1
EXHIBIT 2
2
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PLAN AND AGREEMENT OF REORGANIZATION AND MERGER
BETWEEN
WEST COAST BANCORP,
HB ACQUISITION CORPORATION,
AND
VANCOUVER BANCORP
==================================================================
DATED AS OF FEBRUARY 15, 1996
3
TABLE OF CONTENTS
Page
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SECTION 1. TERMS OF TRANSACTION . . . . . . . . . . . . . . . . . . . 2
1.1. Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2.1. Closing of the Merger. . . . . . . . . . . . . . . . . . . 3
1.2.2. The Bank . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3. Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3.1. Amount of Consideration . . . . . . . . . . . . . . . . . 3
1.3.2. Form of Consideration . . . . . . . . . . . . . . . . . . 4
1.3.3. Average Closing Price . . . . . . . . . . . . . . . . . . 4
1.3.4. Daily Sales Price . . . . . . . . . . . . . . . . . . . . 4
1.3.5. No Fractional Shares . . . . . . . . . . . . . . . . . . . 4
1.3.6. Effect on HB Shares . . . . . . . . . . . . . . . . . . . 4
1.3.7. Options . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.3.8. Certificates . . . . . . . . . . . . . . . . . . . . . . . 5
1.4. Payment to Dissenting Shareholders . . . . . . . . . . . . . . . . 6
1.5. Alternative Structures . . . . . . . . . . . . . . . . . . . . . . 6
1.6. Letter of Transmittal . . . . . . . . . . . . . . . . . . . . . . 7
1.7. Undelivered Certificates . . . . . . . . . . . . . . . . . . . . . 7
1.8. Stock Option Agreement . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2. CLOSING OF THE TRANSACTION . . . . . . . . . . . . . . . . 7
2.1. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2. Events of Closing . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3. Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . 8
3.1. Representations and Warranties of WCB, HB, and VB . . . . . . . . 8
3.1.1. Corporate Organization and Qualification . . . . . . . . . 8
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3.1.2. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 9
3.1.3. Capital Stock . . . . . . . . . . . . . . . . . . . . . . 9
3.1.4. Corporate Authority . . . . . . . . . . . . . . . . . . . 12
3.1.5. Reports and Financial Statements . . . . . . . . . . . . . 12
3.1.6. Absence of Certain Events and Changes . . . . . . . . . . 15
3.1.7. Material Agreements . . . . . . . . . . . . . . . . . . . 15
3.1.8. Knowledge as to Conditions . . . . . . . . . . . . . . . . 16
3.1.9. Brokers and Finders . . . . . . . . . . . . . . . . . . . 16
3.2. Additional Representations and Warranties of VB . . . . . . . . . 16
3.2.1. Governmental Filings; No Violations . . . . . . . . . . . 16
3.2.2. Asset Classification . . . . . . . . . . . . . . . . . . . 17
3.2.3. Properties . . . . . . . . . . . . . . . . . . . . . . . . 17
3.2.4. Compliance with Laws . . . . . . . . . . . . . . . . . . . 18
3.2.5. Litigation . . . . . . . . . . . . . . . . . . . . . . . . 19
3.2.6. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.2.7. Insurance . . . . . . . . . . . . . . . . . . . . . . . . 21
3.2.8. Labor Matters . . . . . . . . . . . . . . . . . . . . . . 21
3.2.9. Employee Benefits . . . . . . . . . . . . . . . . . . . . 21
3.2.10. Environmental Matters . . . . . . . . . . . . . . . . . . 25
3.3. Exceptions to Representations and Warranties . . . . . . . . . . . 27
3.3.1. Disclosure of Exceptions . . . . . . . . . . . . . . . . . 27
3.3.2. Nature of Exceptions . . . . . . . . . . . . . . . . . . . 27
SECTION 4. CONDUCT AND TRANSACTIONS BEFORE CLOSING . . . . . . . . . 28
4.1. Conduct of VB's Business Before Closing . . . . . . . . . . . . . 28
4.1.1. Availability of VB's Books, Records and Properties . . . . 28
4.1.2. Ordinary and Usual Course . . . . . . . . . . . . . . . . 28
4.1.3. Conduct Regarding Representations and Warranties . . . . . 29
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4.1.4. Maintenance of Properties . . . . . . . . . . . . . . . . 29
4.1.5. Preservation of Business Organization . . . . . . . . . . 30
4.1.6. Senior Management . . . . . . . . . . . . . . . . . . . . 30
4.1.7. Compensation . . . . . . . . . . . . . . . . . . . . . . . 30
4.1.8. Update of Financial Statements . . . . . . . . . . . . . . 30
4.1.9. No Solicitation . . . . . . . . . . . . . . . . . . . . . 31
4.1.10. Status of Title/Leasehold Interests . . . . . . . . . . . 31
4.1.11. Review of Loans . . . . . . . . . . . . . . . . . . . . . 31
4.2. Registration Statement or Fairness Hearing . . . . . . . . . . . . 31
4.2.1. Registration Statement . . . . . . . . . . . . . . . . . . 32
4.2.2. Fairness Hearing . . . . . . . . . . . . . . . . . . . . . 33
4.3. Submission to Regulatory Authorities . . . . . . . . . . . . . . . 34
4.4. Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.5. Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.6. Further Actions . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.7. Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.8. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.9. Affiliate Letters . . . . . . . . . . . . . . . . . . . . . . . . 35
4.10. Update of Financial Statements . . . . . . . . . . . . . . . . . . 35
4.11. Availability of WCB's Books, Records and Properties. . . . . . . . 36
4.12. VB Debt Outstanding. . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5. APPROVALS AND CONDITIONS . . . . . . . . . . . . . . . . . 36
5.1. Required Approvals . . . . . . . . . . . . . . . . . . . . . . . . 36
5.2. Conditions to Obligations of WCB and HB . . . . . . . . . . . . . 36
5.2.1. Representations and Warranties . . . . . . . . . . . . . . 36
5.2.2. Compliance . . . . . . . . . . . . . . . . . . . . . . . . 37
5.2.3. No Material Adverse Effect . . . . . . . . . . . . . . . . 37
5.2.4. Financial Condition . . . . . . . . . . . . . . . . . . . 37
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5.2.5. Release of Pledge . . . . . . . . . . . . . . . . . . . . 38
5.2.6. No Change in Loan Review . . . . . . . . . . . . . . . . . 38
5.2.7. No Governmental Proceedings . . . . . . . . . . . . . . . 38
5.2.8. Approval by Counsel . . . . . . . . . . . . . . . . . . . 38
5.2.9. Receipt of Title Policy . . . . . . . . . . . . . . . . . 38
5.2.10. Corporate and Shareholder Action . . . . . . . . . . . . . 38
5.2.11. Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . 38
5.2.12. Opinion of Counsel . . . . . . . . . . . . . . . . . . . . 39
5.2.13. Cash Paid . . . . . . . . . . . . . . . . . . . . . . . . 39
5.2.14. Affiliate Letters . . . . . . . . . . . . . . . . . . . . 39
5.2.15. Registration Statement/Fairness Hearing . . . . . . . . . 40
5.2.16. Consents . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.2.17. Fairness Opinion . . . . . . . . . . . . . . . . . . . . . 40
5.2.18. VB Director to Serve on WCB Board . . . . . . . . . . . . 40
5.2.19. Accounting Treatment . . . . . . . . . . . . . . . . . . . 40
5.2.20. Solicitation of Employees . . . . . . . . . . . . . . . . 40
5.2.21. Other Matters . . . . . . . . . . . . . . . . . . . . . . 40
5.3. Conditions to VB's Obligations . . . . . . . . . . . . . . . . . . 41
5.3.1. Representations and Warranties . . . . . . . . . . . . . . 41
5.3.2. Compliance . . . . . . . . . . . . . . . . . . . . . . . . 41
5.3.3. No Material Adverse Effect . . . . . . . . . . . . . . . . 41
5.3.4. No Governmental Proceedings . . . . . . . . . . . . . . . 41
5.3.5. Corporate and Shareholder Action . . . . . . . . . . . . . 41
5.3.6. Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . 41
5.3.7. Opinion of Counsel . . . . . . . . . . . . . . . . . . . . 41
5.3.8. Cash Paid . . . . . . . . . . . . . . . . . . . . . . . . 42
5.3.9. Registration Statement . . . . . . . . . . . . . . . . . . 42
5.3.10. VB Director to Serve on WCB Board . . . . . . . . . . . . 43
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5.3.11. Approval by Counsel . . . . . . . . . . . . . . . . . . . 43
5.3.12. Other Matters . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6. DIRECTORS, OFFICERS AND EMPLOYEES . . . . . . . . . . . . 43
6.1. Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.2. Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . 43
6.3. Director and Ex-officio Member Appointed . . . . . . . . . . . . . 43
6.4. Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.5. Employee Benefit Issues . . . . . . . . . . . . . . . . . . . . . 44
6.5.1. Comparability of Benefits . . . . . . . . . . . . . . . . 44
6.5.2. Transfer or Merger of Group Plan . . . . . . . . . . . . . 44
6.5.3. No Contract Created . . . . . . . . . . . . . . . . . . . 44
SECTION 7. TERMINATION OF AGREEMENT AND ABANDONMENT
OF TRANSACTION . . . . . . . . . . . . . . . . . . . . . 44
7.1. Termination by Reason of Lapse of Time . . . . . . . . . . . . . . 44
7.2. Other Grounds for Termination . . . . . . . . . . . . . . . . . . 45
7.2.1. Mutual Consent . . . . . . . . . . . . . . . . . . . . . . 45
7.2.2. Conditions of VB Not Met . . . . . . . . . . . . . . . . . 45
7.2.3. VB Fails to Recommend Stockholder Approval or
Triggering Event Occurs . . . . . . . . . . . . . . . . . 45
7.2.4. Conditions of WCB or HB Not Met . . . . . . . . . . . . . 45
7.2.5. Decline in Value of WCB Stock . . . . . . . . . . . . . . 45
7.2.6. Impracticability . . . . . . . . . . . . . . . . . . . . . 47
7.3. Cost Allocation Upon Termination . . . . . . . . . . . . . . . . . 48
SECTION 8. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 48
8.1. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.2. Waivers and Extensions . . . . . . . . . . . . . . . . . . . . . . 48
8.3. General Interpretation . . . . . . . . . . . . . . . . . . . . . . 49
8.4. Construction and Execution in Counterparts . . . . . . . . . . . . 49
8.5. Survival of Representations, Warranties, and Covenants . . . . . . 49
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8.6. Attorneys' Fees and Costs . . . . . . . . . . . . . . . . . . . . 49
8.7. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.8. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.9. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9. AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . 50
9.1. Board Action . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
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SCHEDULES:
SCHEDULE 1 Exceptions to Representations and Warranties
SCHEDULE 2 Offices
SCHEDULE 3 Subsidiaries
SCHEDULE 4 WCB and VB Stock Plans
SCHEDULE 5 Material Contracts
SCHEDULE 6 VB's Required Third Party Consents
SCHEDULE 7 Asset Classification List
SCHEDULE 8 VB's Property Encumbrances
SCHEDULE 9 VB's and the Bank's Offices and Branches
SCHEDULE 10 VB's Compliance with Laws
SCHEDULE 11 VB's Litigation Disclosure
SCHEDULE 12 VB's and The Bank's Insurance Policies
SCHEDULE 13 VB's Employee Benefit Plans
SCHEDULE 14 Index Group
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INDEX OF
DEFINITIONS
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TERMS SECTION
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Acquisition Proposal 7.2.5
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Agreement Intro. Paragraph
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Asset Classification 3.2.2
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Average Closing Price 1.3.3
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Bank Recital A
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BHCA Recital A
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Closing 1.2.1
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Combined Corporation Recital B.1
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Compensation Plans 3.2.9.(b)
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Continuing Employees 6.4
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Contracts 3.2.1.(b)
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Core Deposits 5.2.4.(b)
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Daily Sales Price 1.3.4
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Determination Date 7.2.5.(a)
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Dissenting Shares 1.4
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Effective Date 2.1
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Employees 3.2.9.(b)
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Environmental Laws 3.2.10.(a)(2)
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ERISA 3.2.9
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ERISA Affiliate 3.2.9.(d)
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ESI Plan 3.2.9.(j)
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Exchange Act 3.1.5.(b)
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Exchange Agent 1.3.8.(a)
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Executive Officer 3.1.5.(e)
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FAS 5.2.4.(a)
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FDIA 3.1.2.(b)
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FDIC 3.1.2.(b)
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Federal Reserve Board Recital D
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TERMS SECTION
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Financial Statements 3.1.5.(d)(1)
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GAAP 3.1.5.(d)
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Governmental Entity 3.2.1.(a)
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Hazardous Substances 3.2.10.(a)(3)
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Hearing 4.2.2.(a)(1)
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HB Intro. Paragraph
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Index Differential 7.2.5.(d)(2)
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Index Group 7.2.5.(d)(3)
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Index Price 7.2.5.(d)(1)
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IRC Recital H
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Liens 3.1.3.(a)(5)
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Material Adverse Effect 3.1.6
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Merger Recital B
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Modified Average Closing Price 7.2.5.(a)(1)
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Oregon Director 4.2.2.(a)(1)
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Pension Plan 3.2.9.(c)
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Plan of Exchange 4.2.2.(a)(2)
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Plan or Plans 3.2.9.(a)
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Postponed Effective Date 7.2.5.(b)
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Property 4.1.10
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Prospectus/Proxy Statement 4.2.1.(a)(1)
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Proxy/Disclosure Statement 4.2.2.(a)(3)
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Purchase Price 1.3.1
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Registration Statement 4.2.1.(a)(1)
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Regulatory Approvals Recital D
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Reports 3.1.5.(b)
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SEC 3.1.5.(a)
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Securities Act 3.1.5.(b)
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Securities Laws 3.1.5.(b)
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Stock Option Agreement Recital G
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Subject Property 3.2.10.(a)(1)
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TERMS SECTION
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Subsequent VB/Bank Financial Statements 3.1.5.(d)(5)
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Subsequent WCB Financial Statements 3.1.5.(d)(3)
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Tax 3.2.6
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Termination Date 2.1
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Transaction 1.1
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VB Intro. Paragraph
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VB/Bank Financial Statements 3.1.5.(d)(4)
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VB Options 1.3.7
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VB Stock Plans 3.1.3.(b)(2)
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WCB Intro. Paragraph
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WCB Common Stock 3.1.3.(a)(1)
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WCB Financial Statements 3.1.5.(d)(2)
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WCB Preferred Stock 3.1.3.(a)(1)
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WCB Shares 1.3.2
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WCB Stock Plans 3.1.3.(a)(2)
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PLAN AND AGREEMENT OF REORGANIZATION AND MERGER
BETWEEN
WEST COAST BANCORP, HB ACQUISITION CORPORATION,
AND
VANCOUVER BANCORP
This Plan and Agreement of Reorganization and Merger ("Agreement"),
dated as of February 15, 1996, is between WEST COAST BANCORP ("WCB"), an Oregon
corporation, HB ACQUISITION CORPORATION ("HB"), a Washington corporation, and
VANCOUVER BANCORP ("VB"), a Washington corporation.
PREAMBLE
The management of WCB and VB believe that the merger of VB with and
into HB, on the terms and conditions set forth in this Agreement, is in the
best interests of the stockholders of WCB and VB.
RECITALS
A. THE PARTIES. WCB is a corporation duly organized and validly existing
under Oregon law and is a registered bank holding company under the
Bank Holding Company Act of 1956, as amended ("BHCA"). WCB's
principal offices are located in Lake Oswego, Oregon. WCB owns all of
the outstanding shares of common stock of HB, The Bank of Newport, The
Commercial Bank, Valley Commercial Bank and West Coast Mortgage, Inc.
HB is a corporation duly organized and validly existing under
Washington law. HB's principal offices are located in Seattle,
Washington. VB is a corporation duly organized and validly existing
under Washington law and is a registered bank holding company under
the BHCA. VB's principal offices are located in Vancouver,
Washington. VB owns all of the outstanding shares of common stock of
the Bank of Vancouver ("Bank").
B. THE MERGER. At the Effective Date, the following will occur:
1. VB will merge with and into HB ("Merger") and HB will be the
surviving corporation under the name HB ("Combined
Corporation").
2. Except as otherwise provided in this Agreement, the
outstanding shares of VB Common Stock will be converted into
the right to receive shares of WCB Common Stock.
C. BOARD APPROVALS. The respective boards of directors of WCB, HB, and
VB have approved this Agreement and authorized its execution and
delivery.
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D. OTHER APPROVALS. The Merger is subject to:
1. satisfaction of the conditions described in this Agreement;
2. approval by the shareholders of VB;
3. approval by WCB as the sole shareholder of HB; and
4. approval or acquiescence, as appropriate, by (i) the Board of
Governors of the Federal Reserve System ("Federal Reserve
Board") and (ii) the Director of the Washington Department of
Financial Institutions (collectively, "Regulatory Approvals").
E. EMPLOYMENT AGREEMENT. WCB has entered into an employment agreement
with ▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President and Chief Executive Officer of the
Bank, which will take effect on the Effective Date.
F. DIRECTOR NONCOMPETITION AGREEMENT. Each Director of VB and the Bank's
board of directors has signed a Director Noncompetition Agreement.
These noncompetition agreements will take effect on the Effective
Date.
G. STOCK OPTION AGREEMENT. As an inducement to and condition of WCB's
execution of this Agreement, VB has approved the grant of an option to
WCB under the Stock Option Agreement, as provided in Subsection 1.8.
H. INTENTION OF THE PARTIES. The parties intend the Merger to qualify,
for accounting purposes, as a "pooling of interests." The parties
intend the Merger to qualify, for federal income tax purposes, as a
tax-free reorganization under Section 368 of the Internal Revenue Code
of 1986, as amended ("IRC").
AGREEMENT
In consideration of the mutual promises set forth in this Agreement,
WCB, HB, and VB agree as follows:
SECTION 1.
TERMS OF TRANSACTION
1.1. TRANSACTION. Subject to the terms and conditions set forth in
this Agreement and in the other documents referred to in this
Agreement, VB will merge with and into HB in the Merger. The term
"Transaction" means the Merger transaction contemplated by this
Agreement, subject to any modifications WCB elects in accordance with
Subsection 1.5.
1.2. MERGER. On the Effective Date, VB will merge with and into
HB, with HB being the surviving corporation ("Combined Corporation"),
in accordance with the provisions of, and with
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the effect provided in RCW Title 23B. On the Effective Date, the
articles of incorporation and bylaws of the Combined Corporation will
be the articles of incorporation and bylaws of HB in effect immediately
before the Effective Date. On the Effective Date, the directors and
officers of HB will become the directors and officers of the Combined
Corporation. On the Effective Date, HB's shares then issued and
outstanding will become issued and outstanding shares of the Combined
Corporation. The Combined Corporation's name will be HB, and VB's
principal office before the Merger will be the Combined Corporation's
principal office.
1.2.1. CLOSING OF THE MERGER. Closing of the Transaction
will take place in accordance with Section 2 ("Closing").
Except for Dissenting Shares, all shares of VB Common Stock
issued and outstanding immediately before Closing will be
converted into the right to receive the consideration
described in Subsection 1.3 at Closing, by virtue of the
Merger and under RCW 23B, without any action on the holder's
part.
1.2.2. THE BANK. By virtue of the Merger, the Bank will
become the Combined Corporation's wholly owned subsidiary. On
the Effective Date, the Bank's board of directors will be all
directors who are the Bank's directors immediately before the
Merger plus one additional WCB director designated by WCB.
These directors will serve on the Bank's board of directors
until the next annual meeting of the Bank's shareholders or
until their successors have been elected and qualified. At
the 1997 annual meeting of the Bank's shareholders, the
directors then serving on the Bank's board of directors may
propose a slate of directors for election to the Bank's board.
WCB, as the Bank's sole shareholder, will elect these proposed
directors to serve on the Bank's board of directors until the
1998 annual meeting of the Bank's shareholders, but WCB may
refuse to elect any of these proposed directors if WCB has
good cause to do so. Nothing in this Subsection 1.2.2 or this
Agreement restricts in any way any rights of the Bank's
shareholders and directors at any time after the Effective
Date to nominate, elect, select, or remove the Bank's
directors.
1.3. CONSIDERATION.
1.3.1. AMOUNT OF CONSIDERATION. Except as otherwise
provided in Subsection 1.4, the aggregate consideration
("Purchase Price") VB's stockholders will be entitled to
receive from WCB in connection with the Transaction will be
WCB Common Stock with an aggregate value equal to $11,581,000,
as calculated in accordance with Subsection 1.3.2.
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1.3.2. FORM OF CONSIDERATION. Subject to the terms,
conditions and limitations set forth in this Agreement,
holders of VB Common Stock will be entitled to exchange their
VB Common Stock shares for WCB Common Stock shares, upon
surrender of the holder's certificate or certificates in
accordance with Subsection 1.3.8. Each holder, in exchange
for each share of VB Common Stock the stockholder holds of
record on the Effective Date, will be entitled to receive that
number of shares of WCB Stock calculated by dividing the
Purchase Price by the Average Closing Price (or the Modified
Average Closing Price in the circumstances specified in
Subsection 7.2.5), and by further dividing the number so
reached by the aggregate number of shares of VB Common Stock
that on the Effective Date are either (i) issued and
outstanding or (ii) subject to unexercised options. The
shares of WCB Common Stock to be issued to VB Shareholders
under this Agreement in connection with the Transaction are
referred to as the "WCB Shares."
1.3.3. AVERAGE CLOSING PRICE. For the purpose of this
Agreement, the "Average Closing Price" means the average
(rounded to the nearest ▇▇▇▇▇) of each Daily Sales Price of
WCB stock for the ten consecutive trading days ending on and
including the fifth trading day preceding the Effective Date.
But, if this average is less than $15.30, the Average Closing
Price will be $15.30, and if this average is more than $18.70,
the Average Closing Price will be $18.70. All prices per
share under this Subsection 1.3.3 will be appropriately
adjusted to account for stock dividends, split-ups, mergers,
combinations, conversions, share exchanges or the like.
1.3.4. DAILY SALES PRICE. For the purposes of this
Agreement, "Daily Sales Price" means for any trading day, the
arithmetic average (unrounded) of the closing bid and asked
prices of WCB stock in the over-the-counter market as such
prices are reported by the automated quotation system of the
National Association of Securities Dealers, Inc., or in the
absence of this source, by any other source that WCB and VB
mutually agree on.
1.3.5. NO FRACTIONAL SHARES. WCB will not issue fractional
shares of WCB Common Stock. In lieu of fractional shares of
WCB Common Stock, if any, each shareholder of VB who is
otherwise entitled to receive a fractional share of WCB Common
Stock will receive an amount of cash equal to the product of
such fraction times the Average Closing Price. Such
fractional share interest will not include the right to vote
or receive dividends or any interest on dividends.
1.3.6. EFFECT ON HB SHARES. HB's Common Stock shares issued
and outstanding immediately before the Effective Date will
remain outstanding and unchanged after the
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Transaction. After the Transaction, these shares will
constitute all of the issued and outstanding shares of the
capital stock of the Combined Corporation.
1.3.7. OPTIONS. For purposes of this Agreement, the term
"VB Options" means options issued by VB or the Bank in
accordance with its employee and director stock option plans.
Each holder of these VB Options will be entitled to receive,
in exchange for all of his VB Options, options to purchase
that number of WCB Common Stock shares to which such holder
would have been entitled under Subsection 1.3.2 if such holder
had exercised such VB Options immediately before Closing. All
such options will be subject to the same terms as the VB
Options exchanged in accordance with this Subsection 1.3.7.
1.3.8. CERTIFICATES.
(a) Surrender of Certificates. Each certificate
evidencing VB Common Stock (other than
Dissenting Shares) will, on and after the
Effective Date, be deemed for all corporate
purposes to represent and evidence only the
right to receive WCB Common Stock or cash in
accordance with the provisions of this
Subsection 1.3, until the VB stockholder
surrenders the certificate to an agent
designated by WCB and VB to effect the
exchange of VB Common Stock for WCB Common
Stock or cash ("Exchange Agent"), together
with a properly completed and executed form
of transmittal letter. Until any such
certificate evidencing VB Common Stock is so
surrendered, the holder of such VB Common
Stock will not have any right to receive any
certificates evidencing WCB Common Stock or
cash in lieu of fractional shares.
(b) Issuance of Certificates in Other Names. If
any certificate evidencing WCB Common Stock
is to be issued in a name other than that in
which the certificate(s) for VB Common Stock
surrendered in exchange is registered, the
person requesting this exchange must first:
(1) establish the right to receive the
certificate evidencing WCB Common Stock and
(2) either pay to the Exchange Agent any
transfer or other taxes required by reason of
the issuance of such certificate in a name
other than the registered holder of the
certificate surrendered or establish to the
satisfaction of the Exchange Agent that such
tax has been paid or is not applicable.
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(c) Lost, Stolen, and Destroyed Certificates. If
the Exchange Agent receives: (1) satisfactory
evidence of VB Common Stock ownership
represented by a missing certificate and (2)
any indemnification assurances that the
Exchange Agent may require from persons
claiming such ownership, the Exchange Agent
will be authorized to issue WCB Common Stock
for any VB Common Stock certificate that has
been lost, stolen or destroyed.
(d) Rights to Dividends and Distributions. After
the Effective Date, no holder of a
certificate evidencing shares of VB Common
Stock will be entitled to receive any
dividends or other distributions otherwise
payable to holders of record of WCB Common
Stock on any date after the Effective Date
unless the holder (1) is entitled to receive
WCB Common Stock and (2) has surrendered his
or her certificates evidencing shares of VB
Common Stock in exchange for WCB Common
Stock. This surrender of certificates will
not deprive the holder of any dividends or
distributions that the holder is entitled to
receive for a date before this surrender as a
record holder of VB Common Stock. When the
holder surrenders his or her certificates,
the holder will receive the amount, without
interest, of any cash dividends and any other
distributions distributed after the Effective
Date on the whole number of shares of WCB
Common Stock the holder's VB Common Stock was
converted into at the Effective Date.
(e) Checks in Other Names. If any check for cash
in lieu of fractional shares is to be issued
in a name other than the name that the VB
Common Stock certificate surrendered in
exchange for cash is registered in, the
person requesting the exchange must establish
the right to receive this cash.
1.4. PAYMENT TO DISSENTING SHAREHOLDERS. For purposes of this
Agreement, "Dissenting Shares" means those shares of VB Common Stock
as to which shareholders have perfected their dissenters' rights under
RCW 23B.11.070(2)(b) and RCW 23B.13. Each outstanding dissenting
share of VB Common Stock will be converted at Closing into the rights
provided under RCW 23B.11.070(2)(b) and RCW 23B.13.
1.5. ALTERNATIVE STRUCTURES. Subject to the conditions set forth
below, WCB may, within 60 days of the execution of this Agreement and
in its sole discretion, elect to consummate the Transaction by means
other than those specified in this
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Section 1. If WCB so elects, any means, procedures or amendments
necessary or desirable to consummate the Transaction, in the opinion
of WCB's counsel, will supersede any conflicting, undesirable or
unnecessary provisions of this Agreement; but, unless this Agreement
is amended in accordance with Section 9, the following conditions will
apply: (1) the type and amount of consideration set forth in
Subsection 1.3 will not be modified and (2) the tax consequences to VB
and its shareholders will not be adversely affected. If WCB elects an
alternative structure under this Subsection 1.5, VB will cooperate
with and assist WCB with the following: (1) any amendments to this
Agreement necessary or desirable in the opinion of WCB's counsel and
(2) the preparation and filing of any applications, documents,
instruments and notices necessary or desirable, in the opinion of
WCB's counsel, to obtain the necessary shareholder approvals and
approvals of any regulatory agency, administrative body or other
governmental entity.
1.6. LETTER OF TRANSMITTAL. WCB will prepare a transmittal letter
form reasonably acceptable to VB for use by shareholders holding VB
Common Stock. Certificates representing shares of VB Common Stock
must be delivered for payment in the manner provided in the
transmittal letter form. On or about the Effective Date, WCB will
mail the transmittal letter form to VB shareholders.
1.7. UNDELIVERED CERTIFICATES. If outstanding certificates for VB
Common stock are not surrendered or the payment for them is not
claimed before such payments would escheat or become the property of
any governmental unit or agency, the unclaimed items will, to the
extent permitted by abandoned property or any other applicable law,
become the property of WCB (and to the extent not in its possession
will be paid over to WCB), free and clear of all claims or interests
of any person previously entitled to such items. Notwithstanding the
foregoing, neither WCB nor any other party to this Agreement will be
liable to any holder of VB Common Stock for any amount paid to any
governmental unit or agency having jurisdiction over any such
unclaimed items under the abandoned property or other applicable law
of the jurisdiction, and WCB will pay no interest on amounts owed to
shareholders for shares of VB Common Stock.
1.8. STOCK OPTION AGREEMENT. As a condition to the execution of
this Agreement, WCB and VB will sign a Stock Option Agreement of even
date with this Agreement.
SECTION 2.
CLOSING OF THE TRANSACTION
2.1. CLOSING. Closing will occur on the Effective Date (or the
Postponed Effective Date if Subsection 7.2.5.(b) applies). If Closing
does not occur on or before October 31, 1996 ("Termination Date"),
either WCB or VB may terminate this
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Agreement in accordance with Section 7. Unless WCB and VB agree upon
another date, the Effective Date will be a date selected by WCB and
within five (5) business days after the following:
(a) each condition precedent set forth in Section 5 has
been either fulfilled or waived; and
(b) each approval required by Section 5 has been granted,
and all applicable waiting periods have expired.
2.2. EVENTS OF CLOSING. On the Effective Date, all properly
executed documents required by this Agreement will be delivered to the
proper party, in form consistent with this Agreement. If any party
fails to deliver a required document on the Effective Date or
otherwise defaults under this Agreement on or before the Effective
Date, then the Transaction will not occur unless the adversely
affected party waives the default.
2.3. PLACE OF CLOSING. Unless WCB and VB agree otherwise, the
Closing will occur at the corporate office of WCB, Lake Oswego, Oregon
at 10:00 a.m. on the Effective Date, or any other time during normal
business hours WCB and VB may agree on.
SECTION 3.
REPRESENTATIONS AND WARRANTIES
3.1. REPRESENTATIONS AND WARRANTIES OF WCB, HB, AND VB. Subject to
Subsection 3.3 and except as expressly set forth in Schedule 1, WCB
and HB each represent and warrant to VB, and VB represents and
warrants to WCB and HB, the following:
3.1.1. CORPORATE ORGANIZATION AND QUALIFICATION.
(a) It is a corporation duly organized and
validly existing under the State laws of
either Washington or Oregon, and its
activities do not require it to be qualified
in any foreign jurisdiction.
(b) It has the requisite corporate power and
authority to own or lease its properties and
assets and to carry on its businesses as they
are now being conducted.
(c) The location of each of its offices is listed
in Schedule 2.
(d) It has made available to the other parties to
this Agreement a complete and correct copy of
its articles of incorporation and bylaws,
each
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as amended to date and currently in full
force and effect.
3.1.2. SUBSIDIARIES.
(a) Schedule 3 lists all of its subsidiaries and
the percent of its stock-ownership of these
subsidiaries, as of the date of this
Agreement.
(b) Each of its depository institution
subsidiaries is an "insured depository
institution," as defined in the Federal
Deposit Insurance Act ("FDIA") and applicable
regulations under the FDIA, having deposits
insured by the Federal Deposit Insurance
Corporation ("FDIC"), subject to applicable
FDIC coverage limitations.
(c) Each of its subsidiaries is: (1) either a
commercial bank or a corporation; (2) duly
organized and validly existing under the
State laws of either Washington or Oregon;
and (3) qualified to do business and in good
standing in each jurisdiction where the
property owned, leased, or operated, or the
business conducted by the subsidiary,
requires this qualification.
(d) Each of its subsidiaries has the requisite
corporate power and authority to own or lease
its properties and assets and to carry on its
business as it is now being conducted.
3.1.3. CAPITAL STOCK.
(a) WCB. WCB represents and warrants:
(1) the authorized capital stock of WCB
consists of 25 million shares
divided into two classes: (i) 15
million shares of common stock, no
par value ("WCB Common Stock"),
4,805,689 shares of which are issued
and outstanding and (ii) ten million
shares of blank-check preferred
stock, no par value, none of which
is outstanding ("WCB Preferred
Stock");
(2) options or rights to acquire not
more than an aggregate of 344,420
WCB Common Stock shares (subject to
adjustment on the terms set forth in
the WCB Stock Plans) are outstanding
under the stock option plans
identified in Schedule 4 ("WCB Stock
Plans");
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(3) WCB has no WCB Common Stock shares
reserved for issuance, other than
the shares reserved for issuance
under the WCB Stock Plans, and WCB
has no shares of WCB Preferred Stock
reserved for issuance;
(4) all outstanding shares of WCB Common
Stock have been duly authorized and
validly issued and are fully paid
and nonassessable;
(5) all outstanding shares of capital
stock of each of WCB's subsidiaries
owned by WCB or a subsidiary of WCB
have been duly authorized and
validly issued and are fully paid
and nonassessable, except to the
extent of any assessment required by
ORS 707, and are owned by WCB or a
subsidiary of WCB free and clear of
all liens, pledges, security
interests, claims, proxies,
preemptive or subscriptive rights or
other encumbrances or restrictions
of any kind (collectively, "Liens");
and
(6) except as set forth in this
Agreement or in the WCB Stock Plans,
no shares of capital stock of WCB
are authorized, issued or
outstanding, and there are no
preemptive rights or any outstanding
subscriptions, options, warrants,
rights, convertible securities or
other agreements or commitments of
WCB or any of its subsidiaries of
any character relating to the issued
or unissued capital stock or other
equity securities of WCB or any of
its subsidiaries (including those
relating to the issuance, sale,
purchase, redemption, conversion,
exchange, redemption, voting or
transfer of such stock or
securities).
(b) VB. VB represents and warrants:
(1) the authorized capital stock of VB
consists of (i) ten million shares
of common stock, par value $1 per
share ("VB Common Stock"), 141,428
shares of which are issued and
outstanding and (ii) one million
shares of blank-check preferred
stock, par value $1 per share, none
of which are issued or outstanding;
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(2) options or rights to acquire not
more than an aggregate of 31,523 VB
Common Stock shares (subject to
adjustment on the terms set forth in
the VB Stock Plans) were outstanding
under the stock option and other
plans listed in Schedule 4 ("VB
Stock Plans");
(3) VB has no VB Common Stock shares
reserved for issuance other than the
shares reserved for issuance under
the VB Stock Plans;
(4) all outstanding VB Common Stock
shares have been duly authorized and
validly issued and are fully paid
and nonassessable.
(5) all outstanding shares of capital
stock of each of VB's subsidiaries
owned by VB or a subsidiary of VB
have been duly authorized and
validly issued and are fully paid
and nonassessable except to the
extent provided by RCW 30.12.180,
and are owned by VB or a subsidiary
of VB free and clear of all Liens;
and
(6) except as set forth in this
Agreement or in the VB Stock Plans,
no shares of capital stock of VB are
authorized, issued or outstanding,
and there are no preemptive rights
or any outstanding subscriptions,
options, warrants, rights,
convertible securities or other
agreements or commitments of VB or
any of its subsidiaries of any
character relating to the issued or
unissued capital stock or other
equity securities of VB or any of
its subsidiaries (including those
relating to the issuance, sale,
purchase, redemption, conversion,
exchange, registration, voting or
transfer of such stock or
securities).
3.1.4. CORPORATE AUTHORITY.
(a) It has the requisite corporate power and
authority and has taken all corporate action
necessary in order to execute and deliver
this Agreement, subject, in the case of HB
and VB, only to the approval by its
shareholders of the plan of Merger contained
in this Agreement to the extent required by
RCW 23B.11.030, to
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consummate the transactions contemplated by
this Agreement.
(b) This Agreement is a valid and legally binding
agreement of it, enforceable in accordance
with the terms of this Agreement.
3.1.5. REPORTS AND FINANCIAL STATEMENTS.
(a) Filing of Reports. Since January 1, 1992, it
and each of its subsidiaries has filed all
reports and statements, together with any
required amendments to these reports and
statements, that it was required to file with
(1) the Securities and Exchange Commission
("SEC"), (2) the Federal Reserve Board, (3)
the FDIC, (4) the Washington Department of
Financial Institutions or the Division of
Finance and Corporate Securities of the
Oregon Department of Insurance and Finance,
and (5) any other applicable federal or state
banking, insurance, securities, or other
regulatory authorities. Each of these
reports and statements, including the related
financial statements and exhibits, complied
(or will comply, in the case of reports or
statements filed after the date of this
Agreement) as to form in all material
respects with all applicable statutes, rules
and regulations as of their respective dates
(and, in the case of reports or statements
filed before the date of this Agreement,
without giving effect to any amendments or
modifications filed after the date of this
Agreement).
(b) Delivery to Other Parties of Reports. It has
delivered to the other parties, a copy of
each registration statement, offering
circular, report, definitive proxy statement
or information statement under the Securities
Act of 1933, as amended, ("Securities Act"),
the Securities Exchange Act of 1934, as
amended, ("Exchange Act"), and state
securities and "Blue Sky" laws (collectively,
the "Securities Laws") filed, used or
circulated by it with respect to periods
since January 1, 1992, through the date of
this Agreement. It will promptly deliver to
the other parties each such registration
statement, offering circular, report,
definitive proxy statement or information
statement filed, used or circulated after the
date of this Agreement (collectively, its
"Reports"), each in the form (including
related exhibits and
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amendments) filed with the SEC (or if not so
filed, in the form used or circulated).
(c) Compliance with Securities Laws. As of their
respective dates (and without giving effect to
any amendments or modifications filed after
the date of this Agreement), each of the
Reports, including the related financial
statements, exhibits and schedules, filed,
used or circulated before the date of this
Agreement complied (and each of the Reports
filed after the date of this Agreement, will
comply) in all material respects with
applicable Securities Laws, and did not (or in
the case of reports, statements, or circulars
filed after the date of this Agreement, will
not) contain any untrue statement of a
material fact or omit to state a material fact
required to be stated therein or necessary to
make the statements made therein, in light of
the circumstances under which they were made,
not misleading.
(d) Financial Statements. Each of its balance
sheets included in the Financial Statements
fairly presents (or, in the case of Financial
Statements for periods ending on a date
following the date of this Agreement, will
fairly present) the consolidated financial
position of it and its subsidiaries as of the
date of the balance sheet. Each of the
consolidated statements of income, cash flows
and stockholders' equity included in the
Financial Statements fairly presents (or, in
the case of Financial Statements for periods
ending on a date following the date of this
Agreement, will fairly present) the
consolidated results of operations, retained
earnings and cash flows, as the case may be,
of it and its subsidiaries for the periods
set forth in these statements (subject, in
the case of unaudited statements, to normal
year-end audit adjustments), in each case in
accordance with generally accepted accounting
principals, consistently applied ("GAAP"),
except as may be noted in these statements.
For purposes of this Agreement:
(1) "Financial Statements" means: (i) in
WCB's case, the WCB Financial
Statements (or for periods following
December 31, 1994, the Subsequent WCB
Financial Statements); and (ii) in
VB's case, the VB/Bank Financial
Statements (or for
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26
periods following December 31, 1994,
the Subsequent VB/Bank Financial
Statements).
(2) "WCB Financial Statements" means:
(i) the pre-merger audited
consolidated statements of financial
condition as of December 31, 1994,
of West Coast Bancorp and Commercial
Bancorp, and the related audited
statements of income, changes in
cashflows and stockholders' equity
for the year ended December 31,
1994, and (ii) the unaudited pro
forma combined statements of
financial condition for WCB for
December 31, 1994.
(3) "Subsequent WCB Financial
Statements" means: (i) balance
sheets and related statements of
income and stockholders' equity for
each of WCB's fiscal quarters ending
after December 31, 1994, and before
Closing and (ii) the audited
consolidated statements of financial
condition of WCB as of December 31,
1995, and the related audited
statements of income, changes in
cashflows and stockholders' equity
for the year ended December 31,
1995.
(4) "VB/Bank Financial Statements" means
the audited consolidated statements
of financial condition as of
December 31, 1994 (of VB and the
Bank), the audited statements of
financial condition as of December
31, 1993 and 1992 (of the Bank), and
the related audited statements of
income, changes in cashflows and
stockholders' equity for each of the
years ended December 31, 1994 and
1993.
(5) "Subsequent VB/Bank Financial
Statements" means: (i) a balance
sheet and related statements of
income and stockholders' equity for
each of VB's and the Bank's fiscal
quarters ending after December 31,
1994, and before Closing and (ii)
the audited consolidated statements
of financial condition of VB as of
December 31, 1995, and the related
audited statements of income,
changes in cashflows and
stockholders' equity for the year
ended December 31, 1995.
(e) Loan and Lease Losses. Its Co-Presidents and
Chief Executive Officers, and Chief Financial
Officer (for WCB) or President and Chief
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27
Operations Officer (for VB) (collectively,
"Executive Officers") know of no reason why
the provision for loan and lease losses shown
in the consolidated balance sheet included in
the Financial Statements for the period ended
December 31, 1995, was not adequate as of
that date to provide for estimable and
probable losses, net of recoveries relating
to loans previously charged off, inherent in
its loan portfolio.
3.1.6. ABSENCE OF CERTAIN EVENTS AND CHANGES. Except as
disclosed in its Financial Statements, since December 31,
1994: (1) it and its subsidiaries have conducted their
respective businesses only in the ordinary and usual course of
the businesses and (2) no change or development or combination
of changes or developments has occurred that, individually or
in the aggregate, is reasonably likely to result in a Material
Adverse Effect with respect to it or its subsidiaries. For
purposes of this Agreement, "Material Adverse Effect" with
respect to any corporation means an effect that: (1) is
materially adverse to the business, financial condition,
results of operations or prospects of the corporation and its
subsidiaries taken as a whole; (2) significantly and adversely
affects the ability of the corporation to consummate the
transactions contemplated by this Agreement by the Termination
Date or to perform its material obligations under this
Agreement; or (3) enables any persons to prevent the
consummation by the Termination Date of the transactions
contemplated by this Agreement. No Material Adverse Effect
will be deemed to have occurred on the basis of any effect
resulting from actions or omissions of the corporation taken
with the prior consent of the other parties to this Agreement.
3.1.7. MATERIAL AGREEMENTS.
(a) Except for the Stock Plans and arrangements
made after the date and in accordance with
the terms of this Agreement, it and its
subsidiaries are not bound by any material
contract (as defined in Item 601(b)(10) of
Regulation S-K under the Securities Act)
that: (1) is to be performed after the date
of this Agreement and (2) has not been filed
with or incorporated by reference in its
Reports or set forth in Schedule 5.
(b) Neither it nor any of its subsidiaries is in
default under any contract, agreement,
commitment, arrangement, lease, insurance
policy or other instrument.
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3.1.8. KNOWLEDGE AS TO CONDITIONS. Its Executive Officers
know of no reason why the Regulatory Approvals and, to the
extent necessary, any other approvals, authorizations,
filings, registrations, and notices should not be obtained
without the imposition of any condition or restriction that is
reasonably likely to have a Material Adverse Effect with
respect to it, its subsidiaries, or the Combined Corporation,
or the opinion of the tax experts referred to in Subsection
5.2.11.
3.1.9. BROKERS AND FINDERS. Neither it, its subsidiaries,
nor any of their respective officers, directors or employees
has employed any broker or finder or incurred any liability
for any brokerage fees, commissions or finder's fees in
connection with the transactions contemplated in this
Agreement.
3.2. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF VB. Subject to
Subsection 3.3 and except as expressly set forth in Schedule 1, VB
represents and warrants to WCB and HB, the following:
3.2.1. GOVERNMENTAL FILINGS; NO VIOLATIONS.
(a) Filings. Other than the Regulatory
Approvals, and other than as required under
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended, the Securities Act,
the Exchange Act, state securities and "Blue
Sky" laws, no notices, reports or other
filings are required to be made by it with,
nor are any consents, registrations,
approvals, permits or authorizations required
to be obtained by it from, any governmental
or regulatory authority, agency, court,
commission or other entity, domestic or
foreign ("Governmental Entity"), in
connection with the execution, delivery or
performance of this Agreement by it and the
consummation by it of the Transaction.
(b) Violations. The execution, delivery and
performance of this Agreement does not and
will not, and the consummation by it of the
Transaction will not, constitute or result
in: (1) a material breach or violation of, or
a default under, its articles of
incorporation or bylaws, or the comparable
governing instruments of any of its
subsidiaries; or (2) a material breach or
violation of, or a default under, or the
acceleration of or the creation of a Lien
(with or without the giving of notice, the
lapse of time or both) under, any provision
of any agreement, lease, contract, note,
mortgage, indenture,
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arrangement or other obligation ("Contracts")
of it or any of its subsidiaries or any law,
rule, ordinance or regulation or judgment,
decree, order, award or governmental or
non-governmental permit or license to which
it or any of its subsidiaries is subject, or
any change in the rights or obligations of
any party under any of the Contracts.
Schedule 6 contains a list of all consents it
or its subsidiaries must obtain from third
parties under any Contracts before
consummation of the Transaction.
3.2.2. ASSET CLASSIFICATION.
(a) Schedule 7 sets forth a list, accurate and
complete in all material respects as of
December 31, 1995, except as otherwise
expressly noted in Schedule 7, and separated
by category of classification or criticism
("Asset Classification"), of the aggregate
amounts of loans, extensions of credit and
other assets of it and its subsidiaries that
have been criticized or classified.
(b) Except as shown on Schedule 7, no amounts of
loans, extensions of credit or other assets
that have been classified or criticized by
any representative of any Governmental Entity
as "Other Assets Especially Mentioned,"
"Substandard," "Doubtful," "Loss" or words of
similar effect are excluded from the amounts
disclosed in the Asset Classification, other
than amounts of loans, extensions of credit
or other assets that were paid off or charged
off by it or its subsidiaries before the date
of this Agreement.
3.2.3. PROPERTIES.
(a) Except as disclosed or reserved against in
its Financial Statements or in Schedule 8, it
and its subsidiaries have good and marketable
title, free and clear of all Liens (other
than Liens for current taxes not yet
delinquent or pledges to secure deposits) to
all of the material properties and assets,
tangible or intangible, reflected in its
Reports as being owned by it or its
subsidiaries as of the date of this
Agreement.
(b) To the knowledge of its Executive Officers,
all buildings and all fixtures, equipment and
other property and assets that are material
to its business on a consolidated basis and
are
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held under leases or subleases by it or its
subsidiaries are held under valid leases or
subleases, enforceable in accordance with
their respective terms (except as may be
limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws
affecting creditors' rights generally or by
general equity principles).
(c) Schedule 9 lists all its and its
subsidiaries' existing branches and offices
and all new branches or offices it or any of
its subsidiaries' has applied for.
(d) VB has provided to WCB copies of existing
title policies held in its or the Bank's
files, and no exceptions, reservations, or
encumbrances have arisen or been created
since the date of issuance of those policies.
3.2.4. COMPLIANCE WITH LAWS. Except as disclosed in
Schedule 10, it and each of its subsidiaries:
(a) is in compliance, in the conduct of its
business, with all applicable federal, state,
local and foreign statutes, laws,
regulations, ordinances, rules, judgments,
orders or decrees, including the Truth in
Lending Act, the Equal Credit Opportunity
Act, the Fair Housing Act, the Community
Reinvestment Act, the Home Mortgage
Disclosure Act and all other applicable fair
lending laws or other laws relating to
discrimination;
(b) has all permits, licenses, certificates of
authority, orders, and approvals of, and has
made all filings, applications, and
registrations with, federal, state, local,
and foreign governmental or regulatory bodies
(including the Federal Reserve) that are
required in order to permit it or such
subsidiary to carry on its business as it is
presently conducted;
(c) has received since January 1, 1992, no
notification or communication from any
Governmental Entity (including any bank,
insurance and securities regulatory
authorities) or its staff (1) asserting that
it or any of its subsidiaries is not in
compliance with any of the statutes,
regulations or ordinances that such
Governmental Entity enforces, (2) threatening
to revoke any license, franchise, permit or
governmental authorization, or (3)
threatening or contemplating revocation or
limitation of,
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or that would have the effect of revoking or
limiting, FDIC deposit insurance (nor, to the
knowledge of its Executive Officers, do any
grounds for any of the foregoing exist); and
(d) is not required to notify any federal banking
agency before adding directors to its board
of directors or the employing senior
executives.
3.2.5. LITIGATION. Except as disclosed in its Financial
Statements or in Schedule 11 before the date of this
Agreement:
(a) no criminal or administrative investigations
or hearings, before or by any Governmental
Entity, or civil, criminal or administrative
actions, suits, claims or proceedings, before
or by any person (including any Governmental
Entity) are pending or, to the knowledge of
its Executive Officers, threatened, against
it or any of its subsidiaries (including
under the Truth in Lending Act, the Equal
Credit Opportunity Act, the Fair Housing Act,
the Community Reinvestment Act, the Home
Mortgage Disclosure Act or any other fair
lending law or other law relating to
discrimination); and
(b) neither it nor any of its subsidiaries (nor
any officer, director, controlling person or
property of it or any of its subsidiaries) is
a party to or is subject to any order,
decree, agreement, memorandum of
understanding or similar arrangement with, or
a commitment letter or similar submission to,
any Governmental Entity charged with the
supervision or regulation of depository
institutions or engaged in the insurance of
deposits (including the FDIC) or the
supervision or regulation of it or of its
subsidiaries, and neither it nor any of its
subsidiaries has been advised by any such
Governmental Entity that such Governmental
Entity is contemplating issuing or requesting
(or is considering the appropriateness of
issuing or requesting) any such order,
decree, agreement, memorandum of
understanding, commitment letter or similar
submission.
3.2.6. TAXES. For purposes of this Subsection 3.2.6, "Tax"
includes any tax or similar governmental charge, impost or
levy (including income taxes, franchise taxes, transfer taxes
or fees, stamp taxes, sales taxes, use taxes, excise taxes, ad
valorem taxes, withholding taxes, worker's compensation,
payroll taxes, unemployment insurance, social security,
minimum taxes or windfall
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profits taxes), together with any related liabilities,
penalties, fines, additions to tax or interest, imposed by the
United States or any state, county, provincial, local or
foreign government or subdivision or agency of the United
States.
(a) All federal, state and local Tax returns,
including all information returns, it and its
subsidiaries are required to file have been
timely filed or requests for extensions have
been timely filed. If any extensions were
filed, they have been or will be granted by
Closing and will not have expired. All filed
returns are complete and accurate in all
material respects.
(b) Except as disclosed in its Financial
Statements:
(1) all taxes attributable to it or any
of its subsidiaries that are or were
due or payable (without regard to
whether such taxes have been
assessed) have been paid in full or
have been adequately provided for in
its Financial Statements in
accordance with GAAP;
(2) adequate provision in accordance
with GAAP has been made in its
Financial Statements relating to all
Taxes for the periods covered by
such Financial Statements that were
not yet due and payable as of the
date of this Agreement, regardless
of whether the liability for such
Taxes is disputed;
(3) as of the date of this Agreement and
except as disclosed in its Financial
Statements, there is no outstanding
audit examination, deficiency,
refund litigation or outstanding
waiver or agreement extending the
applicable statute of limitations
for the assessment or collection of
any Taxes for any period with
respect to any Taxes of it or its
subsidiaries;
(4) all Taxes with respect to completed
and settled examinations or
concluded litigation relating to it
or any of its subsidiaries have been
paid in full or have been recorded
on its Financial Statements (in
accordance with GAAP);
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(5) neither it nor any of its
subsidiaries is a party to a Tax
sharing or similar agreement or any
agreement under which it or any of
its subsidiaries has indemnified any
party (other than it or one of its
subsidiaries) with respect to Taxes;
and
(6) the proper and accurate amounts have
been withheld from all employees
(and timely paid to the appropriate
Governmental Entity or set aside in
an account for these purposes) for
all periods through the Effective
Date in compliance with all Tax
withholding provisions of applicable
federal, state, local and foreign
laws (including income, social
security and employment tax
withholding for all types of
compensation).
3.2.7. INSURANCE. It and each of its subsidiaries has taken
all requisite action (including the making of claims and the
giving of notices) under its directors' and officers'
liability insurance policy or policies in order to preserve
all rights under such policies with respect to all matters
known to it (other than matters arising in connection with,
and the transactions contemplated by, this Agreement).
Schedule 12 lists all directors' and officers' liability
insurance policies and other material insurance policies
maintained by it or its subsidiaries.
3.2.8. LABOR MATTERS. Neither it nor any of its
subsidiaries is a party to, or is bound by, any collective
bargaining agreement, contract or other agreement or
understanding with any labor union or labor organization.
Neither it nor any of its subsidiaries is the subject of any
material proceeding: (1) asserting that it or any of its
subsidiaries has committed an unfair labor practice or (2)
seeking to compel it or any of its subsidiaries to bargain
with any labor organization as to wages or conditions of
employment. No strike involving it or any of its subsidiaries
is pending or, to the knowledge of its Executive Officers,
threatened. Its Executive Officers are not aware of any
activity involving its or any of its subsidiaries' employees
seeking to certify a collective bargaining unit or engaging in
any other organizational activity.
3.2.9. EMPLOYEE BENEFITS.
(a) For purposes of this Agreement "Plan" or
"Plans", individually or collectively, means
any "employee benefit plan," as defined in
Section 3(3) of the Employee Retirement
Income
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Security Act of 1974, ("ERISA"), as amended,
maintained by VB or the Bank, as the case may
be.
(b) Schedule 13 sets forth a list, as of the date
of this Agreement, of (1) all bonus, deferred
compensation, pension, retirement,
profit-sharing, thrift, savings, employee
stock ownership, stock bonus, stock purchase,
restricted stock and stock option plans, (2)
all material employment or severance
contracts and (3) all other material employee
benefit plans that cover employees or former
employees of it and its subsidiaries (its
"Compensation Plans"). True and complete
copies of the Compensation Plans (and, as
applicable, copies of summary plan
descriptions, governmental filings (on Form
5500 series or otherwise), actuarial reports
and reports under Financial Accounting
Standards Board Statement No. 106 relating to
such Compensation Plans) covering current or
former employees or directors of it or its
subsidiaries (its "Employees"), including
Plans and related amendments, have been made
available to the other parties to this
Agreement.
(c) All of its Plans covering Employees (other
than "multi-employer plans" within the
meaning of ERISA Sections 3(37) or
4001(a)(3)), to the extent subject to ERISA,
are in substantial compliance with ERISA.
Each of its Plans, that is an "employee
pension benefit plan" within the meaning of
ERISA Section 3(2) ("Pension Plan") and that
is intended to be qualified under IRC Section
401(a), has received a favorable
determination letter from the Internal
Revenue Service, and it is not aware of any
circumstances likely to result in revocation
of any such favorable determination letter.
No litigation relating to its Plans is
pending or, to the knowledge of its Executive
Officers, threatened. Neither it nor any of
its subsidiaries has engaged in a transaction
with respect to any Plan that, assuming the
taxable period of such transaction expired as
of the date of this Agreement, could subject
it or any of its subsidiaries to a Tax or
penalty imposed by either IRC Section 4975 or
ERISA Section 502(i).
(d) No liability under Subtitle C or D of Title
IV or ERISA (other than payment of applicable
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premiums) has been or is expected to be
incurred by it or any of its subsidiaries
with respect to any ongoing, frozen or
terminated "single-employer plan," within the
meaning of ERISA Section 4001(a)(15),
currently or formerly maintained by any of
them, or the single-employer plan of any
entity that is considered one employer with
it under ERISA Section 4001 or IRC Section
414 (an "ERISA Affiliate"). It and its
subsidiaries and ERISA Affiliates have not
incurred and do not expect to incur any
material withdrawal liability with respect to
a multiemployer plan under Subtitle I of
Title IV of ERISA (regardless of whether
based on contributions of ERISA Affiliates).
Neither it, its subsidiaries nor any of its
ERISA Affiliates has been notified by any
multiemployer plan to which it or any of its
subsidiaries or ERISA Affiliates is
contributing, or may be obligated to
contribute, that such multiemployer plan is
currently in reorganization or insolvency
under and within the meaning of ERISA
Sections 4241 or 4245 or that such
multiemployer plan intends to terminate or
has been terminated under ERISA Section
4041A. No notice of a "reportable event"
within the meaning of ERISA Section 4043, for
which the 30-day reporting requirement has
not been waived, has been required to be
filed for any of its Pension Plans or by any
of its ERISA Affiliates within the 12-month
period ending on the date of this Agreement.
Neither it, its subsidiaries nor any of their
respective ERISA Affiliates has incurred or
is aware of any facts that are reasonably
likely to result in any liability under ERISA
Sections 4069 or 4204.
(e) All material contributions it or any of its
subsidiaries are or were required to make
under the terms of any of its Plans have been
timely made or have been reflected in its
Financial Statements. Neither any of its
Pension Plans nor any single-employer plan of
any of its ERISA Affiliates has an
"accumulated funding deficiency" (whether or
not waived) within the meaning of IRC Section
412 or ERISA Section 302. Neither it nor any
of its subsidiaries or its ERISA Affiliates
has provided, or is required to provide,
security to any Pension Plan or to any
single-employer plan of an ERISA Affiliate
under IRC Section 401(a)(29), IRC Section
412(f)(3), or ERISA Sections 306, 307 or
4204.
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(f) Under each of its and its ERISA Affiliates'
Pension Plans that is a single-employer plan,
as of the last day of the most recent plan
year ended before the date of this Agreement,
the actuarially determined present value of
all "benefit liabilities" within the meaning
of ERISA Section 4001(a)(16) (as determined
on the basis of the actuarial assumptions
contained in the Pension Plan's most recent
actuarial valuation), did not exceed the
then-current value of the assets of such
Pension Plan, and to the knowledge of its
Executive Officers, there has been no change
in the financial condition of such Pension
Plan since the last day of the most recent
plan year that reasonably could be expected
to change such conclusion. There would be no
withdrawal liability of it and its
subsidiaries under each Plan that is a
multi-employer plan to which it, its
subsidiaries or its ERISA Affiliates has
contributed during the preceding 12 months,
if such withdrawal liability were determined
as if a "complete withdrawal," within the
meaning of ERISA Section 4203, had occurred
as of the date of this Agreement.
(g) Except as disclosed in its Financial
Statements, neither it nor its subsidiaries
have any obligations for retiree health and
life benefits.
(h) No restrictions exist on the rights of it or
its subsidiaries to amend or terminate any
Plan without incurring liability under the
Plan in addition to normal liabilities for
benefits.
(i) Except as disclosed in its Financial
Statements or as provided in a schedule to
this Agreement, the transactions contemplated
by this Agreement and the Stock Plans will
not result in: (1) vesting, acceleration, or
increase of any amounts payable under any
Compensation Plan, (2) any material increase
in benefits under any Compensation Plan or
(3) payment of any severance or similar
compensation under any Compensation Plan.
(j) The Bank's obligations under the Executive
Supplemental Income ("ESI") Plan will not at
any time exceed the value, as reflected on
the Bank's books (reported consistent with
GAAP), of insurance policies owned by the
Bank on the lives of the officers covered by
the ESI Plan.
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3.2.10. ENVIRONMENTAL MATTERS.
(a) For purposes of this Subsection 3.2.10, the
following definitions apply:
(1) "Subject Property" with respect to a
party means (i) all real property at
which the Businesses of it or its
subsidiaries have been conducted,
all property in which it or its
subsidiaries holds a security or
other interest (including a
fiduciary interest), and any
property where under any
Environmental Law it or any of its
subsidiaries is deemed to be the
owner or operator of the property;
(ii) any facility in which it or its
subsidiaries participates in the
management, including participating
in the management of the owner or
operator of the property; and (iii)
all other real property that, for
purposes of any Environmental Law,
it or any of its subsidiaries
otherwise could be deemed to be an
owner or operator of or as otherwise
having control over.
(2) "Environmental Laws" means any
federal, state, local or foreign
law, regulation, agency policy,
order, decree, judgment, judicial
opinion, or any agreement with any
Governmental Entity, presently in
effect or subsequently adopted
relating to: (i) the manufacture,
generation, transport, use,
treatment, storage, recycling,
disposal, release, threatened
release or presence of Hazardous
Substances, or (ii) the
preservation, restoration or
protection of the environment,
natural resources or human health.
(3) "Hazardous Substances" means any
hazardous or toxic substance,
material or waste that is regulated
by any local governmental authority,
any state government or the United
States Government, including any
material or substance that is (a)
defined as a "hazardous substance"
in 42 USC Section 9601(14), (b)
defined as a "pollutant or
contaminant" in 42 USC Section
9604(a)(2), or (c) defined as a
"hazardous waste" in 42 USC Section
6903(5).
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(b) To the knowledge of its Executive Officers,
it and each of its subsidiaries and the
Subject Property are, and have been, in
compliance with all Environmental Laws, and
no circumstances exist that with the passage
of time or the giving of notice would be
reasonably likely to result in noncompliance
with such Environmental Laws.
(c) To the knowledge of its Executive Officers,
none of the following, and no reasonable
basis for any of the following, exists:
pending or threatened claims, actions,
investigations, notices of non-compliance,
information requests or notices of potential
responsibility or proceedings involving it or
any of its subsidiaries or any Subject
Property, relating to:
(1) an asserted liability of it or any
of its subsidiaries or any prior
owner, occupier or user of Subject
Property under any Environmental Law
or the terms and conditions of any
permit, license, authority,
settlement, agreement, decree or
other obligation arising under any
Environmental Law;
(2) the handling, storage, use,
transportation, removal or disposal
of Hazardous Substances;
(3) the actual or threatened discharge,
release or emission of Hazardous
Substances from, on or under or
within Subject Property into the
air, water, surface water, ground
water, land surface or subsurface
strata; or
(4) personal injuries or damage to
property related to or arising out
of exposure to Hazardous Substances.
(d) To the knowledge of its Executive Officers:
no storage tanks underground or otherwise are
present on the Subject Property or, if
present, none of such tanks are leaking and
each of them is in full compliance with all
Environmental Laws. With respect to any
Subject Property, it and its subsidiaries do
not own, possess or control any PCBs,
PCB-contaminated fluids, wastes or equipment,
or any asbestos or asbestos-containing
material. No Hazardous Substances have been
used, handled, stored, discharged, released
or
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39
emitted, or are threatened to be discharged,
released or emitted, at or on any Subject
Property, except for those types and
quantities of Hazardous Substances typically
used in an office environment and that have
not created conditions requiring remediation
under any Environmental Law.
(e) To the knowledge of its Executive Officers
and except for the investigation or
monitoring by the Environmental Protection
Agency or similar state agencies in the
ordinary course, no part of the Subject
Property has been or is scheduled for
investigation or monitoring under any
Environmental Law.
3.3. EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES.
3.3.1. DISCLOSURE OF EXCEPTIONS. Each exception set forth
in a Schedule is disclosed only for purposes of the
representations and warranties referenced in that exception;
but the following conditions apply:
(a) no exception is required to be set forth in a
Schedule if its absence would not result in
the related representation or warranty being
found untrue or incorrect under the standard
established by this Subsection 3.3; and
(b) the mere inclusion of an exception in a
Schedule is not an admission by a party that
such exception represents a material fact,
event or circumstance or would result in a
Material Adverse Effect with respect to that
party.
3.3.2. NATURE OF EXCEPTIONS. No representation or warranty
contained in Subsection 3.1 or 3.2 will be found untrue or
incorrect and no party to this Agreement will have breached a
representation or warranty due to the following: the
existence of any fact, circumstance or event if that fact,
circumstance or event, individually or taken together with all
similar facts, circumstances or events, would not, or, in the
case of Subsection 3.2.5, is not reasonably likely to, have a
Material Adverse Effect with respect to such party.
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SECTION 4.
CONDUCT AND TRANSACTIONS
BEFORE CLOSING
4.1. CONDUCT OF VB'S BUSINESS BEFORE CLOSING. Before Closing, VB
promises as follows:
4.1.1. AVAILABILITY OF VB'S BOOKS, RECORDS AND PROPERTIES.
(a) VB will make VB's, and cause its subsidiaries
to make their, books, records, properties,
contracts and documents available at all
reasonable times to WCB and its counsel,
accountants and other representatives. These
items will be open for inspection, audit and
direct verification of: (1) loan or deposit
balances, (2) collateral receipts and (3) any
other transactions or documentation WCB may
find reasonably relevant to the Transaction.
VB will, and will cause its subsidiaries to,
cooperate fully in any such inspection,
audit, or direct verification procedures, and
VB will, and will cause its subsidiaries to,
make available all information reasonably
required by or on behalf of WCB.
(b) At WCB's request, VB will request any third
parties involved in the preparation or review
of the VB/Bank Financial Statements or
Subsequent VB/Bank Financial Statements to
disclose to WCB the work papers or any
similar materials related to these financial
statements.
4.1.2. ORDINARY AND USUAL COURSE. Without the prior written
consent of WCB, VB will, and will cause the Bank to, conduct
its business only in the ordinary and usual course and will
not, and will not allow the Bank to, do any of the following:
(a) effect any stock split or other
recapitalization with respect to VB Common
Stock or the Bank's capital stock; issue,
pledge or encumber in any way any shares of
VB's or the Bank's capital stock; or grant
any option or other right to shares of VB's
or the Bank's capital stock (except issuances
of common stock upon exercise of options
granted before the date of this Agreement);
(b) declare or pay any dividend, or make any
other distribution, either directly or
indirectly,
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with respect to VB Common Stock or the Bank's
capital stock;
(c) dispose of assets or make any commitment
other than in the ordinary and usual course of
business;
(d) solicit or accept deposit accounts of a
different type from accounts previously
accepted by it or at rates materially in
excess of rates previously paid by it, except
to reflect changes in prevailing interest
rates, or incur any indebtedness greater than
$5,000;
(e) acquire an ownership interest or a leasehold
interest in any Property or any other real
property, whether by foreclosure or
otherwise, without: (1) making an appropriate
environmental evaluation in advance of
obtaining the interest and providing the
evaluation to WCB and (2) providing WCB with
at least 30 days' advance written notice
before it acquires the interest;
(f) except as otherwise required by law
(including in particular the VB's board of
directors' fiduciary duty to shareholders),
enter into or recommend the adoption by VB's
shareholders of any agreement involving a
possible merger or other business combination
or asset sale by VB not involving the
Transaction; or
(g) enter into any other transaction or make any
expenditure other than in the ordinary and
usual course of its business or as required
by this Agreement, except for expenses
reasonably related to completion of the
Transaction, which expenses are estimated not
to exceed $120,000.
4.1.3. CONDUCT REGARDING REPRESENTATIONS AND WARRANTIES.
VB will not do or cause to be done anything that would cause
any representation or warranty in Subsection 3.1 or 3.2 to be
untrue or inaccurate if made at Closing, except as otherwise
contemplated or required by this Agreement or consented to in
writing by WCB.
4.1.4. MAINTENANCE OF PROPERTIES. VB will, and will cause
the Bank to, maintain its properties and equipment (and
related insurance or its equivalent) in accordance with good
business practice.
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42
4.1.5. PRESERVATION OF BUSINESS ORGANIZATION. VB will, and
will cause the Bank to, use all reasonable efforts to:
(a) preserve its business organization;
(b) retain the services of present management;
and
(c) preserve the goodwill of suppliers, customers
and others with whom it has business
relationships.
4.1.6. SENIOR MANAGEMENT. VB will, and will require the
Bank to, consult with WCB before making any change with
respect to present management personnel having the rank of
vice-president or higher.
4.1.7. COMPENSATION. VB will not, and will not allow the
Bank to, permit any increase in the current or deferred
compensation payable or to become payable by VB to any of its
directors, officers, employees, agents or consultants other
than normal increments in compensation in accordance with VB's
past practices with respect to the timing and amounts of such
increments. Without the prior written approval of WCB, VB
will not, and will not allow the Bank to, commit to, execute
or deliver any employment agreement with any party not
terminable upon two weeks' notice and without expense.
4.1.8. UPDATE OF FINANCIAL STATEMENTS. VB will deliver
Subsequent VB/Bank Financial Statements to WCB by the earlier
of: (1) 5 days after VB or the Bank has prepared and issued
them or (2) 60 days from year-end for year-end statements and
30 days from the end of the quarter for quarterly statements.
The Subsequent VB/Bank Financial Statements:
(a) will be prepared from the books and records
of VB and the Bank;
(b) will present fairly the financial position
and operating results of VB and the Bank at
the times indicated and for the periods
covered;
(c) will be prepared in accordance with GAAP
(except for the absence of notes) and with
the regulations promulgated by applicable
regulatory authorities, to the extent then
applicable, subject to normal year-end
adjustments; and
(d) will reflect all VB's and the Bank's
liabilities, contingent or otherwise, on the
respective dates and for the respective
periods covered, except for liabilities:
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43
(1) not required to be so reflected in
accordance with GAAP or (2) not
significant in amount.
4.1.9. NO SOLICITATION. Neither VB nor any of its officers
or directors, directly or indirectly, will solicit, encourage,
entertain, or facilitate any other proposals or inquiries for
an acquisition of the shares or assets of VB or its
subsidiaries or enter into discussions concerning any such
acquisition, except as otherwise required by law. No such
party will make available to any person not affiliated with VB
or WCB any information about its business or organization that
is not either routinely made available to the public generally
or required by law.
4.1.10. TITLE POLICIES. At WCB's request, VB will provide
WCB with title reports issued by a title insurance company
reasonably satisfactory to WCB, showing unencumbered fee
simple title or vendee's interest to all real Property owned
by VB or the Bank, other than other real estate owned, and
unencumbered leasehold interests in all real Property leased
by VB or the Bank, and containing only such exceptions,
reservations and encumbrances as may be consented to in
writing by WCB or may be consistent with Subsection 3.2.3.
For purposes of this Agreement, "Property" includes any
property that VB or the Bank has owned or leased, or in which
VB or the Bank holds any security interest, mortgage, other
lien or interest.
4.1.11. REVIEW OF LOANS. VB will, and will cause the Bank
to, permit WCB to conduct an examination of the Bank's loans
to determine credit quality and the adequacy of the Bank's
allowance for loan losses. WCB will have continued access to
the Bank's loans through Closing to update the examination.
At WCB's reasonable request, VB and the Bank will provide WCB
with current reports updating the information set forth in
Schedule 7.
4.2. REGISTRATION STATEMENT OR FAIRNESS HEARING. At WCB's sole
discretion, the parties will follow either: (1) the procedures
listed in Subsection 4.2.1 or (2) the procedures listed in
Subsection 4.2.2. WCB will make this election within 60 days
after this Agreement is signed. If WCB chooses Subsection
4.2.2, WCB may subsequently cancel this choice at any time and
elect Subsection 4.2.1 if WCB reasonably and in good faith
determines that proceeding under Subsection 4.2.2 and relying
on the exemption in Section 3(a)(10) of the Securities Act
from registration of the WCB Shares would be materially
disadvantageous to WCB, HB or their shareholders or might give
rise to legal or regulatory penalties.
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44
4.2.1. REGISTRATION STATEMENT. If WCB elects to proceed
under this Subsection 4.2.1, the following will apply:
(a) PREPARATION OF REGISTRATION STATEMENT.
(1) A Registration Statement on Form S-4
("Registration Statement") will be
filed by WCB with the SEC under the
Securities Act for registration of
the WCB Shares, and the parties will
prepare a related prospectus/proxy
statement ("Prospectus/Proxy
Statement") to be mailed to the
shareholders of VB (together with
any amendments and supplements to
such Prospectus/Proxy Statement).
(2) The parties will cooperate with each
other in preparing the Registration
Statement and Prospectus/Proxy
Statement, and will use their best
efforts to: (1) file the
Registration Statement with the SEC
within 45 days following the date on
which this Agreement is executed,
and (2) obtain the clearance of the
SEC, any appropriate state
securities regulators and any other
required regulatory approvals, to
issue such Prospectus/Proxy
Statement.
(3) Nothing will be included in the
Registration Statement or the
Prospectus/Proxy Statement or any
proxy solicitation materials with
respect to any party to this
Agreement unless approved by that
party, which approval will not be
unreasonably withheld.
(b) SUBMISSION TO SHAREHOLDERS.
(1) VB will submit the Prospectus/Proxy
Statement to, and will use its best
efforts in good faith to obtain the
prompt approval of the
Prospectus/Proxy Statement by, all
applicable regulatory authorities.
VB will provide copies of such
submissions for review by WCB.
(2) VB will promptly take the action
necessary in accordance with
applicable law and its articles of
incorporation and bylaws to convene
a shareholders meeting to consider
the approval of this Agreement and
to authorize the
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transactions contemplated by this
Agreement. The shareholders meeting
will be held on the earliest
practical date after the date the
Proxy Statement/Prospectus may first
be sent to VB shareholders without
objection by applicable governmental
authorities; but VB will have at
least 30 days to solicit proxies.
Except as otherwise required by law,
VB's board of directors and VB's
officers will recommend to VB's
shareholders that the shareholders
approve the Transaction.
4.2.2. FAIRNESS HEARING. If WCB elects to proceed under
this Subsection 4.2.2, the following will apply:
(a) PREPARATION OF APPLICATIONS AND FILINGS.
(1) The parties will cooperate to
prepare all necessary applications
and filings to register the WCB
Shares with and conduct a hearing
("Hearing") before the Oregon
Director of the Department of
Consumer and Business Services
("Oregon Director") under Section
59.095 of the Oregon Revised
Statutes.
(2) The parties will use all reasonable
efforts to obtain from the Oregon
Director (i) registration of the WCB
Shares, (ii) approval of a plan of
exchange provided by this Agreement
("Plan of Exchange"), and (iii) a
finding that the Plan of Exchange is
fair, just and equitable.
(3) The parties will cooperate with each
other in preparing the
Proxy/Disclosure Statement, and will
use their best efforts to obtain (i)
approval of the Plan of Exchange by
the Oregon Director and (ii) any
other regulatory approvals required
to issue the Proxy/Disclosure
Statement.
(4) Nothing will be included in the
Proxy/Disclosure Statement or any
proxy solicitation materials with
respect to any party to this
Agreement unless approved by that
party, which approval will not be
unreasonably withheld.
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(b) SUBMISSION TO SHAREHOLDERS.
(1) VB will submit the Proxy/Disclosure
Statement to, and will use its best
efforts in good faith to obtain the
prompt approval of the
Proxy/Disclosure Statement by, all
applicable regulatory authorities.
VB will provide copies of such
submissions for review by WCB.
(2) VB will promptly take the action
necessary in accordance with
applicable law and its articles of
incorporation and bylaws to convene
a shareholders meeting to consider
the approval of this Agreement and
to authorize the transactions
contemplated by this Agreement. The
shareholders meeting will be held on
the earliest practical date after
the date the Proxy/Disclosure
Statement may first be sent to VB
shareholders without objection by
applicable governmental authorities;
but VB will have at least 30 days to
solicit proxies. Except as
otherwise required by law, VB's
board of directors and VB's officers
will recommend to VB's shareholders
that the shareholders approve the
Transaction.
4.3. SUBMISSION TO REGULATORY AUTHORITIES. Representatives of WCB
and HB will prepare and file with applicable regulatory agencies,
applications for approvals, waivers or other actions their counsel
finds necessary or desirable in order to consummate the Transaction.
WCB will provide copies of these applications for VB's review. These
applications are expected to include:
(a) An application to the Federal Reserve; and
(b) A change of control notice with the Director of the
Washington Department of Financial Institutions and
related filings regarding the Transaction.
4.4. ANNOUNCEMENTS. The parties will cooperate and consult with
each other in the development and distribution of all news releases
and other public information disclosures with respect to this
Agreement or the Transaction, unless otherwise required by law.
4.5. CONSENTS. WCB, HB, and VB each will use their best efforts to
obtain the consent or approval of any person, organization or other
entity whose consent or approval is required in order to permit WCB,
HB, and VB to consummate the Transaction.
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4.6. FURTHER ACTIONS. The proper officers of WCB, HB, and VB, in
the name and on behalf of those respective parties, will use their
best efforts in good faith to make all such arrangements, do or cause
to be done all such acts and things, and execute and deliver all such
certificates and other instruments and documents as may be reasonably
necessary or appropriate in order to consummate the Transaction
promptly.
4.7. NOTICE. VB will provide WCB and HB with prompt written notice
of the following:
(a) any events, individually or in the aggregate,
that could have a Material Adverse Effect
with respect to VB or the Bank;
(b) the commencement of any proceeding against VB
by or before any court or governmental
agency, individually or in the aggregate,
that might have a Material Adverse Effect
with respect to VB or the Bank; or
(c) any acquisition of an ownership or leasehold
interest in Property.
4.8. CONFIDENTIALITY. WCB, HB, and VB each will, and VB will cause
the Bank to, hold in confidence all nonpublic information obtained
from the other in connection with the Transaction, other than
information that: (1) is required by law to be disclosed; (2) is
otherwise available on a nonconfidential basis; (3) has become public
without fault of the receiving party; or (4) is necessary to the
defense of one of the parties in a legal or administrative action
brought against that party by another party. If the Transaction is
not completed, WCB, HB and VB will, and VB will cause the Bank to: (1)
each return to the others all confidential documents obtained from
them and (2) not use any nonpublic information obtained under this
Agreement or in connection with the Transaction.
4.9. AFFILIATE LETTERS. Within thirty days following the date this
Agreement is signed, VB will deliver to WCB, after consultation with
legal counsel, a list of names and addresses of VB's "affiliates" with
respect to the Transaction within the meaning of SEC Rule 145. By the
Effective Date, VB will deliver, or cause to be delivered, to WCB a
letter from each of these "affiliates," dated as of the date of its
delivery and in a form satisfactory to WCB.
4.10. UPDATE OF FINANCIAL STATEMENTS. WCB will deliver Subsequent
WCB Financial Statements to VB by the earlier of: (1) 5 days after WCB
prepares and issues them or (2) 60 days from year-end for year-end
statements and 30 days from the end of the quarter for quarterly
statements. The Subsequent WCB Financial Statements will:
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(a) be prepared from the books and records of WCB;
(b) present fairly the financial position and operating
results of WCB at the times indicated and for the
periods covered;
(c) be prepared in accordance with GAAP (except for the
absence of notes) and with the regulations
promulgated by applicable regulatory authorities, to
the extent then applicable, subject to normal
year-end adjustments; and
(d) reflect all liabilities, contingent or otherwise, of
WCB on the respective dates and for the respective
periods covered, except for liabilities not required
to be so reflected in accordance with GAAP or not
significant in amount.
4.11. AVAILABILITY OF WCB'S BOOKS, RECORDS AND PROPERTIES. WCB will
make available to VB true and correct copies of: (1) its articles of
incorporation and bylaws and (2) minutes of the meetings of its
shareholders and its board of directors. At VB's reasonable request,
WCB will also provide VB with copies of: (1) reports filed with the
SEC or banking regulators and (2) WCB's stock option plans.
4.12. VB DEBT OUTSTANDING. On the Effective Date, WCB will either
assume or satisfy VB's note payable to Security State Bank,
Centralia, Washington, in a principal amount not greater than
$1,350,000.
SECTION 5.
APPROVALS AND CONDITIONS
5.1. REQUIRED APPROVALS. The obligations of the parties to this
Agreement are subject to the approval of the Agreement and Transaction
by all appropriate regulatory agencies having jurisdiction with
respect to the Transaction.
5.2. CONDITIONS TO OBLIGATIONS OF WCB AND HB. All obligations of
WCB and HB under this Agreement are subject to satisfaction of the
following conditions at or before Closing:
5.2.1. REPRESENTATIONS AND WARRANTIES. VB's representations
and warranties in this Agreement and in any certificate or
other instrument delivered in connection with this Agreement
will be true and correct in all material respects at Closing
(except to the extent that they expressly relate to an earlier
date, in which case they will be true in all material respects
as of that earlier date). These representations and
warranties will have the same force and effect as if they had
been made at Closing. VB will have delivered to WCB and HB
its certificate, executed by a duly authorized officer of VB
and dated as of Closing, stating that these
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5.2.1. representations and warranties comply with this
Subsection
5.2.2. COMPLIANCE. VB will have performed and complied with
all material terms, covenants and conditions of this
Agreement. VB will have delivered to WCB and HB its
certificate, executed by a duly authorized officer of VB and
dated as of Closing, stating that VB is in compliance with
this Subsection 5.2.2.
5.2.3. NO MATERIAL ADVERSE EFFECT. No material damage,
destruction or loss (whether or not covered by insurance) has
occurred, and no other event, individually or in the
aggregate, having or potentially having a Material Adverse
Effect with respect to VB or the Bank has occurred. VB's
certificate referred to in Subsection 5.2.2 will state that
the conditions identified in this Subsection 5.2.3 are
satisfied.
5.2.4. FINANCIAL CONDITION. The following will be true, and
VB's certificate referred to in Subsection 5.2.2 will so
state:
(a) as of Closing the consolidated net worth of
VB was not less than $6,100,000 and the net
worth of the Bank was not less than
$7,325,000, each as determined in accordance
with GAAP (before any adjustments not
reflected in VB's Financial Statements as of
December 31, 1995, required by Federal
Accounting Standards ("FAS") 115);
(b) all of the Bank's deposits, other than: (1)
brokered deposits, (2) public funds, and (3)
certificates of deposits (or equivalents)
equal to or in excess of $100,000
(collectively, "Core Deposits"), will not be
less than 95% of the daily average Core
Deposits of the Bank for the 90-day period
ending two days before Closing;
(c) the Bank's allowance for possible loan and
lease losses (1) at December 31, 1995, and at
Closing will be adequate to absorb the Bank's
anticipated loan and lease losses (taking
into account any recommendations made by VB's
certified public accountants) and (2) at
Closing will be not less than 1.5% of the
Bank's aggregate loans and leases; and
(d) the reserves set aside for the contingent
liabilities reflected in the Subsequent
VB/Bank Financial Statements will be adequate
to absorb all reasonably anticipated losses.
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5.2.5. RELEASE OF PLEDGE. WCB will have assumed or
satisfied VB's note as provided in Subsection 4.12 and will
have secured a release from Security State Bank, Centralia,
Washington, of VB's stock pledged to Security State Bank as
security for this note.
5.2.6. NO CHANGE IN LOAN REVIEW. VB will have provided to
WCB the reports reasonably requested by WCB under Subsection
4.1.11, and neither these reports nor any examinations
conducted by WCB under Subsection 4.1.11 reveal a material
adverse change in either: (1) the information set forth in
Schedule 7 or (2) information revealed during WCB's previous
examinations of the Bank's loans.
5.2.7. NO GOVERNMENTAL PROCEEDINGS. No action or proceeding
will have been commenced or threatened by any governmental
agency to restrain or prohibit or invalidate the Transaction.
5.2.8. APPROVAL BY COUNSEL. All actions, proceedings,
instruments and documents required in connection with this
Agreement, the Transaction, and all other related legal
matters will have been approved by counsel for WCB and HB.
5.2.9. RECEIPT OF TITLE POLICY. WCB will have received the
title insurance policy or policies required by Subsection
4.1.10.
5.2.10. CORPORATE AND SHAREHOLDER ACTION. VB's board of
directors and VB's shareholders will each have approved the
Transaction.
5.2.11. TAX OPINION. WCB and HB will obtain from ▇▇▇▇▇▇ &
▇▇▇▇, and deliver to VB, an opinion addressed to VB and in
form and substance reasonably satisfactory to VB and its
counsel, to the effect that consummation of the Transaction
will not result in a taxable event for VB or WCB, and
otherwise will have each of the effects specified below:
(a) The Transaction will qualify as a
reorganization within the meaning of IRC
Section 368(a)(1)(A).
(b) Under IRC Section 354(a)(i), VB's
stockholders who, in accordance with Section
1, exchange their VB Common Stock shares
solely for WCB Common Stock shares will not
recognize gain or loss on the exchange.
(c) Cash payments to VB's shareholders in lieu of
a fractional share of WCB Common Stock will
be treated as distributions in redemption of
the
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fractional share interest, subject to the
limitations of IRC Section 302.
5.2.12. OPINION OF COUNSEL. VB will obtain from ▇▇▇▇▇▇
Pepper & Shefelman and deliver to WCB an opinion of counsel,
addressed to WCB, to the effect that:
(a) VB is a corporation validly existing and in
good standing under Washington State law;
(b) the Bank is a Washington State chartered
banking corporation validly existing and in
good standing under Washington State law;
(c) VB has the corporate power and authority to
execute, deliver, and perform this Agreement;
(d) the execution, delivery, and performance of
this Agreement have been duly authorized by
all necessary corporate action on the part of
VB, and this Agreement constitutes the legal,
binding, and valid obligation of VB,
enforceable in accordance with its terms,
except to the extent that enforcement (but
not validity) may be limited by bankruptcy,
insolvency, reorganization, moratorium, or
similar laws generally affecting the
enforcement of the rights of creditors and by
generally applicable principles of equity;
(e) all issued and outstanding shares of VB's and
the Bank's capital stock have been duly
authorized and are validly issued, fully
paid, non-assessable, free of preemptive or
similar rights arising by operation of law or
otherwise, and have been issued in compliance
with all applicable federal and applicable
state securities laws; and
(f) all VB Options have been duly authorized and
validly granted.
5.2.13. CASH PAID. The aggregate of the cash paid to holders
of VB Common Stock under this Agreement and applicable law
will not exceed 10% of the value of the WCB Common Stock
issued upon Closing.
5.2.14. AFFILIATE LETTERS. WCB and HB will have received the
affiliate list and letters specified in Subsection 4.9.
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5.2.15. REGISTRATION STATEMENT/FAIRNESS HEARING.
(a) If the parties proceed under Subsection
4.2.1, the Registration Statement, as it may
have been amended, required in connection
with the shares of WCB Common Stock to be
issued to Shareholders under Subsection 1.3
and as described in Subsection 4.2 will have
become effective, and no stop order
suspending the effectiveness of such
Registration Statement will have been issued
or will remain in effect, and no proceedings
for that purpose will have been initiated or
threatened by the SEC the basis for which
remains in effect.
(b) If the parties proceed under Subsection
4.2.2, the Oregon Director will have issued
an order of registration and a finding that
the Plan of Exchange is fair, just, and
equitable and free from fraud and the WCB
Shares will be exempt from registration under
the Securities Act.
5.2.16. CONSENTS. VB will have obtained the consents as
indicated in Schedule 6.
5.2.17. FAIRNESS OPINION. VB will have received from an
investment advisor reasonably acceptable to WCB, an opinion,
dated immediately before VB mails the Prospectus/Proxy
Statement or Proxy/Disclosure Statement to its shareholders,
to the effect that the financial terms of the Transaction are
financially fair to VB's shareholders. WCB will provide VB's
investment advisor with such information as it may reasonably
request in order to render its opinion.
5.2.18. VB DIRECTOR TO SERVE ON WCB BOARD. VB will have
identified one VB director who is satisfactory to WCB and
willing to serve on WCB's board of directors.
5.2.19. ACCOUNTING TREATMENT. It will have been determined
to the satisfaction of WCB that the Transaction will be
treated for accounting purposes as a "pooling of interests" in
accordance with APB Opinion No. 16, and WCB will have received
a letter to such effect from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP, certified
public accountants.
5.2.20. SOLICITATION OF EMPLOYEES. Neither any member of
VB's board of directors nor any entity with which any such
director is affiliated will have solicited any employee of VB,
WCB or HB with the intention of causing such employee to
terminate his or her employment with VB, WCB or HB, as the
case may be.
5.2.21. OTHER MATTERS. WCB will have received such other
opinions, certificates, and documents as WCB may
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reasonably request in connection with this Agreement and the
Transaction.
5.3. CONDITIONS TO VB'S OBLIGATIONS. All VB's obligations under
this Agreement are subject to satisfaction of the following conditions
at or before Closing:
5.3.1. REPRESENTATIONS AND WARRANTIES. WCB's and HB's
representations and warranties in this Agreement and in any
certificate or other instrument delivered in connection with
this Agreement will be true and correct in all material
respects at Closing (except to the extent that they expressly
relate to an earlier date, in which case they will be true in
all material respects as of that earlier date). These
representations and warranties will have the same force and
effect as if they had been made at Closing. WCB and HB will
have delivered to VB their respective certificates, executed
by duly authorized officers of WCB and HB and dated as of
Closing, stating that these representations and warranties
comply with this Subsection 5.3.1.
5.3.2. COMPLIANCE. WCB and HB each will have performed and
complied with all terms, covenants and conditions of this
Agreement. WCB and HB will have delivered to VB their
respective certificates, executed by duly authorized officers
of WCB and HB and dated as of Closing, stating that WCB and
HB are in compliance with this Subsection 5.3.2.
5.3.3. NO MATERIAL ADVERSE EFFECT. No material damage,
destruction or loss (whether or not covered by insurance) has
occurred, and no other event, individually or in the
aggregate, having or potentially having a Material Adverse
Effect with respect to WCB has occurred. WCB's certificate
referred to in Subsection 5.3.2 will state that the conditions
identified in this Subsection 5.3.3 are satisfied.
5.3.4. NO GOVERNMENTAL PROCEEDINGS. No action or proceeding
will have been commenced or threatened by any governmental
agency to restrain or prohibit or invalidate the Transaction.
5.3.5. CORPORATE AND SHAREHOLDER ACTION. The boards of
directors of WCB and HB, and VB's and HB's shareholders, will
each have approved the Transaction.
5.3.6. TAX OPINION. The tax opinion specified in Subsection
5.2.11 will have been delivered to VB.
5.3.7. OPINION OF COUNSEL. WCB will obtain from ▇▇▇▇▇▇ &
▇▇▇▇, P.C. and deliver to VB an opinion, addressed to VB, to
the effect that:
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(a) WCB is a corporation validly existing and in
good standing under Oregon State law and HB
is a corporation validly existing and in good
standing under Washington State law;
(b) WCB and HB have the corporate power and
authority to execute, deliver, and perform
this Agreement;
(c) the execution, delivery, and performance of
this Agreement have been duly authorized by
all necessary corporate action on the part of
WCB and HB, and this Agreement constitutes
the legal, binding, and valid obligation of
WCB and HB, enforceable in accordance with
its terms, except to the extent that
enforcement (but not validity) may be limited
by bankruptcy, insolvency, reorganization,
moratorium, or similar laws generally
affecting the enforcement of the rights of
creditors and by generally applicable
principles of equity;
(d) the WCB Shares have been duly authorized and,
when issued as contemplated by this
Agreement, will be validly issued, fully paid
and nonassessable; and
(e) (1) The Registration Statement became
effective under the Securities Act on
____________, 1996, and, to the best of
counsel's knowledge, no stop order suspending
the effectiveness of the Registration
Statement has been issued and no proceedings
for that purpose have been instituted or
threatened by the Securities and Exchange
Commission (if the parties proceed under
Subsection 4.2.1) or (2) WCB has received
from the Oregon Director an order of
registration and a finding by the Oregon
Director that the Plan of Exchange is fair,
just, and equitable and free from fraud (if
the parties proceed under Subsection 4.2.2).
5.3.8. CASH PAID. The aggregate of the cash paid to holders
of VB Common Stock under this Agreement and applicable law
will not exceed 10% of the value of the WCB Common Stock
issued upon Closing.
5.3.9. REGISTRATION STATEMENT.
(a) If the parties proceed under Subsection
4.2.1, the Registration Statement, as it may
have been amended, required in connection
with the shares of WCB Common Stock to be
issued to
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Shareholders under Subsection 1.3 and as
described in Subsection 4.2 will have become
effective, and no stop order suspending the
effectiveness of such Registration Statement
will have been issued or will remain in
effect, and no proceedings for that purpose
will have been initiated or threatened by the
SEC the basis for which remains in effect.
(b) If the parties proceed under Subsection
4.2.2, the Oregon Director will have issued
an order of registration and a finding that
the Plan of Exchange is fair, just, and
equitable and free from fraud and the WCB
Shares will be exempt from registration under
the Securities Act.
5.3.10. VB DIRECTOR TO SERVE ON WCB BOARD. WCB has
appointed, effective as of Closing, a VB director satisfactory
to VB to serve on WCB's board of directors.
5.3.11. APPROVAL BY COUNSEL. All actions, proceedings,
instruments and documents required in connection with this
Agreement, the Transaction, and all other related legal
matters will have been approved by counsel for VB and the
Bank.
5.3.12. OTHER MATTERS. VB will have received such other
opinions, certificates, and documents as VB may reasonably
request in connection with this Agreement and the Transaction.
SECTION 6.
DIRECTORS, OFFICERS AND EMPLOYEES
6.1. DIRECTORS. As a condition to the execution of this Agreement,
VB will cause each member of VB's and the Bank's board of directors to
enter into a written noncompetition agreement on or before the date
this Agreement is signed. These noncompetition agreements will take
effect on the Effective Date.
6.2. EMPLOYMENT AGREEMENT. As a condition to the execution of this
Agreement, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ will make himself available to continue as
President of the Bank, in accordance with the terms and conditions set
forth in an employment agreement of even date with this Agreement,
which will take effect on the Effective Date.
6.3. DIRECTOR AND EX-OFFICIO MEMBER APPOINTED. On the Effective
Date, WCB will cause one director, acceptable to WCB, who is a
director of VB immediately before the Effective Date, to be elected or
appointed to WCB's board of directors to serve until his successor is
elected and qualified. As of the Effective Date and until the end of
his term as President of the Bank, WCB will allow ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ to
attend the
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meetings of WCB's board of directors as an ex-officio member of WCB's
board of directors. Nothing in this Subsection 6.3 or this Agreement
restricts in any way any rights of the WCB's shareholders and
directors at any time after the Effective Date to nominate, elect,
select, or remove WCB's directors.
6.4. EMPLOYEES. WCB presently intends to allow the Bank's
employees who are employed with the Combined Corporation following the
Transaction ("Continuing Employees") to participate in certain
employee benefit plans in which employees of WCB and HB currently
participate. WCB intends to grant Continuing Employees credit for
prior service with the Bank for purposes of determining eligibility
and vesting, but Continuing Employees will not receive this credit for
purposes of determining benefit accruals. This expression of intent
is not a contract with the Bank's employees and will not be construed
to create a contract or employment right with the Bank's employees.
6.5. EMPLOYEE BENEFIT ISSUES.
6.5.1. COMPARABILITY OF BENEFITS. WCB confirms to VB its
present intention to provide Continuing Employees with
employee benefit programs which, in the aggregate, are
generally not less favorable than those being provided to WCB
employees.
6.5.2. TRANSFER OR MERGER OF GROUP PLAN. As soon as
practicable after Closing, VB's employee benefit plans will be
terminated and the interests of VB's employees in those plans
will be transferred or merged into WCB's employee benefit
plans.
6.5.3. NO CONTRACT CREATED. Except as provided in
Subsection 6.2, Nothing in this Agreement gives any VB
employee a right to continuing employment.
SECTION 7.
TERMINATION OF AGREEMENT AND
ABANDONMENT OF TRANSACTION
7.1. TERMINATION BY REASON OF LAPSE OF TIME. If Closing does not
occur before the Termination Date, either WCB or VB may terminate this
Agreement and the Transaction if all of the following conditions are
present:
(a) the terminating party's board of directors decides to
terminate by a majority vote of its members;
(b) the terminating party delivers to the other party
written notice that its board of directors has voted
in favor of termination; and
(c) the failure to consummate the Merger by the
Termination Date is not due to a breach by the
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party seeking termination of any of its obligations,
representations or warranties under this Agreement.
7.2. OTHER GROUNDS FOR TERMINATION. This Agreement and the
Transaction may be terminated at any time before Closing (whether
before or after applicable approval of this Agreement by VB's
shareholders, unless otherwise provided) as follows:
7.2.1. MUTUAL CONSENT. By mutual consent of the parties to
this Agreement, if the boards of directors of each party
agrees to terminate by a majority vote of its members.
7.2.2. CONDITIONS OF VB NOT MET. By WCB's board of
directors if, by October 31, 1996, any condition set forth in
Subsections 5.1 or 5.2 has not been satisfied.
7.2.3. VB FAILS TO RECOMMEND STOCKHOLDER APPROVAL OR
TRIGGERING EVENT OCCURS. By WCB's board of directors (a)
before VB's shareholders approve the Transaction, if VB's
board of directors: (1) fails to recommend to its stockholders
the approval of the Transaction or (2) modifies, withdraws or
changes in a manner adverse to WCB its recommendation to
shareholders to approve the Transaction; or (b) an Initial
Triggering Event (as defined in the Stock Option Agreement),
and a Subsequent Triggering Event (as defined in the Stock
Option Agreement) occur, unless WCB exercises the Stock Option
Agreement.
7.2.4. CONDITIONS OF WCB OR HB NOT MET. By VB's board of
directors if, by October 31, 1996, any condition set forth in
Subsections 5.1 or 5.3 has not been satisfied.
7.2.5. DECLINE IN VALUE OF WCB STOCK. By VB's board of
directors, in accordance with the following provisions:
(a) Subject to Subsection 7.2.5.(b), at any time
during the three-business-day period
commencing on the fifth calendar day
preceding the Effective Date (the
"Determination Date"), if both of the
following conditions are satisfied:
(1) The Modified Average Closing Price
(determined for purposes of this
Subsection 7.2.5.(a)(1) as the
Average Closing Price without the
limitations set forth in the second
sentence of Subsection 1.3.3) is
less than $15.30; and
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58
(2) The number, expressed as a
percentage, obtained by dividing the
Modified Average Closing Price by
$17.00 is more than five percentage
points less than the Index
Differential.
(b) If VB exercises its termination right under
Subsection 7.2.5.(a), it will give immediate
written notice to WCB. If VB gives this
notice, the Effective Date will automatically
be postponed to a date ("Postponed Effective
Date") 10 business days from the date of this
notice, unless the parties agree on another
date, and all references to the Effective
Date in this Agreement, except in Subsections
1.3.3, 2.1, 7.2.5.(a) and 7.2.5.(b), will
mean the Postponed Effective Date. Unless
Subsection 7.2.5.(c) applies, during the
five-business-day period beginning on the day
WCB receives VB's termination notice, WCB has
the option to increase the consideration to
be received by VB shareholders by using the
Modified Average Closing Price in place of
the Average Closing Price. If WCB so elects
within the five-business-day period, it will
give immediate written notice to VB, and no
termination will have occurred under this
Subsection 7.2.5, and this Agreement will
remain in effect in accordance with its terms
(except for the substitution of the Modified
Average Closing Price for the Average Closing
Price and Postponed Effective Date for
Effective Date).
(c) At any time during the three-business-day
period commencing on the Determination Date,
if the Modified Average Closing Price is less
than $13.60. If VB exercises this right, it
will give immediate written notice to WCB.
(d) For purposes of this Subsection 7.2.5, the
terms listed below have the following
meanings:
(1) Index Price. For any member of the
Index Group, the Modified Average
Closing Price calculated using,
instead of WCB stock, the common
stock of that member of the Index
Group.
(2) Index Differential. The sum of the
respective numbers (expressed as
percentages), for each of the
members of the Index Group, obtained
by multiplying the weighting (as set
forth in
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59
Schedule 14) of that member of the
Index Group times the quotient of
the Index Price for that member of
the Index Group divided by the Base
Price (as set forth in Schedule 14)
for that member of the Index Group.
(3) Index Group. The companies set
forth in chart form in Schedule 14,
the common stock of all of which
will be publicly traded and as to
which no publicly announced
Acquisition Proposal for the company
will have been made between the day
before the date this Agreement is
signed and the Determination Date.
(4) Acquisition Proposal. A company
within the Index Group has received
an Acquisition Proposal if it
receives a proposal for a
transaction, which if consummated as
proposed would immediately
thereafter result in its equity
holders' controlling 50% or less of
the equity of the entity resulting
from the combination.
(e) If the common stock of any of the companies
listed in Schedule 14 ceases to be publicly
traded or an Acquisition Proposal is
announced with respect to that company
between the day before the date this
Agreement is signed and the Determination
Date, that company will be removed from the
Index Group, and the weights attributed to
the remaining companies will be adjusted
proportionately for purposes of determining
the Index Price.
(f) All prices per share under this Subsection
7.2.5 will be appropriately adjusted to
account for stock dividends, split-ups,
mergers, combinations, conversions, exchanges
of shares or the like.
7.2.6. IMPRACTICABILITY. By either WCB, HB, or VB upon
written notice given to the other parties if the party seeking
termination under this Subsection 7.2.6's board of directors
has determined in its sole judgment, made in good faith and
after due consideration and consultation with counsel, that
the Transaction has become inadvisable or impracticable by
reason of the institution of litigation by the federal
government or the government of either the State of Washington
or the State of Oregon to restrain or invalidate the
transactions contemplated by this Agreement.
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7.3. COST ALLOCATION UPON TERMINATION. In connection with the
termination of this Agreement under this ▇▇▇▇▇▇▇ ▇, ▇▇, ▇▇▇ and HB
each will pay their own out-of-pocket costs incurred in connection
with this Agreement, and will have no other liability to any other
party.
SECTION 8.
MISCELLANEOUS
8.1. NOTICES. Any notice, request, instruction or other document
given under this Agreement must be in writing and must either be
delivered personally or be sent by registered or certified mail,
postage prepaid, and addressed as follows (or to any other address or
person representing any party as designated by that party through
written notice to the other parties):
VB Vancouver Bancorp
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ Pepper & Shefelman
One Main Place
▇▇▇ ▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
WCB and ▇▇ ▇▇▇▇ Coast Bancorp
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
8.2. WAIVERS AND EXTENSIONS. Subject to Section 9, WCB, HB or VB
may grant waivers or extensions to the other parties to this
Agreement, but only through a written instrument executed by the Chief
Executive Officer of the party granting the waiver or extension.
Waivers or extensions which do not comply with the preceding sentence
are not effective. In accordance with this Section 8.2, a party may
extend the time for the performance of any of the obligations or other
acts of any other party, and may waive:
(a) any inaccuracies of any other party in the
representations and warranties contained in this
Agreement or in any document delivered in connection
with this Agreement;
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61
(b) compliance with any of the covenants of any other
party; and
(c) any other party's performance of any obligations
under this Agreement and any other condition
precedent set out in Section 5.
8.3. GENERAL INTERPRETATION. Except as otherwise expressly
provided in this Agreement or unless the context clearly requires
otherwise: (1) the defined terms defined in this Agreement include the
plural as well as the singular and (2) references in this Agreement to
Sections, Subsections, Schedules, and Exhibits refer to Sections and
Subsections of and Schedules and Exhibits to this Agreement. Whenever
the words "include", "includes", or "including" are used in this
Agreement, the parties intend them to be interpreted as if they are
followed by the words "without limitation." All pronouns used in this
Agreement include the masculine, feminine and neuter gender, as the
context requires. All accounting terms used in this Agreement that
are not expressly defined in this Agreement have the respective
meanings given to them in accordance with GAAP.
8.4. CONSTRUCTION AND EXECUTION IN COUNTERPARTS. Except as
otherwise expressly provided in this Agreement, this Agreement: (1)
contains the parties' entire understanding, and no modification or
amendment of its terms or conditions will be effective unless in
writing and signed by the parties, or their respective duly authorized
agents; (2) will not be interpreted by reference to any of the titles
or headings to the Sections or Subsections, which have been inserted
for convenience only and are not deemed a substantive part of this
Agreement; (3) includes all amendments to this Agreement, each of
which is made a part of this Agreement by this reference; and (4) may
be executed in one or more counterparts, each of which will be deemed
an original, but all of which taken together will constitute one and
the same document.
8.5. SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS.
Except for Subsection 4.8 (confidentiality) and Subsection 7.3
(expense allocation), the representations, warranties and covenants
in this Agreement will not survive Closing or termination of this
Agreement.
8.6. ATTORNEYS' FEES AND COSTS. In the event of any dispute or
litigation with respect to the terms and conditions or enforcement of
rights or obligations arising by reason of this Agreement or the
Transaction, the prevailing party in any such litigation will be
entitled to reimbursement from the other party for its costs and
expenses, including reasonable judicial and extra-judicial attorneys'
fees, expenses and disbursements, and fees, costs and expenses
relating to any mediation or appeal.
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62
8.7. ARBITRATION. At either party's request, the parties must
submit any dispute, controversy or claim arising out of or in
connection with, or relating to, this Agreement or any breach or
alleged breach of this Agreement, to arbitration under the American
Arbitration Association's rules then in effect (or under any other
form of arbitration mutually acceptable to the parties). A single
arbitrator agreed on by the parties will conduct the arbitration. If
the parties cannot agree on a single arbitrator, each party must
select one arbitrator and those two arbitrators will select a third
arbitrator. This third arbitrator will hear the dispute. The
arbitrator's decision is final (except as otherwise specifically
provided by law) and binds the parties, and either party may request
any court having jurisdiction to enter a judgment and to enforce the
arbitrator's decision. The arbitrator will provide the parties with a
written decision naming the substantially prevailing party in the
action. This prevailing party is entitled to reimbursement from the
other party for its costs and expenses, including reasonable
attorneys' fees.
8.8. GOVERNING LAW. This Agreement will be governed by and
construed in accordance with the laws of the State of Washington,
except to the extent that certain matters may be governed by federal
law.
8.9. SEVERABILITY. If a court determines that any term of this
Agreement is invalid or unenforceable under applicable law, the
remainder of this Agreement is not affected, and each remaining term
is valid and enforceable to the fullest extent permitted by law.
SECTION 9.
AMENDMENTS
9.1. BOARD ACTION. At any time before the Effective Date, whether
before or after the parties have obtained any applicable shareholder approvals
of the Transaction, the boards of directors of WCB, HB, and VB may: (1) amend or
modify this Agreement or any attached Exhibit or Schedule and (2) grant waivers
or time extensions in accordance with Subsection 8.2; but after the VB
shareholders have approved this Agreement, the parties' boards of directors may
not without VB shareholder approval amend or waive any provision of this
Agreement if the amendment or waiver would reduce the amount or change the form
of consideration VB shareholders will receive in the Transaction. All
amendments, modifications, extensions and waivers must be in writing and signed
by the party agreeing to the amendment, modification, extension or waiver.
Failure by any party to insist on strict compliance with any obligation,
agreement or condition of the other parties under this Agreement, does not
without a writing operate as a waiver or estoppel with respect to that or any
other obligation, agreement or condition.
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Signed as of February 15, 1996:
WEST COAST BANCORP
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Co-President and CEO
HB ACQUISITION CORPORATION
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Co-President and CEO
VANCOUVER BANCORP
By /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
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64
STATE OF OREGON )
) ss.
COUNTY OF CLACKAMAS )
On this 15th day of February, 1996, before me personally appeared
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, to me known to be the Co-President and Chief Executive
Officer of WEST COAST BANCORP, the corporation that executed the foregoing
instrument, who acknowledged said instrument to be the free and voluntary act
and deed of said corporation, for the uses and purposes mentioned there, and
who stated on oath that he or she was authorized to execute said instrument,
and that the seal affixed (if any) was the official seal of said corporation.
IN WITNESS OF THE FOREGOING, I have set my hand and official seal to
this document as of the day and year first written above.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------------
NOTARY PUBLIC in and for the State
of Oregon, residing at
▇▇▇ ▇▇▇▇ ▇▇. ▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Title: Executive Assistant
My commission expires 9/29/97
STATE OF OREGON )
) ss.
COUNTY OF CLACKAMAS )
On this 15th day of February, 1996, before me personally appeared
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ to me known to be the Co-President and Chief Executive
Officer of HB ACQUISITION CORPORATION, the corporation that executed the
foregoing instrument, who acknowledged said instrument to be the free and
voluntary act and deed of said corporation, for the uses and purposes mentioned
there, and who stated on oath that he or she was authorized to execute said
instrument, and that the seal affixed (if any) was the official seal of said
corporation.
IN WITNESS OF THE FOREGOING, I have set my hand and official seal to
this document as of the day and year first written above.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------------
NOTARY PUBLIC in and for the State
of Oregon, residing at
▇▇▇ ▇▇▇▇ ▇▇. ▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Title: Executive Assistant
My commission expires 9/29/97
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65
STATE OF WASHINGTON )
) ss.
COUNTY OF ▇▇▇▇▇ )
On this 15th day of February, 1996, before me personally appeared ▇▇▇
▇. ▇▇▇▇▇▇▇▇, to me known to be the President of VANCOUVER BANCORP, the
corporation that executed the foregoing instrument, who acknowledged said
instrument to be the free and voluntary act and deed of said corporation, for
the uses and purposes mentioned there, and who stated on oath that he or she
was authorized to execute said instrument, and that the seal affixed (if any)
was the official seal of said corporation.
IN WITNESS OF THE FOREGOING, I have set my hand and official seal to
this document as of the day and year first written above.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
NOTARY PUBLIC in and for the State
of Washington, residing at
Vancouver
Title: Notary
My commission expires 7/24/99
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The undersigned, being all of the Board of Directors of Vancouver
Bancorp ("VB"), hereby consent to the Plan and Agreement of Reorganization and
Merger, dated as of February 15, 1996, between West Coast Bancorp, HB
Acquisition Corporation, and VB ("Agreement"), and individually and as a group
agree to vote in favor of the Agreement the shares of capital stock each
beneficially owns, and subject to the good faith exercise of their fiduciary
duties in accordance with the advise of counsel, to support and recommend the
Agreement's adoption by the other shareholders of VB.
Except as otherwise required by law, the undersigned hereby,
individually and as a group, further agree to refrain from (a) negotiating or
accepting any offer of merger, consolidation, or acquisition of any of the
shares or all or substantially all of the assets of VB from the date of the
Agreement through the meeting of the shareholders of VB at which the
transactions contemplated by the Agreement will be considered, and (b) any
other actions or omissions inconsistent with the transactions contemplated by
the Agreement.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------ ------------------------------
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇ /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------ ------------------------------
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------ ------------------------------
/s/ ▇▇▇▇▇ ▇. Pomajevic
------------------------------
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