STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") dated effective May
____, 1999, by and between UMPQUA HOLDINGS CORPORATION, an Oregon corporation
("Umpqua"); XXX XXXXXX, XXXXXXX XXXXXX, XXXX XXXX, XXXXX XXXXXXXX AND XXXXXX
XXXXXXXX (collectively, the "Shareholders"); and STRAND, ATKINSON, XXXXXXXX &
YORK, INCORPORATED, an Oregon corporation (the "Company").
R E C I T A L S :
A. The Shareholders are the owners of all of the issued and
outstanding shares of capital stock of the Company (the "Shares").
B. The Company is a licensed broker dealer selling investment
securities and providing other financial services from offices located in
Portland and Medford, Oregon and Kalama, Washington.
C. All the parties desire to consummate a business combination
transaction pursuant to which Umpqua will acquire all of the stock of the
Company from the Shareholders, for the consideration and on the other terms
set forth in this Agreement.
The parties intending to be legally bound, agree as follows:
1. DEFINITIONS
As used herein, the following terms have the indicated meanings:
"Adjusted Net Income" of the Company for any period means the combined
Net Income of Company and SUI for the period, determined in accordance with
GAAP, with the following adjustments:
(i) Any amortization of goodwill or other intangibles booked or other
purchase accounting adjustments made as a result of the acquisition of
the Company by Umpqua or the acquisition of SUI by the Company and any
amortization thereof, shall be ignored (including related taxes, if
any) in the calculation of Adjusted Net Income.
(ii) Net Income shall be increased by an amount equal to the after tax cost
of the interest income that would have accrued at the Prime Rate on the
amount of all funds paid by the Company to Umpqua or any affiliate of
Umpqua during the period as a dividend, distribution or loan in excess
of the Shareholders equity of the Company at Closing, from the date
such payment was made to the end of the period or the date of its
repayment.
(iii) Net income shall be decreased by an amount equal to after tax cost of
the interest expenses that would have accrued at the Prime Rate on the
amount of all funds provided by Umpqua or any affiliate of Umpqua to
the Company during the period as a loan or capital contribution (except
for the contribution of SUI pursuant to Section 7.12 of this
Agreement), from the date of such loan or capital contribution to the
date of repayment or the end of the period.
(iv) If Umpqua or an affiliate provides a service or product to the Company,
or if the Company provides a service or product to Umpqua or an
affiliate of Umpqua, the reasonable after tax costs of such services or
product will be deducted from (or added to, as the case may be) the net
income for that period. If federal or state regulations requires the
charges in excess of those permitted by the preceding sentence, the
Adjusted Net Income will ignore any such charge.
(v) For the period of time following Closing to December 31, 1999 only,
Adjusted Net Income shall be determined without regard to the revenue
and expenses attributable to the SUI offices and market territory.
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(vi) Any payments to Shareholders pursuant to Section 7.9 will be ignored.
It is the intent of the parties that, subject to the specific
adjustments described above, the Adjusted Net Income of the Company for
future periods will reflect the net income that the Company and SUI would
have earned in such future periods had they been operated during those
periods in the same manner that it was operated during 1998 with the present
capital levels of the Company maintained at its December 31, 1998 level.
"Balance Sheet Date" means December 31, 1998.
"Change in Control" means (i) the sale of South Umpqua Bank or the
Company to a party not controlled by Umpqua or (ii) the acquisition of 50% or
more of the common stock of Umpqua by any person or any merger or other
transaction which results in the Umpqua shareholders immediately prior to the
transaction which, as a group own 100% of Umpqua, having less than 50% of the
outstanding shares of the resulting corporation owning or controlling Umpqua
immediately after the transaction.
"Closing" shall refer to the consummation of the transaction
contemplated under this Agreement in accordance with its terms. "Closing
Date" shall refer to the actual date of Closing, which shall be within 5
business days following the satisfaction or waiver of all conditions to the
obligations of the parties (other than those requiring action at Closing).
Unless the parties mutually agree otherwise, the Closing Date shall be no
later than July 31, 1999.
"Contingent Payment Period" shall mean (i) the period of time following
Closing to December 31, 1999, (ii) the calendar year 2000, (iii) the calendar
year 2001 and (iv) the period of time from January 1, 2002 until the third
anniversary of Closing (herein the "first", "second", "third", and "fourth"
Contingent Payment Period).
"Contingent Purchase Price" means an amount, not to exceed $1,000,000
in the aggregate, determined by the Adjusted Net Income of the Company over
the three years following Closing and from the following table.
For the First Contingent Payment Period:
Average Monthly Adjusted Percentage of
Net Income Maximum Payment
----------------------------------------------------------------
$26,667 or greater 100%
between $24,000 and $26,667 75%
between $21,333 and $24,000 50%
less than $21,333 0%
For the Second, Third and Fourth Contingent Payment Periods:
Average Monthly Adjusted Percentage of
Net Income Maximum Payment
----------------------------------------------------------------
$33,333 or greater 100%
Between $30,000 and $33,333 75%
Between $26,667 and $30,000 50%
Less than $26,667 0%
"GAAP" means the generally accepted accounting principles in the United
States.
"Initial Purchase Price" means $2,100,000.
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"Maximum Payment" shall mean $27,778 for each month (or a prorata
portion for any partial month) during the applicable Contingent Payment
Period.
"Net Income" means net income of the Company for the period determined
in accordance with GAAP.
"Prime Rate" means the prime rate of interest as reported by the Wall
Street Journal.
"SUI" means the broker/dealer operations of South Umpqua Financial
Services, Inc., dba SouthUmpqua Investments, but not including securities
held by such subsidiary for its own account.
"Take-Over" means (i) the sale of South Umpqua Bank or the Company to a
party not controlled by Umpqua, or (ii) the acquisition of 80% or more of the
common stock of Umpqua by any person, or any merger or other transaction
which results in the Umpqua shareholders immediately prior to the transaction
which, as a group own 100% of Umpqua, having less than 20% of the outstanding
shares of the resulting corporation owning or controlling Umpqua.
"Target Adjusted Net Income" means the following monthly Adjusted Net
Income for those months falling within the applicable periods:
Year Monthly Adjusted Net Income
1999 $ 32,000
2000 $ 46,000
2001 $ 55,000
2002 $ 65,000
2003 $ 77,000
2004 $ 91,000
2005 $109,000
2. SALE AND PURCHASE OF SHARES
2.1 Shares and Shareholders. Schedule 2.1 sets forth the name, as it
appears in the Company's corporate records, of each record owner of shares of
the Company's capital stock, the number and class or series of the shares of
capital stock held by each Shareholder, and the percentage of the Purchase
Price each Shareholder is to receive.
2.2 Sale of Shares. Subject to the terms and conditions set forth in this
Agreement, on the Closing Date the Shareholders shall sell, transfer, convey,
assign, and deliver to Umpqua and Umpqua shall purchase, acquire and accept
from the Shareholders, all of the right, title and interest in and to the
Shares, free and clear of all encumbrances, claims, liens or restrictions on
transfer, except such restrictions as may be imposed by state or federal law
upon the sale or transfer of unregistered securities. The obligation of Umpqua
to purchase the Shares is subject to the Shareholders selling to Umpqua, in
the aggregate, all of the Shares.
3. PURCHASE PRICE
3.1 Payment of Initial Purchase Price. Payment of the Initial Purchase
Price shall be paid to the Shareholders in the amounts set forth in Schedule
2.1 in cash by wire transfer or cashier's check delivered at Closing in
exchange for the Shares described in Section 2.2 above.
3.2 Contingent Purchase Price. As soon as possible, and in any event
within 90 days following each Contingent Payment Period, Umpqua shall prepare
an income statement for the Company for that period and shall calculate the
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Adjusted Net Income and resulting Contingent Purchase Price on the basis
thereof. Umpqua shall deliver the financial statements and calculations to the
Shareholders which will have 15 days after receipt of such financial
statements and calculations to make any objections they may have to the
Adjusted Net Income of the Company and the Contingent Purchase Price as
calculated by Umpqua. If the Shareholders do not give notice of objections
within that time period, the Adjusted Net Income and Contingent Purchase Price
so calculated shall be final. If the Shareholders do give timely notice of
their objections, and Umpqua and the Shareholders are unable to resolve the
matter by agreement, either side may submit the matter to an independent
accounting firm, other than KPMG, LLP (or other than Umpqua's then current
independent accountants, as the case may be), mutually selected and paid for
by the Shareholders and Umpqua. The decision of that accounting firm shall be
binding on the parties.
3.3 Payment of Contingent Purchase Price. The Contingent Purchase Price
shall be paid to the Shareholders in the proportions set forth in Schedule 2.1
in cash by wire transfer instructions or by cashier's check within two
business days after the Contingent Purchase Price for and Contingent Payment
Period has been finally determined pursuant to Section 3.2.
4. CLOSING
4.1 Date, Time and Place of Closing. Subject to the terms and conditions
set forth in this Agreement and the fulfillment of the conditions to the
obligations of the parties under Sections 8 and 9, the Closing of this
Agreement shall take place at law offices of Xxxxxx Pepper & Shefelman,
Portland, Oregon at a date and time mutually agreed upon by Umpqua, the
Shareholders and the Company and within 5 days following receipt of all
required consents and other conditions of Closing. Notwithstanding any
provision in this Agreement to the contrary, if the Closing has not occurred
on or before July 31, 1999, either Umpqua or the Company, shall have the right
to terminate this Agreement pursuant to Section 12 provided that the failure
of the Closing to occur did not result from a breach of this Agreement by such
notifying party.
4.2 Documents to be Delivered at Closing by the Shareholders. At Closing,
the Shareholders will deliver or cause the Company to deliver to Umpqua the
following instruments and other documents, in each case in such form as Umpqua
may reasonably request.
4.2.1 The Shares, duly enclosed or with accompanying executed stock
power;
4.2.2 Consents from all parties from whom consent is required to be
in order for the Company or the Shareholders to enter into the
transactions contemplated by this Agreement and Umpqua to acquire
ownership of the Company, including without limitation, the consent of
any unrelated third party lessor to the transfer of the Shares to Umpqua;
4.2.3 Executed closing certificates as set forth in Section 8.1; and
4.2.4 Such other documents and instruments as Umpqua may reasonably
require to effectuate or evidence the transfer of all of the Shares and
control of the Company.
4.2.5 Executed Broker Retention Agreements as set forth in Section
8.4.
4.3 Documents to be Delivered at Closing by Umpqua. At Closing, Umpqua
will execute and deliver to the Shareholders the following instruments and
other documents in each case, in such forms the Shareholders may reasonably
request:
4.3.1 A cashier's check or wire transfer deposit confirmation in the
amounts as provided by Section 3.1;
4.3.2 Executed closing certificates as set forth in Section 9.1; and
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4.3.3 Such other documents and instruments as the Shareholders may
reasonably request in order to effectuate the transaction contemplated by
this Agreement.
4.4 Transfer Taxes. The Shareholders will pay any transfer taxes and
excise taxes incurred by any party in connection with the transactions
contemplated by this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
The Shareholders jointly and severally represent and warrant to Umpqua as
follows:
5.1 Authorization. The execution, delivery and performance of this
Agreement has been duly authorized by the Board of Directors and the
shareholders of the Company, and this Agreement has been duly executed and
delivered by the Company and each Shareholder. The Company has all necessary
corporate authority to execute and deliver this Agreement and to perform the
Company's obligations hereunder. This Agreement is a valid and legally binding
obligation of the Company and the Shareholders, enforceable against the
Company and the Shareholders in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to the enforcement
of creditors' rights generally and by general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law). The Shareholders have the complete and unrestricted right, power and
authority to execute this Agreement and perform their covenants in accordance
with this Agreement and will have at Closing good, absolute and marketable
title to the Shares, free and clear of any liens, claims, encumbrances or
restrictions of any kind.
5.2 Incorporation and Good Standing. The Company is duly organized,
validly existing and in good standing under the applicable laws of the state
of its incorporation and has all necessary power and authority to own, lease
and operate its properties and assets and to conduct its business as its
business is now being conducted. The Company has delivered to Umpqua complete
and accurate copies of the Company's articles of incorporation and bylaws,
including all amendments thereto. The Company is qualified to do business and
is in good standing in each state in which it transacts business. Except as
disclosed in Schedule 5.2, the Company does not have any subsidiaries nor any
direct or indirect equity interest in any corporation, partnership or other
entity.
5.3 Capitalization. The authorized capital stock of the Company consists
of 1,000 shares of Common Stock, no par value, 500 shares of which are
outstanding. The Shares constitute all of the issued and outstanding shares of
capital stock of the Company. The Shares have been validly authorized and
issued, are fully paid and non-assessable, and have not been issued in
violation of any preemptive rights or of any federal or state securities law.
On the date hereof, the Shares are owned beneficially and of record by the
Shareholders as set forth on Schedule 2.1. There are and will be on the
Closing Date no outstanding subscriptions, options, rights, warrants,
convertible securities, buy-in or other agreements or commitments obligating
the Company to issue any additional shares of its capital stock of any class
or any other securities of any kind. Except as disclosed in Schedule 5.3,
there are no agreements that relate to the voting, control or disposition of
the Shares.
5.4 No Conflicts. Neither the execution and delivery of this Agreement
nor the fulfillment of or compliance with the terms and provisions hereof will
violate, conflict with, or result in a breach of the terms, conditions or
provisions of, or constitute a default or an event which, with notice or lapse
of time or both, would constitute a default under, the articles of
incorporation or bylaws of the Company, any contract, agreement, mortgage,
deed of trust or other instrument or obligation to which either the
Shareholders or the Company are parties or by which any of them is bound
(assuming receipt of the consents and approvals disclosed in Schedule 5.5), or
violate any provision of any applicable law or regulation or of any order,
decree, writ or injunction of any court or governmental body, or result in the
creation or imposition of any lien, charge, restriction, security interest or
encumbrance of any nature whatsoever on any property or asset of the Company
or on the Shares.
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5.5 Consents. Except as otherwise set forth in Schedule 5.5, no consent
from, or other approval of, any governmental entity or agency or any other
person or entity is necessary in connection with the execution, delivery or
performance of this Agreement by the Company.
5.6 Real Property Leases. Set forth in Schedule 5.6 is a complete and
accurate copy of all real property leases pursuant to which the Company
occupies its business (the "Business Real Property"). Each of the real estate
leases are in full force and effect and constitute legal, valid and binding
obligations of the parties thereto. The Company has performed in all material
respects the covenants required to be performed by it under each of the real
estate leases to which it is a party and has no knowledge of any material
defaults under any of the leases to which it is a party.
5.7 Tangible Personal Property. Schedule 5.7 sets forth a complete and
accurate description of all equipment, furniture, fixtures and other tangible
personal property owned by, in possession of, or used by the Company on
December 31, 1998 in connection with its business and a complete and accurate
description of all tangible personal property in which the Company has a
leasehold interest, together with a complete and accurate description of each
lease under which the Company holds such leasehold interests. Each of the
leases is in full force and effect and constitutes a legal, valid and binding
obligation of the parties thereto. The Company has performed in all material
respects the covenants required to be performed by it under each of the leases
to which it is a party and has no knowledge of any material defaults under any
of the leases to which it is a party.
5.8 Securities. The Company has delivered to Umpqua a schedule of all
investment securities (Schedule 5.8) held for its own account of a recent date
no more than 5 days prior to the date of this Agreement. The schedule
identifies each such security and sets forth both its cost as reflected on the
books of the Company and its market value as of the date reflected on the
schedule.
5.9 Licenses and Permits. Schedule 5.9 sets forth a complete and
accurate description of all material permits, licenses, franchises,
certificates and similar items and rights, owned or held by the Company
(hereinafter collectively referred to as the "Licenses and Permits"). The
Licenses and Permits are adequate for the operation of the Company's business;
are valid and in full force and effect, and no basis exists for a grantor of
any such Licenses or Permits to terminate the same. No additional material
permit, license, franchise, certificate or similar item or right is required
by the Company for the operation of its business. Except as set forth on
Schedule 5.9, the Company's rights under the Licenses and Permits will not be
impaired by the purchase of the shares by Umpqua.
5.10 Intellectual Property. Schedule 5.10 sets forth a complete and
accurate description of all intellectual property presently in use by the
Company, which intellectual property includes (without limitation) patents,
trademarks, trade names, service marks, copyrights, trade secrets, customer
lists, inventions, formulas, methods, processes, advertising materials,
Internet sites and any other proprietary information or property. Except as
disclosed in Schedule 5.10, there are no outstanding licenses or consents to
third parties granting the right to use any intellectual property owned by the
Company. Except as disclosed in Schedule 5.10, the Company owns or has the
right to use its intellectual property free and clear of any known claims and,
to Shareholders knowledge, without any conflict with the rights of others and
no royalties or fees are payable by the Company to any third party by reason
of the use of any intellectual property by the Company. No additional
intellectual property is required by the Company for the operation of its
business.
5.11 Title to Properties; Encumbrances. The Company has good and
marketable title to (or, in the case of leased property, valid and subsisting
leasehold interests in) all of its properties and assets, including (without
limitation) the properties and assets that will be listed on Schedules 5.6,
5.7 and 5.6 except for properties and assets sold, consumed or otherwise
disposed of by the Company in the ordinary course of its business. None of the
Company's properties or assets are subject to any liens, mortgages,
encumbrances, conditional sales agreements, security interests, claims or
restrictions of any kind or character, except as disclosed in its Audited
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Financial Statements or for (i) encumbrances listed on Schedule 5.11,
(ii) liens for current taxes not yet due and payable, (iii) mechanics and
materialmen's liens arising in the ordinary course of business and securing
obligations that are not overdue and (iv) defects in title which do not
materially and adversely affect, individually or in the aggregate, the
properties or assets as a whole.
5.12 Financial Statements. The Company has delivered its (i) audited
financial statements as of and for each of the five years in the period ended
December 31, 1998 together with the reports of KPMG Peat Marwick, LLP (and its
predecessors) and (ii) unaudited interim financial statements as of and for
the three month period ended March 31, 1999 (collectively the "Financial
Statements"). The Audited Financial Statements were prepared in accordance
with the GAAP and fairly reflect in all material respects the results of
operations and financial condition of the Company for the periods and at the
dates indicated.
5.13 Indebtedness for Borrowed Money; Guaranties. The Company has
delivered to Umpqua a complete and accurate copy of all instruments evidencing
or relating to the Company's indebtedness for borrowed money at April 30,
1999. To Shareholder's knowledge, the Company is not in default or violation
of any provision of any agreement evidencing or relating to its indebtedness
for borrowed money. Schedule 5.13 sets forth as of April 30, 1999 a complete
and accurate description of all guaranties by the Company of any obligation or
liability of any person or entity, including (without limitation) any
guaranties of installment sales contracts, leases or obligations under service
contracts.
5.14 Tax Matters. The Company has duly filed all federal, state and local
tax returns required to be filed by it. All federal, state, local and foreign
income, ad valorem, excise, sales, use, payroll, unemployment and other taxes
and assessments that are due and payable by the Company have been properly
computed, duly reported, fully paid, and discharged. The only unpaid taxes
that require payment by the Company are current taxes not yet due and payable.
All current taxes not yet due and payable by the Company have been properly
accrued and are accurately reflected in the Company's balance sheet in the
Financial Statements. The Company has not been delinquent in the payment of
any tax, assessment or governmental charge, nor has any tax deficiency been
proposed or assessed against it, nor has it executed any waiver of the statute
of limitations on the assessment or collection of any tax.
5.15 Transactions Since Balance Sheet Date. Since the Balance Sheet Date,
except as anticipated by this Agreement or set forth on Schedule 5.15,
(i) the Company has not incurred any material debts, liabilities or
obligations except current liabilities in the ordinary course of business;
discharged or satisfied any material liens or encumbrances, or paid any
material debts, liabilities or obligations, except in the ordinary course of
business; mortgaged, pledged or otherwise subjected to any lien or other
encumbrance any of its properties or assets; canceled any material debt or
claim; sold or transferred any properties or assets except sales from
inventory in the ordinary course of business; nor entered into any material
transaction other than in the ordinary course of business; (ii) there has not
been any change in the financial condition, net income, assets, liabilities,
operations or business of the Company other than changes in the ordinary
course of business, none of which, individually or in the aggregate, has been
materially adverse; (iii) there has not been any declaration, setting aside or
payment of any dividend or other distribution in respect of, or any repurchase
or acquisition of, the capital stock of the Company; (iv) the Company has not
issued any securities or options to purchase any securities of any nature
whatsoever; (v) the Company has not increased the compensation, commissions,
bonuses or other remuneration payable to any officer, director, employee or to
any other person or entity, whether now or hereafter payable, except in the
ordinary course of business, nor paid any bonuses to any Shareholder except as
disclosed in the Company's Financial Statements or contemplated by this
Agreement, (vi) there has not been any damage, destruction or loss (whether or
not covered by insurance) materially and adversely affecting the assets,
properties or business of the Company; (vii) the Company has not made any
capital expenditure or commitment in excess of $5,000 for additions to
property, plant or equipment; (viii) the Company has not made any loan or
advance to any person or entity, other than advances to commission
salespersons in the ordinary course of business; guaranteed any obligation or
liability of any person or entity, including (without limitation) any
guaranties of any contracts or leases, or given any indemnification to any
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person or entity; (ix) the Company has not made any sale, assignment or
transfer of, additions to or transactions involving any tangible asset other
than in the ordinary course of business; (x) the Company has not made any
change in its method of accounting or accounting practices, including (without
limitation) any change in depreciation or amortization policies or rates;
(xi) the Company has not granted any waiver or release of any material claim
or right, or canceled any material debt or claim held by it; (xii) the Company
has not amended or terminated any material contract, agreement or license to
which it is a party; (xiii) the Company has not agreed, in writing or
otherwise, to do or permit any of the foregoing.
5.16 Litigation. Schedule 5.16 sets forth a complete and accurate
description of all orders, decrees, writs or injunctions of any court or
governmental body applicable specifically to the Company and all legal
actions, suits, arbitrations, condemnation actions or other proceedings
pending or, to the knowledge of the Shareholders, threatened against the
Shareholders with respect to their Shares or against the Company or any of its
properties, assets or business except for such matters which would not
materially and adversely affect, individually or in the aggregate, the
Company's business, properties or assets as a whole. The Company has no
knowledge of any facts that might result in any other material action, suit,
arbitration or proceeding. Schedule 5.16 also summarizes all claims and
proceedings that have been made against the Company since January 1, 1996.
5.17 Compliance With Laws. To the best of each of the Shareholders'
knowledge, there are no existing violations of federal, state or local laws,
ordinances, rules, codes, regulations or orders by the Company which are
reasonably likely to materially affect the properties, assets or business of
the Company. The Company is not subject to any restriction, judgment, order,
writ, injunction, decree or award, which materially and adversely affects or
is likely to materially and adversely affect the business, operations,
properties, assets or condition (financial or otherwise) of the Company.
5.18 Contracts and Agreements. Schedule 5.18 sets forth a complete and
accurate description of all material contracts and agreements not previously
scheduled to which the Company is a party or by which it or any of its
property is bound. All such contracts and agreements are in full force and
effect and neither the Company nor, to each Shareholder's knowledge, the other
parties thereto are in breach of any of the provisions thereof. Except as set
forth on Schedule 5.18, the Company is not a party to any contract or
agreement which materially and adversely affects or is likely to materially or
adversely affect the business, operations, properties, assets or condition
(financial or otherwise) of the Company.
5.19 Employee Benefit Plans. Schedule 5.19 sets forth a complete and
accurate description of all pension, profit sharing, bonus, deferred
compensation, percentage compensation, severance pay, retirement, health,
stock option, stock buy-in, insurance and other employee benefit plans and
arrangements binding upon the Company. The Company has complied with the
provisions of and has performed the obligations required of it under such
plans and arrangements, and the Company is not in default under any provision
thereof in any material respect. There have been no material defaults,
breaches or omissions by the Company or any fiduciary under any of these plans
or arrangements.
5.20 Insurance. Schedule 5.20 sets forth a complete and accurate
description of all insurance maintained by the Company and summarizes the
coverage provided by each of the insurance policies, including (without
limitation) whether the insurance policies are "claims made" or "occurrence"
policies. All of the insurance is in full force and effect, and the Company
will keep such insurance in full force and effect until the Closing Date.
5.21 Personnel. Schedule 5.21 sets forth a complete and accurate list of
all employees of the Company as of the date indicated thereon and all
independent contractors regularly performing services on behalf of the Company
and their respective rates of compensation, including any salary, bonus or
other payment arrangement made with any of them. Except as disclosed in
Schedule 5.21, the Company does not have any employment agreements or
contracts between the Company and any person or entity. The Company is not a
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party to or bound by any collective bargaining agreement, nor has the Company
experienced any strikes, grievances, claims of unfair labor practices or other
collective bargaining dispute. There are no unions representing any employees
of the Company. The Company has no knowledge of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of the Company. The Company has paid or has made
provision for the payment of all compensation due any person or entity and has
complied in all material respects with all applicable laws, rules and
regulations relating to the employment of labor, including those related to
wages, hours, collective bargaining and the payment and withholding of taxes,
and has withheld and paid to the appropriate governmental authority, or is
holding for payment not yet due to such authority, all amounts required by law
or agreement to be withheld from the compensation of its employees.
5.22 Accounts Receivable. Schedule 5.22 sets forth a complete and
accurate list of all accounts and notes receivable of the Company as of March
31, 1999 and an aging analysis of such accounts. All receivables of the
Company are valid and enforceable claims, and collectible, arose in the
ordinary course of business, require no further performance by the Company
and, are not subject to claims or offset.
5.23 Delivery of Documents. Complete and accurate copies of all written
instruments listed or described on the schedules have been or will be
furnished or made available to Umpqua. The Company will make available to
Umpqua, to the extent requested by Umpqua, all books, records and facilities
of the Company.
5.24 Powers of Attorney; Authorized Signatories. The Company has provided
to Umpqua (i) the names and addresses of all persons holding a power of
attorney on behalf of the Company, and (ii) the account numbers and names of
all banks or other financial institutions in which the Company currently has
an account, deposit or safe deposit box, with the names of all persons
authorized to draw on the accounts or deposits or to have access to the boxes.
5.25 Full Disclosure. The representations and warranties by the
Shareholders in this Agreement and in the schedules attached hereto, and the
other statements in writing and information furnished or to be furnished to
Umpqua by or on behalf of the Company or the Shareholders in connection with
the transactions contemplated by this Agreement, taken as a whole, do not and
will not contain any untrue statement of a material fact, or omit to state a
material fact necessary to make the statements contained herein not
misleading.
5.26 Continuation of Business. The Shareholders know of no reason why the
Company cannot continue its business in all material respects in the same
manner following the execution of this Agreement and the Closing as it has
been operated prior thereto, except to the extent that Umpqua causes the
business of the Company to change following the Closing.
5.27 Y2K Compliance. The Company has addressed the Y2K issue, tested all
systems and all Company systems are year 2000 compliant in all respects,
except those systems specifically set forth in Schedule 5.27.
6. REPRESENTATIONS AND WARRANTIES OF UMPQUA
Umpqua represents and warrants to the Shareholders as follows:
6.1 Authorization. The execution, delivery and performance of this
Agreement has been duly authorized by the Board of Directors of Umpqua and
this Agreement has been duly executed and delivered by Umpqua. Umpqua has all
necessary corporate authority to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement is a valid and legally
binding obligation of Umpqua, enforceable against Umpqua in accordance with
its terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to the
enforcement of creditors' rights generally and by general principles of equity
9
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). Umpqua has the complete and unrestricted right, power and
authority to execute this Agreement and perform its covenants in accordance
with this Agreement.
6.2 Incorporation. Umpqua is duly organized and validly existing under
the applicable laws of the state of its incorporation and has all necessary
power and authority to own, lease and operate its properties and assets and to
conduct its business as its business is now being conducted. Umpqua is
qualified to do business and is in good standing in each state in which it
transacts business.
6.3 No Conflicts. Neither the execution and delivery of this Agreement
nor the fulfillment of or compliance with the terms and provisions hereof will
violate, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default or an event which, with notice or lapse
of time or both, would constitute a default under, the articles of
incorporation or bylaws of Umpqua, any contract, agreement, mortgage, deed of
trust or other instrument or obligation to which Umpqua is bound or violate
any provision of any applicable law or regulation or of any order, decree,
writ or injunction of any court or governmental body, or result in the
creation or imposition of any lien, charge, restriction, security interest or
encumbrance of any nature whatsoever on any property or asset of Umpqua.
6.4 Consents. Except as set forth in Schedule 6.4, no consent from, or
other approval of, any governmental entity or agency or any other person or
entity is necessary in connection with the execution, delivery or performance
of this Agreement by Umpqua.
6.5 Compliance With Laws. To the best of Umpqua's knowledge, there are
no existing violations of federal, state or local laws, ordinances, rules,
codes, regulations or orders by Umpqua which are reasonably likely to
materially affect the properties, assets or business of Umpqua. To the best of
Umpqua's knowledge, Umpqua is not subject to any restriction, judgment, order,
writ, injunction, decree or award, which materially and adversely affects or
is likely to materially and adversely affect the business, operations,
properties, assets or condition (financial or otherwise) of Umpqua.
6.6 Full Disclosure. The representations and warranties by Umpqua in
this Agreement and in the schedules provided herewith, and the other
statements in writing and information furnished or to be furnished to the
Shareholders by or on behalf of Umpqua in connection with the transactions
contemplated by this Agreement, taken as a whole, do not and will not contain
any untrue statement of a material fact, or omits or will omit to state a
material fact necessary to make the statements contained herein not
misleading.
7. COVENANTS
Umpqua, the Shareholders and the Company agree that:
7.1 Undertaking. The Shareholders, the Company and Umpqua mutually agree
to cooperate and use commercially reasonable good faith efforts to prepare all
documentation, to effect all filings and to obtain all permits, consents,
approvals and authorizations of all third parties and governmental bodies as
may be necessary to consummate the transactions contemplated by this
Agreement. It will be Umpqua's responsibility to file or prepare for filing
all required consents or applications to permit this transaction to be
consummated except for the NASD application and notice requirements which will
be the Company's responsibility.
7.2 Conduct of Business by the Company Prior to the Closing Date. The
Company and the Shareholders shall cause the Company to conduct its operations
according to the ordinary and usual course of business reasonably consistent
with past and current practices, to use commercially reasonable good faith
efforts to maintain and preserve its assets, properties, insurance policies,
business organization, and advantageous business relationships and to retain
the services of its officers, employees, agents and independent contractors,
and shall not allow the Company to engage in any practice, take any material
action, or enter into any material transaction outside of the ordinary course
of business.
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7.3 Umpqua's Examination. The Company and the Shareholders shall cause
the Company to permit representatives of Umpqua to have full access to and to
examine, at all reasonable times, and in a manner so as not to interfere with
the normal business operations of the Company, the books, records, properties
and assets of the Company.
7.4 Notice of Changes. The Company shall give prompt written notice to
Umpqua of any material adverse change in the financial condition, net income,
assets, liabilities, operations or business of the Company. Umpqua shall give
prompt written notice to the Shareholders of any material adverse change in
the financial condition, net income, assets, liabilities, operations or
business of Umpqua.
7.5 Further Assurances. From time to time at or after the Closing, as
and when requested by any party hereto, the other party shall execute and
deliver, or cause to be executed and delivered, all such documents and
instruments and shall take, or cause to be taken, all such further or other
actions as such other party may reasonably deem necessary or desirable to
consummate the transactions contemplated by this Agreement.
7.6 Release of Guarantees. All guarantees by the Company of the
indebtedness or obligations of any other party or person shall be released,
discharged or terminated prior to or at Closing.
7.7 Update of Representations. If any party to this Agreement becomes
aware of any breach of the representations and warranties contained herein,
whether made by such party or any other party, such party shall notify all
other parties, by the delivery of a new or revised Schedule disclosing the
facts constituting such breach or otherwise. The non-breaching parties shall
be entitled to exercise any right they may have to terminate this Agreement on
the basis of such breach, but if they elect to proceed with the Closing rather
than terminating, the breach so disclosed and all remedies in respect thereof
shall be deemed to have been waived.
7.8 Payment of Debt from Shareholder. Prior to or contemporaneous with
Closing, the Shareholders shall pay off all indebtedness owing to the Company,
net of any amounts owed by the Company to the Shareholders.
7.9 Long Term Bonus Pool. Umpqua will cause the Company to establish a
"Long Term Bonus Pool" ("LTBP"). The first LTBP will consist of 20% of the
amount by which the Company's Adjusted Net Income exceeds the Target Adjusted
Net Income from the Closing Date through December 31, 2001.
The second LTBP will consist of 28% of the amount by which the Company's
Adjusted Net Income exceeds the Target Adjusted Income from January 1, 2002
through the fifth anniversary of the Closing Date. All amounts in the LTBP
will be paid to eligible participants within 10 days of the determination of
the amounts in the pool.
The person entitled to participate in the LTBP will be as set forth in
Schedule 7.9. Umpqua shall have final approval on the distribution of the LTBP
among the participants upon consultation with management of the Company. The
LTBP will replace all existing bonus, incentive, profit sharing or other
deferred compensation arrangements of the Company except for a 401(k) plan and
the Company's commitment to match up to 25% of the employee contribution (up
to a maximum match of $2,500 per person).
7.10 Commission Schedule. Without the consent of Umpqua, the existing
commission pay-out schedule applicable to the Company's licensed brokers will
not be increased following Closing. During the five years following Closing,
Umpqua will not cause the Company to reduce the existing commission pay-out
schedule to existing non-Shareholders employees who have signed the Broker
Agreement. Further, Umpqua shall not cause the Company to reduce the pay-out
to Shareholder employees without the consent of at least a majority of the
Shareholders then employed by the Company or unless the Company fails to
achieve, commencing for periods following January 1, 2000, Adjusted Net Income
11
during a six month period of at least $125,000. If such commission is
adjusted, Umpqua will meet on a quarterly basis with the Shareholder employees
to determine if such commissions can be increased, should stay at the same
level, or be reduced further. In the event of a Take-Over, the existing
commission pay-out schedule will not be lowered with respect to current
brokers for a period of not less than two years.
7.11 Stock Options. Promptly following Closing, Umpqua shall grant
nonqualified stock options to the persons, in the amounts and subject to the
vesting as set forth in Schedule 7.11. Further, Umpqua will reserve options
with respect to 30,000 additional shares of Umpqua common stock for future
grants to motivate existing non-shareholder brokers and recruit new brokers
who may join the Company during the five years after Closing. The grant of
these options shall be made at the recommendation of the Shareholders then
with the Company, subject to the reasonable approval of Umpqua.
7.12 South Umpqua Investments. Promptly following Closing, Umpqua will
contribute or cause to be contributed the operating assets, books and records,
personnel and current customer relationships of SUI to the Company, not
including securities held by such subsidiary for its own account.
7.13 Payment of Bonuses. On or prior to Closing, the Company shall accrue
for the payment of bonuses for the period of January 1, 1999 through Closing
but only to the extent such bonuses shall not exceed Net Income for the
period. Payment of such bonuses shall be effected within 30 days of Closing
except for an accounting adjustment reserve fund which shall be established in
the amount of $40,000. This accounting adjustment reserve fund will be charged
or credited with accounting adjustments with respect to the period of January
1, 1999 to Closing. Final payment of this accounting reserve fund net balance
will be made 90 days after Closing.
8. CONDITIONS PRECEDENT TO OBLIGATION OF UMPQUA
The obligation of Umpqua to effect the transactions contemplated by this
Agreement is subject to the satisfaction on or prior to the Closing Date of
the following conditions, each of which may be waived by Umpqua:
8.1 Representations, Warranties of the Shareholders and Covenants of the
Company and the Shareholders. All representations and warranties of the
Shareholders contained in this Agreement shall be true and correct in all
material respects as of the Closing Date with the same effect as though such
representations and warranties were made on the Closing Date, except to the
extent that such representations and warranties expressly relate to any
earlier date, and the Company and the Shareholders shall have performed and
complied in all material respects with all the covenants and agreements and
satisfied in all material respects all the conditions required by this
Agreement to be performed, complied with or satisfied by the Company and each
of the Shareholders on or prior to the Closing Date. The Company and each of
the Shareholders must have delivered to Umpqua a certificate dated as of the
Closing Date certifying that this condition has been fulfilled.
8.2 No Adverse Change. No material adverse change in the financial
condition, net income, assets, liabilities, operations or business of the
Company shall have occurred.
8.3 Third Party Approvals. This Agreement and the transactions
contemplated by this Agreement shall have received all required material
approvals and consents from all Company lessors, and federal, state or local
regulatory agencies whose consent is required and copies of such approvals and
consents shall have been delivered to Umpqua.
8.4 Broker Agreements. The Company will have secured executed Broker
Agreements substantially in the form of Schedule 8.4 from all licensed brokers
of the Company who are not Shareholders.
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8.5 Employment Agreement. The Company will have secured an executed
Employment Agreement substantially in the form of Schedule 8.5 from the
employee.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND THE SHAREHOLDERS
The obligations of the Shareholders and the Company to effect the
transactions contemplated by this Agreement are subject to the satisfaction on
or prior to the Closing Date of the following conditions, each of which may be
waived by the Company or by the Shareholders:
9.1 Representations, Warranties and Covenants of Umpqua. All
representations and warranties of Umpqua contained in this Agreement shall be
true and correct in all material respects as of the Closing Date with the same
effect as though such representations and warranties were made on the Closing
Date, except to the extent that such representations and warranties expressly
relate to an earlier date, and Umpqua shall have performed and complied in all
material respects with all of the covenants and agreements and satisfied in
all material respects all the conditions required by this Agreement to be
performed, complied with or satisfied by Umpqua on or prior to the Closing
Date. Umpqua must have delivered to the Company a certificate dated as of the
Closing Date certifying that this condition has been fulfilled.
9.2 No Adverse Changes. No material adverse change in the financial
condition, net income, assets, liabilities, operations or business of Umpqua
shall have occurred.
9.3 Third Party Approvals. This Agreement and the transactions
contemplated by this Agreement shall have received all required material
approvals and consents from all Company lessors, and federal, state or local
regulatory agencies whose consent is required, and copies of such approvals
and consents shall have been delivered to the Company.
10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations and warranties made in this Agreement or in any
certificate, exhibit, document, or instrument furnished in connection with
this Agreement shall survive the Closing. Notwithstanding any investigation or
examination conducted before or after the Closing or the decision of any party
to complete the Closing, subject to the provisions of Section 7.7 each party
shall be entitled to rely upon the representations and warranties set forth in
this Agreement. Under no circumstance shall the representation and warranties
of the parties contained in this Agreement incur to the benefit of the others
for more than three (3) years from the date of Closing (but six (6) years for
any Claim based upon fraud). (the "Survival Period").
11. INDEMNIFICATION
11.1 General Indemnity. The Shareholders agree to jointly and severally
indemnify, defend and hold harmless the Company and Umpqua and their
respective successors and assigns (the "Umpqua Indemnified Parties") from and
against any claims, damages, liabilities, loss, penalties, actions, suits,
proceedings, demands, assessments, costs and expenses, including reasonable
attorneys fees and expenses of investigation ("Claims"), incurred by any
Umpqua Indemnified Party arising from or related to (i) any breach of any
representation or warranty made by the Company or the Shareholders in this
Agreement of which notice is given to the Shareholders by the Umpqua
Indemnified Parties prior to the expiration of the Survival Period for such
representation or warranty or (ii) any breach of any covenant or agreement
made by the Company or the Shareholders in this Agreement, to the extent, in
the case of the Company, that such covenant or agreement was to be performed
at or before the Closing. Umpqua agrees to indemnify, defend and hold harmless
the Shareholders and their respective successors and assigns (the "Shareholder
Indemnified Parties") from and against any Claims incurred by any Shareholder
Indemnified Party arising from or related to (i) any breach of any
representation or warranty made by Umpqua in this Agreement of which notice is
13
given to Umpqua by the Shareholder Indemnified Parties prior to the expiration
of the Survival Period for such representation or warranty or (ii) any breach
of any covenant or agreement made by Umpqua in this Agreement.
11.2 Defense of Claims. Each of the Shareholder Indemnified Parties and
the Umpqua Indemnified Parties (an "Indemnified Party") shall promptly notify
the indemnifying party of any Claim against which indemnification will be
sought hereunder. If the Claim involves a claim, investigation, demand, action
or suit by a third party, including a governmental authority, the indemnifying
party shall have the right to defend the claim with counsel of their choosing,
but the Indemnified Party shall be entitled to participate in the defense at
its expense. If the indemnifying party does not assume the defense of the
Claim, the Indemnified Party may do so, but the indemnifying party will have
the right to participate in the defense at their expense. The party defending
a Claim shall not settle the Claim without the consent of the other party or
parties, which consent shall not be unreasonably withheld.
11.3 Limitations. Any amount against which an Indemnified Party is
entitled to be indemnified hereunder shall be reduced by (i) the amount of any
insurance proceeds available to such Indemnified Party in respect of the
matter giving rise to a Claim, and (ii) any recoveries from third parties in
respect of the Claim or the facts underlying the Claim. Further, no
Indemnified Party shall make a Claim for indemnification unless the basis for
a Claim is $10,000. Notwithstanding the forgoing, if the basis for a Claim is
less than $10,000, one or more Claims may be aggregated providing the
aggregate amounts exceed $20,000. The $10,000 and $20,000 sums are one-time
deductible amounts.
12. TERMINATION
12.1 Mutual Consent. This Agreement may be terminated by the written
consent of the parties.
12.2 By Umpqua. This Agreement may be terminated by written notice of
termination given by Umpqua to the Company and the Shareholders (i) if the
Company or the Shareholders default in any material respect in the observance
of or in the due and timely performance by them of any of the agreements and
covenants contained herein, (ii) if any of the warranties and representations
of the Company or the Shareholders contained herein are false in any material
respect, or (iii) if the conditions of this Agreement to be complied with or
performed by the Shareholders or the Company at or before Closing are not
complied with or performed at the time required for such compliance or
performance and such noncompliance or nonperformance is not waived by Umpqua.
12.3 By the Company or Shareholders. This Agreement may be terminated by
written notice of termination given by the Company to Umpqua if (i) Umpqua
defaults in any material respect in the observance of or in the due and timely
performance by Umpqua of any agreements and covenants of Umpqua contained,
(ii) any of the representations and warranties of Umpqua contained herein are
false in any material respect or (iii) the conditions of this Agreement to be
complied with or performed by Umpqua at or before Closing are not complied
with or performed at the time required for such compliance or performance and
such noncompliance or nonperformance is not waived by the Company.
12.4 Effect of Termination. Upon any termination of this Agreement under
Section 12.1, no party to this Agreement shall have any liability or
obligation hereunder. Upon any termination of this Agreement under Section
12.2 or 12.3, neither party shall have any prospective obligation hereunder,
but each party shall have, if otherwise available, the remedy of specific
enforcement, prior to termination.
13. DISPUTE RESOLUTION
13.1 Mediation. The parties hope there will be no disputes arising out
of this transaction. To that end, each commits to cooperate in good faith and
to deal fairly in performing its duties under this Agreement in order to
accomplish their mutual objectives and avoid disputes. But if a dispute
14
arises, the parties agree to resolve all disputes by the following alternate
dispute resolution process. The parties will seek a fair and prompt negotiated
resolution, but if this is not successful, all disputes shall be resolved by
binding arbitration; provided, however, that during this process, at the
request of either party made not later than twenty-five (25) days after the
initial arbitration demand, the parties will attempt to resolve any dispute by
non-binding mediation (but without delaying the arbitration hearing date). The
parties recognize that negotiation or mediation may not be appropriate to
resolve some disputes and agree that either party may proceed with arbitration
without negotiating or mediating. The parties confirm that by agreeing to this
alternate dispute resolution process, they intend to give up their right to
have any dispute decided in court by a judge or jury.
13.2 Binding Arbitration. Any claim between the parties arising out of or
relating to this Agreement shall be determined by arbitration in Portland,
Oregon (or some other place as the parties may agree). The arbitration shall
be conducted before one neutral arbitrator; provided, however, that if either
party demands a total award greater than $250,000, including interest,
attorneys' fees and costs, then either party may require that there be three
(3) neutral arbitrators. If the parties cannot agree on the identity of the
arbitrator(s) within ten (10) days of the arbitration demand, the
arbitrator(s) shall be selected by the administrator of the American
Arbitration Association (AAA) office having jurisdiction over Portland, Oregon
from its Large, Complex Case Panel (or have similar professional credentials).
Each arbitrator shall be an attorney with at least fifteen (15) years'
experience in corporate law. Whether a claim is covered by this Agreement
shall be determined by the arbitrator(s). All statutes of limitations which
would otherwise apply to a court proceeding shall apply equally to any
arbitration proceeding hereunder.
13.3 Procedures. The arbitration shall be conducted in accordance with
the AAA Commercial Arbitration Rules with Expedited Procedures, as modified by
this Agreement. There shall be no dispositive motion practice. As may be shown
to be necessary to ensure a fair hearing, the arbitrator(s) may authorize
limited discovery, and may enter pre-hearing orders regarding (without
limitation) scheduling, document exchange, witness disclosure and issues to be
heard. The arbitrator(s) shall not be bound by the rules of evidence or of
civil procedure, but may consider such writings and oral presentations as
reasonable business people would use in the conduct of their day-to-day
affairs, and may require the parties to submit some or all of their case by
written declaration or such other manner of presentation as the arbitrator(s)
may determine to be appropriate. The parties intend to limit live testimony
and cross-examination to the extent necessary to ensure a fair hearing on
material issues.
13.4 Hearing and Award. The arbitrator(s) shall take such steps as may be
necessary to hold a private hearing within ninety (90) days of the initial
demand for arbitration and to conclude the hearing within three (3) days; and
the arbitrator(s)'s written decision shall be made not later than fourteen
(14) calendar days after the hearing. The parties have included these time
limits in order to expedite the proceeding, but they are not jurisdictional,
and the arbitrator(s) may for good cause afford or permit reasonable
extensions or delays, which shall not affect the validity of the award. The
written decision shall contain a brief statement of the claim(s) determined
and the award made on each claim. In making the decision and award, the
arbitrator(s) shall apply applicable substantive law. Absent fraud, collusion
or willful misconduct by an arbitrator, the award shall be final, and judgment
may be entered in any court having jurisdiction thereof. The arbitrator(s) may
award injunctive relief or any other remedy available from a judge, including
the joinder of parties or consolidation of this arbitration with any other
involving common issues of law or fact or which may promote judicial economy,
and may award attorneys' fees and costs to the prevailing party, but shall not
have the power to award punitive or exemplary damages. If the arbitration is
conducted by three arbitrators, the decision and award of the arbitrators need
not be unanimous; rather, the decision and award of two arbitrators shall be
final.
14. NONDISCLOSURE, NON-COMPETE, AND NON-SOLICITATION
14.1 Nondisclosure. Shareholders acknowledge that the identity or
trading practices of customers or prospective customers of the Company, sales
techniques, trading practices, asset allocation methods, security selection
15
techniques and other information and practices of the Company constitute
"Trade Secrets" which are confidential and proprietary to the Company.
Additionally, by virtue of certain Shareholder's employment with the Company,
such Shareholders have had and will continue to have access to information
that is confidential and proprietary to the Company's customers and other
third persons. Shareholders therefore agrees that Shareholders:
14.1.1 will not, at any time, without the express written consent of
the Company, disclose, publish or divulge to any person, firm, or
corporation any of said Trade Secrets except in accordance with express
instruction or permission of the Company;
14.1.2 will not use, directly or indirectly, for Shareholder's own
benefit or the benefit of any other person, firm, or corporation any of
said Trade Secrets;
14.1.3 will treat confidentially all documents involving said Trade
Secrets that are delivered or made available to any Shareholder as a
necessary part of Shareholder's responsibilities as an employee of the
Company, whether or not they are identified or marked by the Company as
proprietary or confidential documents, and will not reproduce or use such
documents without appropriate authority;
14.1.4 will not advise others of said Trade Secrets known or used by
the Company or others associated with the Company;
14.1.5 will not, following his leaving the employ of the Company,
accept employment where the duties under such employment would require or
would pose a reasonable likelihood of requiring Shareholder to use or
disclose said Trade Secrets; and
14.1.6 will equally abide by the restrictions set forth above in
Section 14.1.1 through 14.1.6, inclusive, as to any information that is
proprietary and confidential to third persons and that was divulged to
Shareholder by virtue of his employment with the Company.
Provided, however, upon satisfaction of the covenants set forth in
Section 14.2 and 14.3, the identity of such Shareholder's customers will no
longer be deemed a Trade Secret.
14.2 Non-Compete. For a term of five (5) years following the Closing
Date (but in no case longer than two years following a Take-Over),
Shareholders will not, directly or indirectly, within the state of Oregon or
Xxxxx County Washington, own, operate, manage, control, participate in the
ownership, management, operation or control of or be paid or employed by or
acquire any interest in or securities of or otherwise become associated with
or provide assistance to, as an employee, consultant, director, officer,
shareholder, partner, agent, associate, principal, representative or any other
capacity, any business entity engaged in the sale of investment securities.
14.3 Non-Solicitation and Acceptance of the Company Customers and
Employees. Shareholders agrees that for a period of the greater of (i) five
(5) years from the Closing Date; or (ii) one (1) year following termination of
employment, (but in no case longer than two years following a Take-Over)
Shareholders will not, without the prior written consent of the Company which
consent may be withheld by the Company in the Company's sole discretion,
directly or indirectly solicit, influence, or assist anyone in the
solicitation or influencing of (a) any customer of the Company or Umpqua for
the purpose of causing, encouraging, or attempting to cause or encourage such
customer to divert its current, ongoing, or future business from the Company
or Umpqua or to accept any brokerage business from such customers; or (b) any
other employee of the Company or Umpqua for the purpose of causing,
encouraging, or attempting to cause or encourage such other employee to leave
the employment of the Company or Umpqua. Without limiting the foregoing, it is
understood and agreed that any written or oral communication to a customer or
employee of the Company or Umpqua which announces Shareholder's departure from
the Company or which announces Shareholder's new employment, business address,
phone number or email address shall constitute a solicitation of such customer
or employee.
16
14.4 Consideration Paid. It is understood that the covenants given in
this Section 14 are given to ensure that Umpqua acquires the goodwill of the
business of the Company and are an integral part of this Agreement. The
parties agree that a total of $200,000 of the Initial Purchase Price is
allocated to these covenants which shall be allocated for tax purposes to the
Shareholders in proportion to their stock holdings set forth on Schedule 2.1.
14.5 Enforcement. In the event of any breach of this Section 14 by
Shareholder or any threatened or attempted breach by Shareholder of the
nondisclosure, non-compete, non-solicitation and non-acceptance obligations
set forth above in Subsection 14.1.1 through 14.1.4, the Company will be
entitled to injunctive relief against Shareholder and the parties hereby agree
that the amount of any bond for damages to be posted by the Company in seeking
such injunction will be Five Hundred Dollars ($500); provided, however, that
this provision will in no way limit or be evidence of the amount of damages to
the enjoined party. Nothing herein will be construed as precluding or limiting
any other remedies available hereunder or at law or in equity for any breach
or threatened or attempted breach of this Section, including the recovery of
damages.
15. GENERAL PROVISIONS
15.1 Entire Agreement. This Agreement and the exhibits and schedules
hereto constitutes the entire agreement between the parties regarding the
subject matter hereof and supersedes all prior agreements and understandings
between the parties relating to the subject matter of this Agreement. There
are no agreements, understandings, restrictions, warranties, representations
between the parties relating to the subject matter hereof other than those set
forth in this Agreement.
15.2 Schedules. The exhibits attached and the schedules provided
pursuant to this Agreement are made a part of this Agreement by this
reference.
15.3 Publicity. The parties hereto agree that no public release or
announcement concerning the terms of the transactions contemplated by this
Agreement shall be issued by any party without the prior consent of the other
party (which consent shall not be unreasonably withheld), except as such
release or announcement may be required by law.
15.4 Amendment. This Agreement may not be amended, modified or
terminated except by an instrument in writing signed by all parties to this
Agreement.
15.5 Construction. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine or neuter gender thereof or to the
plurals of each, as the identity of the person or persons or the context may
require. The descriptive headings contained in this Agreement are for
reference purposes only and are not intended to describe, interpret, define or
limit the scope, extent or intent of this Agreement or any provision contained
in this Agreement.
15.6 Invalidity. If any provision contained in this Agreement shall for
any reason be held to be invalid, illegal, void or unenforceable in any
respect, such provision shall be deemed modified so as to constitute a
provision conforming as nearly as possible to such invalid, illegal, void or
unenforceable provision while still remaining valid and enforceable; and the
remaining terms or provisions contained herein shall not be affected thereby.
15.7 Payment of Expenses. Whether or not the transactions contemplated by
this Agreement are consummated, each of the parties to this Agreement shall be
responsible for its own costs and expenses incurred in connection with the
preparation and negotiation of this Agreement and the transactions
contemplated hereby.
15.8 Binding Effect and Assignment. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
legal representatives, successors and permitted assigns. No party may assign
any of their rights or delegate any of their obligations hereunder. Any
assignment in violation hereof shall be void.
17
15.9 Applicability of Exceptions and Disclosure. All facts and agreements
disclosed in the Exhibits and Schedules to this Agreement shall be deemed to
be disclosed for all purposes of this Agreement and to constitute exceptions
not only to the representations and warranties in the specific Sections that
refer to such Exhibits or Schedules, but also to all other representations and
warranties to which such disclosures are relevant.
15.10 Notices. All notices and other communications hereunder shall be
(i) in writing, dated with the current date of such notice, and signed by the
party giving such notice, and (ii) mailed, postpaid, registered or certified,
return receipt requested, addressed to the party to be notified, or delivered
by personal delivery or by overnight courier. Notice shall be deemed given
when received by the party to be notified or when the party to be notified
refuses to accept delivery of the notice. The initial addresses of the parties
shall be as follows:
If to Umpqua: Umpqua Holdings Corporation
000 X.X. Xxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attn: Xxx Xxxxx
With a copy to: Xxxxxx Pepper & Shefelman LLP
000 X.X. Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
If to the Company:Strand, Atkinson, Xxxxxxxx & York,
Incorporated
000 X.X. Xxxxxxxxxx
Xxxxxxxx, XX 00000
Attn: Xxx Xxxxxx
With a copy to: Xxxxxxxxxx Xxxx Xxxxx Xxxxxxx Xxxx & Grim LLP
0000 X.X. Xxxx Xxxxxx
Xxxxxxxx, XX 00000
If to the
Shareholders: Xxx Xxxxxx Xxxx Xxxx
340 Berwick 0000 XX Xxxxxxx
Xxxx Xxxxxx, XX 00000 Xxxxxxxx, XX 00000
Xxxxxxx Xxxxxx Xxxxxx Xxxxxxxx
0000 XX Xxxxxxxxxx Xx. 0000 XX Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000 Xxxxxxxx, XX 00000
Xxxxx Xxxxxxxx
0000 XX 00xx
Xxxxxxxx, XX 00000
The parties hereto shall have the right from time to time to change their
respective addresses by written notice to the other parties.
15.11 Definition of Knowledge. As used in this Agreement, the Company's
and the Shareholders' "knowledge" shall include the knowledge of the
Shareholders.
15.12 Remedies. Except as may be expressly set forth in this Agreement,
none of the remedies provided for in this Agreement shall be the exclusive
18
remedy of either party for a breach of this Agreement. The parties hereto
shall have the right to seek any other remedy at law or in equity in lieu of
or in addition to any remedies provided for in this Agreement.
15.13 Waiver. No waiver of any breach or default hereunder shall be
considered valid unless in writing and signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any subsequent breach or
default of the same or similar nature.
15.14 Governing Law. This Agreement shall be construed, enforced and
governed in accordance with the laws of the State of Oregon.
15.15 Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one and the same
instrument.
15.16 No Strict Construction. The parties and their counsel have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto and
no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
UMPQUA HOLDINGS CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------------
STRAND, ATKINSON, XXXXXXXX & YORK,
INCORPORATED
By: /s/ Xxx Xxxxxx
------------------------------------------
Xxx Xxxxxx, President
SHAREHOLDERS
/s/ Xxx Xxxxxx
----------------------------------------------
Xxx Xxxxxx
/s/ Xxxxxxx Xxxxxx
----------------------------------------------
Xxxxxxx Xxxxxx
/s/ Xxxx Xxxx
----------------------------------------------
Xxxx Xxxx
/s/ Xxxxx Xxxxxxxx
----------------------------------------------
Xxxxx Xxxxxxxx
/s/ Xxxxxx Xxxxxxxx
----------------------------------------------
Xxxxxx Xxxxxxxx
19
AMENDMENT NO. 1
TO
STOCK PURCHASE AGREEMENT
This is an amendment (the "Amendment") to the STOCK PURCHASE AGREEMENT
dated effective May 10, 1999, by and between UMPQUA HOLDINGS CORPORATION, an
Oregon corporation ("Umpqua"); XXX XXXXXX, XXXXXXX XXXXXX, XXXX XXXX, XXXXX
XXXXXXXX AND XXXXXX XXXXXXXX (collectively, the "Shareholders"); and STRAND,
ATKINSON, XXXXXXXX & YORK, INCORPORATED, an Oregon corporation (the
"Company").
R E C I T A L S :
References made to that certain Stock Purchase Agreement dated effective
May 10, 1999 (the "Agreement") by and between the parties to this Amendment.
Except as specifically amended or supplemented by this Amendment, all
provisions of the Agreement continue to be effective and are incorporated
hereby this reference.
1. Modifications of Adjusted Net Income Thresholds and Targets
In connection with the acquisition of the Company by Umpqua, initial
approval from the Federal Reserve Board is expected to include the right for
the Company to engage only in "tier 1" and exempt activities expressly deemed
to be closely related to banking. The parties estimate that unless and until
the Company receives permission to engage in "tier 2" activities, its
opportunity to achieve its gargeted and threshold income levels will be
moderately affected. Accordingly, the parties agree that for every month (or
pro rata portion of any such month) in which the Company is not permitted to
engage in "tier 2" activities, the net Income targets either for purposes of
the Contingent Purchase Price calculations or achieving the Target Adjusted
Net Income levels, will be reduced by $3,200 per month. Once such tier 2
authority has been received, the thresholds and targets will again revert to
the levels set forth in the Agreement.
2. Extension of Closing Date
The parties agree that the outside Closing Date (absent a further mutual
agreement to the contrary) shall be extended to November 30, 1999.
1
IN WITNESS WHEREOF, the parties have executed this Amendment as of July
12, 1999.
UMPQUA HOLDINGS CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------
STRAND, ATKINSON, XXXXXXXX & YORK,
INCORPORATED
By: /s/ Xxx Xxxxxx
----------------------------------
Xxx Xxxxxx, President
SHAREHOLDERS
/s/ Xxx Xxxxxx
--------------------------------------
Xxx Xxxxxx
/s/ Xxxxxxx Xxxxxx
--------------------------------------
Xxxxxxx Xxxxxx
/s/ Xxxx Xxxx
--------------------------------------
Xxxx Xxxx
/s/ Xxxxx Xxxxxxxx
--------------------------------------
Xxxxx Xxxxxxxx
/s/ Xxxxxx Xxxxxxxx
--------------------------------------
Xxxxxx Xxxxxxxx
2
