3 RIGHTS OF DISSENTING PCB SHAREHOLDERS. Any shareholder of PCB who
shall have lawfully dissented from the Merger in accordance with the applicable
statutes of the State of California, and who shall have timely demanded payment
of the value of his shares of PCB Common Stock and submitted such shares for
endorsement as provided in Section 1302 of the CGCL, shall thereafter have only
such rights as are provided a dissenting shareholder in accordance with said
statutes and shall have no other rights under this Agreement. Said shareholders
shall be referred to herein as "DISSENTING PCB SHAREHOLDERS."
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF PCB. Each representation and
warranty of PCB set forth in this Agreement shall be deemed to be made on and as
of the date hereof, the Closing Date and the Effective Time. No representation
or warranty is inaccurate, incomplete or incorrect in any material respect as of
the date furnished or contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact necessary to make
such representation, warranty or statement not misleading to Scripps. PCB
represents and warrants to Scripps as follows:
(a) ORGANIZATION, STANDING AND POWER. PCB is a banking
corporation duly organized, validly existing and in good standing under the laws
of the State of California, has all requisite power and authority to own, lease
and operate its properties and to carry on its business as now being conducted
and is duly qualified and in good standing to do business in each jurisdiction
in which the nature of its business or the ownership or leasing of its
properties makes such qualification necessary other than in such jurisdictions
where the failure to so qualify would not have a material adverse effect on PCB.
As used in this Agreement, (i) any reference to any event, change or effect
being "MATERIAL" with respect to any entity means an event, change or
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effect which is material in relation to the condition (financial or otherwise),
properties, assets, liabilities, businesses or operations of such entity taken
as a whole and (ii) the term "MATERIAL ADVERSE EFFECT" means, with respect to
PCB or Scripps, as the case may be, a material adverse effect on the business,
assets, results of operations or financial condition of such party or on the
ability of such party to perform its obligations hereunder or to consummate the
transactions contemplated hereby, it being understood that a material adverse
effect on any party shall not include a change with respect to such party
resulting from any change in law, rule or regulation or generally accepted
accounting principles which impairs both PCB and Scripps in a substantially
similar manner.
(b) CAPITAL STRUCTURE.
(i) As of the date hereof, the authorized capital stock
of PCB consists of 10,000,000 shares of PCB Common Stock. As of the close of
business on April 21, 1998, (A) 815,470 shares of PCB Common Stock were issued
and outstanding, (B) options to purchase 23,102 shares of PCB Common Stock were
issued and outstanding, and (C) options to purchase 68,868 shares were available
for issuance pursuant to the Pacific Commerce Bank 1995 Stock Option Plan (the
"PCB STOCK OPTION PLAN"). Except as set forth in the preceding sentence, PCB
has no other instrument or agreement outstanding permitting the holder to
acquire shares of capital stock of PCB. All outstanding shares of PCB Common
Stock are validly issued, fully paid and nonassessable, are not subject to any
preemptive rights and have been issued in compliance with all applicable
securities laws. All outstanding options of PCB were issued, and upon exercise
in accordance with the terms of the outstanding options said shares shall be
issued, in compliance with all applicable laws. The shares of PCB Common Stock
are not registered pursuant to Section 12 or Section 15 of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT").
(ii) As of the date hereof, PCB does not have outstanding
any bonds, debentures, notes or other indebtedness or other instruments the
holders of which have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) ("VOTING DEBT") with the
shareholders of PCB on any matter.
(iii) As of the date of this Agreement, except as set
forth on Section 3.1(b)(iii) of the disclosure schedule of PCB (the "PCB
DISCLOSURE SCHEDULE") delivered to Scripps prior to the execution of this
Agreement which contains a list of all of the PCB stock options outstanding,
indicating for each (a) the grant date; (b) whether vested or unvested; (c)
exercise price; and (d) a vesting schedule by plan year, and except for this
Agreement and the PCB Stock Plans, PCB does not have outstanding any options,
warrants, calls, rights, commitments or agreements of any character to which
PCB is a party or is bound obligating PCB to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock or any
Voting Debt of PCB or obligating PCB to grant, extend or enter into any such
option, warrant, call, right, commitment or agreement. Except as collateral
for outstanding loans held in its loan portfolio, PCB does not, directly or
indirectly, own any equity interest in any bank, corporation or other entity.
From and after the Effective Time, there will be no option, warrant, call,
right or agreement obligating PCB to issue, deliver or sell, or cause to be
issued, delivered
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or sold, any shares of capital stock or any Voting Debt of PCB, or obligating
PCB to grant, extend or enter into any such option, warrant, call, right or
agreement. As of the date hereof, except as set forth on Section 3.1(b)(iii)
of the PCB Disclosure Schedule, there are no outstanding contractual
obligations of PCB to repurchase, redeem or otherwise acquire any shares of
capital stock of PCB.
(iv) Except as set forth on Section 3.1(b)(iv) of the PCB
Disclosure Schedule, since January 1, 1996, PCB has not (A) issued or permitted
to be issued any shares of capital stock, or securities exercisable for or
convertible into shares of capital stock of PCB, other than pursuant to and as
required by the terms of the PCB Stock Plans (and stock options granted
thereunder); (B) repurchased, redeemed or otherwise acquired, directly or
indirectly, any shares of capital stock of PCB (other than the acquisition of
trust account shares) except in connection with internal reorganizations,
consolidations, liquidations or mergers and in connection with the items set
forth on Section 3.1(b)(iv) of the PCB Disclosure Schedule; or (C) declared, set
aside, made or paid to the shareholders of PCB dividends or other distributions
on the outstanding shares of capital stock of PCB other than regular semiannual
cash dividends on the PCB Common Stock at a rate not in excess of the regular
semiannual cash dividends most recently declared by PCB prior to the date of
this Agreement.
(c) AUTHORITY.
(i) PCB has all requisite corporate power and authority
to enter into this Agreement and, subject to approval of this Agreement by the
shareholders of PCB, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of PCB, subject to the approval by the shareholders
of PCB. This Agreement has been duly executed and delivered by PCB and
constitutes a valid and binding obligation of PCB enforceable in accordance with
its terms.
(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with,
give rise to or result in any violation of, or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or the loss of a material benefit
under, or the creation of a lien, pledge, security interest, charge or other
encumbrance on assets (any such conflict, violation, default, right, loss or
creation being referred to herein as a "VIOLATION") pursuant to any provision of
the Articles of Incorporation, as amended (the "PCB ARTICLES"), or Bylaws of
PCB, except as disclosed on Section 3.1(c) of the PCB Disclosure Schedule and
subject to obtaining or making the consents, approvals, orders, authorizations,
registrations, declarations and filings referred to in paragraph (iii) below or,
be, give rise to or result in any Violation pursuant to any loan or credit
agreement, note, mortgage, indenture, lease, Benefit Plan (as defined in
Section 3.1(n)) or other agreement, obligation, instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to PCB, or its properties or assets, which Violations
would in the aggregate have a material adverse effect on PCB.
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(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign (each a "GOVERNMENTAL ENTITY") is required by or with respect to PCB in
connection with the execution and delivery of this Agreement by PCB, or the
consummation by PCB of the transaction contemplated hereby, the failure of which
to obtain or make would in the aggregate have a material adverse effect on PCB
or on its ability to perform its obligations hereunder, except for (A) the
filing of applications and notices with the FDIC under applicable provisions of
federal banking law and approval of same, (B) the filing with the CDFI of
applications relating to the transactions contemplated hereby (the "CDFI
APPLICATION"), and (C) the filing of the Merger Agreement with the Secretary of
State of the State of California and appropriate documents with the relevant
authorities of other states in which PCB is qualified to do business.
(d) PCB FILINGS. PCB has made available to Scripps a true and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by PCB with the CDFI and the FDIC (the "REGULATORY
AGENCIES") since January 1, 1995 (such documents, as amended since the time of
their filing, being referred to herein as the "PCB FILINGS"), which are all the
documents that PCB was required to file with the Regulatory Agencies since such
date. As of their respective dates, the PCB Filings complied in all material
respects with the requirements of the Applicable Laws (as defined in
Section 3.1(g)) and none of the PCB Filings 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 PCB included
in the PCB Filings filed since January 1, 1995 comply in all material respects
with applicable accounting requirements and with the published rules and
regulations of the CDFI with respect thereto. To the extent required by such
rules and regulations, such financial statements have been prepared in
accordance with generally accepted 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 unaudited statements, to
recurring audit adjustments normal in nature and amount) the consolidated
financial position of PCB as at the dates thereof and the consolidated results
of its operations and cash flows or changes in financial position for the
periods then ended.
(e) ARTICLES, BYLAWS, BOOKS AND RECORDS. The copies of the PCB
Articles and Bylaws of PCB, heretofore delivered to Scripps are complete and
accurate copies thereof as in effect on the date hereof. The minute book of PCB
made available to Scripps contains a complete and accurate record of all
meetings of PCB's Board of Directors (and committees thereof) and shareholders.
The corporate books and records (including financial statements) of PCB fairly
reflect the material transactions to which PCB is a party or by which its
properties are subject or bound, and such books and records have been properly
kept and maintained.
(f) INFORMATION SUPPLIED. The information supplied or to be
supplied by PCB for inclusion or incorporation by reference in the CDFI
Application to be filed with the CDFI by Scripps and PCB in connection with
obtaining approval from the CDFI to consummate the transactions contemplated
herein, including the issuance of shares of Scripps Common Stock in the Merger,
will not, at the time the Merger becomes effective under the CGCL, contain any
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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.
(g) COMPLIANCE WITH APPLICABLE LAWS. PCB holds all permits,
licenses, variances, exemptions, orders and approvals of all Governmental
Entities which are necessary for the operation of the business of PCB (the "PCB
PERMITS"), except for PCB Permits the failure of which to hold would not,
individually or in the aggregate, have a material adverse effect on PCB. PCB is
in compliance in all material respects with the terms of the PCB Permits and all
applicable laws and regulations, except for possible violations which,
individually or in the aggregate, would not have a material adverse effect on
PCB. Except as set forth on Section 3.1(g) of the PCB Disclosure Schedule, the
business of PCB is not being conducted in violation of any law, ordinance,
regulation, order, writ, rule or decree of any Governmental Entity, including
but not limited to all federal and state laws (including but not limited to the
Bank Secrecy Act), rules and regulations relating to the offer, sale or issuance
of securities, and the operation of a commercial bank (the "APPLICABLE LAWS"),
except for possible violations which individually or in the aggregate would not
have a material adverse effect on PCB. As of the date of this Agreement, no
investigation by any Governmental Entity with respect to PCB is pending or
threatened, other than, in each case, those the outcome of which, as far as
reasonably can be foreseen, will not have a material adverse effect on PCB. PCB
has not failed to file with the proper federal, state, local or other
authorities any material report or other document required to be filed by it.
PCB has filed all material documents and reports required to be filed by it with
the Regulatory Agencies and any other Governmental Entity having jurisdiction
over its business or any of its assets or properties. All such reports conform
in all material respects with the requirements promulgated by such Governmental
Entities and Regulatory Agencies. All compliance or corrective action relating
to PCB required by all Governmental Entities and Regulatory Agencies has been
taken. PCB has not received any notification, formally or informally, from any
Governmental Entity or Regulatory Agency or the staff thereof (A) asserting that
it is not in compliance with any of the Applicable Laws, or (B) threatening to
revoke any license, franchise, permit or governmental authorization. PCB has
paid all assessments made or imposed by any Governmental Entity.
(h) LITIGATION. Except as set forth on Section 3.1(h) of the
PCB Disclosure Schedule, there is no suit, action or proceeding pending or, to
the knowledge of PCB, threatened, against or affecting PCB nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against PCB. To PCB's knowledge, there is no reasonable
basis for any legal action or other proceeding or investigation before any
court, any arbitrator of any kind or any government agency, and PCB is not
subject to any potential adverse claim, the outcome of which could involve the
payment or receipt by PCB of any amount in excess of $50,000, unless an insurer
of PCB has agreed to defend against and pay the amount of any resulting
liability without reservation, or, if any such legal action, proceeding,
investigation or claim will not involve the payment by PCB of a monetary amount,
which could materially adversely affect PCB or its business or property or the
transactions contemplated hereby. PCB has no knowledge of any pending or
threatened claims or charges under any Applicable Laws, including but not
limited to, the Community Reinvestment Act, before the Equal Employment
10
Opportunity Commission, the California Department of Fair Housing & Economic
Development, the California Unemployment Appeals Board, or any federal or state
human relations commission or agency. There is no labor dispute, strike,
slow-down or stoppage pending or, to the best of the knowledge of PCB,
threatened against PCB.
(i) TAXES. PCB has filed all material tax returns required to
be filed by it, which tax returns are true, correct and complete in all material
respects, and has paid all taxes required to be paid as shown on such returns.
Except as set forth on Section 3.1(i) of the PCB Disclosure Schedule, no
material deficiencies for any taxes have been proposed, asserted or assessed
against PCB. Except with respect to claims for refund, the Federal income tax
returns of PCB have been examined by and settled with the United States Internal
Revenue Service (the "IRS"), or the statute of limitations has expired (and no
waiver extending the statute of limitations has been requested or granted), for
all taxable years ending on or before December 31, 1990. The Federal income tax
returns of PCB are not currently under examination by the IRS. For the purpose
of this Agreement, (x) the term "TAX" (including, with correlative meaning, the
terms "TAXES" and "TAXABLE") includes all Federal, state, local and foreign
income, profits, franchise, gross receipts, payroll, sales, employment, use,
property, withholding, excise, occupancy and other taxes, duties or assessments
of any nature whatsoever, together with all interest, penalties and additions
imposed with respect to such amounts; and (y) the term "TAX RETURN" includes all
returns and reports (including elections, declarations, disclosures, schedules,
estimates and information returns) required to be supplied to a tax authority
relating to taxes. PCB has delivered to Scripps copies of all of its tax
returns with respect to taxes payable to the United States of America and the
State of California for the fiscal years ended December 31, 1996, 1995, 1994 and
1993. No consent has been filed relating to PCB pursuant to Section 341(f) of
the Code.
(j) PROPERTIES AND LEASES.
(i) PCB has good and marketable title, free and clear of
all liens and encumbrances and the right of possession, subject to existing
leaseholds, to all real properties and good title to all other property and
assets, tangible and intangible, reflected in the PCB balance sheet as of March
31, 1998 (except property held as lessee under leases disclosed in writing prior
to the date hereof and except personal property sold or otherwise disposed of
since March 31, 1998, in the Ordinary Course of Business, as defined in
Section 4.1(a) below), except (a) liens for taxes or assessments not delinquent,
(b) such other liens and encumbrances and imperfections of title as do not
materially affect the value of such property as reflected in the PCB balance
sheet as of March 31, 1998, or as currently shown on the books and records of
PCB and which do not interfere with or impair its present and continued use, or
(c) exceptions disclosed in title reports and preliminary title reports, copies
of which have been provided to Scripps. All tangible properties of PCB conform
in all material respects with all applicable ordinances, regulations and zoning
laws. All tangible properties of PCB are in a good state of maintenance and
repair and are adequate for the current business of PCB. No properties of PCB,
and, to the best of PCB's knowledge, no properties in which it holds a
collateral or contingent interest or purchase option, are the subject of any
pending or threatened investigation, claim or proceeding relating to the use,
storage or disposal on such property of or contamination of such property by any
toxic or
11
hazardous waste material or substance. PCB does not own, possess or have a
collateral or contingent interest or purchase option in any properties or other
assets which contain or have located within or thereon any hazardous or toxic
waste material or substance unless the location of such hazardous or toxic waste
material or other substance or its use thereon conforms in all material respects
with all federal, state and local laws, rules, regulations or other provisions
regulating the discharge of materials into the environment. As to any asset not
owned or leased by PCB, PCB has not controlled, directed or participated in the
operation or management of any such asset or any facilities or enterprise
conducted thereon, such that it has become an owner or operator of such asset
under applicable environmental laws.
(ii) All properties held by PCB under leases are held by
it under valid, binding and enforceable leases, with such exceptions as are not
material and do not interfere with the conduct of the business of PCB, and PCB
enjoys quiet and peaceful possession of such leased property. PCB is not in
material default in any respect under any material lease, agreement or
obligation regarding its properties to which it is a party or by which it is
bound.
(iii) Except as set forth on Section 3.1(j) of the PCB
Disclosure Schedule, no third party consents are required under the leases
referred to in Section 3.1(j)(ii) in order to consummate the transactions
contemplated by this Agreement and the Merger Agreement. Where required, PCB
shall obtain, prior to the Effective Date, the necessary consents of such
parties.
(k) CLASSIFIED LOANS. Except as set forth on Section 3.1(k) of
the PCB Disclosure Schedule, there are no loans presently owned by PCB that have
been classified by PCB management or PCB internal policy or procedure, any
outside review examiner, accountant or any bank regulatory agency as "Other
Loans Specially Mentioned," "Special Mention," "Substandard," "Doubtful," or
"Loss" or classified using categories or words with similar import and all loans
or portions thereof classified "Loss" have been charged off. Notwithstanding
the above, PCB shall be under no obligation to disclose to Scripps any such
classification by any bank examiner where such disclosure would violate any
obligation of confidentiality of PCB imposed by the CDFI or the FDIC. PCB
regularly reviews and appropriately classifies its loans in accordance with all
applicable legal and regulatory requirements and generally accepted banking
practices. All loans and investments of PCB are legal, valid and binding
obligations enforceable in accordance with their respective terms and are not
subject to any setoffs, counterclaims or disputes (subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and subject, as to enforceability, to equitable principles of general
applicability), except as disclosed to Scripps in writing or reserved for in the
unaudited balance sheet of PCB as of March 31, 1998, and were duly authorized
under and made in compliance with Applicable Laws. PCB does not have any
extensions of credit, investments, guarantees, indemnification agreements or
commitments for the same (including without limitation commitments to issue
letters of credit, to create acceptances, or to repurchase securities, federal
funds or other assets) other than those documented on the books and records of
PCB.
12
(l) CERTAIN AGREEMENTS. Except as disclosed in the PCB Filings
or as set forth on Section 3.1(l) of the PCB Disclosure Schedule or as set forth
in the PCB Stock Plans and except for this Agreement, as of the date of this
Agreement, PCB is not a party to any oral or written (i) consulting agreement
(other than data processing, software programming and licensing contracts
entered into in the Ordinary Course of Business) not terminable on 60 days or
less notice involving the payment of more than $10,000 per annum, in the case of
any such agreement with an individual, or $25,000 per annum, in the case of any
other such agreement, or any union, guild or collective bargaining agreement,
(ii) agreement with any executive officer or other key employee of PCB the
benefits of which are contingent, or the terms of which are materially altered,
upon the occurrence of a transaction involving PCB or of the nature contemplated
by this Agreement, (iii) agreement with respect to any executive officer of PCB
providing any term of employment or compensation guarantee, or (iv) agreement or
plan, including any stock option plan, stock appreciation rights plan,
restricted stock plan or stock purchase plan, any of the benefits of which will
be increased, or the vesting of the benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement.
(m) RESTRICTIONS ON INVESTMENTS. Except for pledges to secure
public and trust deposits and repurchase agreements in the Ordinary Course of
Business, none of the investments reflected in the PCB balance sheet as of
March 31, 1998, and none of the investments made by PCB since December 31, 1997,
are subject to any restriction, whether contractual or statutory, which
materially impairs the ability of PCB freely to dispose of such investment at
any time.
(n) BENEFIT PLANS.
(i) With respect to each employee benefit plan
(including, without limitation, any "employee benefit plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) (all the foregoing being herein called "BENEFIT PLANS"), maintained
or contributed to by PCB (the "PCB BENEFIT PLANS"), PCB has made available to
Scripps a true and correct copy of (A) the most recent annual report (Form 5500)
filed with the IRS, (B) such PCB Benefit Plan, (C) each trust agreement relating
to such PCB Benefit Plan, (D) the most recent summary plan description for each
PCB Benefit Plan for which a summary plan description is required, (E) the most
recent actuarial report or valuation relating to a PCB Benefit Plan subject to
title IV of ERISA, and (F) the most recent determination letter issued by the
IRS with respect to any PCB Benefit Plan qualified under Section 401(a) of the
Code.
(ii) The current value of the assets of each of the PCB
Benefit Plans subject to title IV of ERISA exceeds that plan's "Benefit
Liabilities" as that term is defined in Section 4001(a)(16) of ERISA, when
determined under actuarial factors that would apply if that plan terminated in
accordance with all applicable legal requirements.
(iii) Except as set forth in Section 3.1(n)of the PCB
Disclosure Schedule, to the best knowledge of PCB, each of the PCB Benefit Plans
has been administered in
13
compliance with its terms in all material respects and is in compliance in all
material respects with the applicable provisions of ERISA (including, but not
limited to, the funding and prohibited transactions provisions thereof), the
Code and other applicable laws.
(iv) There has been no reportable event within the
meaning of Section 4043(b) of ERISA (for which a waiver did not apply) or any
accumulated funding deficiency (whether or not waived) within the meaning of
Section 412 of the Code with respect to any PCB Benefit Plan.
(v) All contributions to the PCB Benefit Plans required
thereunder have been made or provided for.
(vi) No contributions have been made by PCB, to any
"Multiemployer Plan," as such term is defined in Section 3(37) of ERISA.
(vii) To the best knowledge of PCB, each of the PCB
Benefit Plans which is intended to be a qualified plan within the meaning of
Section 401(a) of the Code is so qualified, and PCB is not aware of any fact or
circumstance which would adversely affect the qualified status of any such plan.
(viii) With respect to the PCB Benefit Plans, individually
and in the aggregate, no event has occurred and, to the knowledge of PCB there
exists no condition or set of circumstances in connection with which PCB could
be subject to any liability that is reasonably likely to have a material adverse
effect on PCB (except liability for benefits claims and funding obligations
payable in the ordinary course) under ERISA, the Code or any other applicable
law.
(ix) True and complete copies of the PCB Stock Plans as
in effect on the date hereof have been provided to Scripps.
(o) SUBSIDIARIES. Section 3.1(o) of the PCB Disclosure
Schedule sets forth all of the Subsidiaries of PCB as of the date of this
Agreement and indicates for each such Subsidiary, as of such date, the
jurisdiction of organization. As used in this Agreement, the word "SUBSIDIARY"
when used with respect to any party means any corporation or other organization,
whether incorporated or unincorporated, of which such party directly or
indirectly owns or controls at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
board of directors or others performing similar functions with respect to such
corporation or other organization, or any organization of which such party is a
general partner (excluding partnerships, the general partnership interests of
which held by such party or any Subsidiary of such party do not have a majority
of the voting interests in such partnership).
(p) AGREEMENTS WITH REGULATORY AGENCIES. PCB holds a currently
valid license issued by the CDFI to engage in the commercial banking business in
California at the locations at which it currently conducts business. Neither
the scope of the business of PCB nor the location of its properties requires it
to be licensed to do business in any jurisdiction other than the State of
California. PCB's deposits are insured by the FDIC to the maximum extent
14
permitted by applicable law and regulation. PCB is not a party to any written
agreement or memorandum of understanding with, or a party to any commitment
letter or similar undertaking to, or is subject to any order or directive by, or
is a recipient of any extraordinary supervisory letter from, or has adopted any
board resolutions at the request of, any Regulatory Agency, nor has PCB been
advised by any Regulatory Agency that it is contemplating issuing or requesting
(or is considering the appropriateness of issuing or requesting) any such order,
directive, written agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter, board resolution or similar undertaking.
(q) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the PCB Filings filed prior to the date of this Agreement, since December 31,
1997, PCB has not incurred any material liability, except in the Ordinary Course
of Business consistent with its past practices, nor has there been any change,
or any event involving a prospective change, in the business, financial
condition or results of operations of PCB which has had, or is reasonably likely
to have, a material adverse effect on PCB (other than as a result of changes in
banking laws or regulations of general applicability or interpretations
thereof).
(r) NO UNDISCLOSED LIABILITIES. Except for items for which
reserves have been established in the unaudited balance sheets of PCB as of
March 31, 1998, PCB has not incurred or discharged, and is not legally obligated
with respect to, any indebtedness, liability (including, without limitation, a
liability arising out of an indemnification, guarantee, hold harmless or similar
arrangement) or obligation (accrued or contingent, whether due or to become due,
and whether or not subordinated to the claims of its general creditors), other
than as a result of operations in the Ordinary Course of Business after such
date. No agreement pursuant to which any loans or other assets have been or
will be sold by PCB entitled the buyer of such loans or other assets, unless
there is material breach of a representation or covenant by PCB, to cause PCB to
repurchase such loan or other asset or the buyer to pursue any other form of
recourse against PCB. PCB has not knowingly made and shall not make any
representations or covenants in any such agreement that contained or shall
contain any untrue statement of a material fact or omitted or shall omit to
state a material fact necessary in order to make the statements contained
therein, in light of the circumstances under which such representations and/or
covenants were made or shall be made, not misleading. Except as set forth in
Section 3.1(r) of the PCB Disclosure Schedule, no cash, stock or other dividend
or any distribution with respect to the PCB shares has been declared, set aside
or paid, nor have any of the PCB shares been purchased, redeemed or otherwise
acquired, directly or indirectly, by PCB since December 31, 1995.
(s) ACCOUNTING MATTERS. Based upon consultation with its
independent accountants, neither PCB nor any of its directors, officers or, to
its knowledge, shareholders has taken or agreed to take any action that would
prevent Scripps from accounting for the business combination to be effected by
the Merger as a "pooling of interests."
(t) ENVIRONMENTAL MATTERS. Each of the representations
contained in the following subparagraphs (i)-(v) of this Section 3.1(t) is
qualified in its entirety by the information set forth in Section 3.1(t) of the
PCB Disclosure Schedule.
15
(i) To the knowledge of PCB, the Participation
Facilities, and the Loan Properties (each as hereinafter defined) are, and have
been, in compliance with all applicable laws, rules, regulations, standards and
requirements of the United States Environmental Protection Agency ("EPA") and of
state and local agencies with jurisdiction over pollution or protection of the
environment, except for violations which, either individually or in the
aggregate, do not or would not result in a material adverse effect on PCB.
(ii) To the knowledge of PCB, there is no suit, claim,
action or proceeding pending or threatened, before any court, governmental
agency or board or other forum in which PCB or any Participation Facility has
been or, with respect to threatened proceedings, may be, named as a defendant
(x) for alleged noncompliance (including by any predecessor), with any
environmental law, rule or regulation or (y) relating to the release into the
environment of any Hazardous Material (as hereinafter defined) or oil whether or
not occurring at or on a site owned, leased or operated by PCB or any
Participation Facility except as would not, either individually or in the
aggregate, result in a material adverse effect on PCB.
(iii) To the knowledge of PCB, there is no suit, claim,
action or proceeding pending or threatened, before any court, governmental
agency or board or other forum in which any Loan Property has been or, with
respect to threatened proceedings, may be, named as a defendant (x) for alleged
noncompliance (including by any predecessor) with any environmental law, rule or
regulation or (y) relating to the release into the environment of any Hazardous
Material or oil whether or not occurring at or on a site owned, leased or
operated by a Loan Property, except where such noncompliance or release does not
or would not result, either individually or in the aggregate, in a material
adverse effect on PCB.
(iv) To the knowledge of PCB, there is no reasonable
basis for any suit, claim, action or proceeding as described in subsection (ii)
or (iii) of this Section 3.1(t), except as would not, individually or in the
aggregate, have a material adverse effect on PCB.
(v) During the period of (x) PCB's ownership or
operation of any of its respective current properties, (y) PCB's participation
in the management of any Participation Facility, or (z) PCB's holding of a
security interest in a Loan Property, to the knowledge of PCB, there has been no
release of Hazardous Material or oil in, on, under or affecting such properties,
except where such release does not or would not result, either individually or
in the aggregate, in a material adverse effect on PCB. Prior to the period of
(x) PCB's ownership or operation of any of their respective current properties,
(y) PCB's participation in the management of any Participation Facility, or
(z) PCB's holding of a security interest in a Loan Property, to the knowledge of
PCB, there was no release of Hazardous Material or oil in, on, under or
affecting any such property, Participation Facility or Loan Property, except
where such release does not or would not result, either individually or in the
aggregate, in a material adverse effect on PCB.
(vi) The following definitions apply for purposes of this
Section 3.1(t): (x) "LOAN PROPERTY" means any property in which PCB holds a
security interest for an amount greater than $25,000 and, where required by the
context, said term means the owner or operator of such property;
(y) "PARTICIPATION FACILITY" means any facility in which PCB participates in the
16
management and, where required by the context, said term means the owner or
operator of such property; and (z) "HAZARDOUS MATERIAL" means any pollutant,
contaminant, or hazardous substance under the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. 9601 et seq., or any
similar state law.
(u) OWNERSHIP OF SCRIPPS COMMON STOCK. As of the date hereof,
PCB does not beneficially own, directly or indirectly, nor is it a party to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of, any of the outstanding shares of capital stock of
Scripps entitled to vote generally in the election of directors (other than
trust account shares). PCB does not "beneficially own" any shares of Scripps
Common Stock.
(v) APPROVALS. PCB knows of no reason why all Consents (as
defined in Section 6.1(b)), should not be obtained without the imposition of any
condition or restriction of the type referred to in Section 6.1(f) or why the
accountants' letter referred to in Section 6.1(e) cannot be obtained.
(w) BROKERS AND FINDERS. Except as set forth on Section 3.1(w)
of the PCB Disclosure Schedule, neither PCB nor any of its directors, officers
or employees has employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions or similar payments in
connection with the transactions contemplated by this Agreement. Any
liabilities to any such broker or finder shall be reflected in the financial
statements of PCB as of the Valuation Date.
(x) LABOR MATTERS. Except as set forth on Section 3.1(x) of
the PCB Disclosure Schedule, PCB is not a party to, or bound by, any collective
bargaining agreement, contract or other agreement or understanding with a labor
union or labor organization, nor is it the subject of any material proceeding
asserting that it has committed an unfair labor practice or seeking to compel it
to bargain with any labor organization as to wages or conditions of employment
nor is there any strike or other labor dispute involving it pending or, to its
knowledge, threatened.
(y) TRADEMARKS AND TRADE NAMES. PCB (i) owns and has the
exclusive right to use all trademarks, trade names, patents, copyrights, service
marks, trade secrets, or other intellectual property rights (collectively,
"INTELLECTUAL PROPERTY RIGHTS") used in or necessary for the conduct of their
businesses as now or heretofore conducted; and (ii) is not infringing upon the
Intellectual Property Rights of any person or entity. No claim is pending or
threatened by any person or entity against or otherwise affecting the use by PCB
of any Intellectual Property Rights and there is no valid basis for any such
claim.
(z) COMPENSATION OF OFFICERS AND EMPLOYEES. Except as set
forth on Section 3.1(z) of the PCB Disclosure Schedule, (i) no officer or
employee of PCB is receiving aggregate direct remuneration at a rate exceeding
$60,000 per annum, and (ii) the consummation of the transactions contemplated by
this Agreement and the Merger Agreement will not (either alone or upon the
occurrence of any additional or further acts or events) result in any payment
17
(whether of severance pay or otherwise) becoming due from PCB or Scripps to any
employee of PCB.
(aa) INSURANCE. PCB is and continuously since its inception has
been, insured with reputable insurers against all risks normally insured against
by banks, and all of the insurance policies and bonds maintained by PCB are in
full force and effect, PCB is not in default thereunder and all material claims
thereunder have been filed in due and timely fashion. In the best judgment of
the management of PCB, such insurance coverage is adequate for PCB. Since
December 31, 1997 there has not been any damage to, destruction of, or loss of
any assets of PCB not covered by insurance that could materially adversely
affect the business, financial condition, properties, assets or results of
operations of PCB.
(bb) LOAN LOSS RESERVES. The allowance for loan losses in the
PCB balance sheets dated December 31, 1997, March 31, 1998, and as of the
Valuation Date are and will be adequate in all material respects under the
requirements of all applicable state and federal laws and regulations to provide
for possible loan losses on outstanding loans, net of recoveries. PCB has
disclosed to Scripps in writing prior to the date hereof, and will promptly
inform Scripps of the amounts of all loans, leases, other extensions of credit
or commitments, or other interest-bearing assets of PCB, that have been
classified as of the date hereof or hereafter by PCB management or PCB internal
policy or procedure, any outside review examiner, accountant or any bank
regulatory agency as "Other Loans Specially Mentioned," "Special Mention,"
"Substandard," "Doubtful," or "Loss" or classified using categories or words
with similar import in the case of loans (or that would have been so classified,
in the case of other interest-bearing assets, had they been loans).
Notwithstanding the above, PCB shall be under no obligation to disclose to
Scripps any such classification by any bank regulatory agency where such
disclosure would violate any obligation of confidentiality of PCB imposed by
such bank regulatory agency. PCB has furnished and will continue to furnish to
Scripps true and accurate information concerning the loan portfolio of PCB, and
no material information with respect to the loan portfolio has been or will be
withheld from Scripps.
(cc) TRANSACTIONS WITH AFFILIATES. Except as may arise in the
Ordinary Course of Business, PCB has not extended credit, committed itself to
extend credit, or transferred any asset to or assumed or guaranteed any
liability of the employees or directors of PCB, or any spouse or child of any of
them, or to any of their "affiliates" or "associates" as such terms are defined
in Rule 405 under the Securities Act. PCB has not entered into any other
transactions with the employees or directors of PCB or any spouse or child of
any of them, or any of their affiliates or associates, except as disclosed in
writing to Scripps. Any such transactions have been on terms no less favorable
to PCB than those which would prevail in an arms-length transaction with an
independent third party. PCB has not violated the applicable rules of the
Regulatory Agencies in connection with any such transactions described in this
subsection.
(dd) INFORMATION IN SCRIPPS APPLICATIONS. The information
pertaining to PCB which has been or will be furnished to Scripps for or on
behalf of PCB for inclusion in the applications to be filed to obtain government
approvals, including the CDFI Application (the "APPLICATIONS") or that will be
contained in the Joint Proxy Statement, does not and will not
18
contain any untrue statement of any material fact and does not omit and will not
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they are
made, not misleading; provided, however, that information of a later date shall
be deemed to modify information as of an earlier date. All financial statements
of PCB included in the Applications or the Joint Proxy Statement, will present
fairly the financial condition and results of operations of PCB at the dates and
for the periods covered by such statements in accordance with generally accepted
accounting principles consistently applied throughout the periods covered by
such statements. PCB shall promptly advise Scripps in writing if prior to the
Effective Time, PCB shall obtain knowledge of any facts that would make it
necessary to amend or supplement the Applications or the Joint Proxy Statement
in order to make the statements therein not misleading or to comply with
applicable law or regulation.
3.2 REPRESENTATIONS AND WARRANTIES OF SCRIPPS. Each representation
and warranty of Scripps set forth in this Agreement shall be deemed to be made
on and as of the date hereof, the Closing Date and the Effective Time. No
representation or warranty is inaccurate, incomplete or incorrect in any
material respect as of the date furnished or contains or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
necessary to make such representation, warranty or statement not misleading to
PCB. Scripps represents and warrants to PCB as follows:
(a) ORGANIZATION, STANDING AND POWER. Scripps is a banking
corporation duly organized, validly existing and in good standing under the laws
of California, has all requisite power and authority to own, lease and operate
its properties and to carry on its business as now being conducted and is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes such
qualification necessary other than in such jurisdictions where the failure to so
qualify would not have a material adverse effect on Scripps.
(b) CAPITAL STRUCTURE.
(i) As of the date hereof, the authorized capital stock
of Scripps consists of 10,000,000 shares of Scripps Common Stock. As of the
close of business on April 21, 1998, (A) 4,943,715 shares of Scripps Common
Stock were outstanding, (B) 337,946 shares of Scripps Common Stock were issuable
upon exercise of outstanding stock options and warrants, and (C) 162,906 shares
of Scripps Common Stock were reserved for issuance pursuant to the Employee
Stock Purchase Plan, Employee Stock Ownership Plan, Dividend Reinvestment Plan
and various Stock Option Plans (collectively referred to as the "SCRIPPS STOCK
PLANS"). Except as set forth in the preceding sentence and except as set fourth
in Section 3.2 (b)(i) of the disclosure schedule of Scripps (the "SCRIPPS
DISCLOSURE SCHEDULE") delivered to PCB prior to the execution of this Agreement,
Scripps has no other instrument or agreement outstanding permitting the holder
to acquire shares of capital stock of Scripps. All outstanding shares of Scripps
Common Stock are, and the shares of Scripps Common Stock to be issued pursuant
to or as specifically contemplated by this Agreement, will be, duly authorized,
validly issued, fully paid and nonassessable and not subject to any
19
preemptive rights and have been issued in compliance with all applicable
securities laws. All outstanding options of Scripps were issued and, upon
issuance in accordance with the terms of the outstanding options said shares
shall be validly issued, fully paid and nonassessable and issued in compliance
with all applicable securities laws. The shares of Scripps Common Stock are not
registered pursuant to Section 12 or Section 15 of the Exchange Act.
(ii) As of the date hereof, Scripps does not have
outstanding any Voting Debt.
(iii) As of the date of this Agreement, except as set
forth on Section 3.2(b)(iii) of the Scripps Disclosure Schedule, and except for
this Agreement and the Scripps Stock Plans, Scripps does not have outstanding
any options, warrants, calls, rights, commitments or agreements of any character
to which Scripps is bound obligating Scripps to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock or any
Voting Debt or obligating Scripps to grant, extend or enter into any such
option, warrant, call, right, commitment or agreement. Except as collateral for
outstanding loans held in its loan portfolio, Scripps does not, directly or
indirectly, own any equity interest in any bank, corporation or other entity.
From and after the Effective Time, there will be no option, warrant, call, right
or agreement obligating Scripps to issue, deliver or sell, or cause to be
issued, delivered or sold, any shares of capital stock or any Voting Debt of
Scripps, or obligating Scripps to grant, extend or enter into any such option,
warrant, call, right or agreement. As of the date hereof, except as set forth
on Section 3.1(b)(iii) of the Scripps Disclosure Schedule, there are no
outstanding contractual obligations of Scripps to repurchase, redeem or
otherwise acquire any shares of capital stock of Scripps.
(iv) Except as set forth on Section 3.2(b)(iv) of the
Scripps Disclosure Schedule, since January 1, 1996, Scripps has not (A) issued
or permitted to be issued any shares of capital stock, or securities exercisable
for or convertible into shares of capital stock of Scripps, other than pursuant
to and as required by the terms of the Scripps Stock Plans (and stock options
granted thereunder); (B) repurchased, redeemed or otherwise acquired, directly
or indirectly, any shares of capital stock of Scripps (other than the
acquisition of trust account shares) except in connection with internal
reorganizations, consolidations, liquidations or mergers and in connection with
the items set forth on Section 3.2(b)(iv) of the Scripps Disclosure Schedule; or
(C) declared, set aside, made or paid to the shareholders of Scripps dividends
or other distributions on the outstanding shares of capital stock of Scripps
other than regular semiannual cash dividends on the Scripps Common Stock at a
rate not in excess of the regular semiannual cash dividends most recently
declared by Scripps prior to the date of this Agreement.
(c) AUTHORITY.
(i) Scripps has all requisite corporate power and
authority to enter into this Agreement and, subject to approval by the
shareholders of Scripps of this Agreement, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Scripps. This Agreement has
been
20
duly executed and delivered by Scripps and constitutes a valid and binding
obligation of Scripps, enforceable in accordance with its terms.
(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not be, give rise to
or result in any Violation pursuant to any provision of the Articles of
Incorporation or Bylaws of Scripps, subject to obtaining or making the consents,
approvals, orders, authorizations, registrations, declarations and filings
referred to in paragraph (iii) below or, be, give rise to or result in any
Violation pursuant to any loan or credit agreement, note, mortgage, indenture,
lease, Benefit Plan or other agreement, obligation, instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Scripps or its properties or assets,
which Violations would in the aggregate have a material adverse effect on
Scripps.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Scripps in connection with the execution and delivery of this
Agreement by Scripps or the consummation by Scripps of the transactions
contemplated hereby, the failure of which to obtain or make would in the
aggregate have a material adverse effect on Scripps or on its ability to perform
its obligations hereunder, except for (A) the filing of applications and notices
with the CDFI and approval of same, (B) such filings and approvals as are
required to be made or obtained under the securities or "Blue Sky" laws of
various states in connection with the issuance of Scripps Common Stock
contemplated by this Agreement, (C) the filing of the Merger Agreement with the
Secretary of State of the State of California and appropriate documents with the
relevant authorities of other states in which Scripps is qualified to do
business, (D) consents, authorizations, approvals, filings or exemptions in
connection with compliance with the applicable provisions of Federal securities
laws relating to the regulation of investment advisors and broker-dealers and of
any applicable industry self-regulatory organization, or which are required
under consumer finance, mortgage banking and other similar laws, and (F) such
filings, notifications and approvals as may be required under the Small Business
Investment Act of 1958 and the rules and regulations thereunder.
(d) SCRIPPS FILINGS. Scripps has made available to PCB a true
and complete copy of each report, schedule, registration statement and
definitive proxy statement filed by Scripps with the Regulatory Agencies since
January 1, 1995 (such documents, as amended since the time of their filing,
being referred to herein as the "SCRIPPS FILINGS"), which are all the documents
that Scripps was required to file with the Regulatory Agencies since such date.
As of their respective dates, the Scripps Filings complied in all material
respects with the requirements of the Applicable Laws and none of the Scripps
Filings 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 Scripps included in the Scripps Filings
filed since January 1, 1995 comply in all material respects with applicable
accounting requirements and with the published rules and regulations of the CDFI
with respect thereto. To the extent required by such rules and regulations,
such financial statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be
21
indicated in the notes thereto) and fairly present (subject, in the case of the
unaudited statements, to recurring audit adjustments normal in nature and
amount) the financial position of Scripps as at the dates thereof and the
results of its operations and cash flows or changes in financial position for
the periods then ended.
(e) ARTICLES, BYLAWS, BOOKS AND RECORDS. The copies of the
Articles of Incorporation and Bylaws of Scripps, delivered to PCB are complete
and accurate copies thereof as in effect on the date hereof. The minute book of
Scripps made available to PCB contains a complete and accurate record of all
meetings of Scripps's Board of Directors (and committees thereof) and
shareholders. The corporate books and records (including financial statements)
of Scripps fairly reflect the material transactions to which Scripps is a party
or by which its properties are subject or bound, and such books and records have
been properly kept and maintained.
(f) INFORMATION SUPPLIED. No representation or warranty of
Scripps contained in this Agreement or any statement, schedule, exhibit or
certificate given or to be given by or on behalf of Scripps to PCB in connection
herewith and none of the information supplied or to be supplied by Scripps to
PCB under this Agreement contains or will contain any untrue statement of
material fact or admit 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.
(g) COMPLIANCE WITH APPLICABLE LAWS. Scripps holds all
permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities which are necessary for the operation of the business of
Scripps (the "SCRIPPS PERMITS"), except for Scripps Permits the failure of which
to hold would not, individually or in the aggregate, have a material adverse
effect on Scripps. Scripps is in compliance in all material respects with the
terms of the Scripps Permits and all applicable laws and regulations, except for
possible violations which, individually or in the aggregate, would not have a
material adverse effect on Scripps. Except as disclosed in the Scripps Filings
filed prior to the date of this Agreement, the business of Scripps is not being
conducted in violation of any Applicable Laws, except for violations which
individually or in the aggregate would not, have a material adverse effect on
Scripps. No investigation or review by any Governmental Entity with respect to
Scripps is pending or, to the knowledge of Scripps, threatened, nor has any
Governmental Entity indicated to Scripps and intention to conduct the same,
other than which individually or in the aggregate, will not have a material
adverse effect on Scripps. Scripps has not failed to file with the proper
federal, state, local or other authorities any material report or other document
required to be filed by it. Scripps has filed all material documents and
reports required to be filed by it with the Regulatory Agencies and any other
Governmental Entity having jurisdiction over its business or any of its assets
or properties. All such reports conform in all material respects with the
requirements promulgated by such Governmental Entities and Regulatory Agencies.
All compliance or corrective action relating to Scripps required by all
Governmental Entities and Regulatory Agencies has been taken. Scripps has not
received any notification, formally or informally, from any Governmental Entity
or Regulatory Agency or the staff thereof (A) asserting that it is not in
compliance with any of the Applicable Laws, or (B) threatening to revoke any
license, franchise,
22
permit or governmental authorization. Scripps has paid all assessments made or
imposed by any Governmental Entity.
(h) LITIGATION. Except as set forth on Section 3.2(h) of the
Scripps Disclosure Schedule, there is no suit, action or proceeding pending or,
to the knowledge of Scripps, threatened, against or affecting Scripps which, if
adversely determined, would have a material adverse effect on Scripps; nor is
there any judgment, decree, injunction, rule or order of any Governmental Entity
or arbitrator outstanding against Scripps, having, or which, insofar as
reasonably can be foreseen, in the future would have, any such effect. To
Scripps's knowledge, there is no reasonable basis for any legal action or other
proceeding or investigation before any court, any arbitrator of any kind or any
government agency, and Scripps is not subject to any potential adverse claim,
the outcome of which could involve the payment or receipt by Scripps of any
amount in excess of $150,000, unless an insurer of Scripps has agreed to defend
against and pay the amount of any resulting liability without reservation, or,
if any such legal action, proceeding, investigation or claim will not involve
the payment by Scripps of a monetary amount, which could materially adversely
affect Scripps or its business or property or the transactions contemplated
hereby. Scripps has no knowledge of any pending or threatened claims or charges
under any Applicable Laws, including but not limited to, the Community
Reinvestment Act, before the Equal Employment Opportunity Commission, the
California Department of Fair Housing & Economic Development, the California
Unemployment Appeals Board, or any federal or state human relations commission
or agency. There is no labor dispute, strike, slow-down or stoppage pending or,
to the best of the knowledge of Scripps, threatened against Scripps.
(i) TAXES. Scripps has filed all material tax returns required
to be filed by it, which tax returns are true, correct and complete in all
material respects, and has paid all taxes required to be paid as shown on such
returns. No material deficiencies for any taxes have been proposed, asserted or
assessed against Scripps. Except with respect to claims for refund, the Federal
income tax returns of Scripps have been examined by and settled with the IRS, or
the statute of limitations has expired (and no waiver extending the statute of
limitations has been requested or granted), for all taxable years ending on or
before December 31, 1990. The Federal income tax returns of Scripps are not
currently under examination by the IRS.
(j) PROPERTIES AND LEASES.
(i) Scripps has good and marketable title, free and
clear of all liens and encumbrances and the right of possession, subject to
existing leaseholds, to all real properties and good title to all other property
and assets, tangible and intangible, reflected in the Scripps balance sheet as
of March 31, 1998 (except property held as lessee under leases disclosed in
writing prior to the date hereof and except personal property sold or otherwise
disposed of since March 31, 1998, in the Ordinary Course of Business), except
(a) liens for taxes or assessments not delinquent, (b) such other liens and
encumbrances and imperfections of title as do not materially affect the value of
such property as reflected in the Scripps balance sheet as of March 31, 1998, or
as currently shown on the books and records of Scripps and which do not
interfere with or impair its present and continued use, or (c) exceptions
disclosed in title reports
23
and preliminary title reports, copies of which have been provided to Scripps.
All tangible properties of Scripps conform in all material respects with all
applicable ordinances, regulations and zoning laws. All tangible properties of
Scripps are in a good state of maintenance and repair and are adequate for the
current business of Scripps. No properties of Scripps, and, to the best of
Scripps's knowledge, no properties in which it holds a collateral or contingent
interest or purchase option, are the subject of any pending or threatened
investigation, claim or proceeding relating to the use, storage or disposal on
such property of or contamination of such property by any toxic or hazardous
waste material or substance. Scripps does not own, possess or have a collateral
or contingent interest or purchase option in any properties or other assets
which contain or have located within or thereon any hazardous or toxic waste
material or substance unless the location of such hazardous or toxic waste
material or other substance or its use thereon conforms in all material respects
with all federal, state and local laws, rules, regulations or other provisions
regulating the discharge of materials into the environment. As to any asset not
owned or leased by Scripps, Scripps has not controlled, directed or participated
in the operation or management of any such asset or any facilities or enterprise
conducted thereon, such that it has become an owner or operator of such asset
under applicable environmental laws.
(ii) All properties held by Scripps under leases are held
by it under valid, binding and enforceable leases, with such exceptions as are
not material and do not interfere with the conduct of the business of Scripps,
and Scripps enjoys quiet and peaceful possession of such leased property.
Scripps is not in material default in any respect under any material lease,
agreement or obligation regarding its properties to which it is a party or by
which it is bound.
(iii) Except as set forth on Section 3.2(j) of the Scripps
Disclosure Schedule, no third party consents are required under the leases
referred to in Section 3.2(j) in order to consummate the transactions
contemplated by this Agreement and the Merger Agreement. Where required,
Scripps shall obtain, prior to the Effective Date, the necessary consents of
such parties.
(k) SUBSIDIARIES. Scripps does not have any Subsidiaries.
(l) AGREEMENTS WITH REGULATORY AUTHORITIES. Scripps holds a
currently valid license issued by the CDFI to engage in the commercial banking
and trust business in California at the locations at which it currently conducts
business. Neither the scope of the business of Scripps nor the location of its
properties requires it to be licensed to do business in any jurisdiction other
than the State of California. Scripps's deposits are insured by the FDIC to the
maximum extent permitted by applicable law and regulation. Scripps is not a
party to any written agreement or memorandum of understanding with, or a party
to any commitment letter or similar undertaking to, or is subject to any order
or directive by, or is a recipient of any extraordinary supervisory letter from,
or has adopted any board resolutions at the request of, any Regulatory Agency,
nor has Scripps been advised by any Regulatory Authority that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, directive, written agreement, memorandum
of understanding, extraordinary supervisory letter, commitment letter, board
resolutions or similar undertaking.
24
(m) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the Scripps Filings filed prior to the date of this Agreement, since
December 31, 1997, Scripps has not incurred any material liability, except in
the Ordinary Course of Business consistent with its past practices, nor has
there been any change, or any event involving a prospective change, in the
business, financial condition or results of operations of Scripps which has had,
or is reasonably likely to have, a material adverse effect on Scripps (other
than as a result of changes in banking laws or regulations of general
applicability or interpretations thereof).
(n) NO UNDISCLOSED LIABILITIES. Except for items for which
reserves have been established in the unaudited balance sheet of Scripps as of
March 31, 1998, Scripps has not incurred or discharged, and is not legally
obligated with respect to, any indebtedness, liability (including, without
limitation, a liability arising out of an indemnification, guarantee, hold
harmless or similar arrangement) or obligation (accrued or contingent, whether
due or to become due, and whether or not subordinated to the claims of its
general creditors), other than as a result of operations in the Ordinary Course
of Business after such date. Except as set forth in Section 3.2(n) of the
Scripps Disclosure Schedule, no cash, stock or other dividend or any
distribution with respect to the Scripps shares has been declared, set aside or
paid, nor have any of the PCB shares been purchased, redeemed or otherwise
acquired, directly or indirectly, by PCB since December 31, 1995.
(o) ACCOUNTING MATTERS. Based upon consultation with its
independent accountants, neither Scripps nor any of its directors, officers or,
to its knowledge, shareholders has taken or agreed to take any action that would
prevent Scripps from accounting for the business combination to be effected by
the Merger as a "pooling of interests."
(p) CAPITAL STOCK. At the Effective Time, the Scripps Common
Stock issued pursuant to the Merger will be duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights.
(q) APPROVALS. Scripps knows of no reason why all Consents
should not be obtained without the imposition of any condition or restriction of
the type referred to in Section 6.1(f) or why the accountants' letter referred
to in Section 6.1(e) cannot be obtained.
(r) BROKERS AND FINDERS. Except as set forth on Section 3.2(r)
of the Scripps Disclosure Schedule, neither Scripps nor any of its respective
directors, officers or employees has employed any broker or finder or incurred
any liability for any financial advisory fees, brokerage fees, commissions or
similar payments in connection with the transactions contemplated by this
Agreement.
(s) BENEFIT PLANS.
(i) With respect to each Benefit Plan maintained or
contributed to by Scripps (the "Scripps Benefit Plans"), Scripps has made
available to PCB a true and correct copy of (A) the most recent annual report
(Form 5500) filed with the IRS, (B) such Scripps Benefit Plan, (C) each trust
agreement relating to such Scripps Benefit Plan, (D) the most recent summary
plan description for each Scripps Benefit Plan for which a summary plan
description is
25
required, (E) the most recent actuarial report or valuation relating to a
Scripps Benefit Plan subject to title IV of ERISA, and (F) the most recent
determination letter issued by the IRS with respect to any Scripps Benefit
Plan qualified under Section 401(a) of the Code.
(ii) The current value of the assets of each of the
Scripps Benefit Plans subject to title IV of ERISA exceeds that plan's "Benefit
Liabilities" as that term is defined in Section 4001(a)(16) of ERISA, when
determined under actuarial factors that would apply if that plan terminated in
accordance with all applicable legal requirements.
(iii) Except as set forth in Section 3.2(s) of the Scripps
Disclosure Schedule, to the best knowledge of Scripps, each of the Scripps
Benefit Plans has been administered in compliance with its terms in all material
respects and is in compliance in all material respects with the applicable
provisions of ERISA (including, but not limited to, the funding and prohibited
transactions provisions thereof), the Code and other applicable laws.
(iv) There has been no reportable event within the
meaning of Section 4043(b) of ERISA (for which a waiver did not apply) or any
accumulated funding deficiency (whether or not waived) within the meaning of
Section 412 of the Code with respect to any Scripps Benefit Plan.
(v) All contributions to the Scripps Benefit Plans
required thereunder have been made or provided for.
(vi) No contributions have been made by Scripps, to any
"Multiemployer Plan," as such term is defined in Section 3(37) of ERISA.
(vii) To the best knowledge of Scripps, each of the
Scripps Benefit Plans which is intended to be a qualified plan within the
meaning of Section 401(a) of the Code is so qualified, and Scripps is not aware
of any fact or circumstance which would adversely affect the qualified status of
any such plan.
(viii) With respect to the Scripps Benefit Plans,
individually and in the aggregate, no event has occurred and, to the knowledge
of Scripps there exists no condition or set of circumstances in connection with
which Scripps could be subject to any liability that is reasonably likely to
have a material adverse effect on Scripps (except liability for benefits claims
and funding obligations payable in the ordinary course) under ERISA, the Code or
any other applicable law.
(ix) True and complete copies of the Scripps Stock Plans
as in effect on the date hereof have been provided to PCB.
(t) ENVIRONMENTAL MATTERS. Each of the representations
contained in the following subparagraphs (i)-(v) of this Section 3.2(t) is
qualified in its entirety by the information set forth in Section 3.2(t) of the
Scripps Disclosure Schedule.
26
(i) To the knowledge of Scripps, the Scripps
Participation Facilities, and the Scripps Loan Properties (each as hereinafter
defined) are, and have been, in compliance with all applicable laws, rules,
regulations, standards and requirements of the EPA and of state and local
agencies with jurisdiction over pollution or protection of the environment,
except for violations which, either individually or in the aggregate, do not or
would not result in a material adverse effect on Scripps.
(ii) To the knowledge of Scripps, there is no suit,
claim, action or proceeding pending or threatened, before any court,
governmental agency or board or other forum in which Scripps or any Scripps
Participation Facility has been or, with respect to threatened proceedings, may
be, named as a defendant (x) for alleged noncompliance (including by any
predecessor), with any environmental law, rule or regulation or (y) relating to
the release into the environment of any Hazardous Material (as hereinafter
defined) or oil whether or not occurring at or on a site owned, leased or
operated by Scripps or any Scripps Participation Facility except as would not,
either individually or in the aggregate, result in a material adverse effect on
Scripps.
(iii) To the knowledge of Scripps, there is no suit,
claim, action or proceeding pending or threatened, before any court,
governmental agency or board or other forum in which any Scripps Loan Property
has been or, with respect to threatened proceedings, may be, named as a
defendant (x) for alleged noncompliance (including by any predecessor) with any
environmental law, rule or regulation or (y) relating to the release into the
environment of any Hazardous Material or oil whether or not occurring at or on a
site owned, leased or operated by a Scripps Loan Property, except where such
noncompliance or release does not or would not result, either individually or in
the aggregate, in a material adverse effect on Scripps.
(iv) To the knowledge of Scripps, there is no reasonable
basis for any suit, claim, action or proceeding as described in subsection (ii)
or (iii) of this Section 3.2(t), except as would not, individually or in the
aggregate, have a material adverse effect on Scripps.
(v) During the period of (x) Scripps's ownership or
operation of any of its respective current properties, (y) Scripps's
participation in the management of any Scripps Participation Facility, or
(z) Scripps's holding of a security interest in a Scripps Loan Property, to the
knowledge of Scripps, there has been no release of Hazardous Material or oil in,
on, under or affecting such properties, except where such release does not or
would not result, either individually or in the aggregate, in a material adverse
effect on Scripps. Prior to the period of (x) Scripps's ownership or operation
of any of their respective current properties, (y) Scripps's participation in
the management of any Scripps Participation Facility, or (z) Scripps's holding
of a security interest in a Scripps Loan Property, to the knowledge of Scripps,
there was no release of Hazardous Material or oil in, on, under or affecting any
such property, Scripps Participation Facility or Scripps Loan Property, except
where such release does not or would not result, either individually or in the
aggregate, in a material adverse effect on Scripps.
(vi) The following definitions apply for purposes of this
Section 3.2(t): (x) "Scripps Loan Property" means any property in which Scripps
holds a security interest for an
27
amount greater than $25,000 and, where required by the context, said term
means the owner or operator of such property; (y) "Scripps Participation
Facility" means any facility in which Scripps participates in the management
and, where required by the context, said term means the owner or operator of
such property; and (z) "Hazardous Material" means any pollutant, contaminant,
or hazardous substance under the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. 9601 et seq., or any similar state
law.
(u) INSURANCE. Scripps is and continuously since its inception
has been, insured with reputable insurers against all risks normally insured
against by banks, and all of the insurance policies and bonds maintained by
Scripps are in full force and effect, Scripps is not in default thereunder and
all material claims thereunder have been filed in due and timely fashion. In
the best judgment of the management of Scripps, such insurance coverage is
adequate for Scripps. Since December 31, 1997 there has not been any damage to,
destruction of, or loss of any assets of Scripps not covered by insurance that
could materially adversely affect the business, financial condition, properties,
assets or results of operations of Scripps.
(v) LOAN LOSS RESERVES. The allowance for loan losses in the
Scripps balance sheets dated December 31, 1997, March 31, 1998, and as of the
Valuation Date are and will be adequate in all material respects under the
requirements of all applicable state and federal laws and regulations to provide
for possible loan losses on outstanding loans, net of recoveries. Scripps has
disclosed to PCB in writing prior to the date hereof, and will promptly inform
Scripps of the amounts of all loans, leases, other extensions of credit or
commitments, or other interest-bearing assets of Scripps, that have been
classified as of the date hereof or hereafter by Scripps management or Scripps
internal policy or procedure, any outside review examiner, accountant or any
bank regulatory agency as "Other Loans Specially Mentioned," "Special Mention,"
"Substandard," "Doubtful," or "Loss" or classified using categories or words
with similar import in the case of loans (or that would have been so classified,
in the case of other interest-bearing assets, had they been loans).
Notwithstanding the above, Scripps shall be under no obligation to disclose to
PCB any such classification by any bank regulatory agency where such disclosure
would violate any obligation of confidentiality of Scripps imposed by such bank
regulatory agency. Scripps has furnished and will continue to furnish to PCB
true and accurate information concerning the loan portfolio of Scripps, and no
material information with respect to the loan portfolio has been or will be
withheld from PCB.
(w) TRANSACTIONS WITH AFFILIATES. Except as may arise in the
Ordinary Course of Business, Scripps has not extended credit, committed itself
to extend credit, or transferred any asset to or assumed or guaranteed any
liability of the employees or directors of Scripps, or any spouse or child of
any of them, or to any of their "affiliates" or "associates" as such terms are
defined in Rule 405 under the Securities Act. Scripps has not entered into any
other transactions with the employees or directors of Scripps or any spouse or
child of any of them, or any of their affiliates or associates, except as
disclosed in writing to PCB. Any such transactions have been on terms no less
favorable to Scripps than those which would prevail in an arms-length
transaction with an independent third party. Scripps has not violated the
applicable rules of the Regulatory Agencies in connection with any such
transactions described in this subsection.
28
(x) STATUS OF TRUST ASSETS. As used in this Agreement, the
term "Trust Assets" shall mean and include: (a) all right, title and interest
of Scripps in and to and under any and all trusts, ▇▇▇▇▇, agency agreements,
decedent's estates and other representative or fiduciary appointments in favor
of, or services by, Scripps and all other trust, ▇▇▇▇▇, agency agreements and
the like similar to the foregoing under which Scripps has been named as of the
Closing Date in some representative or fiduciary capacity to take effect at some
time in the future; and (b) all properties, rights, documents, instruments,
interests and other tangible and intangible assets owned by, governed or
administered under, arising under or with respect to or pertaining to any of the
foregoing.
(i) With respect to the Trust Assets: (i) no notice has
been received by Scripps questioning the validity or enforceability of any of
the agreements, contracts or other commitments to which Scripps is a party
comprising a part of the Trust Assets; (ii) to Scripps's knowledge, none of the
parties to any such agreement, contract or other commitment is in default of any
material obligation under, or in the performance of, any material term,
condition or other provision of any such agreement, contract or other
commitment; (iii) the rights of Scripps to receive fees in connection with Trust
Assets are free and clear of all pledges, security interests and liens of any
kind whatsoever; (iv) in the management, operation and servicing of the Trust
Assets, Scripps has complied, in all material respects, with all applicable
federal, state and local laws, rules, regulations, ordinances, rulings, orders
awards, judgments and decrees; and (v) in the management, operation and
servicing of the Trust Assets, Scripps has complied with all material terms of
all instruments governing the Trust Assets.
(ii) Except as set forth on Section 3.2(x) of the Scripps
Disclosure Schedule, to Scripps's knowledge (without conducting any site
investigation or other analysis for the purpose of making this representation),
neither the use nor current condition of any real property relating to the Trust
Assets is or has been such during the time the Trust Assets were owned, operated
or managed by Scripps, in violation of any Applicable Law under circumstances
where the violation would have a Material Adverse Effect on the real property in
question. Scripps has adhered to and followed in all material respects all
environmental policies of Scripps with respect to the Trust Assets.
(y) INFORMATION PERTAINING TO SCRIPPS. The information
pertaining to Scripps which has been or will be furnished for or on behalf of
Scripps for inclusion in the Applications and that will be contained in the
Joint Proxy Statement, does not and will not contain any untrue statement of any
material fact and does not omit and will not omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not misleading; provided,
however, that information of a later date shall be deemed to modify information
as of an earlier date. All financial statements of Scripps included in each
Application and in the Joint Proxy Statement will present fairly the financial
condition and results of operations of Scripps at the dates and for the periods
covered by such statements in accordance with generally accepted accounting
principles consistently applied throughout the periods covered by such
statements. Scripps shall promptly advise PCB in writing if prior to the
Effective Time Scripps shall obtain knowledge of any facts that would make it
necessary to amend or supplement any Application or the Joint Proxy
29
Statement in order to make the statements therein not misleading or to comply
with applicable law or regulation.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 COVENANTS OF PCB. During the period from the date of this
Agreement and continuing until the Effective Time, PCB agrees that, except as
expressly contemplated or permitted by this Agreement, or to the extent that
Scripps shall otherwise consent in writing:
(a) ORDINARY COURSE. PCB shall carry on its business in, and
only in, the usual, regular and ordinary course in substantially the same manner
as heretofore conducted. For purposes of this Agreement, the "Ordinary Course
of Business" of either party shall consist of the banking and related businesses
as presently conducted by it in compliance with customary safe and sound banking
practices and applicable banking laws and regulations. PCB shall use all
reasonable efforts to preserve intact its present business organizations,
maintain its rights and franchises and preserve its relationships with
customers, suppliers and others having business dealings with them to the end
that its goodwill and ongoing businesses shall not be impaired in any material
respect.
(i) Specifically, and not by way of limitation, PCB
shall cause its officers to:
(A) comply with all Applicable Laws;
(B) use their best efforts to keep in force, at
not less than the present limits, all policies of insurance (including deposit
insurance of the FDIC) to the extent reasonably practicable in light of the
prevailing market conditions in the insurance industry;
(C) use their best efforts to keep available to
Scripps the services of its present officers and employees (it being understood
that PCB shall have the right to terminate the employment of any of its officers
or employees in accordance with its established employment procedures);
(D) comply with all orders, agreements and
memoranda of understanding with respect to it made by or with the Regulatory
Agencies or any other regulatory authority of competent jurisdiction, and
promptly forward to the Scripps all communications received from any such
authority that are not prohibited by such authority from being so disclosed and
inform Scripps of any material restrictions imposed by any governmental
authority on its business;
(E) with respect to any extension of credit in
excess of $50,000, not waive or release any right or collateral or cancel or
compromise any debt or claim, except in the Ordinary Course of Business;
30
(F) not make, re-negotiate, renew, increase,
extend or purchase any loans, advances or loan commitments, in each case to any
of its officers, directors or any affiliated or related persons of such
directors or officers except in the Ordinary Course of Business consistent with
its established loan procedures and in compliance with applicable rules of the
Regulatory Agencies;
(G) not take any action to create, relocate or
terminate the operations of any banking office or branch, or to form any new
subsidiary or affiliated entity; and
(H) not settle or otherwise take any action to
release or reduce any of its rights with respect to any litigation involving a
claim of more than $25,000 in which PCB is a party.
(ii) PCB shall not:
(A) enter into any new material line of
business;
(B) change its lending, investment, liability
management and other material banking policies in any material respect;
(C) incur or commit to any capital expenditures
or any obligations or liabilities in connection therewith other than capital
expenditures and obligations or liabilities which are not in excess or $25,000
and which are incurred or committed to in the Ordinary Course of Business
consistent with past practice and the items shown on Section 4.1(a) of the PCB
Disclosure Schedule;
(D) commit itself to any loan with a principal
amount in excess of $400,000, provided that Scripps consent shall be deemed
given unless it objects and states the basis of its objection in writing, or
verbally with prompt written confirmation, within two business days after
receipt of written notice directed to authorized personnel of Scripps, together
with sufficient supporting information to allow Scripps to make an informed
judgment, and Scripps shall not unreasonably withhold its consent; provided,
further, that any consent given by Scripps shall be binding only if given by
authorized personnel of Scripps; or
(E) purchase any investment security with a
maturity in excess of two years.
(iii) PCB shall promptly notify Scripps in writing upon
the occurrence by it of any of the following:
(A) the classification of any loan as
substandard, doubtful or loss;
(B) the filing or commencement of any legal
action or other proceeding or investigation against it; or
31
(C) its pre-tax earnings in any month are less
than Fifty Thousand Dollars ($50,000).
(b) DIVIDENDS; CHANGES IN STOCK. PCB shall not and shall not
propose to, (i) declare or pay any dividends on or make other distributions in
respect of any of its capital stock; (ii) split, combine or reclassify any of
its capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock; or (iii) repurchase, redeem or otherwise acquire (other than as
agent for shareholders reinvesting dividends pursuant to such party's dividend
reinvestment plan and except for the acquisition of trust account shares), any
shares of its capital stock.
(c) ISSUANCE OF SECURITIES. PCB shall not issue, deliver,
sell, pledge, assign or otherwise encumber or authorize or propose the issuance,
delivery, sale, pledge, assignment or other encumbrance of, any shares of its
capital stock of any class, any Voting Debt or any securities convertible into
or exercisable for, or any rights, warrants or options to acquire, any such
shares or Voting Debt, or enter into any agreement with respect to any of the
foregoing, other than the issuance of PCB Common Stock pursuant to outstanding
employee stock options or similar rights to acquire PCB Common Stock granted
pursuant to the PCB Stock Option Plan, in each case as in effect on the date of
this Agreement and in each case in accordance with their present terms.
Notwithstanding the foregoing, nothing herein shall prohibit the issuance of
stock options under PCB's Stock Option Plan in the Ordinary Course of Business
and consistent with past practice.
(d) GOVERNING DOCUMENTS. PCB shall not amend or propose
publicly to amend the PCB Articles, Bylaws or its other governing documents.
(e) NO SOLICITATIONS. PCB shall not and shall not authorize or
permit any of its officers, directors or employees or any investment banker,
financial advisor, attorney, accountant or other representative or agent
retained by it, to solicit or encourage (including by way of furnishing
nonpublic information), or take any other action to facilitate, any inquiries or
the making of any proposal which constitutes, or may reasonably be expected to
lead to, any takeover proposal (as defined below), or, subject to the fiduciary
duties of the Board of Directors of PCB, in each case as determined after
consultation with counsel, agree or endorse any takeover proposal, or
participate in any discussions or negotiations, or provide third parties with
any nonpublic information, relating to any such inquiry or proposal. PCB shall
promptly advise Scripps orally and in writing of any such inquiries or
proposals, including all of the material terms thereof. As used in this
Agreement, "TAKEOVER PROPOSAL" shall mean any tender or exchange offer, proposal
for a merger, consolidation or other business combination involving PCB or any
proposal or offer to acquire in any manner a substantial equity interest in, or
a substantial portion of the assets of PCB, other than the transactions
contemplated or permitted by this Agreement.
(f) NO ACQUISITIONS. Other than acquisitions described on
Section 4.1(f) of the PCB Disclosure Schedule, PCB shall not acquire or agree to
acquire, by merging or consolidating with, or by purchasing a substantial equity
interest in or a substantial portion of the
32
assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof
or otherwise acquire or agree to acquire any assets in each case which are
material, individually or in the aggregate, to PCB; PROVIDED, HOWEVER, that
the foregoing shall not prohibit (i) foreclosures and other acquisitions
related to previously contracted debt, in each case in the Ordinary Course of
Business and so long as PCB gives notice to and consults with Scripps if the
foreclosure relates to real property as to which PCB has notice of possible
environmental liabilities associated with ownership of such property, or,
(ii) investments made by small business investment corporations, acquisitions
of financial assets and merchant banking activities, in each case in the
Ordinary Course of Business.
(g) NO DISPOSITIONS. Other than (i) dispositions referred to
in the PCB Filings filed prior to the date of this Agreement or described on
Section 4.1(g) of the PCB Disclosure Schedule, (ii) as may be required to
consummate the transactions contemplated hereby, (iii) securitization activities
in the Ordinary Course of Business and (iv) other activities in the Ordinary
Course of Business consistent with prior practice, PCB shall not sell, lease,
encumber or otherwise dispose of, or agree to sell, lease, encumber or otherwise
dispose of, any of its assets.
(h) INDEBTEDNESS. Other than in the Ordinary Course of
Business consistent with past practice, PCB shall not incur any indebtedness for
borrowed money (other than short-term indebtedness incurred to refinance
short-term indebtedness and other indebtedness of PCB; it being understood and
agreed that incurrence of indebtedness in the Ordinary Course of Business shall
include, without limitation, the creation of deposit liabilities, purchases of
federal funds, sales of certificates of deposit and entering into repurchase
agreements), assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other individual, corporation or other
entity, or make any loan or advance other than in the Ordinary Course of
Business consistent with past practice.
(i) OTHER ACTIONS. PCB shall not take any action that is
intended to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect, or in any of
the conditions to the Merger set forth in Article VI not being satisfied or in a
violation of any provision of this Agreement, or (unless such action is required
by applicable law or sound banking practice) which would adversely affect the
ability of PCB to obtain any of the Consents without imposition of a condition
or restriction of the type referred to in Section 6.1(f) hereof except, in every
case, as may be required by applicable law.
(j) ADVICE OF CHANGES; GOVERNMENT FILINGS. PCB shall promptly
advise Scripps orally and in writing of any change or event having, or which,
insofar as can reasonably be foreseen, could have, a material adverse effect on
PCB or which would cause or constitute a material breach of any of the
representations, warranties or covenants of PCB contained herein. PCB shall
file all reports required to be filed by it with the CDFI between the date of
this Agreement and the Effective Time and shall deliver to Scripps copies of all
such reports promptly after the same are filed. PCB shall file all call reports
with the appropriate Regulatory Authorities and all other reports, applications
and other documents required to be filed with the appropriate Regulatory
Authorities between the date hereof and the Effective Time and shall
33
make available to Scripps copies of all such reports promptly after the same
are filed. PCB shall file in a timely manner (taking into account any
extensions duly obtained) all other reports, tax returns and other documents
required to be filed with federal, state, local and other authorities.
(k) ACCOUNTING METHODS. PCB shall not change its methods of
accounting in effect at December 31, 1997, except as required by changes in
generally accepted accounting principles as concurred to by PCB's independent
auditors. PCB will not change its fiscal year.
(l) POOLING AND TAX-FREE REORGANIZATION TREATMENT. PCB shall
not take or cause to be taken any action, whether before or after the Effective
Time, which would disqualify the Merger as a "pooling of interests" for
accounting purposes or the Merger as a "reorganization" within the meaning of
Section 368(a) of the Code.
(m) BENEFIT PLANS. Except as set forth on Section 4.1(m) of
the PCB Disclosure Schedule or as provided for in Section 5.7 hereof, PCB agrees
that it will not, without the prior written consent of Scripps, (i) enter into,
adopt, amend (except as may be required by law) or terminate any PCB Benefit
Plan, or any other employee benefit plan or any agreement, arrangement, plan or
policy between PCB and one or more of its directors or officers, (ii) except for
normal increases in the Ordinary Course of Business consistent with past
practice that in the aggregate do not result in a material increase in benefits
or compensation expense to PCB, increase in any manner the compensation or
fringe benefits of any director, officer or employee or pay any benefit not
required by any plan and arrangement as in effect as of the date hereof
(including, without limitation, the granting of stock options, stock
appreciation rights, restricted stock, restricted stock units or performance
units or shares (or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing) or (iii) enter into or renew any
contract, agreement, commitment or arrangement providing for the payment to any
director, officer or employee of PCB of compensation or benefits contingent, or
the terms of which are materially altered, upon the occurrence of any of the
transactions contemplated by this Agreement.
4.2 COVENANTS OF SCRIPPS. During the period from the date of this
Agreement and continuing until the Effective Time, Scripps agrees that, except
as expressly contemplated or permitted by this Agreement, or to the extent that
PCB shall otherwise consent in writing:
(a) ORDINARY COURSE. Scripps shall carry on its business in,
and only in, the usual, regular and ordinary course in substantially the same
manner as heretofore conducted. Scripps shall use all reasonable efforts to
preserve intact its present business organizations, maintain its rights and
franchises and preserve its relationships with customers, suppliers and others
having business dealings with them to the end that its goodwill and ongoing
businesses shall not be impaired in any material respect.
(i) Specifically, and not by way of limitation, Scripps
shall cause its officers to:
(A) comply with all Applicable Laws;
34
(B) use their best efforts to keep in force, at
not less than the present limits, all policies of insurance (including deposit
insurance of the FDIC) to the extent reasonably practicable in light of the
prevailing market conditions in the insurance industry;
(C) use their best efforts to keep available the
services of its present officers and employees (it being understood that Scripps
shall have the right to terminate the employment of any of its officers or
employees in accordance with its established employment procedures);
(D) comply with all orders, agreements and
memoranda of understanding with respect to it made by or with the Regulatory
Agencies or any other regulatory authority of competent jurisdiction, and
promptly forward to PCB all communications received from any such authority that
are not prohibited by such authority from being so disclosed and inform PCB of
any material restrictions imposed by any governmental authority on its business;
(E) not take any action to terminate the
operations of any banking office or branch, or to form any new subsidiary; or
(F) not settle or otherwise take any action to
release or reduce any of its rights with respect to any litigation involving a
claim of more than $100,000 in which Scripps is a party.
(ii) Scripps shall not:
(A) enter into any new material line of business;
(B) change its lending, investment, liabilities,
management and other material banking policies in any material respect;
(C) Incur or commit to any capital expenditures
or any obligations or liabilities in connection therewith other than capital
expenditures and obligations or liabilities which are not in excess of $100,000
and which are incurred or committed to in the Ordinary Course of Business
consistent with past practice and the items shown on Section 4.2(a) of the
Scripps Disclosure Schedule;
(iii) Scripps shall promptly notify Scripps in writing
upon the occurrence by it of any of the following:
(A) the classification of any loan as
substandard, doubtful or loss;
(B) the filing or commencement of any legal
action or other proceeding or investigation against it; or
(C) its pre-tax earnings in any month are less
than One Hundred Thousand Dollars ($100,000).
35
(b) ISSUANCE OF SECURITIES. Scripps shall not issue, deliver,
sell, pledge, assign or otherwise encumber or propose the issuance, delivery,
sale, pledge, assignment or other encumbrance of, any shares of its capital
stock of any class, any Voting Debt or any securities convertible into or
exercisable for, or any rights, warrants or options to acquire, any such shares
or Voting Debt, or enter into any agreement with respect to any of the
foregoing, other than the issuance of Scripps Common Stock pursuant to
outstanding employee stock options or similar rights to acquire Scripps Common
Stock granted pursuant to the Scripps Stock Plans, in each case as in effect on
the date of this Agreement and in each case in accordance with their present
terms. Notwithstanding the foregoing, nothing herein shall prohibit the
issuance of stock options under Scripps's Stock Option Plans in the Ordinary
Course of Business and consistent with past practice.
(c) GOVERNING DOCUMENTS. Scripps shall not amend or propose
publicly to amend the Scripps Articles, Bylaws or its other governing documents,
except for changes in the size of its board of directors or increases in
authorized capitalization.
(d) NO SOLICITATIONS. Scripps shall not and shall not
authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative or agent retained by it, to solicit or encourage (including by
way of furnishing nonpublic information), or take any other action to
facilitate, any inquiries or the making of any proposal which constitutes, or
may reasonably be expected to lead to, any takeover proposal (as defined below),
or, subject to the fiduciary duties of the Board of Directors of Scripps, in
each case as determined after consultation with counsel, agree or endorse any
takeover proposal, or participate in any discussions or negotiations, or provide
third parties with any nonpublic information, relating to any such inquiry or
proposal. Scripps shall promptly advise PCB orally and in writing of any such
inquiries or proposals, including all of the material terms thereof. As used in
this Agreement, "takeover proposal" shall mean any tender or exchange offer,
proposal for a merger, consolidation or other business combination involving
Scripps or any proposal or offer to acquire in any manner a substantial equity
interest in, or a substantial portion of the assets of Scripps, other than the
transactions contemplated or permitted by this Agreement.
(e) NO ACQUISITIONS. Other than acquisitions described on
Section 4.2(e) of the Scripps Disclosure Schedule, Scripps shall not acquire or
agree to acquire, by merging or consolidating with, or by purchasing a
substantial equity interest in or a substantial portion of the assets of, or by
any other manner, any business or any corporation, partnership, association or
other business organization or division thereof or otherwise acquire or agree to
acquire any assets in each case which are material, individually or in the
aggregate, to Scripps; PROVIDED, HOWEVER, that the foregoing shall not prohibit
(i) foreclosures and other acquisitions related to previously contracted debt,
in each case in the Ordinary Course of Business and so long as Scripps gives
notice to and consults with PCB if the foreclosure relates to real property as
to which Scripps has notice of possible environmental liabilities associated
with ownership of such property, or, (ii) investments made by small business
investment corporations, acquisitions of financial assets and merchant banking
activities, in each case in the Ordinary Course of Business.
36
(f) NO DISPOSITIONS. Other than (i) dispositions referred to
in the Scripps Filings filed prior to the date of this Agreement or described on
Section 4.2(f) of the Scripps Disclosure Schedule, (ii) as may be required to
consummate the transactions contemplated hereby, (iii) securitization activities
in the Ordinary Course of Business and (iv) other activities in the Ordinary
Course of Business consistent with prior practice, Scripps shall not sell,
lease, encumber or otherwise dispose of, or agree to sell, lease, encumber or
otherwise dispose of, any of its assets.
(g) INDEBTEDNESS. Other than in the Ordinary Course of
Business consistent with past practice, Scripps shall not incur any indebtedness
for borrowed money (other than short-term indebtedness incurred to refinance
short-term indebtedness and other indebtedness of Scripps; it being understood
and agreed that incurrence of indebtedness in the Ordinary Course of Business
shall include, without limitation, the creation of deposit liabilities,
purchases of federal funds, sales of certificates of deposit and entering into
repurchase agreements), assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other individual,
corporation or other entity, or make any loan or advance other than in the
Ordinary Course of Business consistent with past practice.
(h) OTHER ACTIONS. Scripps shall not take any action that is
intended to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect, or in any of
the conditions to the Merger set forth in Article VI not being satisfied or in a
violation of any provision of this Agreement, or (unless such action is required
by applicable law or sound banking practice) which would adversely affect the
ability of Scripps to obtain any consents required by it without imposition of a
condition or restriction of the type referred to in Section 6.1(f) hereof
except, in every case, as may be required by applicable law.
(i) ADVICE OF CHANGES; GOVERNMENT FILINGS. Scripps shall
promptly advise PCB orally and in writing of any change or event having, or
which, insofar as can reasonably be foreseen, could have, a material adverse
effect on Scripps or which would cause or constitute a material breach of any of
the representations, warranties or covenants of Scripps contained herein.
Scripps shall file all reports required to be filed by it with the CDFI between
the date of this Agreement and the Effective Time and shall deliver to PCB
copies of all such reports promptly after the same are filed. Scripps shall
file all call reports with the appropriate Regulatory Authorities and all other
reports, applications and other documents required to be filed with the
appropriate Regulatory Authorities between the date hereof and the Effective
Time and shall make available to PCB copies of all such reports promptly after
the same are filed. Scripps shall file in a timely manner (taking into account
any extensions duly obtained) all other reports, tax returns and other documents
required to be filed with federal, state, local and other authorities.
(j) POOLING AND TAX-FREE REORGANIZATION TREATMENT. Scripps
shall not take or cause to be taken any action, whether before or after the
Effective Time, which would disqualify the Merger as a "pooling of interests"
for accounting purposes or the Merger as a "reorganization" within the meaning
of Section 368(a) of the Code.
37
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 REGULATORY MATTERS.
(a) Scripps and PCB shall promptly prepare and file with the
CDFI the CDFI Application and all other Applications with the appropriate
Governmental Authorities. Each of Scripps and PCB shall use all reasonable
efforts to have the CDFI Application declared effective under applicable law
as promptly as practicable after such filing. Scripps shall also use its
best efforts to obtain all necessary state securities law or "Blue Sky"
permits and approvals required to carry out the transactions contemplated by
this Agreement, and PCB shall furnish all information concerning PCB and the
holders of PCB Common Stock as may be reasonably requested in connection with
any such action.
(b) The parties hereto shall cooperate with each other and use
their best efforts to promptly prepare and file all necessary documentation, to
effect all necessary applications, notices, petitions, filings and other
documents, and subject to the proviso set forth in Section 5.4 hereof, to obtain
as promptly as practicable all necessary permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement. PCB
and Scripps shall have the right to review in advance, and to the extent
practicable each will consult the other on, in each case subject to applicable
laws relating to the exchange of information, all the information relating to
PCB or Scripps, as the case may be, which appear in any filing made with, or
written materials submitted to, any third party or any Governmental Entity in
connection with the transactions contemplated by this Agreement. In exercising
the foregoing right, each of the parties hereto shall act reasonably and as
promptly as practicable. The parties hereto agree that they will consult with
each other with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement and each
party will keep the other apprised of the status of matters relating to
completion of the transactions contemplated herein.
(c) PCB and Scripps shall, upon request, furnish each other
with all information concerning themselves, their directors, officers and
shareholders and such other matters as may be reasonably necessary or advisable
in connection with the CDFI Application or any other statement, filing, notice
or application made by or on behalf of PCB or Scripps to any Governmental Entity
in connection with the Merger and the other transactions contemplated by this
Agreement.
(d) PCB and Scripps shall promptly furnish each other with
copies of written communications received by PCB or Scripps, as the case may be,
or any of their respective affiliates or associates (as such terms are defined
in Rule 405 under the Securities Act as in effect on the date hereof) from, or
delivered by any of the foregoing to, any Governmental Entity in respect of the
transactions contemplated hereby.
38
5.2 ACCESS TO INFORMATION.
(a) Upon reasonable notice and subject to applicable laws
relating to the exchange of information, Scripps and PCB shall each afford to
the officers, employees, accountants, counsel and other representatives of the
other, access, during normal business hours during the period prior to the
Effective Time, to all its properties, books, contracts, commitments and
records, including but not limited to shareholder and Common Stock records, and,
during such period, each of Scripps and PCB shall make available to the other
(a) a copy of each report, schedule, registration statement and other document
filed or received by it during such period pursuant to the requirements of
Federal or state banking laws (other than reports or documents which such party
is not permitted to disclose under applicable law) and (b) all other information
concerning its business, properties and personnel as such other party may
reasonably request. Each party shall also use its best efforts to cause its
independent accountant to make available to the other party, its accountants,
counsel and other agents, and to the extent reasonably requested in connection
with such review, such independent accountant's work papers and documentation
relating to its work papers and its audits of the books and records of each
party. The parties will hold all such information in confidence to the extent
required by, and in accordance with, the provisions of the Confidentiality
Agreement dated February 20, 1998, between Scripps and PCB. No investigation by
either Scripps or PCB shall affect the representations and warranties of the
other set forth herein.
(b) Not later than ten working days after the end of each month
(beginning for the month of April, 1998) until the Effective Date, PCB will
provide to Scripps the following reports for each such month;
(i) past due reports by loan;
(ii) non-accrual report by loan;
(iii) loss reports by loan;
(iv) restructured loans; and
(v) any quarterly call reports submitted to regulators
during such month.
(c) Prior to the Effective Date, PCB will submit to the chief
executive officer of Scripps for review a loan approval/credit write-up document
for any loan that is all of the following: (i) a new loan or a renewal of an
existing loan, and (ii) in a commitment amount over $400,000, or when the
aggregate debt of the borrower and its affiliates will exceed $400,000.
5.3 SHAREHOLDER MEETINGS. As promptly as practicable after the
execution of this Agreement, Scripps and PCB shall prepare and file as part of
the CDFI Application (and with any other Applications required) a preliminary
Joint Proxy Statement and, after consultation with each other, shall respond to
any comments received from any Governmental Entity with respect to the
preliminary Joint Proxy Statement and cause the definitive Joint Proxy Statement
to be
39
mailed to the shareholders of each of PCB and Scripps. If any event occurs
which should be set forth in an amendment or a supplement to the Joint Proxy
Statement or in any filing required to be made with any Governmental Entity,
each party inform the other and will cooperate in filing with the
Governmental Entity and/or mailing to the shareholders such amendment or
supplement. The Joint Proxy Statement, and all amendments or supplements
thereto, shall comply in all material respects with applicable law and be in
form and substance satisfactory to both Scripps and PCB. Scripps and PCB
each shall take all steps necessary to duly call, give notice of, convene and
hold a meeting of their respective shareholders to be held as soon as is
reasonably practicable after the date on which the CDFI Application becomes
effective for the purpose of voting upon the approval of this Agreement and
the consummation of the transactions contemplated herein. Scripps and PCB
will, through their respective Boards of Directors, subject to their
respective fiduciary obligations as determined by the respective Boards of
Directors after consultation with outside counsel, recommend to their
respective shareholders approval of such matters. Scripps and PCB shall
coordinate and cooperate with respect to the timing of such meetings and
shall use their best efforts to hold such meetings on the same day.
5.4 LEGAL CONDITIONS TO MERGER. Each of Scripps and PCB shall use
their best efforts (i) to take, or cause to be taken, all actions necessary to
comply promptly with all legal requirements which may be imposed on such party
with respect to the Merger, subject to the conditions set forth in Article VI
hereof, to consummate the transactions contemplated by this Agreement and
(ii) to obtain (and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any Government Entity
and any other public or private third party which is required to be obtained or
made by such party in connection with the Merger and the transactions
contemplated by this Agreement; PROVIDED, HOWEVER, that a party shall not be
obligated to take any action pursuant to the foregoing if the taking of such
action or such compliance or the obtaining or such consent, authorization,
order, approval or exemption is likely, in the reasonable opinion of such
party's Board of Directors, to result in the imposition of a condition or
restriction on such party of the type referred to in Section 6.1(f) hereof.
Each of Scripps and PCB will promptly cooperate with and furnish information to
the other in connection with any such condition or restriction suffered by, or
requirement imposed upon, any of them in connection with the foregoing.
5.5 AFFILIATES. Each of PCB and Scripps shall use its best efforts to
cause each director, executive officer and other person who is an "affiliate"
(for purposes of qualifying for "pooling-of-interests" treatment as described
below) of such party to deliver to the other party hereto, as soon as
practicable after the date hereof, and prior to the date of the shareholders
meetings called to approve this Agreement and the consummation of the
transactions contemplated herein, a written agreement (an "Affiliates
Agreement") substantially in the form attached hereto as EXHIBIT B, providing
that such person will not sell, pledge, transfer or otherwise dispose of any
shares of PCB Common Stock or Scripps Common Stock held by such "affiliate" and
in the case of the "affiliates" of PCB, the shares of Scripps Common Stock to be
received by such "affiliate" in the Merger during the period commencing 30 days
prior to the Merger and ending at the time of the publication of financial
results covering at least 30 days of combined operations of PCB and Scripps.
Securities representing shares of Scripps Common
40
Stock issued to affiliates of PCB (as determined by counsel to Scripps and
PCB) may be subject to stop transfer orders to enforce such written
agreements.
5.6 PRESS RELEASES. Neither party shall issue any press release or
written statement for general circulation relating to the Merger, this Agreement
or the Merger Agreement unless previously provided to the other party for review
and approval (which approval will not be unreasonably withheld or delayed) and
shall cooperate with the other party in the development and distribution of all
news releases and other public information disclosures with respect to the
Merger, this Agreement or the Merger Agreement; provided that either party may,
without the consent of the other party, make any disclosure with regard to the
Merger, this Agreement or the Merger Agreement that it determines with advice of
counsel is required under any applicable law or regulation.
5.7 EMPLOYEE BENEFIT PLANS.
(a) Scripps and PCB agree that, unless otherwise agreed in
writing, the Scripps Benefits Plans in effect at the date of this Agreement
shall remain in effect after the Effective Time with respect to employees
covered by such plans at the Effective Time, and PCB employees formerly covered
by, to the extent available, PCB Benefit Plans shall be covered by, to the
extent available, similar Scripps Benefit Plans after the Effective Time.
(b) In the case of PCB Benefits Plans under which the
employees' interests are based upon PCB Common Stock, Scripps and PCB agree that
such interests shall, following the Effective Date, be based on Scripps Common
Stock in accordance with the terms of the Scripps Benefits Plans and in an
equitable manner.
5.8 STOCK OPTIONS AND RESTRICTED STOCK.
(a) Scripps and PCB acknowledge that the Merger shall
constitute, for purposes of the PCB Stock Option Plan, a merger in which PCB is
not the surviving corporation. At the Effective Time, all outstanding rights
with respect to PCB Common Stock pursuant to stock options under the PCB Stock
Option Plan (the "PCB STOCK OPTIONS"), whether or not then exercisable, shall be
converted into and become rights with respect to Scripps Common Stock, and
Scripps shall assume each PCB Stock Option in accordance with the terms of the
PCB Stock Option Plan under which it was issued and the stock option agreement
by which it is evidenced. From and after the Effective Time, (i) each PCB Stock
Option assumed by Scripps may be exercised solely for shares of Scripps Common
Stock, (ii) the number of shares of Scripps Common Stock subject to each PCB
Stock Option shall be equal to the number of full shares of Scripps Common Stock
as the holder of such PCB Stock Option would have been entitled to receive
pursuant to the Merger had such holder exercised such option in full immediately
prior to the Effective Time (the "DEEMED SCRIPPS SHARES") and (iii) the per
share exercise price for each such PCB Stock Option shall be equal to (y) the
aggregate exercise price for the shares of PCB Common Stock otherwise
purchasable pursuant to such PCB Stock Option divided by (z) the Deemed Scripps
Shares; provided, however, that in the case of any option to which Section 421
of the Code applies by reason of its qualification under Section 422 of the Code
("INCENTIVE STOCK OPTIONS"), the option price, the number of shares purchasable
pursuant to such option and the
41
terms and conditions of exercise of such option shall be determined in order
to comply with Section 424(a) of the Code. At or prior to the Effective
Time, PCB shall use its best efforts to make all necessary arrangements with
respect to the PCB Stock Option Plan to permit the assumption of the
unexercised PCB Stock Options by Scripps pursuant to this Section 5.8.
(b) Scripps shall use reasonable efforts to (i) comply with the
terms of the PCB Stock Option Plans and (ii) ensure, to the extent required by,
and subject to the provisions of, such Plans, that PCB Stock Options which
qualified as incentive stock options prior to the Effective Time qualify as
incentive stock options of Scripps after the Effective Time.
(c) At or prior to the Effective Time, Scripps shall take all
corporate action necessary to reserve for issuance a sufficient number of shares
of Scripps Common Stock for delivery upon exercise of PCB Stock Options assumed
by it in accordance with this Section 5.8. As soon as possible after the
Effective Time, Scripps shall file a request for permit or exemption, as the
case may be, with the CDFI with respect to the shares of Scripps Common Stock
subject to such options.
5.9 EXPENSES. 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 such expense. All such
expenses shall be accrued by the respective parties or otherwise reflected in
the financial statements as of the Valuation Date.
5.10 GOVERNANCE. Scripps's Board of Directors shall take all action
necessary to cause the directors comprising the full Board of Directors of
Scripps at the Effective Time to be adjusted to accommodate the appointment of
▇▇. ▇▇▇▇▇▇▇▇▇ and the remainder such directors shall be the then current members
of the Scripps Board of Directors. If, prior to the Effective Time,
▇▇. ▇▇▇▇▇▇▇▇▇ shall decline or be unable to serve as a director, PCB shall
designate another person to serve in such person's stead, which person shall be
reasonably acceptable to Scripps.
5.11 ADDITIONAL AGREEMENTS; BEST EFFORTS. Subject to the terms and
conditions of this Agreement, including, without limitation, the proviso of
Section 5.4, each of the parties hereto agrees to use its best efforts to take,
or cause to be taken, all action and 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,
including, without limitation, cooperating fully with the other party hereto,
providing the other party hereto with any appropriate information and making all
necessary filings in connection with the Consents. In case at any time after
the Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, or to vest Scripps with full title to all
properties, assets, approvals, immunities and franchises of PCB, the proper
officers and directors of each party to this Agreement shall take all such
necessary action.
5.12 DISSENTING SHAREHOLDERS. Both PCB and Scripps agree that they
will not settle with any dissenting shareholders for a fair market value in
excess of the value set forth in the Notice of Approval sent pursuant to
Section 1301 of the CGCL, unless pursuant to the prior written approval of the
other or pursuant to a judicial or regulatory proceeding.
42
5.13 NASDAQ LISTING. Prior to December 31, 1998, Scripps shall file
materials with the Securities and Exchange Commission to register its shares of
Common Stock under Section 12(g) of the Exchange Act. In connection with such
registration, Scripps shall use its reasonable efforts to cause the shares of
Scripps Common Stock to be quoted on the Nasdaq National Market or the Nasdaq
SmallCap Market; provided, however, that PCB acknowledges that satisfaction of
the listing criteria for either the National Market or SmallCap Market is
subject to certain contingencies beyond the control of Scripps (including,
without limitation, satisfaction of Nasdaq's requirements for a minimum number
of "round lot" holders and the required number of Nasdaq members willing to act
as market makers).
5.14 RELEASE OF INTERIM FINANCIAL STATEMENTS. Within three weeks
following the end of the second month after the Valuation Date, Scripps shall
release unaudited interim financial statements that cover at least 30 days of
combined operations of PCB and Scripps and that otherwise satisfy the
requirements applicable to "pooling of interests" accounting treatment to permit
affiliates of Scripps and former affiliates of PCB to purchase or sell shares of
Scripps Common Stock.
5.15 INSURANCE. For a period of three years after the Effective Time,
Scripps shall maintain, with respect to claims arising from facts or events
which occurred before the Effective Time, officers' and directors' liability
insurance covering the officers and directors of PCB who are currently covered
(in their capacities as officers and directors) by PCB's existing officers' and
director' liability insurance policies, on terms substantially no less
advantageous to such officers and directors than such existing insurance.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction prior to the Effective Time of the following conditions:
(a) SHAREHOLDER APPROVAL. This Agreement and the consummation
of the transactions contemplated herein shall have been approved and adopted by
the affirmative vote of the holders of a majority of the outstanding shares of
PCB and Scripps Common Stock entitled to vote thereon. Shareholders holding not
more than 1.6% of the outstanding shares of PCB Common Stock shall be dissenting
shareholders under California law.
(b) OTHER APPROVALS. Other than the filing provided for by
Section 1.1, all authorizations, consents, orders or approvals of, or
declarations or filings with, and all expirations of waiting periods imposed by,
any Governmental Entity (collectively, the "CONSENTS") which are prescribed by
law as necessary for the consummation of the Merger and the other transactions
contemplated hereby, other than immaterial Consents the failure to obtain which
would have no material adverse effect on the consummation of the Merger or the
other transactions contemplated hereby, or on Scripps as the surviving
corporation, shall have been
43
filed, occurred or been obtained, as the case may be, and all such Consents
shall be in full force and effect.
(c) PERMITS. The CDFI Application shall have become effective
under the Applicable Laws and no stop order suspending the effectiveness of the
CDFI Application shall have been issued and no proceedings for that purpose
shall have been initiated or threatened by the CDFI. The FDIC shall have
approved the transactions contemplated herein, and no proceedings suspending
such approval shall have been initiated or threatened by the FDIC.
(d) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No order,
injunction or decree issued by any court or agency of competent jurisdiction or
other legal restraint or prohibition (an "INJUNCTION") preventing the
consummation of the Merger or any of the transactions contemplated hereby, shall
be in effect, nor shall any proceeding by any Governmental Entity seeking any
such Injunction be pending. No statute, rule, regulation, order, injunction or
decree shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits, restricts or makes illegal consummation of
the Merger.
(e) POOLING OF INTERESTS. Scripps shall have received a
letter, dated the Closing Date, addressed to Scripps from Price Waterhouse, LLP,
in response to a letter from Scripps summarizing the relevant facts and in form
and substance reasonably satisfactory to Scripps, a copy of which shall be
provided to PCB, to the effect that the Merger qualifies for "pooling of
interests" treatment for financial reporting purposes and that such accounting
treatment is in accordance with generally accepted accounting principles. Price
Waterhouse LLP and Scripps shall also have received from each of ▇.▇. ▇▇▇▇ LLP
and PCB a letter in form and substance satisfactory to Price Waterhouse LLP and
Scripps to the effect that ▇.▇. ▇▇▇▇ LLP and PCB is not aware of any fact
concerning PCB or any of its affiliates that would preclude Scripps from
accounting for the Merger by the "pooling of interests" method for financial
reporting purposes.
(f) NO BURDENSOME CONDITION. There shall not be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the merger or any of the transactions contemplated hereby,
by any Federal or state Governmental Entity which, in connection with the grant
of a Consent, imposes any condition or restriction upon PCB or Scripps which
would so materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement as to render inadvisable, in the
reasonable judgment of the Board of Directors of either Scripps or PCB, the
consummation of the Merger.
6.2 CONDITIONS TO OBLIGATIONS OF SCRIPPS. The obligation of Scripps
to effect the Merger is also subject to the satisfaction or waiver by Scripps
prior to the Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of PCB set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, except as otherwise
contemplated by this Agreement, and Scripps shall have received a certificate
signed on behalf of PCB by the President and by the Chief Financial Officer of
PCB to such effect,
44
provided, however, that notwithstanding anything herein to the contrary,
this Section 6.2(a) shall be deemed to have been satisfied even if such
representations or warranties are not true and correct unless the failure of
any of the representations or warranties to be so true and correct, in the
reasonable opinion of Scripps, would have or would be reasonably likely to
have, individually or in the aggregate, a material adverse effect on PCB or
upon the consummation of the transactions contemplated hereby.
(b) PERFORMANCE OF OBLIGATIONS OF PCB. PCB shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Scripps shall have
received a certificate signed on behalf of PCB by the President and by the Chief
Financial Officer of PCB to such effect.
(c) CONSENTS UNDER AGREEMENTS. PCB shall have obtained the
consent or approval of each person whose consent or approval shall be required
in order to permit the succession by Scripps pursuant to the Merger to any
obligation, right or interest of PCB under any loan or credit agreement, note,
mortgage, indenture, lease, license or other agreement or instrument, except
those for which failure to obtain such consents and approvals would not, in the
reasonable opinion of Scripps, individually or in the aggregate, have a material
adverse effect on PCB or upon the consummation of the transactions contemplated
hereby.
(d) TAX MATTERS. Scripps shall have received such advice as it
desires from ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich LLP, counsel to Scripps, dated the
Closing Date, 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
Code, and that Scripps and PCB will each be a party to that reorganization
within the meaning of Section 368(b) of the Code.
(e) LEGAL OPINION. Scripps shall have received the opinion of
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and ▇▇▇▇, LLP, counsel to PCB, dated the Closing Date, in
substantially the form attached hereto as EXHIBIT C.
(f) MATERIAL ADVERSE CHANGE. No materially adverse change
shall have occurred since March 31, 1998, in the business, financial condition,
results of operations or assets of PCB, taken as a whole, and PCB is not a party
to or, threatened with, and to the best of PCB's knowledge there is no
reasonable basis for, any legal action or other proceeding before any court, any
arbitrator of any kind or any government agency, which legal action or
proceeding in the reasonable judgment of Scripps, could materially adversely
affect PCB or its business, financial condition, results of operations or
assets.
(g) ABSENCE OF LEGAL IMPEDIMENT. No legal impediment to the
Merger shall have arisen in the reasonable opinion of Scripps and its counsel,
and no litigation, proceeding or investigation shall be pending or threatened
before any court or government agency relating to the transactions contemplated
by this Agreement and the Merger Agreement which affords a material basis in the
reasonable opinion of Scripps and its counsel, for a determination that it would
be inadvisable or inexpedient to continue to carry out the terms of, or to
attempt to consummate the transactions contemplated by, this Agreement or the
Merger Agreement.
45
(h) UNAUDITED FINANCIALS. Not later than two business days
prior to the Effective Date, PCB shall have furnished Scripps a copy of its most
recently prepared unaudited year-to-date consolidated financial statements,
including a balance sheet and year-to-date statement of income and statement of
cash flows of PCB.
(i) AFFILIATE AGREEMENTS. Scripps shall have received at least
thirty (30) days prior to the Effective Date from each person who, in the
opinion of Scripps's counsel and PCB's counsel, might be deemed to be an
affiliate of PCB or Scripps, a signed Affiliates Agreement.
(j) CLOSING DOCUMENTS. Scripps shall have received such
certificates and other closing documents as counsel for Scripps shall reasonably
request.
(k) OPINION OF COMPLIANCE AUDITOR. Scripps shall have reviewed
the actions taken to respond to recommendations made in connection with the most
recent compliance examination of PCB by the FDIC, which actions shall be
reasonably acceptable to Scripps's compliance officer.
(l) APPROVAL OF OPTION PLAN. Any required permits, approvals
of shareholders and regulatory authorities, effectiveness of registration
statements, or other requirements (or waivers thereof) applicable to amendment
of the Scripps Stock Option Plans to facilitate the assumption of PCB Options
shall have been obtained or occurred to the reasonable satisfaction of Scripps.
(m) PERFORMANCE TESTS. As of the Valuation Date, Closing Date
and the Effective Date, the financial statements of PCB shall (A) report amounts
that equal or exceed (i) total shareholders' equity of $6,800,000,
(ii) leverage, tier 1 and total risk-based capital ratios of 9.20%, 12.35% and
13.25%, respectively, (iii) total deposits of $60,000,000, including "core
deposits" (defined as all deposits other than brokered deposits), (iv) total
reserves for losses on OREO and the outstanding loans and leases, net of
recoveries, of $525,000 and 1.2% of outstanding loans and leases, and (B) have
less than $2,100,000 total nonperforming and classified loans, including
nonaccrual, past due, restructured and loans classified by PCB management or PCB
internal policy or procedure, any outside review examiner, accountant or any
bank regulatory agency as "Other Loans Specially Mentioned," "Special Mention,"
"Substandard," "Doubtful," or "Loss" or classified using categories or words
with similar import.
(n) TERMINATION OF CERTAIN AGREEMENTS AND ARRANGEMENTS. PCB
shall have obtained the agreement of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ to terminate his profit
sharing arrangement as currently in effect, pursuant to the terms of an
agreement approved by Scripps. PCB shall have given notice to effect the
termination by October 31, 1998 of the Data Processing Service Agreement entered
into with First National Bank, and any payments (including liquidated damages)
required to be paid to First National Bank pursuant to such termination shall
have been accrued or otherwise reflected in the financial statements of PCB as
of the Valuation Date. PCB shall have obtained the agreement of each party with
which PCB maintains a deferred compensation arrangement to restructure such
relationship so that either (i) all deferred compensation will be drawn and paid
to the beneficiary within ten years of the "normal
46
retirement date" or "expiration date" specified in such agreement, or (ii)
the accrual under such deferred compensation arrangement would be reduced to
5% per year following the Closing.
6.3 CONDITIONS TO OBLIGATIONS OF PCB. The obligation of PCB to effect
the Merger is also subject to the satisfaction or waiver by PCB prior to the
Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Scripps set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, except as otherwise
contemplated by this Agreement, and PCB shall have received a certificate signed
on behalf of Scripps by the President and by the Chief Financial Officer of
Scripps to such effect, provided, however, that notwithstanding anything herein
to the contrary, this Section 6.3(a) shall be deemed to have been satisfied even
if such representations or warranties are not true and correct unless the
failure of any of the representations or warranties to be so true and correct,
in the reasonable opinion of PCB, would have or would be reasonably likely to
have, individually or in the aggregate, a material adverse effect on Scripps or
upon the consummation of the transactions contemplated hereby.
(b) PERFORMANCE OF OBLIGATIONS OF SCRIPPS. Scripps shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and PCB shall have
received a certificate signed on behalf of Scripps by the President and by the
Chief Financial Officer of Scripps to such effect.
(c) CONSENTS UNDER AGREEMENTS. Scripps shall have obtained the
consent or approval of each person whose consent or approval shall be required
in connection with the transactions contemplated hereby, except those for which
failure to obtain such consents and approvals would not, in the reasonable
opinion of PCB, individually or in the aggregate, have a material adverse effect
on Scripps or upon the consummation of the transactions contemplated hereby.
(d) TAX MATTERS. PCB shall have received such advice as it
desires from ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and ▇▇▇▇ LLP, counsel to PCB, or from the
accountants of PCB, dated the Closing Date, 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 Code, and that PCB and Scripps will each be a
party to that reorganization within the meaning of Section 368(b) of the Code.
(e) LEGAL OPINION. PCB shall have received the opinion of ▇▇▇▇
▇▇▇▇ ▇▇▇▇ & Freidenrich LLP, counsel to Scripps, dated the Closing Date, in
substantially the form of EXHIBIT D attached thereto.
(f) MATERIAL ADVERSE CHANGE. No materially adverse change
shall have occurred since March 31, 1998, in the business, financial condition,
results of operations or assets of Scripps and Scripps is not a party to or,
threatened with, and to the best of Scripps's knowledge there is no reasonable
basis for, any legal action or other proceeding before any court,
47
any arbitrator of any kind or any government agency, which legal action or
proceeding in the reasonable judgment of PCB, could materially adversely
affect Scripps or its business, financial condition, results of operations or
assets.
(g) ABSENCE OF LEGAL IMPEDIMENT. No legal impediment to the
Merger shall have arisen in the reasonable opinion of PCB and its counsel, and
no litigation, proceeding or investigation shall be pending or threatened before
any court or government agency relating to the transactions contemplated by this
Agreement and the Merger Agreement which affords a material basis in the
reasonable opinion of PCB and its counsel, for a determination that it would be
inadvisable or inexpedient to continue to carry out the terms of, or to attempt
to consummate the transactions contemplated by, this Agreement or the Merger
Agreement.
(h) UNAUDITED FINANCIALS. Not later than five business days
prior to the Effective Date, Scripps shall have furnished PCB a copy of its most
recently prepared unaudited year-to-date consolidated financial statements,
including a balance sheet and year-to-date statement of income and statement of
cash flows of Scripps.
(i) AFFILIATE AGREEMENTS. PCB shall have received at least
thirty (30) days prior to the Effective Date from each person who, in the
opinion of PCB's counsel and Scripps's counsel, might be deemed to be an
affiliate of Scripps or PCB, a signed Affiliates Agreement.
(j) CLOSING DOCUMENTS. PCB shall have received such
certificates and other closing documents as counsel for PCB shall reasonably
request.
(k) APPROVAL OF OPTION PLAN. Any required permits, approvals
of shareholders and regulatory authorities, effectiveness of registration
statements, or other requirements applicable to amendment of the Scripps Stock
Option Plans to facilitate the issuance of Scripps Options upon cancellation of
PCB Options shall have been obtained or occurred to the reasonable satisfaction
of PCB.
(l) PERFORMANCE TESTS. As of the Valuation Date, Closing Date
and the Effective Date, the financial statement of Scripps shall (A) report
amounts that equal or exceed (i) total shareholders' equity of $33,000,000,
(ii) leverage, tier 1 and total risk-based capital ratios of 7.50%, 10.00% and
11.00%, respectively, (iii) total deposits of $350,000,000, including "core
deposits" (defined as all deposits other than brokered deposits), (iv) total
reserves for losses on OREO and the outstanding loans and leases, net of
recoveries, of $3,000,000 and 1.20% of outstanding loans and leases, and
(B) have less than $9,500,000 total nonperforming and classified loans,
including nonaccrual, past due, restructured and loans classified by Scripps
management or Scripps internal policy or procedure, any outside review examiner,
accountant or any bank regulatory agency as "Other Loans Specially Mentioned,"
"Special Mention," "Substandard," "Doubtful," or "Loss" or classified using
categories or words with similar import.
(m) BOARD REPRESENTATION. ▇▇. ▇▇▇▇▇▇▇▇▇ shall have been
elected to the Board of Directors of Scripps as of the Effective Date.
48
(n) FAIRNESS OPINION. PCB shall have received the opinion of
▇▇▇▇▇▇▇▇▇ & Associates dated as of the Closing Date in form and substance
satisfactory to PCB to the effect that the consideration to be received from
Scripps by PCB shareholders in exchange for their PCB Common Stock is fair from
a financial point of view to the PCB shareholders.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 TERMINATION. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval of the matters presented
in connection with the Merger by the shareholders of Scripps and PCB:
(a) by mutual consent of Scripps and PCB in a written
instrument, if the Board of Directors of each so determines by a vote of a
majority of the members of its entire Board;
(b) by either Scripps or PCB upon written notice to the other
party if (i) any Consent shall have been denied or not received or (ii) any
Governmental Entity of competent jurisdiction shall have issued a final
nonappealable order enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement;
(c) by either Scripps or PCB if the Merger shall not have been
consummated on or before October 10, 1998;
(d) by either Scripps or PCB (provided that the terminating
party is not in material breach of any of its obligations under Article V) if
any approval of the shareholders of Scripps or of PCB required for the
consummation of the Merger shall not have been obtained by reason of the failure
to obtain the required vote at a duly held meeting of shareholders or at any
adjournment or postponement thereof;
(e) by either Scripps or PCB if there shall have been a
material breach of any of the representations or warranties set forth in this
Agreement on the part of the other party, which breach by its nature cannot be
cured prior to the Closing and which breach would, in the reasonable opinion of
the non-breaching party, individually or in the aggregate, have, or be
reasonably likely to have, a material adverse effect on the breaching party or
upon the consummation of the transactions contemplated hereby;
(f) by either Scripps or PCB if there shall have been a
material breach of any of the covenants or agreements set forth in this
Agreement on the part of the other party, which breach shall not have been cured
within twenty business days following receipt by the breaching party of written
notice of such breach from the other party hereto; or
(g) (i) by Scripps, if the Board of Directors of PCB does not
recommend in the Proxy Statement that PCB's shareholders approve and adopt this
Agreement, or if after recommending in the Proxy Statement that shareholders
approve and adopt this Agreement, the
49
Board of Directors of PCB shall have withdrawn, modified or amended such
recommendation in any respect materially adverse to Scripps or (ii) by PCB,
if the Board of Directors of Scripps does not recommend in the Proxy
Statement that Scripps's shareholders approve and adopt this Agreement, or if
after recommending in the Proxy Statement that shareholders approve and adopt
this Agreement, the Board of Directors of Scripps shall have withdrawn,
modified or amended such recommendation in any respect materially adverse to
PCB.
7.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Scripps or PCB as provided in Section 7.1, this Agreement
shall forthwith become void and have no effect except (i) with respect to
Sections 5.6 and 7.2 and (ii) no party shall be relieved or released from any
liabilities or damages arising out of the willful breach by the other party of
any provision of this Agreement. The Confidentiality Agreement dated as of
February 20, 1998 shall survive any termination of this Agreement.
7.3 AMENDMENT. This Agreement may be amended by the parties hereto,
by action taken or authorized by their respective Boards of Directors, at any
time before or after approval of the matters presented in connection with the
Merger by the shareholders of Scripps or PCB, provided, however, that after any
such approval, no amendment shall be made which by law requires further approval
by such shareholders, without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
7.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
7.5 COMPENSATION TO SCRIPPS. Upon the occurrence of any of the
following events, PCB shall promptly pay to Scripps, upon written request, One
Hundred Thousand Dollars ($100,000), which the parties hereto agree and
stipulate (i) is reasonable and full liquidated damages and reasonable
compensation to Scripps for its involvement in the transactions contemplated by
this Agreement to the date of such request, (ii) is not a penalty or forfeiture,
and (iii) will not affect in any manner the provisions of Section 5.9, which
provision shall remain in full force and effect after any termination of this
Agreement, and PCB shall have no further obligations or liabilities of any kind
under this Agreement, and by accepting such payment from PCB, Scripps shall have
no further obligations of any kind under the Agreement:
(a) at any time prior to a termination of this Agreement under
Section 7.1 hereof, the Board of Directors of PCB approves a transaction, or PCB
executes a letter of intent or other agreement or documents pursuant to which
any person, corporation, partnership or other entity would acquire 10% or more
of the outstanding shares of PCB Common Stock or if the
50
Board of Directors of PCB recommends the acceptance by the holders of PCB
Common Stock of a tender offer having the same result; or
(b) this Agreement is terminated by Scripps pursuant to
Section 7.1(e) or Section 7.1(f) hereof, unless, at the time of such
termination, Scripps is in material breach of any material condition, warranty,
representation or agreement hereof; or
(c) this Agreement is terminated pursuant to Section 7.1(d)
hereof by reason of the failure of the PCB shareholders to approve the
transactions contemplated hereby and, on or prior to one year thereafter, the
Board of Directors of PCB approves a transaction, or PCB executes a letter of
intent or other agreement or documents pursuant to which any person,
corporation, partnership or other entity would acquire 10% or more of the
outstanding shares of PCB Common Stock or if the Board of Directors of PCB
recommends the acceptance by the holders of PCB Common Stock of a tender offer
having the same result.
7.6 COMPENSATION TO PCB. Upon the occurrence of any of the following
events, Scripps shall promptly pay to PCB, upon written request, One Hundred
Thousand Dollars ($100,000), which the parties hereto agree and stipulate (i) is
reasonable and full liquidated damages and reasonable compensation to PCB for
its involvement in the transactions contemplated by this Agreement to the date
of such request, (ii) is not a penalty or forfeiture, and (iii) will not affect
in any manner the provisions of Section 5.9, which provision shall remain in
full force and effect after any termination of this Agreement, and Scripps shall
have no further obligations or liabilities of any kind under this Agreement and,
by accepting such payment from Scripps, PCB shall have no further obligations of
any kind under the Agreement:
(a) at any time prior to a termination of this Agreement under
Section 7.1 hereof, the Board of Directors of Scripps approves a transaction, or
Scripps executes a letter of intent or other agreement or documents pursuant to
which any person, corporation, partnership or other entity would acquire 10% or
more of the outstanding shares of Scripps Common Stock or if the Board of
Directors of Scripps recommends the acceptance by the holders of Scripps Common
Stock of a tender offer having the same result; or
(b) this Agreement is terminated by PCB pursuant to
Section 7.1(e) or Section 7.1(f) hereof, unless, at the time of such
termination, PCB is in material breach of any material condition, warranty,
representation or agreement hereof; or
(c) this Agreement is terminated pursuant to Section 7.1(d)
hereof by reason of the failure of the Scripps shareholders to approve the
transactions contemplated hereby and, on or prior to one year thereafter, the
Board of Directors of Scripps approves a transaction, or Scripps executes a
letter of intent or other agreement or documents pursuant to which any person,
corporation, partnership or other entity would acquire 10% or more of the
outstanding shares of Scripps Common Stock or if the Board of Directors of
Scripps recommends the acceptance by the holders of Scripps Common Stock of a
tender offer having the same result.
51
ARTICLE VIII
GENERAL PROVISIONS
8.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. 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,
including, without limitation, Sections 5.7, 5.8, 5.9, 5.10, 5.11, 5.12, 5.13,
5.14, 5.14 and 5.15.
8.2 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to Scripps, to:
Scripps Bank
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
and
(b) if to PCB, to:
Pacific Commerce Bank
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
52
with a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇ ▇▇▇▇▇▇, #▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
8.3 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and heading contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation." The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available. The phrases "the date of this
Agreement," "the date hereof" and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to April 22, 1998.
8.4 COUNTERPARTS. This Agreement may be executed in counterparts, all
of which shall be considered one and the same agreement and shall become
effective when 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.
8.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES; RIGHTS OF
OWNERSHIP. This Agreement (including the documents and the instruments referred
to herein) (a) constitutes the entire agreement and supersedes all prior
agreements (except for the Confidentiality Agreement between Scripps and PCB
dated February 20, 1998, which shall remain in full force and effect and survive
the execution of this Agreement) and understandings, both written and oral,
among the parties with respect to the subject matter hereof, and (b) except as
provided in Section 5.10, is not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder. The parties hereby
acknowledge that, except as otherwise hereinafter agreed to in writing, no party
shall have the right to acquire or shall be deemed to have acquired shares of
common stock of the other party pursuant to the Merger until consummation
thereof.
8.6 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.
8.7 ENFORCEMENT OF AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
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 United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
53
8.8 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.
8.9 PUBLICITY. Except as otherwise required by the Applicable Laws,
so long as this Agreement is in effect, the publication of any press release or
other public announcement with respect to the transactions contemplated by this
Agreement shall be made jointly upon the mutual consent of the parties.
8.10 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
ATTORNEYS' FEES. If legal action or other proceeding is brought
for enforcement of this Agreement, or because of an alleged dispute, breach,
default or misrepresentation in connection with any of the provisions of this
Agreement, the successful or prevailing party or parties shall be entitled to
reasonable attorneys' fees and other costs incurred in that action or proceeding
in addition to any other relief to which it or they may be entitled.
54
IN WITNESS WHEREOF, Scripps and PCB have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first above written.
SCRIPPS BANK,
a California corporation
By: /s/
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Title: Chairman
----------------------------
PACIFIC COMMERCE BANK,
a California corporation
By: /s/
----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, M.D.
-----------------------------
Title: Chairman
----------------------------
55
INDEX OF DEFINED TERMS
For purposes of the Agreement (including this index):
ADJUSTED BOOK VALUE. "Adjusted Book Value" shall have the meaning set
forth in Section 2.1(c)of the Agreement.
ADJUSTMENT FACTORS. "Adjustment Factors" shall have the meaning set
forth in Section 2.1(c) of the Agreement.
AFFILIATES AGREEMENT. "Affiliates Agreement" shall have the meaning set
forth in Section 5.5.
AGREEMENTS. "Agreements" shall have the meaning set forth in the first
paragraph.
APPLICABLE LAWS. "Applicable Laws" shall have the meaning set forth in
Section 3.1(g) of the Agreement.
APPLICATIONS. "Applications" shall have the meaning set forth in
Section 3.1(dd) of the Agreement.
BENEFIT PLANS. "Benefit Plans" shall have the meaning set forth in
Section 3.1(n) of the Agreement.
CDFI. "CDFI" shall have the meaning set forth in Section 1.3(b) of the
Agreement.
CDFI APPLICATION. "CDFI Application" shall have the meaning set forth in
Section 3.1(c)(iii) of the Agreement.
CERTIFICATE. "Certificate " shall have the meaning set forth in
Section 2.1(b) of the Agreement.
CFC. "CFC" shall have the meaning set forth in Section 1.1 of the
Agreement.
CGCL. "CGCL" shall have the meaning set forth in Section 1.1 of the
Agreement.
CLOSING. "Closing" shall have the meaning set forth in Section 1.2 of
the Agreement.
CLOSING DATE. "Closing Date" shall have the meaning set forth in
Section 1.2 of the Agreement.
CODE. "Code" shall have the meaning set forth in the Recitals.
CONSENTS. "Consents" shall have the meaning set forth in Section 6.1(b)
of the Agreement.
CONSTITUENT CORPORATIONS. "Constituent Corporations" shall have the
meaning set forth in Section 1.3(a) of the Agreement.
i
CONVERSION NUMBER. "Conversion Number" shall have the meaning set forth
in Section 2.1(b) of the Agreement.
DEEMED SCRIPPS SHARES. "Deemed Scripps Shares" shall have the meaning
set forth in Section 5.8(a) of the Agreement.
DILUTED ADJUSTED BOOK VALUE PER SHARE. "Diluted Adjusted Book Value Per
Share" shall have the meaning set forth in Section 2.1(c) of the Agreement.
DISSENTING PCB SHAREHOLDERS. "Dissenting PCB Shareholders" shall have
the meaning set forth in Section 2.3 of the Agreement.
EFFECTIVE DATE. The "Effective Date" shall be the date on which the
Effective Time occurs.
EFFECTIVE TIME. "Effective Time" shall have the meaning set forth in
Section 1.1 of the Agreement.
EPA. "EPA" shall have the meaning set forth in Section 3.1(t)(i) of the
Agreement.
ERISA. "ERISA" shall have the meaning set forth in Section 3.1(n) of the
Agreement.
EXCHANGE ACT. "Exchange Act" shall have the meaning set forth in
Section 3.1(t)(i) of the Agreement.
EXCHANGE AGENT. "Exchange Agent" shall have the meaning set forth in
Section 2.2(a) of the Agreement.
EXCHANGE FUND. "Exchange Fund" shall have the meaning set forth in
Section 2.2(a) of the Agreement.
FDIC. "FDIC" shall have the meaning set forth in Section 1.3(b) of the
Agreement.
FINAL PCBDABVPS. "Final PCBDABVPS" shall have the meaning set forth in
Section 2.1(c) of the Agreement.
GOVERNMENTAL ENTITY. "Governmental Entity" shall have the meaning set
forth in Section 3.1(c)(iii) of the Agreement.
HAZARDOUS MATERIAL. "Hazardous Material" shall have the meaning set
forth in Section 3.1(c)(vi) of the Agreement.
INCENTIVE STOCK OPTIONS. "incentive stock options" shall have the
meaning set forth in Section 5.8(a) of the Agreement.
INJUNCTION. "Injunction" shall have the meaning set forth in
Section 6.1(d) of the Agreement.
ii
INTELLECTUAL PROPERTY RIGHTS. "Intellectual Property Rights" shall have
the meaning set forth in Section 3.1(y) of the Agreement.
IRS. "IRS" shall have the meaning set forth in Section 3.1(i) of the
Agreement.
LOAN PROPERTY. "Loan Property" shall have the meaning set forth in
Section 3.1(t)(vi) of the Agreement.
MADE AVAILABLE. "made available" shall have the meaning set forth in
Section 8.3 of the Agreement.
MATERIAL. "material" shall have the meaning set forth in Section 3.1(a)
of the Agreement.
MATERIAL ADVERSE EFFECT. "material adverse effect" shall have the
meaning set forth in Section 3.1(a) of the Agreement.
MERGER. "Merger" shall have the meaning set forth in the Recitals.
MERGER AGREEMENT. "Merger Agreement" shall have the meaning set forth in
the Recitals.
ORDINARY COURSE OF BUSINESS. "Ordinary Course of Business" shall have
the meaning as set forth in Section 4.1(a) of the Agreement.
PCB. "PCB" shall have the meaning set forth in the first paragraph of
the Agreement.
PCB ARTICLES. "PCB Articles" shall have the meaning set forth in
Section 3.1(c)(ii) of the Agreement.
PCB BENEFIT PLANS. "PCB Benefit Plans" shall have the meaning set forth
in Section 3.1(n) of the Agreement.
PCB DISCLOSURE SCHEDULE. "PCB Disclosure Schedule" shall have the
meaning set forth in Section 3.1(b)(iii) of the Agreement.
PCB FILINGS. "PCB Filings" shall have the meaning set forth in
Section 3.1(d) of the Agreement.
PCB STOCK OPTION PLAN. "PCB Stock Option Plan" shall have the meaning
set forth in Section 3.1(b)(i) of the Agreement.
PCB STOCK OPTIONS. "PCB Stock Options" shall have the meaning set forth
in Section 5.8(a) of the Agreement.
PCB PERMITS. "PCB Permits" shall have the meaning set forth in
Section 5.8(a) of the Agreement.
iii
PARTICIPATION FACILITY. "Participation Facility" shall have the meaning
set forth in Section 3.1(c)(vi) of the Agreement.
REGULATORY AGENCIES. "Regulatory Agencies" shall have the meaning set
forth in Section 3.1(d) of the Agreement.
SECURITIES ACT. "Securities Act" shall have the meaning set forth in
Section 2.2(d) of the Agreement.
SCRIPPS. "Scripps" shall have the meaning set forth in the first
paragraph of the Agreement.
SCRIPPS DISCLOSURE SCHEDULE. "Scripps Disclosure Schedule" shall have
the meaning set forth in Section 3.2(b)(i) of the Agreement.
SCRIPPS FILINGS. "Scripps Filings" shall have the meaning set forth in
Section 3.2(d) of the Agreement.
SCRIPPS STOCK PLANS. "Scripps Stock Plans" shall have the meaning set
forth in Section 3.2(b)(i) of the Agreement.
SUBSIDIARY. "Subsidiary" shall have the meaning set forth in
Section 3.1(o) of the Agreement.
TAKEOVER PROPOSAL. "takeover proposal" shall have the meaning set forth
in Section 4.1(e) of the Agreement.
TAX. "tax" shall have the meaning set forth in Section 3.1(i) of the
Agreement.
TAX RETURN. "tax return" shall have the meaning set forth in
Section 3.1(i) of the Agreement.
THE DATE HEREOF. "the date hereof" shall have the meaning set forth in
Section 8.3 of the Agreement.
THE DATE OF THIS AGREEMENT. "the date of this agreement" shall have the
meaning set forth in Section 8.3 of the Agreement.
UNFUNDED LIABILITIES FACTOR. "Unfunded Liabilities Factor" shall have
the meaning set forth in Section 2.1(c) of the Agreement.
VALUATION DATE. "Valuation Date" shall have the meaning set forth in
Section 2.1(c) of the Agreement.
VIOLATION. "Violation" shall have the meaning set forth in
Section 3.1(c)(ii) of the Agreement.
iv
VOTING DEBT. "Voting Debt" shall have the meaning set forth in
Section 3.1(b)(ii) of the Agreement.
v