Exhibit 99.54
AGREEMENT AND
PLAN OF REORGANIZATION
AND MERGER
By and Between
NORTH VALLEY BANCORP
and
YOLO COMMUNITY BANK
Dated April 23 2004
TABLE OF CONTENTS
AGREEMENT AND PLAN OF REORGANIZATION
Page
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1. THE MERGER ............................................................ 2
1.1 Creation of New YCB Bank ....................................... 2
1.2 Merger ......................................................... 2
1.2.a. Merger of New YCB Bank and YCB ......................... 2
1.2.b. Effect on New YCB Bank Shares .......................... 2
1.2.c. Effect on YCB Shares ................................... 2
1.2.d. Effect on NVBancorp Shares ............................. 2
1.2.e. Alternative Method ..................................... 2
1.3 Effect of the Merger ........................................... 3
1.4 Name of Merged Bank ............................................ 3
1.5 Execution of Agreement of Merger ............................... 3
1.6 Cooperation; Best Efforts ...................................... 3
2. ALLOCATION OF CASH, CONVERSION AND CANCELLATION
OF SHARES ............................................................. 4
2.1 Conversion of YCB Shares ....................................... 4
2.2 Election and Proration Procedures .............................. 4
2.2.a. Election Forms and Types of Elections .................. 4
2.2.b. Proper and Timely Election ............................. 5
2.2.c. Allocation ............................................. 5
2.2.d. Payment and Proration .................................. 5
2.3 Fractional Shares .............................................. 7
2.4 Surrender of YCB Shares ........................................ 7
2.5 Further Transfers of YCB Shares ................................ 8
2.6 Adjustments .................................................... 8
2.7 Treatment of Stock Options ..................................... 8
2.8 Dissenting Share of YCB Stock .................................. 9
3. COVENANTS OF THE PARTIES .............................................. 9
3.1 Covenants of NVBancorp ......................................... 9
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3.1.a. Amendment of Articles and Bylaws ....................... 9
3.1.b. Appointment of Holding Company Director ................ 9
3.1.c. Amendment of NVBancorp Stock Option Plan ............... 9
3.1.d. Reservation, Issuance and Registration of
NVBancorp Share ........................................ 9
3.1.e. Nasdaq Stock Market Listing ............................ 10
3.1.f. Director and Officer Liability Insurance ............... 10
3.1.g. Organization of New YCB Bank ........................... 10
3.l.h. Executive Agreement of Merger .......................... 10
3.2 Covenants of YCB ............................................... 10
3.2.a. Approval by Shareholders ............................... 10
3.2.b. Termination of YCB Stock Option Plan ................... 11
3.2.c. Termination or Merger of YCB Benefit Plans ............. 11
3.2.d. Capital Commitments and Expenditure .................... 11
3.2.e. Compensation ........................................... 11
3.2.f. Loans .................................................. 12
3.2.g. Certain Notes .......................................... 12
3.2.h. Loan Review ............................................ 12
3.2.i. Loan Provision ......................................... 12
3.2.j. No Merger or Solicitation .............................. 13
3.2.k. Execute Agreement of Merger ............................ 13
3.3 Mutual Covenants of NVBancorp and YCB .......................... 14
3.3.a. Appointment of Executive Officers ...................... 14
3.3.b. YCB Bank Directors ..................................... 14
3.3.c. Appointment of President of YCB ........................ 14
3.3.d. Classified Board of Directors .......................... 14
3.3.e. (Intentionally Omitted) ................................ 15
3.3.f. Shareholder Lists and Other Information ................ 15
3.3.g. Government Approvals ................................... 15
3.3.h. Notification of Breach of Representations,
Warranties and Covenants ............................... 15
3.3.i. Financial Statements ................................... 16
3.3.j. Conduct of Business in the Ordinary Course ............. 16
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3.3.k. Press Releases ......................................... 18
3.3.l. Employee Benefit Plans ................................. 18
3.3.m. Changes in Capital Stock; Dividends .................... 18
3.3.n. Access to Properties, Books and Records;
Confidentiality ........................................ 19
3.3.o. Loan Performance ....................................... 20
3.3.p. (Intentionally Omitted) ................................ 20
3.3.q. Rights Plans ........................................... 20
4. REPRESENTATIONS AND WARRANTIES OF YCB ................................. 20
4.a. Corporate Status and Power to Enter Into Agreements ............ 20
4.b. Articles, Bylaws, Books and Records ............................ 20
4.c. Compliance With Laws, Regulations and Decrees .................. 21
4.d. Capitalization ................................................. 21
4.e. Trademarks and Trade Names ..................................... 21
4.f. Financial Statements, Regulatory Reports ....................... 21
4.g. Tax Returns .................................................... 22
4.h. Material Adverse Change ........................................ 23
4.i. No Undisclosed Liabilities ..................................... 23
4.j. Properties and Leases .......................................... 23
4.k. Material Contracts ............................................. 24
4.l. Classified Loans ............................................... 24
4.m. No Restrictions on Investments ................................. 25
4.n. Employment Benefit Plans/ERIS .................................. 25
4.o. Collective Bargaining and Employment Agreements ................ 26
4.p. Compensation of Officers and Employees ......................... 26
4.q. Legal Actions and Proceedings .................................. 26
4.r. Execution and Delivery of the Agreement ........................ 27
4.s. Retention of Broker or Consultant .............................. 27
4.t. Insurance ...................................................... 28
4.u. Loan Loss Reserves ............................................. 28
4.v. Transactions With Affiliates ................................... 28
4.w. Risk Management Investments .................................... 28
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4.x. Information in Proxy Statement/Prospectus ...................... 28
4.y. Community Reinvestment Act Compliance .......................... 29
4.z. Accuracy and Effective Date of Representation and Warranties,
Covenants and Agreement ........................................ 29
5. REPRESENTATIONS AND WARRANTIES OF NVBancorp ........................... 29
5.a. Corporate Status and Power to Enter Into Agreements ............ 29
5.b. Articles, Bylaws, Books and Record ............................. 30
5.c. Compliance With Laws, Regulations and Decrees .................. 30
5.d. Capitalization ................................................. 30
5.e. Trademarks and Trade Names ..................................... 31
5.f. Financial Statements, Regulatory Reports ....................... 31
5.g. Tax Returns .................................................... 32
5.h. Material Adverse Change ........................................ 32
5.i. No Undisclosed Liabilities ..................................... 32
5.j. Properties and Leases .......................................... 33
5.k. Material Contracts ............................................. 34
5.l. Classified Loans ............................................... 34
5.m. No Restrictions on Investments ................................. 35
5.n. Employment Benefit Plans/ERISA ................................. 35
5.o. Collective Bargaining and Employment Agreements ................ 36
5.p. Compensation of Officers and Employees ......................... 36
5.q. Legal Actions and Proceedings .................................. 36
5.r. Execution and Delivery of the Agreement ........................ 37
5.s. Retention of Broker or Consultant .............................. 37
5.t. Insurance ...................................................... 37
5.u. Loan Loss Reserve .............................................. 38
5.v. Transactions With Affiliates ................................... 38
5.w. Risk Management Instruments .................................... 38
5.x. Information in Proxy Statement/Prospectus ...................... 38
5.y. Community Reinvestment Act Compliance .......................... 39
5.z. Accuracy and Effective Date of Representations and Warranties
and Agreements ................................................. 39
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6. SECURITIES ACT OF 1933; SECURITIES EXCHANGE ACT OF 1934 ............... 39
6.a. Preparation and Filing of Permit Application ................... 39
6.b. Issuance of Permit ............................................. 40
6.c. Sales and Resales of Common Stock .............................. 40
6.d. Rule 145 ....................................................... 40
7. CONDITIONS TO THE OBLIGATIONS OF NVBancorp ............................ 40
7.a. Representations and Warranties ................................. 40
7.b. Compliance and Performance Under Agreement ..................... 41
7.c. Material Adverse Change ........................................ 41
7.d. Approval of Agreement .......................................... 41
7.e. Officer's Certificate .......................................... 41
7.f. Opinion of Counsel ............................................. 41
7.g. Absence of Proceedings ......................................... 41
7.h. Issuance of Permit ............................................. 41
7.i. Government Approvals ........................................... 42
7.j. Tax Opinion .................................................... 42
7.k. Accountant's Letters ........................................... 43
7.l. Affiliate Agreements ........................................... 43
7.m. Dissenting Shares .............................................. 43
7.n. Unaudited Financials ........................................... 44
7.o. Closing Documents .............................................. 44
7.p. Consents ....................................................... 44
7.q. Director-Shareholder Agreements ................................ 44
7.r. Employment Agreements .......................................... 44
8. CONDITIONS TO THE OBLIGATIONS OF YCB .................................. 44
8.a. Representations and Warranties ................................. 44
8.b. Compliance and Performance Under Agreement ..................... 45
8.c. Material Adverse Change ........................................ 45
8.d. Approval of Agreement .......................................... 45
8.e. Officer's Certificate .......................................... 45
8.f. Opinion of Counsel ............................................. 45
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8.g. Absence of Proceedings ......................................... 45
8.h. Issuance of Permit ............................................. 45
8.i. Government Approvals ........................................... 45
8.j. Tax Opinion .................................................... 46
8.k. Accountant's Letters ........................................... 47
8.l. Unaudited Financials ........................................... 47
8.m. Affiliate Agreements ........................................... 47
8.n. Closing Documents .............................................. 47
8.o. Consents ....................................................... 47
8.p. Fairness Opinion ............................................... 47
9. CLOSING ............................................................... 48
9.a. Closing Date ................................................... 48
9.b. Delivery of Documents .......................................... 48
9.c. Filings ........................................................ 48
10. POST-CLOSING MATTERS .................................................. 48
11. EXPENSES .............................................................. 48
12. AMENDMENT; TERMINATION ................................................ 48
12.a. Amendment ...................................................... 48
12.b. Termination .................................................... 49
12.c. Termination Date ............................................... 51
12.d. Notice ......................................................... 51
12.e. Effect of Termination; Liquidated Damages ...................... 51
13. INDEMNIFICATION ....................................................... 52
13.1 By NVBancorp ................................................... 52
13.2 By YCB ......................................................... 53
13.3 Notification ................................................... 53
14. MISCELLANEOUS ......................................................... 53
14.a. Notices ........................................................ 53
14.b. Knowledge ...................................................... 54
14.c. Binding Agreement .............................................. 54
14.d. Material Adverse Effect ........................................ 54
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14.e. Survival of Representations and Warranties ..................... 55
14.f. Governing Law .................................................. 55
14.g. Attorneys' Fees ................................................ 55
14.h. Entire Agreement; Severability ................................. 55
14.i. Counterparts ................................................... 55
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AGREEMENT
AND
PLAN OF REORGANIZATION AND MERGER
---------------------------------
THIS AGREEMENT AND PLAN OF REORGANIZATION AND MERGER, dated as of April
23, 2004, ("Agreement"), is made and entered into by and among North Valley
Bancorp, a California corporation ("NVBancorp"), and Yolo Community Bank, a
California banking corporation ("YCB"). North Valley Bank, a California banking
corporation, is a wholly-owned subsidiary of NVBancorp and any reference
hereafter to "NVB" relates to North Valley Bank.
Recitals:
--------
A. The Boards of Directors of NVBancorp and YCB deem it advisable
and in the best interests of NVBancorp and YCB, and their
respective shareholders, that NVBancorp and YCB enter into a
business combination upon the terms and conditions set forth
herein and in accordance with the California General
Corporation Law (the "CGCL") whereby YCB will become a
wholly-owned subsidiary of NVBancorp.
B. This Agreement provides for the completion of the acquisition
of YCB by NVBancorp through the merger ("Merger") of YCB with a
newly formed California banking corporation which shall be a
wholly owned subsidiary of NVBancorp ("New YCB Bank") under the
applicable laws of the State of California and pursuant to an
agreement of merger (the "Agreement of Merger") to be entered
into by and among YCB, NVBancorp and New YCB Bank substantially
in the form attached hereto as Exhibit A.
C. The Merger is intended to qualify as a tax-free reorganization
within the meaning of Section 368 of the Internal Revenue Code
of 1986, as amended (the "IRC").
D. Pursuant to the Merger, each YCB shareholder will receive, in
exchange for each share of YCB common stock ("YCB Share" or
"YCB Shares"), an amount in cash or shares of NVBancorp common
stock ("NVBancorp Share" or "NVBancorp Shares") equal to the
Per Share Consideration as defined in Section 2.1 of this
Agreement and in the Agreement of Merger (the "Merger
Consideration").
E. The Boards of Directors of NVBancorp and YCB have determined
that the Merger and the other transactions contemplated by this
Agreement are consistent with, and will contribute to the
furtherance of, their respective business strategies and goals.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein and in the Agreement of Merger, the parties hereto
agree as follows:
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1. THE MERGER.
----------
1.1. Creation of New YCB Bank. As soon as practicable, NVBancorp
shall (a) organize New YCB Bank pursuant to Section 350 et seq. of the
California Financial Code as a new California banking corporation, wholly-owned
by NVBancorp formed for the sole purpose of facilitating the business
combination; and (b) cause New YCB Bank to file an application for deposit
insurance with the Federal Deposit Insurance Corporation (the "FDIC"). The
Articles of Incorporation and Bylaws of New YCB Bank shall be identical to the
YCB Articles of Incorporation and Bylaws, except for the corporate name.
1.2. Merger. The Merger shall become effective (the "Effective Time
of the Merger") on the date that the Agreement of Merger is filed with the
Commissioner of the California Department of Financial Institutions (the
"Commissioner"), after having been filed with the California Secretary of State
and previously approved by the Commissioner (as provided in Section 1.5 hereof).
The date on which occurs the Effective Time of the Merger (as specified in the
Agreement of Merger) is referred to herein as the "Effective Date." At the
Effective Time of the Merger, and pursuant to the terms of this Agreement and
the Agreement of Merger, the following transactions will be deemed to have
occurred simultaneously:
1.2.a. Merger of New YCB Bank and YCB. New YCB Bank and YCB
will merge, and the separate corporate existence of YCB shall cease. New YCB
Bank as the corporation surviving the Merger is sometimes referred to herein as
the "Resulting Corporation" or as the "Merged Bank."
1.2.b. Effect on New YCB Bank Shares. Each share of the
common stock of New YCB Bank (the "New YCB Bank Stock") issued and outstanding
immediately prior to the Effective Time of the Merger shall, on and after the
Effective Time of the Merger, remain issued and outstanding.
1.2.c. Effect on YCB Shares. Each YCB Share issued and
outstanding immediately prior to the Effective Time of the Merger, except for
Dissenting YCB Shares (as defined in Section 2.8 hereof), on and after the
Effective Time of the Merger, pursuant to the Agreement of Merger and without
any further action on the part of YCB or the holders of YCB Shares, shall be
canceled automatically and cease to be an issued and outstanding share of YCB
Shares, and shall be converted into the right to elect to receive newly issued
NVBancorp Shares or cash as provided in Section 2 below. Certificates formerly
evidencing shares of YCB Stock shall be surrendered for payment and exchange to
the Exchange Agent (as defined in Section 2.2.a hereof), in accordance with
Section 2.2d.
1.2.d. Effect on NVBancorp Shares. Each share of NVBancorp
common stock issued and outstanding immediately prior to the Effective Time of
the Merger shall, on and after the Effective Time of the Merger, remain issued
and outstanding and shall automatically and for all purposes be deemed to
represent one share of common stock of NVBancorp.
1.2.e. Alternative Method. Anything herein to the contrary
notwithstanding, upon written notice to YCB and YCB's written approval,
NVBancorp may at any time prior to the Effective Time of the Merger change the
method of effecting the acquisition of YCB (including, without limitation, the
provisions of this Section 1) if and to the extent it deems such change to be
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necessary, appropriate or desirable; provided, however, that no such change
shall: (i) alter or change the amount or kind of consideration to be issued to
holders of YCB Shares as provided for in this Agreement; (ii) cause the
transaction to be treated as anything other than a tax-free reorganization to
NVBancorp and YCB, and except to the extent cash is received, the holders of YCB
Shares; or (iii) materially impede or delay the receipt of any approvals
referred to in Sections 7.i and 8.i below or the consummation of the
transactions contemplated by this Agreement.
1.3. Effect of the Merger. By virtue of the Merger and at the
Effective Time of the Merger, all of the rights, privileges, powers and
franchises and all property and assets of every kind and description of New YCB
Bank and YCB shall be vested in and be held and enjoyed by the Merged Bank,
without further act or deed, and all the estates and interests of every kind of
New YCB Bank and YCB, including all debts due to either of them, shall be as
effectively the property of the Merged Bank as they were the property of New YCB
Bank and YCB, and the title to any real estate vested by deed or otherwise in
either New YCB Bank or YCB shall not revert or be in any way impaired by reason
of the Merger; and all rights of creditors and liens upon any property of New
YCB Bank and YCB shall be preserved unimpaired, and all debts, liabilities and
duties of New YCB Bank and YCB shall be debts, liabilities and duties of the
Merged Bank and may be enforced against it to the same extent as if such debts,
liabilities and duties had been incurred or contracted by it, and none of such
debts, liabilities or duties shall be expanded, increased, broadened or enlarged
by reason of the Merger.
1.4. Name of Merged Bank. Upon the filing and acceptance of the
Agreement of Merger, New YCB Bank shall file a Certificate of Amendment of its
Articles of Incorporation changing its corporate name to "Yolo Community Bank"
with the Commissioner and thereafter shall file the Certificate of Amendment
with the California Secretary of State as of the Closing Date. Immediately
thereafter, a certified copy of the Certificate of Amendment shall be submitted
to the Commissioner.
1.5. Execution of Agreement of Merger. Prior to the Closing Date and
as soon as practicable after the organization of New YCB Bank, the approval of
this Agreement and the transactions contemplated hereby by the shareholder of
New YCB Bank and the shareholders of YCB, and the satisfaction of the conditions
precedent to the consummation of the Merger, the Agreement of Merger in the form
attached as Exhibit "A" (as amended, if necessary, to conform to the
requirements of law or a governmental authority or agency having authority over
the Merger, which requirements are not materially in contravention of any of the
substantive terms hereof) shall be executed by YCB, NV Bancorp and New YCB Bank.
As soon as possible thereafter, the Agreement of Merger, along with the
requisite Officers' Certificates, shall be submitted to the Commissioner for
approval and endorsement pursuant to Section 4887(a) of the California Financial
Code and, thereafter, shall be filed with the California Secretary of State.
Prior to the close of business on the Closing Date, an executed copy of the
Agreement of Merger with the approval of the Commissioner endorsed therein and
certified by the California Secretary of State shall be filed with the
Commissioner as provided in Section 4887(b) of the California Financial Code,
effective as of the close of business on the Closing Date. The Merger shall
become effective in accordance with the provisions of Section 1.2 of this
Agreement.
1.6. Cooperation; Best Efforts. Each of YCB and NVBancorp,
consistent with the fiduciary duties of the directors of YCB and NVBancorp,
respectively, will use its best efforts to consummate the transactions
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contemplated by this Agreement and cooperate in any action necessary or
advisable to facilitate such consummation including, without limitation, making
all filings required in order to obtain any necessary consents or to comply with
any law and providing any information required in connection therewith.
2. ALLOCATION OF CASH, CONVERSION AND SURRENDER OF SHARES.
------------------------------------------------------
2.1. Conversion of YCB Shares.
------------------------
2.1.a. Subject to the other provisions of this Section 2,
each share of YCB Common Stock issued and outstanding immediately prior to the
Effective Time of the Merger (other than Dissenters' Shares as defined in
Section 2.8) shall, by virtue of the Merger, be converted into the right to
receive, at the election of the holder thereof as provided in Section 2.2,
either (i) cash (the "Cash Consideration") in an amount equal to the sum of (a)
$9,511,976 and (b) 741,700 multiplied by the NVBancorp Measuring Price, divided
by the number of shares of YCB Common Stock issued and outstanding immediately
prior to the Effective Time of the Merger (the "Per Share Consideration"), or
(ii) a number of shares of NVBancorp Common Stock (the "Stock Consideration")
equal to the Per Share Consideration divided by the NVBancorp Measuring Price.
The NVBancorp Measuring Price shall equal the average closing price of
NVBancorp Common Stock as listed on Nasdaq National Market over the ten (10)
consecutive trading day period ending on the second Business Day prior to the
Closing Date.
2.2 Election and Proration Procedures.
---------------------------------
2.2.a. Election Forms and Types of Elections. An election
form and other appropriate and customary transmittal materials (which shall
specify that delivery shall be effected, and risk of loss and title to the
certificates theretofore representing shares of YCB Common Stock shall pass,
only upon proper delivery of such certificates to the Exchange Agent selected by
NVBancorp (the "Exchange Agent")) in such form and substance as designated by
NVBancorp and reasonably acceptable to YCB (the "Election Form") shall be mailed
at NVBancorp's expense no less than forty days prior to the Effective Time of
the Merger or on such other date as NVBancorp and YCB shall mutually agree (the
"Mailing Date") to each holder of record of YCB Common Stock as of a date of
NVBancorp's choice which is at least three Business Days prior to the Mailing
Date (the "Election Form Record Date"). NVBancorp shall make available one or
more Election Forms as may be reasonably requested by all persons who become
holders of YCB Common Stock after the Election Form Record Date and prior to the
Election Deadline (as defined herein), and that YCB shall promptly provide or
cause to be provided to the Exchange Agent all information reasonably necessary
for the Exchange Agent to perform its obligations as specified herein. Each
Election Form shall permit the holder (or the beneficial owner through
appropriate and customary documentation and instructions) to elect (an
"Election") to receive either (i) NVBancorp Common Stock (a "Stock Election")
with respect to each share of YCB Common Stock, or (ii) cash (a "Cash Election")
with respect to each share of YCB Common Stock. Any shares of YCB Common Stock
(other than Dissenters' Shares) with respect to which the holder (or indirectly
the beneficial owner) shall not have submitted to the Exchange Agent an
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effective, properly completed Election Form, which was received prior to the
Election Deadline, shall be deemed to be "Undesignated Shares" hereunder.
2.2.b. Proper and Timely Election. Any Election shall have
been properly made and effective only if the Exchange Agent shall have actually
received a properly completed Election Form by 5:00 P.M. Pacific Time on the
last Business Day prior to the Closing Date (or such other time and date as YCB
and NVBancorp may mutually agree) (the "Election Deadline"). An Election Form
shall be deemed properly completed only if an Election is indicated for each
share of YCB Common Stock covered by such Election Form and if accompanied by
one or more certificates (or customary affidavits and indemnification regarding
the loss or destruction of such certificates or the guaranteed delivery of such
certificates) representing all shares of YCB Common Stock covered by such
Election Form, together with duly executed transmittal materials included in or
required by the Election Form. Any Election Form may be revoked or changed by
the person submitting such Election Form prior to the Election Deadline. In the
event an Election Form is revoked prior to the Election Deadline, the shares of
YCB Common Stock represented by such Election Form shall automatically become
Undesignated Shares unless and until a new Election is properly and timely made
with respect to such shares on or before the Election Deadline, and NVBancorp
shall cause the certificates representing such shares of YCB Common Stock to be
promptly returned without charge to the person submitting the revoked Election
Form upon written request to that effect from the holder who submitted such
Election Form. Subject to the terms of this Agreement and of the Election Form,
the Exchange Agent shall have reasonable discretion to determine whether any
election, revocation or change has been properly or timely made and to disregard
immaterial defects in the Election Forms, and any decisions of NVBancorp and YCB
required by the Exchange Agent and made in good faith in determining such
matters shall be binding and conclusive. Neither NVBancorp nor the Exchange
Agent shall be under any obligation to notify any person of any defect in an
Election Form.
2.2.c. Allocation. Notwithstanding anything in this
Agreement to the contrary, the number of shares of YCB Common Stock to be
converted into the right to receive Cash Consideration in the Merger (the "Cash
Election Number") shall be equal to (i) $9,511,976 divided by the Per Share
Consideration less (ii) the number of Dissenters' Shares, if any, (the "Cash
Pool"). The number of shares of YCB Common Stock to be converted into the right
to receive Stock Consideration in the Merger (the "Stock Election Number") shall
be equal to the number of shares of YCB Common Stock issued and outstanding
immediately prior to the Effective Time of the Merger less the sum of (i) the
Cash Election Number, and (ii) the number of Dissenters' Shares, if any.
In no event (except as provided in Sections 2.2.d.(iv) or 12.b.(xvi))
will the total amount of cash paid to YCB shareholders under this Agreement
exceed $9,511,976.00 and the number of NVBancorp Shares exchanged for YCB Shares
exceed 741,700 NVBancorp Shares.
2.2.d. Payment and Proration. As promptly as practicable but
not later than five Business Days after the Effective Time of the Merger,
NVBancorp shall cause the Exchange Agent to effect the allocation among the
holders of YCB Common Stock of rights to receive NVBancorp Common Stock or cash
in the Merger in accordance with the Election Forms as follows:
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(i) In the event that the aggregate number of
shares of YCB Common Stock in respect of which Cash Elections
have been made and all Undesignated Shares in respect of which
Cash Elections are deemed to have been made (it being
understood that in such case all Undesignated Shares shall be
deemed to be shares in respect of which Cash Elections have
been made) (collectively, the "Cash Election Shares") exceeds
the Cash Election Number, all shares in respect of which Stock
Elections have been made (the "Stock Election Shares") shall be
converted into the right to receive Stock Consideration, and
all Cash Election Shares shall be converted into the right to
receive Stock Consideration or Cash Consideration in the
following manner:
(A) Cash Election Shares shall be deemed
converted to Stock Election Shares, on a pro-rata
basis for each record holder of shares of YCB Common
Stock with respect to those shares, if any, of such
record holder that are Cash Election Shares, so that
the number of Cash Election Shares so converted, when
added to the existing Stock Election Shares, shall
equal as closely as practicable the Stock Election
Number and all such Cash Election Shares so converted
shall be converted into the right to receive Stock
Consideration (and cash in lieu of fractional
interests); and
(B) Any remaining Cash Election Shares shall
be converted into the right to receive Cash
Consideration.
(ii) In the event that the aggregate number of
Stock Election Shares exceeds the Stock Election Number, all
Cash Election Shares and all Undesignated Shares in respect of
which Cash Elections are deemed to have been made (it being
understood that in such case all Undesignated Shares shall be
deemed to be shares in respect of which Cash Elections have
been made) shall be converted into the right to receive Cash
Consideration, and all Stock Election Shares shall be converted
into the right to receive Stock Consideration or Cash
Consideration in the following manner:
(A) Stock Election Shares shall be deemed
converted into Cash Election Shares, on a pro-rata
basis for each record holder of shares of YCB Common
Stock with respect to those shares, if any, of such
record holder that are Stock Election Shares, so that
the number of Stock Election Shares so converted,
when added to the existing Cash Election Shares,
shall equal as closely as practicable the Cash
Election Number, and all such shares so converted
shall be converted into the right to receive Cash
Consideration; and
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(B) The remaining Stock Election Shares shall
be converted into the right to receive Stock
Consideration (and cash in lieu of fractional
interests).
(iii) (Intentionally Omitted)
(iv) Notwithstanding any other provision of this
Agreement, if after applying the allocation rules set forth in
the preceding subsections of this Section 2.2, the aggregate
value of the NVBancorp Common Stock that would be issued
pursuant to the Merger (valued at the closing price of
NVBancorp Common Stock on the date on which the Effective Time
of the Merger occurs (the "Closing Price") is less than 50% of
the aggregate value of the total consideration (which total
consideration shall include cash paid or anticipated to be paid
to Dissenting Shareholders) to be paid in exchange for YCB
Common Stock (the "Minimum Percentage") NVBancorp and YCB shall
be authorized to reallocate, in good faith and in such a manner
as they reasonably determine to be fair and equitable, shares
of NVBancorp Common Stock and cash among the holders of YCB
Common Stock, or to vary the number of shares of NVBancorp
Common stock to be issued in the Merger, in a manner such that
the number of shares of NVBancorp Common stock to be issued in
the Merger shall not represent less than the Minimum
Percentage.
2.3 Fractional Shares. Notwithstanding any other provision hereof,
no fractional shares of NVBancorp Shares shall be issued to holders of YCB
Shares. In lieu thereof, each such holder entitled to a fraction of a NVBancorp
Share shall receive, at the Effective Time of the Merger or upon surrender of
the certificate or certificates representing such holder's YCB Shares, whichever
is later, an amount in cash equal to the NVBancorp Measuring Price as defined in
Paragraph 2.1.a., multiplied by the fraction of an NVBancorp Share to which such
holder otherwise would be entitled. No such holder shall be entitled to
dividends, voting rights, interest on the value of, or any other rights in
respect of a fractional share.
2.4 Surrender of YCB Shares.
-----------------------
For all shares not surrendered in accordance with Paragraph 2.2
the following applies:
2.4.a. No dividends or other distributions of any kind which
are declared payable to shareholders of record of the NVBancorp Shares after the
Effective Date will be paid to persons entitled to receive such certificates for
NVBancorp Shares until such persons surrender their certificates representing
YCB Shares (or customary affidavits regarding the loss or destruction of such
certificates have been delivered). Upon surrender of such certificates
representing YCB Shares, the holder thereof shall be paid, without interest, any
dividends or other distributions with respect to the NVBancorp Shares as to
which the record date and payment date occurred on or after the Effective Date
and on or before the date of surrender.
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2.4.b. If any certificate for NVBancorp Shares is to be
issued in a name other than that in which the certificate for YCB Shares
surrendered in exchange therefor is registered, any transfer costs or expenses
(except taxes) required by reason of the issuance of certificates for such
NVBancorp Shares in a name other than the registered holder of the certificate
surrendered shall be paid by the person requesting such change.
2.4.c. All dividends or distributions, and any cash to be
paid pursuant to Sections 2.2 and 2.3, if held by the Exchange Agent for payment
or delivery to the holders of unsurrendered certificates representing YCB Shares
and unclaimed at the end of one year from the Effective Date, shall (together
with any interest earned thereon) at such time be paid or redelivered by the
Exchange Agent to NVBancorp, and after such time any holder of a certificate
representing YCB Shares who has not surrendered such certificate to the Exchange
Agent shall, subject to applicable law, look, as a general creditor, only to
NVBancorp for payment or delivery of such dividends or distributions or cash, as
the case may be.
2.5. Further Transfers of YCB Shares. At the Effective Time of the
Merger, the stock transfer books of YCB shall be closed and no transfer of YCB
Shares theretofore outstanding shall thereafter be made.
2.6. Adjustments. If, between the date of this Agreement and the
Effective Date, the outstanding shares of NVBancorp Shares or YCB Shares shall
have been changed into a different number of shares or a different class by
reason of any reclassification, recapitalization, split-up, combination,
exchange of shares or readjustment, or a stock dividend thereon shall be
declared with a record date within such period, the number of NVBancorp Shares
to be issued and delivered in the Merger in exchange for each outstanding YCB
Share shall be correspondingly adjusted.
2.7 Treatment of Stock Options.
--------------------------
2.7.a. Each person holding one or more options to purchase
YCB Shares ("YCB Option" or "YCB Options") pursuant to the Yolo Community Bank
1998 Stock Option Plan , as amended to date ("YCB Stock Option Plan") shall have
the right, in his or her discretion, to either:
(i) exercise any vested portion (including any
portion vested as a result of the Merger) of the YCB Option to
acquire YCB Shares prior to the Effective Date; or
(ii) as of the Effective Time of the Merger,
surrender the YCB Option agreement to NVBancorp, in which event
such person will be entitled to receive a substitute option
("Substitute Option") exercisable for (a) a number of NVBancorp
Shares, based on the conversion ratio equal to the Per Share
Consideration divided by the NVBancorp Measuring Price (the
"Option Conversion Ratio") rounded up or down to the nearest
whole share, and (b) the exercise price for the shares subject
to the YCB Option shall be adjusted by dividing the pre-Merger
exercise price for the YCB Option by the Option Conversion
Ratio, rounded to the nearest xxxxx.
2.7.b. The Substitute Options to be received in exchange for
YCB Options shall be fully vested, shall be exercisable as provided in the
original applicable YCB Option agreement and shall otherwise preserve the
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characteristics, terms and conditions of the original YCB Option to the greatest
extent possible under a stock option plan of NVBancorp, subject to the
requirements of law and any applicable rules.
2.8 Dissenting Share of YCB Stock. Any YCB Shares held by a
"dissenting shareholder" within the meaning of Chapter 13 of the CGCL, which
have not been withdrawn or caused to lose their status as "dissenting shares,"
shall not be converted into NVBancorp Shares but shall, after the Effective Time
of the Merger, be entitled only to such rights as are provided to a dissenting
shareholder under Chapter 13 of the CGCL (Section 1300 et seq. of the California
Corporations Code) and shall have no other rights under this Agreement or as a
shareholder of NVBancorp.
3. COVENANTS OF THE PARTIES.
------------------------
3.1. Covenants of NVBancorp. During the period from the date of this
Agreement and continuing until the Effective Time of the Merger, except as
expressly contemplated or permitted by this Agreement or to the extent that YCB
shall otherwise consent in writing, which consent will not be unreasonably
withheld or delayed more than three (3) business days after the request for
consent is delivered:
3.1.a. Articles and Bylaws of Merged Bank. The Articles of
Incorporation and Bylaws of New YCB Bank in effect immediately prior to the
Effective Time of the Merger shall be the Articles of Incorporation and Bylaws
of the Merged Bank , provided, however, the Articles of Incorporation of the
Merged Bank shall be amended to change the name of the Merged Bank to "Yolo
Community Bank" at the Effective Time of the Merger.
3.1.b. Appointment of Holding Company Directors. Promptly
after the Effective Time of the Merger, two (2) of the existing directors of YCB
(the Chairman of the Board of YCB and one other Board Member selected by the YCB
Board and approved by the NVBancorp Board of Directors) shall be appointed to
the NVBancorp Board of Directors. One such director shall serve as a Class I
Director and the other such director shall serve as a Class III Director, under
the classified Board structure described by Section 3.3.d. below.
3.1.c. Amendment of NVBancorp Stock Option Plan. NVBancorp
shall take all necessary corporate action, if needed, including any required
approval of the shareholders of NVBancorp to amend its 1998 Employee Stock
Incentive Plan, or assume the YCB 1998 Stock Option Plan, or establish a new
stock option plan and shall cause to be filed and become effective under the
Securities Act of 1933, as amended (the "1933 Act"), as of the Effective Time of
the Merger, or as soon thereafter as practicable, a registration statement with
respect to the options to be granted and shares to be issued thereunder to
fulfill the obligations to grant Substitute Options to holders of YCB Options
pursuant to Section 2.7 of this Agreement.
3.1.d. Reservation, Issuance and Qualification of NVBancorp
Shares. NVBancorp shall reserve for issuance in connection with the Merger and
in accordance with the terms of this Agreement (i) a number of NVBancorp Shares
sufficient to complete the exchange of NVBancorp Shares for the outstanding YCB
Shares pursuant to the provisions of Section 2.1 above and (ii) the maximum
number of NVBancorp Shares to which the holders of Substitute Options may be
entitled pursuant to Section 2.7 above at or after the Effective Time of the
Merger. NVBancorp shall cause the issuance of such NVBancorp Shares to be
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qualified under the California Corporate Securities Law of 1968, in accordance
with a permit to be issued by the Commissioner of Corporations after a fairness
hearing, so that such NVBancorp Shares shall be exempted securities under the
1933 Act, as provided in Section 6 below.
3.1.e. Nasdaq Stock Market Listing. NVBancorp shall take all
necessary action to list NVBancorp's Shares issued pursuant to this Agreement
with the Nasdaq Stock Market for trading on the NASDEQ National Market, to be
effective as soon as practicable following the Effective Time of the Merger.
3.1.f. Director and Officer Liability Insurance. NVBancorp,
from and after the Effective Date, will directly or indirectly cause the persons
who served as directors or officers of YCB on or before the Effective Date to be
covered by NVBancorp's existing directors' and officers' liability insurance
policy (provided that NVBancorp may substitute therefor policies of at least the
same coverage and amounts containing terms and conditions which are not less
advantageous than such policy) or so-called tail coverage obtained in connection
with YCB's directors' and officers' liability insurance policies in effect as of
the Effective Date; provided that NVBancorp shall not be obligated to make
annual premium payments for such insurance to the extent such premiums exceed
150% of the most recent annual premium paid by YCB for such insurance. Subject
to the preceding sentence, such insurance coverage, shall commence on the
Effective Date and will be provided for a period of no less than three (3) years
after the Effective Date. From the date hereof through the Effective Date and
subject to the foregoing, YCB shall use its best efforts to arrange for tail
coverage related to its then current policies of directors' and officers'
liability insurance and, following the Effective Date, NVBancorp shall exercise
those rights which it may have to in order to commence such coverage. In
connection with any active, pending claim under an existing YCB directors' and
officers' liability insurance policy, NVBancorp will take no action that would
have the effect of waiving any such claim and will not omit to take any action
that is necessary to preserve such a claim.
3.1.g. Organization of new YCB Bank. NVBancorp shall use its
best efforts to obtain as expeditiously as possible the regulatory approvals
described in Section 1.1. of this Agreement in order to organize New YCB Bank
and, in its capacity as the sole shareholder of New YCB Bank, to authorize and
approve the Merger.
3.1.h. Execute Agreement of Merger. As soon as practicable
after receipt of approval by the YCB shareholders and all Government Approvals,
NVBancorp shall execute and delivery and shall cause New YCB Bank to execute and
deliver the Agreement of Merger.
3.2. Covenants of YCB. During the period from the date of this
Agreement and continuing until the Effective Time of the Merger, except as
expressly contemplated or permitted by this Agreement or to the extent that
NVBancorp shall otherwise consent in writing, which consent will not be
unreasonably withheld or delayed more than three (3) business days after the
request for consent is delivered:
3.2.a. Approval by YCB Shareholders. YCB shall cause the
principal terms of the Merger to be submitted promptly for the approval of its
shareholders at a meeting to be called and held in accordance with applicable
law. Subject to continuing fiduciary duties to its shareholders, the Board of
Directors of YCB, in authorizing the execution and delivery of this Agreement,
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unanimously recommends that the principal terms of the Merger, including but not
limited to the termination of the YCB Stockholders Agreements, be approved by
its shareholders. In connection with the call of such meeting, YCB shall cause
the Proxy Statement/Prospectus described in Section 6 of this Agreement to be
mailed to its shareholders. Subject to its continuing fiduciary duty to the
shareholders of YCB, the Board of Directors of YCB shall, at all times prior to
and during such meeting of its shareholders, recommend that this Agreement and
the principal terms of the Merger, including but not limited to the termination
of the YCB Stockholders Agreements, be approved and, subject to such duty, use
its best efforts to cause such approval to be granted by the favorable vote or
consent of the holders of not less than seventy-five percent (75%) of the YCB
Shares.
3.2.b. Termination of YCB Stock Option Plan. Unless assumed
by NV Bancorp, YCB shall take all necessary action to cause the termination of
the YCB Stock Option Plan at the Effective Time of the Merger and the exercise
or surrender (in exchange for Substitute Options) of YCB Options outstanding
thereunder.
3.2.c. Termination or Merger of YCB Benefit Plans. Except
for the Yolo Community Bank Employee Stock Ownership Plan (YCB ESOP), if
requested by NVBancorp, YCB shall take all necessary action to cause the
termination or merger of YCB Employee Plans (as defined in Section 4.n. hereof)
after December 31, 2004. The YCB ESOP will be terminated immediately prior to
the Effective Date.
3.2.d. Capital Commitments and Expenditures. After the
execution of this Agreement, no new capital commitments shall be entered into,
and no capital expenditures shall be made by YCB in excess of One Hundred
Thousand Dollars ($100,000.00) in the aggregate, including but not limited to,
creation of any new branches and acquisitions or leases of real property, except
commitments or expenditures within existing operating and capital budgets
heretofore furnished to and approved in writing by NVBancorp. NVBancorp
acknowledges that YCB is in the process of doing tenant improvements for a new
branch in downtown Woodland and opening a new branch in Fairfield. NVBancorp
specifically acknowledges and approves the budget which has been adopted for
those capital expenditures.
3.2.e. Compensation. YCB shall not make or approve any
increase in the compensation payable or to become payable by it to any of its
directors, officers, employees or agents with annual salaries in excess of
Seventy-Five ThousandDollars ($75,000.00) (including but not limited to
compensation through any profit sharing, pension, retirement, severance,
incentive or other employee benefit program or arrangement other than
compensation related to a YCB Employee Stock Ownership Plan contribution for
2004 which is consistent with the amount contributed for 2003), nor shall any
bonus payment or any agreement or commitment to make a bonus payment be made,
nor shall any stock option, warrant or other right to acquire capital stock be
granted (except as provided in Section 2.6), or employment agreement (other than
any such employment agreement that may arise by operation of law upon the hiring
of any new employee) or consulting agreement be entered into by YCB with any
such directors, officers, employees or agents unless NVBancorp has given its
prior written consent. Nothing herein shall prevent the payment to officers and
employees of YCB of regular salary increases, consistent with past practices in
connection with regular salary reviews or bonuses consistent with past
practices, as heretofore disclosed by YCB to NVBancorp.
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3.2.f. Loans. YCB shall not, without first having obtained
the written consent of NVBancorp (which shall be deemed to have been given if no
response is provided following written request therefor within three (3)
business days of receipt of such request), cause, allow, or suffer its officers
or agents to commit to any loan or renewal which does not comply in all material
respects with its credit policies in effect and as disclosed and provided to
NVBancorp prior to the date of this Agreement, provided, however, that all new
and renewed stand-alone extensions of credit over Two Hundred Fifty Thousand
Dollars ($250,000.00) secured or unsecured loans and Five Hundred Thousand
Dollars ($500,000.00) for real estate secured loans, except for conforming FHLMC
and FNMA loans, shall be subject to such prior written consent. The prior
written consent of NVBancorp shall be deemed waived for any new stand-alone
extension of credit which is Two Hundred Fifty Thousand Dollars ($250,000.00)
and where such new stand-alone extension of credit is either in compliance with
YCB credit policy and the approving officer has the requisite lending authority
or has (have) been approved by the YCB loan committee or equivalent committee of
the YCB Board of Directors performing such function. YCB shall promptly provide
to NVBancorp for its review and comment relevant information concerning any
proposed new stand-alone extension of credit in excess of Two Hundred Fifty
Thousand Dollars ($250,000.00).
3.2.g. Certain Notices. YCB shall notify NVBancorp within
five (5) business days in writing upon the occurrence of any of the following:
(i) the classification of any loan as "Non-
Accrual," "Watch," "Other Assets Specially Mentioned,"
"Substandard," "Doubtful" or "Loss"; or
(ii) the filing or commencement of any legal action
or other proceeding or investigation against YCB.
3.2.h. Loan Review. Until the Effective Date, YCB will
submit to NVBancorp upon request (but not less often than monthly) a list of
loans that may reasonably be described as or are included in any of the
following categories or specifications: (i) any new stand-alone extension of
credit over Two Hundred Fifty Thousand Dollars ($250,000.00), (ii) any
restructured loan as defined under XXXX 00, xxxxxxxxxx xx xxxxxx, (xxx) any
renewal or upgrade or other change in status of an existing loan over One
Hundred Thousand Dollars ($100,000.00), and (iv) any renewal of an existing loan
previously classified by management or internal policy or procedure of YCB, or
by any outside review examiner, accountant or any bank regulatory authority as
"Non-Accrual," "Watch," "Other Assets Specially Mentioned," "Substandard,"
"Doubtful," or "Loss," or classified using categories or words with similar
import, in a commitment amount over One Hundred Thousand Dollars ($100,000.00)
or where the aggregate debt of the borrower and its affiliates and/or related
interests will exceed One Hundred Thousand Dollars ($100,000.00). YCB will
provide to NVBancorp a copy of the loan approval/credit write-up and supporting
information on any loan described in subsections (i), (ii), (iii) or (iv) above
at the time of delivery of such list of loans. Copies of such supporting
information shall be returned to YCB within seven (7) days of receipt.
3.2.i. Loan Provision. YCB shall maintain adequate reserves
for loan losses. Without limiting the generality of the foregoing, each month
following the date of this Agreement through the Effective Date, YCB shall
expense as a provision to its allowance for loan losses, such amount as may be
required by the written loan loss policy and procedures adopted by the Board of
Directors of YCB and provided to NVBancorp prior to the date of this Agreement.
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3.2.j. Merger or Solicitation.
----------------------
(i) Subject to the continuing fiduciary duty of
the Board of Directors of YCB to its shareholders, prior to the
Effective Time of the Merger, YCB shall not effect or agree to
effect or enter into a transaction or series of transactions
with one or more third persons, groups or entities providing
for the acquisition of all or a substantial part of YCB or its
subsidiaries, whether by way of merger, exchange of stock, sale
of assets, or otherwise ("Business Combination"), acquire or
agree to acquire any of its own capital stock or the capital
stock or asset (except in a fiduciary capacity or in the
Ordinary Course of Business) of any other entity, or commence
any proceedings for winding up and dissolution affecting either
of them.
(ii) Subject to the continuing fiduciary duty of
the Board of Directors of YCB to its shareholders, prior to the
Effective Time of the Merger, neither YCB nor any of its
officers, directors or affiliates, nor any investment banker,
attorney, accountant or other agent, advisor or representative
retained by YCB shall (a) solicit or encourage, directly or
indirectly, any inquiries, discussions or proposals for,
continue, propose or enter into discussions or negotiations
looking toward, or enter into any agreement or understanding
providing for, any Business Combination with any third party;
or (b) disclose, directly or indirectly, any nonpublic
information to any corporation, partnership, person or other
entity or group concerning YCB's business and properties or
afford any such other party access to its properties, books or
records or otherwise assist or encourage any such other party
in connection with the foregoing, or (c) furnish or cause to be
furnished any information concerning its business, financial
condition, operations, properties or prospects to another
person, having any actual or prospective role with respect to
any such Business Combination.
(iii) YCB shall notify NVBancorp immediately of the
details of any indication of interest of any person,
corporation, firm, association or group to acquire by any means
a controlling interest in YCB or engage in any Business
Combination with YCB.
(iv) Notwithstanding anything to the contrary
contained in this Agreement, in the event the Board of
Directors of YCB receives a bona fide unsolicited offer for a
Business Combination of YCB with another entity, and reasonably
determines, upon advice of counsel, that as a result of such
offer, any duty to act or to refrain from doing any act
pursuant to this Agreement is inconsistent with the continuing
fiduciary duties of the Board of Directors to its shareholders,
subject to the provisions of this Agreement including, without
limitation, Section 12.e.(ii) and the rights accorded NVBancorp
thereunder which shall remain in effect, such duty to act or to
refrain from doing any act shall be excused and such failure to
act or refrain from doing any act shall not (a) constitute the
failure of any condition, breach of any covenant or otherwise
constitute any breach of this Agreement, or (b) create any
claim or cause of action asserting any liability against any
member of the Board of Directors of YCB.
3.2.k. Execute Agreement of Merger. As soon as practicable
after receipt of approval by the YCB shareholders and all Government Approvals,
YCB shall execute and deliver the Agreement of Merger.
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3.3. Mutual Covenants of NVBancorp and YCB.
-------------------------------------
3.3.a. Appointment of Executive Officers. At the Effective
Time of the Merger, the following persons shall become executive officers of the
Resulting Corporation and shall be appointed to the positions indicated: Xxxx
XxXxxxxxx, President and Chief Executive Officer, Xxxxxx X. Xxxxxx, Executive
Vice President and Chief Financial Officer, Xxxx Xxxxx, Executive Vice President
and Loan Administrator, Xxxxx Xxxxxx, Senior Vice President and Branch
Administrator, and Xxxx Xxx, Senior Vice President.
3.3.b. Directors of Resulting Corporation. The directors of
New YCB Bank immediately prior to the Effective Time of the Merger shall be the
directors of the Resulting Corporation until their successors have been chosen
and qualified in accordance with the Articles of Incorporation and the Bylaws of
the Resulting Corporation; provided, however, that prior to the Effective Time
of the Merger, the directors of New YCB Bank shall (i) fix the exact number of
directors of the Resulting Corporation at twelve (12), and (ii) appoint all ten
(10) of the existing members of the Board of Directors of YCB to serve on the
board of directors of New YCB Bank, being: Xxxxx Xxxxxxxxx, Xxxxxxx Xxxxxxx,
Xxxxxx Xxxxxxxx, H. Xxxxx Xxxx, Xxxxx Xxxxxxxx, Xxxxxxx Xxxxxx, Xxxxxx Xxxxxxx,
Xxxx Xxxxx, Xxxxxx Xxxxxxxxxxxxx, and Xxxx XxXxxxxxx, to serve until their
successors are duly elected and qualified, and (iii) appoint two (2) of the
existing directors of NVBancorp (to be designated by the Board of Directors of
NVBancorp) to also serve on the board of directors of the Resulting Corporation
until their successors are duly elected and qualifed.
3.3.c . Appointment of President of Resulting Corporation.
From and after the Effective Time of the Merger, Xxxx XxXxxxxxx, will be
President and Chief Executive Officer of Resulting Corporation and shall be
appointed the position of Executive Vice President of NVBancorp to participate
as a member of the Executive Management Team of NVBancorp.
3.3.d. Classified Board of Directors. The NVBancorp's
Articles of Incorporation and Bylaws provide that the NVBancorp Board of
Directors shall be divided into three classes of directors, each consisting of a
number of directors equal as nearly as practicable to one-third the total number
of directors, for so long as such Board consists of at least nine (9) authorized
directors and, in the event that the total number of authorized directors on
such Board is at least six (6) but less than nine (9), for classification of the
Board of Directors into two classes, each consisting of a number of directors
equal as nearly as practicable to one-half the total number of directors.
Pursuant to the Bylaws, if the Board is divided into three classes, each class
of directors would be subject to election every third year and would serve for a
three-year term for so long as the Board remained classified into three classes,
or would be subject to election every second year and would serve for a two-year
term in the event the Board were classified into two classes. Pursuant to the
Bylaws, effective at the 2004 Annual Meeting of Shareholders of North Valley
Bancorp, the Board of Directors will be allocated into two classes with Class II
elected for a term to expire at the 2005 Annual Meeting and Class III elected
for a term to expire at the 2006 Annual Meeting.
At the Effective Time of the Merger, the NVBancorp Board of Directors
will re-establish the three classes of directors as follows:
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Class I Class II Class III
------------------- -------------------- ------------------
Xxxxx X. Xxxxxxx Xxxxxxx X. Xxx Xxxxxxx X. Xxxxxxx
X.X. Xxxxx, Xx. Xxxxxx X. Xxxxxx Xxx X. Xxxxxxxxxx
YCB Second Director Xxxxxxx X. Xxxxxxxxx Xxxxx X. Xxxxxxxx
YCB Chairman
At the 2005 NVBancorp Annual Meeting of Shareholders, Class I directors
will be elected for a three-year term which would run until the 2008 Annual
Meeting and Class II directors will be elected for a two year-term which would
run until the 2007 Annual Meeting. At the 2006 Annual Meeting the Class III
directors will be elected for a three-year term, which would run until the 2009
Annual Meeting. In all cases above, the term of a Director shall terminate upon
the election and qualification of his or her successor.
Commencing with the NVBancorp Annual Meeting of Shareholders scheduled
to occur in 2007, only directors of the class whose term is expiring would be
voted upon, and upon election each such director would serve for a three-year
term and until their successors are duly elected and qualified, subject to any
decrease in the total number of authorized directors, as described above.
Subsequently, all classes of directors would also be elected for a three-year
term and until their successors are duly elected and qualified.
3.3.e. (Intentionally Omitted)
3.3.f. Shareholder Lists and Other Information. After
execution hereof, each of NVBancorp and YCB shall from time to time make
available to the other party, upon request, a list of its shareholders and their
addresses and such other information as the other party shall reasonably request
regarding the ownership of the common stock of NVBancorp and YCB, respectively.
3.3.g. Government Approvals. Each party will use its best
efforts in good faith to take or cause to be taken as promptly as practicable
all such steps as shall be necessary to obtain (i) the prior approval of the
Merger and the transactions contemplated pursuant to this Agreement and the
Agreement of Merger by the Federal Deposit Insurance Corporation (the "FDIC")
under the Bank Merger Act, the Board of Governors of the Federal Reserve System
(the "FRB") under the Bank Holding Company Act of 1956, as amended, the
California Department of Financial Institutions (the "DFI"), the California
Commissioner of Corporations, and (ii) all other such consents or approvals of
government agencies and regulatory authorities as shall be required by law or
otherwise desirable, and shall do any and all acts and things necessary or
appropriate in order to cause the Merger to be consummated on the terms provided
in the Agreement of Merger and this Agreement as promptly as practicable. All
approvals referred to in this Section 3.3.g. and in Section 3.1.g. are
hereinafter referred to as the "Government Approvals."
3.3.h. Notification of Breach of Representations, Warranties
and Covenants. Each party shall promptly give written notice to the each other
party upon becoming aware of the occurrence or impending or threatened
occurrence of any event which would cause or constitute a breach of any of the
representations, warranties or covenants of that party contained or referred to
in the Agreement of Merger or this Agreement and shall use its best efforts to
prevent the same or to remedy the same promptly.
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3.3.i. Financial Statements.
--------------------
(i) NVBancorp and YCB have delivered or shall
deliver to each other prior to the date hereof true and correct
copies of (consolidated, as applicable) statements of income,
changes in shareholders' equity and, as applicable, statements
of cash flows, for the three (3) months ended March 31, 2004,
and for the fiscal years ended December 31, 2003, 2002, and
2001, and balance sheets as of the three (3) month period ended
March 31, 2004, and as of December 31, 2003, 2002,and 2001.
Such financial statements at December 31, 2003, 2002 and 2001
have been audited by Xxxxx Xxxxx LLP, as independent public
accountants for NVBancorp during the relevant periods, and
Xxxxx Xxxxx LLP, as independent public accountants for YCB
during the relevant periods, and include or shall include an
opinion of such accounting firm to the effect that such
financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied
throughout the periods covered by such financial statements and
present fairly, in all material respects, the (consolidated, as
applicable) financial position, results of operations and cash
flows of each party at the dates indicated and for the periods
then ending. The opinions of such accounting firm do not and
shall not contain any qualifications.
(ii) NVBancorp and YCB shall provide to each other,
at or prior to the Effective Date, copies of all financial
statements and proxy statements issued or to be issued to its
shareholders and filed with the SEC or FDIC between the date of
this Agreement and the Effective Date. As of their respective
filing dates, each of the documents described in the preceding
sentence complied or shall comply in all material respects with
all legal and regulatory requirements applicable thereto.
3.3.j. Conduct of Business in the Ordinary Course. Prior to
the Effective Time of the Merger:
(i) NVBancorp and YCB shall conduct their
businesses (including the businesses of their subsidiaries) in
the ordinary course as heretofore conducted. For purposes of
this Agreement, the "Ordinary Course of Business" of each party
shall consist of the banking and related businesses as
presently conducted by it and its subsidiaries in compliance
with customary safe and sound banking practices and applicable
laws and regulations. Unless a party has given its previous
written consent (which shall not be unreasonably withheld and
shall be deemed to have been given if no response is provided
following written request therefor within three (3) business
days of receipt of such request) to any act or omission to the
contrary, each party shall, and shall cause its subsidiaries
to, until the Effective Date:
(A) preserve its business and business
organizations intact;
(B) preserve the good will of customers and
others having business relations with it and take no
action that would impair the benefit to each party of
the goodwill of it or the other benefits of the
Merger;
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(C) consult with each party as to the making
of any decisions or the taking of any actions in
matters other than in the Ordinary Course of
Business;
(D) maintain its properties in customary
repair, working order and condition (reasonable wear
and tear excepted);
(E) comply with all laws, regulations and
decrees applicable to the conduct of its business;
(F) use its best efforts to keep in force at
not less than its present limits all policies of
insurance (including deposit insurance of the FDIC)
to the extent reasonably practicable in light of the
prevailing market conditions in the insurance
industry;
(G) use its reasonable best commercial
efforts to keep available the services of its present
officers and employees (it being understood that each
party shall have the right to terminate the
employment of any of its officers or employees in
accordance with its established employment
procedures);
(H) comply with all orders of and agreements
or memoranda of understanding with respect to it made
by or with, the FDIC, FRB, DFI, or any other
government agency or regulatory authority of
competent jurisdiction, and promptly forward to each
party all communications received from any such
agency or authority that are not prohibited by such
agency or authority from being so disclosed and
inform each party of any material restrictions
imposed by any government agency or regulatory
authority on its business;
(I) file in a timely manner (taking into
account any extensions duly obtained) all reports,
tax returns and other documents required to be filed
with federal, state, local and other authorities;
(J) conduct an environmental audit prior to
foreclosure on any property concerning which it has
knowledge, or should have knowledge, that asbestos or
asbestos-containing material, PCB's or PCB-
contaminated materials, any petroleum product, or
hazardous substance or waste (as defined under any
applicable environmental laws) was or is present,
manufactured, recycled, reclaimed, released, stored,
treated, or disposed of, and provide the results of
such audit to and consult with each party regarding
the significance of the audit prior to the
foreclosure on any such property;
(K) not sell, lease, pledge, assign,
encumber or otherwise dispose of any of its assets
except in the Ordinary Course of Business, for
adequate value, without recourse and consistent with
its customary practice;
(L) not take any action with respect to its
investments or risk management arrangements which are
inconsistent with the policies established by its
Board of Directors; and
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(M) not take any action to create, relocate
or terminate the operations of any banking office or
branch, except for the plans for improvements to the
new Woodland branch and the opening of a Fairfield
branch or to form any new subsidiary or affiliated
entity;
(N) (Intentionally Omitted)
3.3.k. Press Releases. No party shall issue any press
release or written statement for general circulation relating to the Merger,
this Agreement or the Agreement of Merger unless previously provided to each
party for review and approval (which approval will not be unreasonably withheld
or delayed) and each party shall cooperate with each other party in the
development and distribution of all news releases and other public information
disclosures with respect to the Merger, this Agreement or the Agreement of
Merger; provided that a party may, without the consent of each other party, make
any disclosure with regard to the Merger, this Agreement or the Agreement of
Merger that it determines with advice of counsel is required under any
applicable law or regulation.
3.3.l. Employee Benefit Plans. The parties agree that the
employee benefit plans of YCB may be terminated, frozen, modified or merged into
the employee benefit plans of NVBancorp after December 31, 2004 (the "Benefits
Termination Date") in accordance with applicable laws and regulations and the
provisions of the IRC, as determined by NVBancorp. Prior to the Benefits
Termination Date, Merged Bank employees will be afforded the same Employee
Benefits in effect at YCB prior to the Effective Date, including, but not
limited to, medical insurance and 401(k) employer contributions. After the
Benefits Termination Date, YCB employees that are then current employees of
NVBancorp or NVB will commence participation in NVBancorp's employee benefit
plans in accordance with the terms and conditions provided under such plans;
provided, however, that each employee of YCB who is a then current employee of
NVBancorp or NVB or the state bank resulting from the merger of New YCB Bank and
YCB ("Transferred Employee") shall receive credit for his or her years of
service with YCB for purposes of eligibility benefit levels and vesting under
NVBancorp's employee benefit plans; provided, further, that each Transferred
Employee who elects coverage under NVBancorp's health plan within thirty (30)
days after coverage is extended to him or her shall not be subject to any
pre-existing condition limitation under such health plan.
3.3.m. Changes in Capital Stock; Dividends. On or after the
date hereof and at or prior to the Effective Time of the Merger, except with the
prior written consent of each other party or as otherwise provided in this
Agreement and the Agreement of Merger:
(i) Except as provided in this Agreement, no party
shall amend its Articles of Incorporation or Bylaws or the
Articles of Incorporation or Bylaws of its subsidiary; make any
change in their respective authorized, issued or outstanding
capital stock or any other equity security; issue, grant, sell,
pledge, assign or otherwise encumber or dispose of, or
purchase, redeem, retire or otherwise acquire (other than in a
fiduciary capacity), shares of or securities convertible into,
capital stock or other equity securities of their respective
companies, or enter into any agreement, call or commitment of
any character so to do; grant or issue any stock option
relating to or right to acquire shares of their capital stock
or other equity security; or agree to do any of the foregoing,
except as expressly provided herein. Nothing herein shall
prohibit the issuance of shares upon exercise of options
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granted under the NVBancorp 1989 Director Stock Option Plan,
the NVBancorp 1998 Employee Stock Incentive Plan or the
NVBancorp 1999 Director Stock Option Plan or the YCB Stock
Option Plan and outstanding at the time this Agreement is
executed; and
(ii) Neither NVBancorp nor YCB shall declare, set
aside or pay any dividend or other distribution in respect of
its common stock (including, without limitation, any stock
dividend or distribution) other than regular quarterly cash
dividends issued by NVBancorp on its common stock in amounts
substantially equivalent to cash dividends paid prior to the
date hereof (it being understood that declaration of a
quarterly cash dividend equal to the most recent previous
quarterly dividend will be deemed to meet this standard).
Notwithstanding anything to the contrary contained in this
Agreement, NVBancorp and YCB agree that immediately prior to
the Closing Date, YCB shall pay a cash dividend to its
shareholders in an aggregate amount equal to forty percent
(40%) of YCB's net income from January 1, 2004, through the
last day prior to the Closing Date, as computed by Xxxxx Xxxxx,
LLP for YCB on a tax basis consistent with prior years and
excluding non deductible Merger related expenses.
3.3.n. Access to Properties, Books and Records;
Confidentiality. Prior to the Effective Time of the Merger, each party shall
give each other party and its counsel, independent accountants and agents, full
access during normal business hours and upon reasonable request, to all of its
properties, books, contracts, commitments and records including, but not limited
to, the corporate, financial and operational records, papers, reports,
instructions, procedures, tax returns and filings tax settlement letters,
material contracts or commitments, regulatory examinations and correspondences
(but excluding any documents or materials subject to the attorney-client
privilege or related to consideration of the Merger), and shall allow each other
party to make copies of such materials (excluding regulatory examinations and
correspondence to the extent prohibited by applicable law or regulation) and
shall furnish each other party with all such information concerning its affairs
as each other party may reasonably request. Each party shall also use its best
efforts to cause its independent accountants to make available to each other
party, its accountants, counsel and other agents, to the extent reasonably
requested in connection with such review, such independent accountants' work
papers and documentation relating to its work papers and its audits of the books
and records of each party. The availability or actual delivery of such
information about a party shall not affect the covenants, representations and
warranties of any party contained in this Agreement and in the Agreement of
Merger. Each party shall use its best efforts to cause its officers, directors,
employees, auditors, independent accountants and attorneys to cooperate with
each other party in its reasonable requests for information. Each party shall
treat as confidential all such information in the same manner as each party
treats similar confidential information of its own, and if this Agreement is
terminated, each party shall continue to treat all such information as
confidential and to cause its employees to keep all such information
confidential and shall return such documents theretofore delivered by each other
party as each other party shall request, and shall use such information, or
cause it to be used, solely for the purposes of evaluating and completing the
transactions contemplated hereby; provided that each party may disclose any such
information to the extent required by federal or state securities laws or
otherwise required by any government agency or regulatory authority, or by
generally accepted accounting principles. The foregoing confidentiality
obligations shall not apply in respect of any information publicly available or
to any information previously known to the party in question, the use of which
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is not otherwise restricted. Notwithstanding the foregoing, the parties agree to
comply with the terms and provisions of that certain Confidentiality Agreement
entered into between the parties dated April 6, 2004, and any inconsistency
between the terms and provisions of that Confidentiality Agreement and the
foregoing provisions shall be resolved in favor of the terms and provisions
contained in the Confidentiality Agreement.
3.3.o. Loan Performance. From and after the date of this
Agreement until the Effective Date, each party will provide to the other reports
and information as determined by the Chief Credit Officers of NVBancorp and YCB
for such month to provide adequate status reports on all loans classified or
other assets specially mentioned as substandard, doubtful or loss, past due
reports, non-accrual reports, loss reports, restructured loan reports, and
quarterly call reports submitted to regulators, if any, for review and
monitoring by their respective Chief Credit Officers of each bank.
3.3.p. (Intentionally Omitted)
3.3.q. Rights Plan. NVBancorp has adopted a rights plan with
respect to its common stock. NVBancorp and YCB agree to cooperate and take any
and all action necessary or desirable from time to time until the Effective Time
of the Merger (including the execution of an amendment to such shareholder
rights agreement) in order to ensure that no shareholder rights will "flip-in"
as a result of the execution and delivery of this Agreement or the Merger or any
of the transactions described herein.
4. REPRESENTATIONS AND WARRANTIES OF YCB.
-------------------------------------
YCB represents and warrants to NVBancorp that, except as set forth on a
schedule (the "YCB Disclosure Schedule") to be delivered to NVBancorp
concurrently with this Agreement and attached hereto as Exhibit B, corresponding
in number with the applicable section of this Agreement:
4.a. Corporate Status and Power to Enter Into Agreements. (i) YCB is
a banking corporation, organized and existing under the laws of the State of
California, (ii) subject to obtaining the Government Approvals and approval of
the principal terms of the Merger by the YCB shareholders, YCB has all necessary
corporate power to enter into this Agreement and the Agreement of Merger and to
carry out all of the terms and provisions hereof and thereof to be carried out
by it, (iii) YCB holds a currently valid license, issued by the California
Commissioner of Banking to engage in the commercial banking business with
offices in the State of California at the locations at which it is licensed and
currently conducts business, and (iv) YCB is not subject to any directive,
resolution, memorandum of understanding or order of the FDIC, DFI or any other
regulatory authority having jurisdiction over its business or any of its assets
or properties. Neither the scope of the business of YCB nor the location of its
properties requires it to be licensed to do business in any jurisdiction other
than the State of California. YCB's deposits are insured by the FDIC to the
maximum extent permitted by applicable law and regulation.
4.b. Articles, Bylaws, Books and Records. The copies of the Articles
of Incorporation and Bylaws of YCB heretofore delivered to NVBancorp are
complete and accurate copies thereof as in effect on the date hereof. The minute
books of YCB made available to NVBancorp contain a complete and accurate record
of all meetings of YCB's Board of Directors (and committees thereof) and
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shareholders. The corporate books and records (including financial statements)
of YCB fairly reflect the material transactions to which YCB is a party or by
which its properties are subject or bound, and such books and records have been
properly kept and maintained.
4.c. Compliance With Laws, Regulations and Decrees. YCB (i) has the
corporate power to own or lease its properties and to conduct its business as
currently conducted, (ii) to its knowledge, has complied in all material
respects with, and is not in material default of any laws, regulations,
ordinances, orders or decrees applicable to the conduct of its business and the
ownership of its properties, including but not limited to all federal and state
laws (including but not limited to the Bank Secrecy Act), rules and regulations
relating to the offer, sale or issuance of securities, and the operation of a
commercial bank, other than where such noncompliance or default is not likely to
result in a material limitation on the conduct of the business of YCB or is not
likely to otherwise have a material adverse effect on YCB, (iii) has not failed
to file with the proper federal, state, local or other authorities any material
report or other document required to be filed, and (iv) has all approvals,
authorizations, consents, licenses, clearances and orders of, and has currently
effective all registrations with, all government and regulatory authorities
which are necessary to the business and operations of YCB as now being
conducted.
4.d. Capitalization. As of the date of this Agreement, the
authorized capital stock of YCB consists of 1,000,000 shares of YCB common
stock, of which 71,693 shares are duly authorized, validly issued, fully paid
and non-assessable and currently outstanding. Said capital stock has been
offered, sold and issued in compliance with all applicable securities laws. As
of the date of this Agreement, there are outstanding options to purchase 6,150
shares of YCB common stock, at a weighted average exercise price of $111.18 per
share, issued pursuant to the YCB Stock Option Plan. Said options were issued
and, upon issuance in accordance with the terms of the outstanding options, said
shares shall be issued, in compliance with all applicable securities laws.
Otherwise, there are no outstanding (i) options, agreements, calls or
commitments of any character which would obligate YCB to issue, sell, pledge,
assign or otherwise encumber or dispose of, or to purchase, redeem or otherwise
acquire, any YCB common stock or any other equity security of YCB, or (ii)
warrants or options relating to, rights to acquire, or debt or equity securities
convertible into, shares of YCB common stock or any other equity security of
YCB.
4.e. Trademarks and Trade Names. To the best of its knowledge, YCB
(i) owns and has the exclusive right to use all trademarks, trade names,
patents, copyrights, service marks, trade secrets, or other intellectual
property rights (collectively, "Intellectual Property Rights") used in or
necessary for the conduct of its business as now or heretofore conducted; and
(ii) its not infringing upon the Intellectual Property Rights of any other
person or entity. No claim is pending or threatened by any person or entity
against or otherwise affecting the use by YCB of any Intellectual Property
Rights and, to the best of its knowledge, there is no valid basis for any such
claim.
4.f. Financial Statements, Regulatory Reports. No financial
statement or other document provided or to be provided to NVBancorp as required
by Section 3.3.i. hereof, as of the date of such document, contained, or as to
documents to be delivered after the date hereof, will contain, any untrue
statement of a material fact, or, at the date thereof, omitted or will omit to
state a material fact necessary in order to make the statements contained
therein, in light of the circumstances under which such statements were or will
be made, not misleading; provided, however, that information as of a later date
shall be deemed to modify contrary information as of any earlier date. YCB has
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filed all material documents and reports required to be filed by them with the
DFI and FDIC and any other government agency or regulatory authority having
jurisdiction over its business, assets or properties. All such reports conform
in all material respects with the requirements promulgated by such government
agencies and regulatory authorities. All compliance or corrective action
relating to YCB required by government agencies and regulatory authorities
having jurisdiction over YCB has been taken. Except as disclosed in such
statements, reports or documents, YCB have not received any notification,
formally or informally, from any agency or department of any federal, state or
local government or any regulatory authority or the staff thereof (i) asserting
that it is not in compliance with any of the statutes, regulations or ordinances
which such government or regulatory authority enforces, or (ii) threatening to
revoke any license, franchise, permit or government authorization. YCB has paid
all assessments made or imposed by any government agency. YCB has delivered to
NVBancorp copies of all annual management letters and opinions, and has made
available to NVBancorp for inspection all reviews, correspondence and other
documents in the files of YCB prepared by certified public accountants engaged
by YCB and delivered to YCB since. The financial records of YCB have been, and
are being and shall be, maintained in all material respects in accordance with
all applicable legal and accounting requirements sufficient to insure that all
transactions reflected therein are, in all material respects, executed in
accordance with management's general or specific authorization and recorded in
conformity with generally accepted accounting principles at the time in effect.
To the knowledge of YCB's management, the data processing equipment, data
transmission equipment, related peripheral equipment and software used by YCB in
the operation of its business to generate and retrieve its financial records are
adequate for the current needs of YCB.
4.g. Tax Returns.
-----------
(i) YCB has timely filed all federal, state, county, local
and foreign tax returns required to be filed by it, including, without
limitation, estimated tax, use tax, excise tax, real property and
personal property tax reports and returns, employer's withholding tax
returns, other withholding tax returns and Federal Unemployment Tax
Returns, and all other reports or other information required or
requested to be filed by YCB, and each such return, report or other
information was, when filed, complete and accurate in all material
respects. YCB has paid all taxes, fees and other government charges,
including any interest and penalties thereon, when they have become
due, except those that are being contested in good faith, which
contested matters have been disclosed to NVBancorp. YCB has not been
requested to give nor has it given any currently effective waivers
extending the statutory period of limitation applicable to any tax
return required to be filed by it for any period. There are no claims
pending against YCB for any alleged deficiency in the payment of any
taxes, and YCB does not know of any pending or threatened audits,
investigations or claims for unpaid taxes or relating to any liability
in respect of any taxes. There have been no events, including a change
in ownership, that would result in a reappraisal and establishment of a
new base-year full value for purposes of applicable provisions of the
California Constitution, of any real property owned in whole or in part
by YCB or to the best of YCB's knowledge, of any real property leased
by YCB.
(ii) YCB has made available to NVBancorp for review copies of
all its tax returns with respect to taxes payable to the United States
of America and the State of California for the fiscal years ended 1999,
2000, 2001, 2002, and 2003.
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(iii) No consent has been filed relating to YCB pursuant to
Section 341(f) of the IRC.
4.h. Material Adverse Change. Except as heretofore disclosed in
writing by YCB to NVBancorp, since March 31, 2004, here has been (i) no material
adverse change in the business, assets, licenses, permits, franchises, results
of operations or financial condition of YCB (whether or not in the Ordinary
Course of Business), (ii) no change in any of the assets, licenses, permits or
franchises of YCB that has had or can reasonably be expected to have a material
adverse effect on any of the items listed in clause 4.h.(i) above, (iii) no
damage, destruction, or other casualty loss (whether or not covered by
insurance) that has had or can reasonably be expected to have a material adverse
effect on any of the items listed in clause 4.h.(i) above, (iv) no amendment,
modification, or termination of any existing, or entering into of any new,
contract, agreement, plan, lease, license, permit or franchise that is material
to the business, financial condition, assets, liabilities or operations of YCB,
except in the Ordinary Course of Business; and (v) no disposition by YCB of one
or more assets that, individually or in the aggregate, are material to YCB,
except sales of assets in the Ordinary Course of Business.
4.i. No Undisclosed Liabilities. Except for items for which reserves
have been established in the unaudited balance sheets of YCB as of Xxxxx 00,
0000, XXX has not incurred or discharged, and is not legally obligated with
respect to, any indebtedness, liability (including, without limitation, a
liability arising out of an indemnification, guarantee, hold harmless or similar
arrangement) or obligation (accrued or contingent, whether due or to become due,
and whether or not subordinated to the claims of its general creditors), other
than as a result of operations in the Ordinary Course of Business after such
date. No cash, stock or other dividend or any other distribution with respect to
the YCB Shares has been declared, set aside or paid, nor have any of the YCB
Shares been purchased, redeemed or otherwise acquired, directly or indirectly,
by YCB since April 2, 2004.
4.j. Properties and Leases.
---------------------
(i) YCB has good and marketable title, free and clear of all
liens and encumbrances and the right of possession, subject to existing
leaseholds, to all real properties and good title, free and clear of
all liens and encumbrances, to all other property and assets, tangible
and intangible, reflected in the YCB balance sheet as of March 31,
2004, (except property held as lessee under leases disclosed in writing
prior to the date hereof and except personal property sold or otherwise
disposed of since March 31, 2004, in the Ordinary Course of Business),
except for (a) liens for taxes or assessments not delinquent, (b) such
other liens and encumbrances and imperfections of title as do not
materially affect the value of such property as reflected in the YCB
balance sheet as of March 31, 2004, or as currently shown on the books
and records of YCB and which do not interfere with or impair its
present and continued use, or (c) exceptions disclosed in title reports
and preliminary title reports, copies of which have been provided to
NVBancorp. To the knowledge of YCB, all tangible properties of YCB
conform in all material respects with all applicable ordinances,
regulations and zoning laws. All tangible properties of YCB are in a
good state of maintenance and repair and are adequate for the current
business of YCB. No properties of YCB, and, to the best of YCB's
knowledge, no properties in which YCB holds a collateral or contingent
interest or purchase option, are the subject of any pending or
threatened investigation, claim or proceeding relating to the use,
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storage or disposal on such property of or contamination of such
property by any toxic or hazardous waste material or substance. To the
best of its knowledge, YCB does not own, possess or have a collateral
or contingent interest or purchase option in any properties or other
assets which contain or have located within or thereon any hazardous or
toxic waste material or substance unless the location of such hazardous
or toxic waste material or other substance or its use thereon conforms
in all material respects with all federal, state and local laws, rules,
regulations or other provisions regulating the discharge of materials
into the environment. As to any real property not owned or leased by
YCB and held as security for a loan or in which YCB otherwise has an
interest, YCB has not controlled, directed or participated in the
operation or management of any such real property or any facilities or
enterprise conducted thereon, such that it has become an owner or
operator of such real property under applicable environmental laws.
(ii) All properties held by YCB under leases are held under
valid, binding and enforceable leases, with such exceptions as are not
material and do not interfere with the conduct of the business of YCB,
and YCB enjoys quiet and peaceful possession of such leased property.
YCB is not in material default in any respect under any material lease,
agreement or obligation regarding its properties to which it is a party
or by which it is bound.
(iii) Except as disclosed to NVBancorp in writing, all of
YCB's rights and obligations under the leases referred to in Section
4.j.(ii) above do not require the consent of any other party to the
transaction contemplated by this Agreement and the Agreement of Merger.
Where required, YCB shall obtain, prior to the Effective Date, the
consent of such parties to such transaction.
(iv) YCB will disclose the terms and conditions of the
construction contracts for the tenant improvements on-going at the
Woodland and Fairfield branch offices.
4.k. Material Contracts. Except as disclosed in the YCB Disclosure
Schedule and excluding loans, lines of credit, loan commitments or letters of
credit to which YCB is a party, YCB is not a party to or bound by any contract
or other agreement made in the Ordinary Course of Business which involves
aggregate future payments by or to YCB of more than Fifty Thousand Dollars
Dollars ($50,000.00) and which is made for a fixed period expiring more than one
year from the date hereof, and YCB is not a party to or bound by any agreement
not made in the Ordinary Course of Business which is to be performed at or after
the date hereof. Each of the contracts and agreements disclosed to NVBancorp
pursuant to this Section 4.k. is a legal and binding obligation (subject to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally and subject, as to enforceability, to equitable principles of general
applicability), and no breach or default (and no condition which, with notice or
passage of time, or both, could become a breach or default) exists with respect
thereto.
4.l. Classified Loans. Except as disclosed in the YCB Disclosure
Schedule, there are no loans presently owned by YCB that have been classified by
YCB management or YCB internal policy or procedure, any outside review examiner,
accountant or any bank regulatory authority as "Non-Accrual," "Watch," "Other
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Assets Specially Mentioned," "Substandard," "Doubtful," or "Loss" or classified
using categories or words with similar import and all loans or portions thereof
so classified shall have been reserved to the extent required. YCB regularly
reviews and appropriately classifies their loans in accordance with all
applicable legal and regulatory requirements and generally accepted banking
practices. All loans and investments of YCB are legal, valid and binding
obligations enforceable in accordance with their respective terms and are not
subject to any setoffs, counterclaims or disputes (subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and subject, as to enforceability, to equitable principles of general
applicability), except as disclosed in the YCB Disclosure Schedule or reserved
for in the unaudited balance sheet of YCB as of March 31, 2004, and were duly
authorized under and made in compliance with applicable federal and state laws
and regulations. YCB does not have any extensions of credit, investments,
guarantees, indemnification agreements or commitments for the same (including
without limitation commitments to issue letters of credit, to create
acceptances, or to repurchase securities, federal funds or other assets) other
than those documented on the books and records of YCB.
4.m. No Restrictions on Investments. Except for pledges to secure
public and trust deposits and repurchase agreements in the Ordinary Course of
Business and securities classified as "held-to-maturity" as defined under SFAS
Xx. 000, xxxx of the investments reflected in the YCB balance sheet as of March
31, 2004, and none of the investments made by YCB since March 31, 2004, is
subject to any restriction, whether contractual or statutory, which materially
impairs the ability of YCB to freely dispose of such investment at any time.
4.n. Employment Benefit Plans/ERISA.
------------------------------
(i) YCB has provided to NVBancorp an accurate list setting
forth all bonus, incentive compensation, profit-sharing, pension,
retirement, stock purchase, stock option, deferred compensation,
severance, hospitalization, medical, dental, vision, group insurance,
death benefit, disability and other fringe benefit plans, trust
agreements, arrangements and commitments of YCB (including but not
limited to any such plans, agreements, arrangements and commitments
applicable to former employees or retired employees, or for which such
persons are eligible) (collectively, "Employee Plans"), if any,
together with copies of all such Employee Plans that are documented and
any and all contracts of employment, and has made available to
NVBancorp any Board of Directors' minutes (or committee minutes)
authorizing, approving or guaranteeing such Employee Plans and
contracts; and
(ii) All contributions, premiums or other payments due from
YCB to (or under) any Employee Plans have been fully paid or adequately
provided for on YCB's audited financial statements for the year ended
December 31, 2003, or unaudited financial statements for the three (3)
months ended March 31, 2004. All accruals thereon (including, where
appropriate, proportional accruals for partial periods) have been made
in accordance with generally accepted accounting principles
consistently applied on a reasonable basis; and
(iii) YCB has disclosed in writing to NVBancorp the names of
each director, officer and employee of YCB; and
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(iv) The Employee Plans have been administered where required
in substantial compliance with ERISA, the IRC and the terms of such
Employee Plans, and there is no pending or threatened litigation
relating to any such Employee Plan; and
(v) YCB has not offered in the past health benefits for
retired employees and has no intention to offer any additional health
or other benefits for retired employees; and
(vi) Each Employee Plan is in full force and effect, and
neither YCB nor any other party thereto is in material default under
any of them, and there have been no claims of default and there are no
facts or conditions which if continued, or on notice, will result in a
material default under any Employee Plans; and
(vii) YCB has provided to NVBancorp a list of all agreements
or other understandings pursuant to which the consummation of the
transactions contemplated hereby will (a) entitle any current or former
employee or officer of YCB to severance pay, unemployment compensation
or any other payment, or (b) accelerate the time of payment or vesting
or increase the amount of compensation due any such employee or
officer.
4.o. Collective Bargaining and Employment Agreements. Except as
provided in this Agreement or as previously disclosed to NVBancorp and NVB in
writing, YCB does not have any union or collective bargaining or written
employment agreements, contracts or other agreements with any labor organization
or with any member of management, or any management or consultation agreement
not terminable at will by YCB without liability and no such contract or
agreement has been requested by, or is under discussion by management with, any
group of employees, any member of management or any other person. There are no
material controversies pending between YCB and any current or former employees,
and to the best of YCB's knowledge, there are no efforts presently being made by
any labor union seeking to organize any of such employees.
4.p. Compensation of Officers and Employees. Except as disclosed in
the YCB Disclosure Schedule, no officer or employee of YCB is receiving
aggregate direct remuneration at a rate exceeding Fifty Thousand Dollars
($50,000.00) per annum.
4.q. Legal Actions and Proceedings. Except as disclosed in the YCB
Disclosure Schedule, YCB is not a party to, or so far as known to it, threatened
with, and to YCB's knowledge, there is no reasonable basis for, any legal action
or other proceeding or investigation before any court, any arbitrator of any
kind or any government agency, and YCB is not subject to any potential adverse
claim, the outcome of which could involve the payment or receipt by YCB of any
amount in excess of Twenty-Five Thousand Dollars ($25,000.00), unless an insurer
has agreed to defend against and pay the amount of any resulting liability
without reservation, or, if any such legal action, proceeding, investigation or
claim will not involve the payment by YCB of a monetary amount, which could have
a material adverse effect on YCB or its business or property or the transactions
contemplated hereby. YCB has no knowledge of any pending or threatened claims or
charges under the Community Reinvestment Act, before the Equal Employment
Opportunity Commission, the California Department of Fair Housing & Economic
Development, the California Unemployment Appeals Board, or any federal or state
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human relations commission or agency. There is no labor dispute, strike,
slow-down or stoppage pending or, to the best of the knowledge of YCB,
threatened against YCB.
4.r. Execution and Delivery of the Agreement.
---------------------------------------
(i) The execution and delivery of this Agreement and the
Agreement of Merger have been duly authorized by the Board of Directors
of YCB and, when the principal terms of the Merger, this Agreement and
the Agreement of Merger have been duly approved by the affirmative vote
of the holders of the majority of the outstanding YCB Shares either at
a meeting of shareholders duly called and held or by action taken
without a meeting pursuant to the YCB Articles, Bylaws and California
law, the Merger, this Agreement and the Agreement of Merger will be
duly and validly authorized by all necessary corporate action on the
part of YCB.
(ii) This Agreement has been duly executed and delivered by
YCB and (assuming due execution and delivery by NVBancorp) constitutes,
and the Agreement of Merger, upon its execution and delivery by YCB
(and assuming due execution and delivery by NVBancorp) will constitute,
a legal and binding obligation of YCB in accordance with its terms.
(iii) The execution and delivery by YCB of this Agreement and
the Agreement of Merger and the consummation of the transactions herein
and therein contemplated (a) do not violate any provision of the
Articles of Incorporation or Bylaws of YCB, or violate in any material
respect any provision of federal or state law or any government rule or
regulation (assuming (1) receipt of the Government Approvals, (2)
receipt of the requisite YCB shareholder approval referred to in
Section 4(r)(i) hereof, and (3) receipt of appropriate permits or
approvals under state securities or "blue sky" laws, including a permit
from the California Commissioner of Corporations after a fairness
hearing as described in Section 3.1.d. or, in the alternative, a
registration statement on Form S-4 declared effective by the SEC), and
(b) do not require any consent of any person under, conflict in any
material respect with or result in a material breach of, or accelerate
the performance required by any of the terms of, any material debt
instrument, lease, license, covenant, agreement or understanding to
which YCB is a party or by which it is bound or any order, ruling,
decree, judgment, arbitration award or stipulation to which YCB is
subject, or constitute a material default thereunder or result in the
creation of any lien, claim, security interest, encumbrance, charge,
restriction or right of any third party of any kind whatsoever upon any
of the properties or assets of YCB.
4.s. Retention of Broker or Consultant. No broker, agent, finder,
consultant or other party (other than legal, compliance, loan reviewers and
accounting advisors) has been retained by YCB or is entitled to be paid based
upon any agreements, arrangements or understandings made by YCB in connection
with any of the transactions contemplated by this Agreement or the Agreement of
Merger, except that YCB has engaged the firm of Professional Bank Services, Inc.
to provide consulting services to YCB, including an opinion regarding the
fairness of the consideration to be received by YCB shareholders in the Merger.
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YCB has provided NVBancorp with a true and accurate copy of its agreement(s)
with Professional Bank Services, Inc.
4.t. Insurance. YCB is and continuously since its inception has
been, insured with reputable insurers against all risks normally insured against
by banks, and all of the insurance policies and bonds maintained by YCB are in
full force and effect, YCB is not in default thereunder and all material claims
thereunder have been filed in due and timely fashion. In the best judgment of
the management of YCB, such insurance coverage is adequate for YCB. Since March
31, 2004, there has not been any damage to, destruction of, or loss of any
assets of YCB not covered by insurance that could have a material adverse effect
on the business, financial condition, properties, assets or results of
operations of YCB.
4.u. Loan Loss Reserves. The YCB loan loss reserve shall be adequate
to cover the risk identified in the loan portfolio based on the Company's policy
and methodology, which has been previously provided.
4.v. Transactions With Affiliates. Except in the Ordinary Course of
Business, YCB has not extended credit, committed itself to extend credit, or
transferred any asset to or assumed or guaranteed any liability of the employees
or directors of YCB, or to any spouse or child of any of them, or to any of
their "affiliates" or "associates" as such terms are defined in Rule 405 under
the 1933 Act. YCB has not entered into any other transactions with the employees
or directors of YCB or any spouse or child of any of them, or any of their
affiliates or associates, except as disclosed in writing to NVBancorp. Any such
transactions have been on terms no less favorable to YCB than those which would
prevail in an arms-length transaction with an independent third party. YCB has
not violated any applicable regulation of any government agency or regulatory
authority having jurisdiction over YCB in connection with any such transactions
described in this subsection.
4.w. Risk Management Instruments. All interest rate swaps, caps,
floors, option agreements, futures and forward contracts and other similar risk
management arrangements, whether entered into for YCB's own account (all of
which are listed on the YCB Disclosure Schedule), if any, were entered into in
accordance with prudent business practices and all applicable laws, rules,
regulations and regulatory policies and with counterparties believed to be
financially responsible at the time; and each of them constitutes the valid and
legally binding obligation of YCB, enforceable in accordance with its terms
(except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles), and are in full force and effect. Neither YCB, nor to YCB's
knowledge, any other party thereto, is in breach of any of its obligations under
any such agreement or arrangement.
4.x. Information in Proxy Statement/Prospectus. The information
pertaining to YCB which has been or will be furnished to NVBancorp for or on
behalf of YCB for inclusion in the Proxy Statement/Prospectus to be provided to
the shareholders of YCB, or in the applications to be filed to obtain the
Government Approvals (the "Applications"), does not and will not contain any
untrue statement of any material fact or omit or will omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they are made, not misleading;
provided, however, that information of a later date shall be deemed to modify
contrary information as of an earlier date. All financial statements of YCB
included in or accompanying the Proxy Statement/Prospectus to be provided to the
shareholders of YCB, or the Applications, will present fairly the financial
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condition and results of operations of YCB at the dates and for the periods
covered by such statements in accordance with generally accepted accounting
principles consistently applied throughout the periods covered by such
statements. YCB shall promptly advise NVBancorp in writing if, at any time prior
to the Effective Time of the Merger, YCB shall obtain knowledge of any facts
that would make it necessary to amend or supplement the Proxy
Statement/Prospectus provided to the shareholders of YCB or any Application, in
order to make the statements therein not misleading or to comply with applicable
laws and regulations.
4.y. Community Reinvestment Act Compliance. YCB is in substantial
compliance with the applicable provisions of the Community Reinvestment Act of
1977 and the regulations promulgated thereunder (collectively, the "CRA") and
has received a CRA rating of "satisfactory" from the DFI in its most recent
examination, and YCB has no knowledge of the existence of any fact or
circumstance or set of facts or circumstances which could be reasonably expected
to result in YCB failing to be in substantial compliance with such provisions or
having its current rating lowered.
4.z. Accuracy and Effective Date of Representations and Warranties,
Covenants and Agreements. Each representation, warranty, covenant and agreement
of YCB set forth in this Agreement shall be deemed to be made on and as of the
date hereof (except to the extent that a representation or warranty is qualified
as set forth in the YCB Disclosure Schedule corresponding in number with the
applicable section of such representation or warranty), the Closing Date and the
Effective Time of the Merger. No representation or warranty by YCB, and no
statement by YCB in any certificate, agreement, schedule or other document
furnished or to be furnished in connection with the transactions contemplated by
this Agreement or the Agreement of Merger, was or will be inaccurate, incomplete
or incorrect in any material respect as of the date furnished or contains or
will contain any untrue statement of a material fact or omits or will omit to
state any material fact necessary to make such representation, warranty or
statement not misleading to NVBancorp.
5. REPRESENTATIONS AND WARRANTIES OF NVBancorp.
-------------------------------------------
In the following representations and warranties, all references to
assets, liabilities, properties, rights, obligations, financial condition,
operations, knowledge, information and other characteristics of NVBancorp shall
be deemed to include reference to those characteristics of NVBancorp on a
consolidated basis, except as the context otherwise indicates or requires.
NVBancorp represents and warrants to YCB that, except as set forth on a schedule
(the "NVBancorp Disclosure Schedule" as Exhibit C) to be delivered to YCB
concurrently with the execution and delivery of this Agreement, corresponding in
number with the applicable section of this Agreement:
5.a. Corporate Status and Power to Enter Into Agreements. (i)
NVBancorp is a corporation duly incorporated, validly existing and in good
standing under California law and is a registered bank holding company under the
Bank Holding Company Act of 1956, as amended, (ii) subject to obtaining the
Government Approvals and approval of the principal terms of the Merger by the
NVBancorp shareholders, NVBancorp has all necessary corporate power to enter
into this Agreement and the Agreement of Merger and to carry out all of the
terms and provisions hereof and thereof to be carried out by it, (iii) NVB holds
a currently valid license issued by the California Commissioner of Banking to
engage in the commercial banking business in the State of California at the
locations at which it is licensed and currently conducts business, and (iv)
neither NVBancorp nor NVB is subject to any directive, resolution, memorandum of
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understanding or order of the FDIC, FRB, California Commissioner of Banking or
any other regulatory authority having jurisdiction over its business or any of
its assets or properties. Neither the scope of the business of NVBancorp nor the
location of its properties requires NVBancorp or NVB to be licensed to do
business in any jurisdiction other than the State of California. NVB's deposits
are insured by the FDIC to the maximum extent permitted by applicable law and
regulation.
5.b. Articles, Bylaws, Books and Records. The copies of the Articles
of Incorporation and Bylaws of NVBancorp heretofore delivered to YCB are
complete and accurate copies thereof as in effect on the date hereof. The minute
books of NVBancorp made available to YCB contain a complete and accurate record
of all meetings of NVBancorp's Board of Directors (and committees thereof) and
shareholders. The corporate books and records (including financial statements)
of NVBancorp fairly reflect the material transactions to which NVBancorp is a
party or by which its properties are subject or bound, and such books and
records have been properly kept and maintained.
5.c. Compliance With Laws, Regulations and Decrees. NVBancorp (i)
has the corporate power to own or lease its properties and to conduct its
business as currently conducted, (ii) to its knowledge, has complied in all
material respects with, and is not in material default of any laws, regulations,
ordinances, orders or decrees applicable to the conduct of its business and the
ownership of its properties, including but not limited to all federal and state
laws (including but not limited to the Bank Secrecy Act), rules and regulations
relating to the offer, sale or issuance of securities, and the operation of a
commercial bank, other than where such noncompliance or default is not likely to
result in a material limitation on the conduct of the business of NVBancorp or
is not likely to otherwise have a material adverse effect on NVBancorp and NVB
taken as a whole, (iii) have not failed to file with the proper federal, state,
local or other authorities any material report or other document required to be
filed, and (iv) have all approvals, authorizations, consents, licenses,
clearances and orders of, and have currently effective all registrations with,
all government agencies and regulatory authorities which are necessary to the
business and operations of NVBancorp and NVB as now being conducted.
5.d. Capitalization. As of the date of this Agreement, the
authorized capital stock of NVBancorp consists of 20,000,000 shares of NVBancorp
common stock, no par value, of which 6,513,823 shares are duly authorized,
validly issued, fully paid and nonassessable and currently outstanding, and
5,000,000 shares of NVBancorp preferred stock of which no shares are
outstanding. A total of 125,000 shares of Series A Junior Participating
Preferred Stock have been designated by the NVBancorp Board of Directors for
purposes of the NVBancorp Shareholder Protection Rights Agreement dated as of
September 9, 1999. Said capital stock has been offered, sold and issued in
compliance with all applicable securities laws. As of the date of this
Agreement, there are currently outstanding options to purchase 981,970 shares of
NVBancorp common stock, at a weighted average exercise price of $8.67 per share,
issued pursuant to the NVBancorp 1989 Director Stock Option Plan, the NVBancorp
1998 Employee Stock Incentive Plan and the NVBancorp 1999 Director Stock Option
Plan. Said options were issued and, upon issuance in accordance with the terms
of the outstanding options said shares shall be issued, in compliance with all
applicable securities laws. Otherwise, other than rights under the NVBancorp
Shareholder Protection Rights Agreement dated as of September 9, 1999, there are
no outstanding (i) options, agreements, calls or commitments of any character
which would obligate NVBancorp to issue, sell, pledge, assign or otherwise
encumber or dispose of, or to purchase, redeem or otherwise acquire, any
NVBancorp common stock or any other equity security of NVBancorp, or (ii)
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warrants or options relating to, rights to acquire, or debt or equity securities
convertible into, shares of NVBancorp common stock or any other equity security
of NVBancorp. NVBancorp owns all of the outstanding equity securities of NVB.
Except as collateral for outstanding loans held in their loan portfolios and,
except as summarized in the NVBancorp Disclosure Schedule, neither NVBancorp nor
NVB owns, directly or indirectly, any equity interest in any bank (other than
NVBancorp's ownership of NVB), corporation or other entity.
5.e. Trademarks and Trade Names. To the best of NVBancorp's
knowledge, NVBancorp and NVB (i) own and have the exclusive right to use all
Intellectual Property Rights used in or necessary for the conduct of their
businesses as now or heretofore conducted; and (ii) are not infringing upon the
Intellectual Property Rights of any other person or entity. No claim is pending
or threatened by any person or entity against or otherwise affecting the use by
NVBancorp or NVB of any Intellectual Property Rights and, to the best of its
knowledge, there is no valid basis for any such claim.
5.f. Financial Statements, Regulatory Reports. No financial
statement or other document provided or to be provided to YCB as required by
Section 3.3.i. hereof, as of the date of such document, contained, or as to
documents to be delivered after the date hereof, will contain, any untrue
statement of a material fact, or, at the date thereof, omitted or will omit to
state a material fact necessary in order to make the statements contained
therein, in light of the circumstances under which such statements were or will
be made, not misleading; provided, however, that information as of a later date
shall be deemed to modify contrary information as of any earlier date. NVBancorp
has filed all material documents and reports required to be filed by it with the
Commission, FDIC, FRB, the California Department of Financial Institutions and
any other government agency or regulatory authority having jurisdiction over
their business, assets or properties. All such reports conform in all material
respects with the requirements promulgated by such government agencies and
regulatory authorities. All compliance or corrective action relating to
NVBancorp and NVB required by government agencies and regulatory authorities
having jurisdiction over NVBancorp or NVB has been taken. Except as disclosed in
such statements, reports or documents, neither NVBancorp nor NVB has received
any notification, formally or informally, from any agency or department of any
federal, state or local government or any regulatory authority or the staff
thereof (a) asserting that it is not in compliance with any of the statutes,
regulations or ordinances which such government or regulatory authority
enforces, or (b) threatening to revoke any license, franchise, permit or
government authorization. NVBancorp and NVB have paid all assessments made or
imposed by any government agency. NVBancorp has delivered to YCB copies of all
annual management letters and opinions, and has made available to YCB for
inspection all reviews, correspondence and other documents in the files of
NVBancorp prepared by certified public accountants engaged by NVBancorp and
delivered to NVBancorp since March 31, 2004. The financial records of NVBancorp
have been, and are being and shall be, maintained in all material respects in
accordance with all applicable legal and accounting requirements sufficient to
insure that all transactions reflected therein are, in all material respects,
executed in accordance with management's general or specific authorization and
recorded in conformity with generally accepted accounting principles at the time
in effect. The data processing equipment, data transmission equipment, related
peripheral equipment and software used by NVBancorp in the operation of its
business to generate and retrieve its financial records are adequate for the
current needs of NVBancorp.
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5.g. Tax Returns.
-----------
(i) NVBancorp has timely filed all federal, state, county,
local and foreign tax returns required to be filed by it, including,
without limitation, estimated tax, use tax, excise tax, real property
and personal property tax reports and returns, employer's withholding
tax returns, other withholding tax returns and Federal Unemployment Tax
Returns, and all other reports or other information required or
requested to be filed by NVBancorp, and each such return, report or
other information was, when filed, complete and accurate in all
material respects. NVBancorp has paid all taxes, fees and other
government charges, including any interest and penalties thereon, when
they have become due, except those that are being contested in good
faith, which contested matters have been disclosed to YCB. NVBancorp
has not been requested to give nor has it given any currently effective
waivers extending the statutory period of limitation applicable to any
tax return required to be filed by it for any period. There are no
claims pending against NVBancorp for any alleged deficiency in the
payment of any taxes, and NVBancorp does not know of any pending or
threatened audits, investigations or claims for unpaid taxes or
relating to any liability in respect of any taxes. There have been no
events, including a change in ownership, that would result in a
reappraisal and establishment of a new base-year full value for
purposes of applicable provisions of the California Constitution, of
any real property owned in whole or in part by NVBancorp or to the best
of NVBancorp's knowledge, of any real property leased by NVBancorp.
(ii) NVBancorp has made available to YCB for review copies of
all its tax returns with respect to taxes payable to the United States
of America and the State of California for the fiscal years ended 1999,
2000, 2001, and 2002.
(iii) No consent has been filed relating to NVBancorp pursuant
to Section 341(f) of the IRC.
5.h. Material Adverse Change. Except as heretofore disclosed in
writing by NVBancorp to YCB, since March 31, 2004, there has been (i) no
material adverse change in the business, assets, licenses, permits, franchises,
results of operations or financial condition of NVBancorp (whether or not in the
Ordinary Course of Business), (ii) no change in any of the assets, licenses,
permits or franchises of NVBancorp that has had or can reasonably be expected to
have a material adverse effect on any of the items listed above, (iii) no
damage, destruction, or other casualty loss (whether or not covered by
insurance) that has had or can reasonably be expected to have a material adverse
effect on any of the items listed above, (iv) no amendment, modification, or
termination of any existing, or entering into of any new, contract, agreement,
plan, lease, license, permit or franchise that is material to the business,
financial condition, assets, liabilities or operations of NVBancorp, except in
the Ordinary Course of Business, and (v) no disposition by NVBancorp of one or
more assets that, individually or in the aggregate, are material to NVBancorp,
except sales of assets in the Ordinary Course of Business.
5.i. No Undisclosed Liabilities. Except for items for which
reserves have been established in the unaudited balance sheets of NVBancorp as
of March 31, 2004, NVBancorp has not incurred or discharged, and is not legally
obligated with respect to, any indebtedness, liability (including, without
limitation, a liability arising out of an indemnification, guarantee, hold
harmless or similar arrangement) or obligation (accrued or contingent, whether
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due or to become due, and whether or not subordinated to the claims of its
general creditors), other than as a result of operations in the Ordinary Course
of Business after such date. No agreement pursuant to which any loans or other
assets have been or will be sold by NVBancorp entitles the buyer of such loans
or other assets, unless there is a material breach of a representation or
covenant by NVBancorp to cause NVBancorp repurchase such loan or other asset or
to pursue any other form of recourse against NVBancorp. NVBancorp has not
knowingly made or shall make any representation or covenant in any such
agreement that contained or shall contain any untrue statement of a material
fact or omitted or shall omit to state a material fact necessary in order to
make the statements contained therein, in light of the circumstances under which
such representations and/or covenants were made or shall be made, not
misleading.
5.j. Properties and Leases.
---------------------
(i) NVBancorp and/or NVB has good and marketable title, free
and clear of all liens and encumbrances and the right of possession,
subject to existing leaseholds, to all real properties and good title,
free and clear of all liens and encumbrances, to all other property and
assets, tangible and intangible, reflected in the NVBancorp balance
sheet as of March 31, 2004, (except property held as lessee under
leases disclosed in writing prior to the date hereof and except
personal property sold or otherwise disposed of since March 31, 2004,
in the Ordinary Course of Business), except for (a) liens for taxes or
assessments not delinquent, (b) such other liens and encumbrances and
imperfections of title as do not materially affect the value of such
property as reflected in the NVBancorp balance sheet as of March 31,
2004, or as currently shown on the books and records of NVBancorp and
which do not interfere with or impair its present and continued use, or
(c) exceptions disclosed in title reports and preliminary title
reports, copies of which have been provided to YCB. All tangible
properties of NVBancorp and/or NVB conform in all material respects
with all applicable ordinances, regulations and zoning laws. To the
knowledge of NVBancorp, all tangible properties of NVBancorp and/or NVB
are in a good state of maintenance and repair and are adequate for the
current business of NVBancorp. No properties of NVBancorp and/or NVB,
and, to the best of NVBancorp's knowledge, no properties in which
NVBancorp and/or NVB holds a collateral or contingent interest or
purchase option, are the subject of any pending or threatened
investigation, claim or proceeding relating to the use, storage or
disposal on such property of or contamination of such property by any
toxic or hazardous waste material or substance. To the best of
NVBancorp's knowledge, NVBancorp and/or NVB does not own, possess or
have a collateral or contingent interest or purchase option in any
properties or other assets which contain or have located within or
thereon any hazardous or toxic waste material or substance unless the
location of such hazardous or toxic waste material or other substance
or its use thereon conforms in all material respects with all federal,
state and local laws, rules, regulations or other provisions regulating
the discharge of materials into the environment. As to any real
property not owned or leased by NVBancorp and/or NVB and held as
security for a loan or in which NVBancorp otherwise has an interest,
NVBancorp and/or NVB has not controlled, directed or participated in
the operation or management of any such real property or any facilities
or enterprise conducted thereon, such that it has become an owner or
operator of such real property under applicable environmental laws.
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(ii) All properties held by NVBancorp and/or NVB under leases
are held under valid, binding and enforceable leases, with such
exceptions as are not material and do not interfere with the conduct of
the business of NVBancorp, and NVBancorp and/or NVB enjoy quiet and
peaceful possession of such leased property. NVBancorp and/or NVB is
not in material default in any respect under any material lease,
agreement or obligation regarding its properties to which it is a party
or by which it is bound.
(iii) Except as disclosed to YCB in writing, all of
NVBancorp's or NVB's rights and obligations under the leases referred
to in Section 5.j.(ii) above do not require the consent of any other
party to the transaction contemplated by this Agreement and the
Agreement of Merger. Where required, NVBancorp shall obtain, prior to
the Effective Date, the consent of such parties to such transactions.
5.k. Material Contracts. Except as previously disclosed to YCB in
writing and excluding loans, lines of credit, loan commitments or letters of
credit to which NVBancorp is a party, NVBancorp is not a party to or bound by
any contract or other agreement made in the Ordinary Course of Business which
involves aggregate future payments by or to NVBancorp of more than One Hundred
Thousand Dollars ($100,000.00) and which is made for a fixed period expiring
more than one year from the date hereof, and NVBancorp is not a party to or
bound by any agreement not made in the Ordinary Course of Business which is to
be performed at or after the date hereof. Each of the contracts and agreements
disclosed to YCB pursuant to this Section 5.k. is a legal and binding obligation
(subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and subject, as to enforceability, to equitable
principles of general applicability), and no breach or default (and no condition
which, with notice or passage of time, or both, could become a breach or
default) exists with respect thereto.
5.l. Classified Loans. Except as previously disclosed to YCB in
writing, there are no loans presently owned by NVB that have been classified by
NVB's management or NVB internal policy or procedure, any outside review
examiner, accountant or any bank regulatory authority as "Non-Accrual," "Watch,"
"Other Assets Specially Mentioned," "Substandard," "Doubtful," or "Loss" or
classified using categories or words with similar import and all loans or
portions thereof so classified have been reserved to the extent required. NVB
regularly reviews and appropriately classifies its loans in accordance with all
applicable legal and regulatory requirements and generally accepted banking
practices. All loans and investments of NVB are legal, valid and binding
obligations enforceable in accordance with their respective terms and are not
subject to any setoffs, counterclaims or disputes (subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and subject, as to enforceability, to equitable principles of general
applicability), except as disclosed to YCB in writing or reserved for in the
unaudited balance sheet of NVB as of March 31, 2004, and were duly authorized
under and made in compliance with applicable federal and state laws and
regulations. NVB has no extensions of credit, investments, guarantees,
indemnification agreements or commitments for the same (including without
limitation commitments to issue letters of credit, to create acceptances, or to
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repurchase securities, federal funds or other assets) other than those
documented on the books and records of NVB.
5.m. No Restrictions on Investments. Except for pledges to secure
public and trust deposits and repurchase agreements in the Ordinary Course of
Business and securities classified as "held-to-maturity" as defined under SFAS
Xx. 000, xxxx of the investments reflected in the NVBancorp balance sheet as of
March 31, 2004, and none of the investments made by NVBancorp since March 31,
2004, is subject to any restriction, whether contractual or statutory, which
materially impairs the ability of NVBancorp to freely dispose of such investment
at any time.
5.n. Employment Benefit Plans/ERISA.
------------------------------
(i) NVBancorp has provided to YCB an accurate list setting
forth all bonus, incentive compensation, profit-sharing, pension,
retirement, stock purchase, stock option, deferred compensation,
severance, hospitalization, medical, dental, vision, group insurance,
death benefit, disability and other fringe benefit plans, trust
agreements, arrangements and commitments of NVBancorp (including but
not limited to any such plans, agreements, arrangements and commitments
applicable to former employees or retired employees, or for which such
persons are eligible) (collectively, "Employee Plans"), if any,
together with copies of all such Employee Plans that are documented and
any and all contracts of employment, and has made available to YCB any
Board of Directors' minutes (or committee minutes) authorizing,
approving or guaranteeing such Employee Plans and contracts; and
(ii) All contributions, premiums or other payments due from
NVBancorp to (or under) any Employee Plans have been fully paid or
adequately provided for on NVBancorp's audited financial statements for
the year ended 2003, or unaudited financial statements for the three
(3) months ended March 31, 2004. All accruals thereon (including, where
appropriate, proportional accruals for partial periods) have been made
in accordance with generally accepted accounting principles
consistently applied on a reasonable basis; and
(iii) NVBancorp has disclosed in writing to YCB the names of
each director, officer and employee of NVBancorp and NVB; and
(iv) The Employee Plans have been administered where required
in substantial compliance with ERISA, the IRC and the terms of such
Employee Plans, and there is no pending or threatened litigation
relating to any such Employee Plan; and
(v) Except as disclosed in the NVBancorp Disclosure
Schedule, NVBancorp and NVB have not offered in the past health
benefits for retired employees and have no intention to offer any
additional health or other benefits for retired employees; and
(vi) Each Employee Plan is in full force and effect, and
neither NVBancorp, NVB, nor any other party thereto is in material
default under any of them, and there have been no claims of default and
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there are no facts or conditions which if continued, or on notice, will
result in a material default under any Employee Plans; and
(vii) NVBancorp has provided to YCB a list of all agreements
or other understandings pursuant to which the consummation of the
transactions contemplated hereby will (a) entitle any current or former
employee or officer of NVBancorp or NVB to severance pay, unemployment
compensation or any other payment, or (b) accelerate the time of
payment or vesting or increase the amount of compensation due any such
employee or officer.
5.o. Collective Bargaining and Employment Agreements. Except as
disclosed in the NVBancorp Disclosure Schedule, NVBancorp and NVB has no union
or collective bargaining or written employment agreements, contracts or other
agreements with any labor organization or with any member of management, or any
management or consultation agreement not terminable at will by NVBancorp without
liability and no such contract or agreement has been requested by, or is under
discussion by management with, any group of employees, any member of management
or any other person. There are no material controversies pending between
NVBancorp and any current or former employees, and to the best of NVBancorp's
knowledge, there are no efforts presently being made by any labor union seeking
to organize any of such employees.
5.p. Compensation of Officers and Employees. Except as disclosed in
the NVBancorp Disclosure Schedule, (i) no officer or employee of NVBancorp or
NVB is receiving aggregate direct remuneration at a rate exceeding Fifty
Thousand Dollars ($50,000.00) per annum, and (ii) the consummation of the
transactions contemplated by this Agreement and the Agreement of Merger will not
(either alone or upon the occurrence of any additional or further acts or
events) result in any payment (whether of severance pay or otherwise) becoming
due from NVBancorp to any employee of NVBancorp.
5.q. Legal Actions and Proceedings. Except as disclosed in the
NVBancorp Disclosure Schedule, NVBancorp is not a party to, or so far as known
to it, threatened with, and to NVBancorp's knowledge, there is no reasonable
basis for, any legal action or other proceeding or investigation before any
court, any arbitrator of any kind or any government agency, and NVBancorp is not
subject to any potential adverse claim, the outcome of which could involve the
payment or receipt by NVBancorp of any amount in excess of One Hundred Thousand
Dollars ($100,000.00), unless an insurer has agreed to defend against and pay
the amount of any resulting liability without reservation, or, if any such legal
action, proceeding, investigation or claim will not involve the payment by
NVBancorp of a monetary amount, which could reasonably be expected to have a
material adverse effect on NVBancorp or its business or property or the
transactions contemplated hereby. NVBancorp has no knowledge of any pending or
threatened claims or charges under the Community Reinvestment Act, before the
Equal Employment Opportunity Commission, the California Department of Fair
Housing and Economic Development, the California Unemployment Appeals Board, or
any federal or state human relations commission or agency. There is no labor
dispute, strike, slow-down or stoppage pending or, to the best of the knowledge
of NVBancorp, threatened against NVBancorp.
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5.r. Execution and Delivery of the Agreement.
---------------------------------------
(i) The execution and delivery of this Agreement and the
Agreement of Merger have been duly authorized by the Board of Directors
of NVBancorp and, this Agreement and the Agreement of Merger have been
duly and validly authorized by all necessary corporate action on the
part of NVBancorp.
(ii) This Agreement has been duly executed and delivered by
NVBancorp and (assuming due execution and delivery by YCB) constitutes
a legal and binding obligation of NVBancorp in accordance with its
terms, and the Agreement of Merger, upon its execution and delivery by
New YCB Bank (after obtaining all applicable Government Approvals and
assuming due execution and delivery by YCB) will constitute, a legal
and binding obligation of NewYCB Bank in accordance with its terms.
(iii) The execution and delivery by NVBancorp of this
Agreement and the consummation of the transactions contemplated herein
and in the Agreement of Merger (a) do not violate any provision of the
Articles of Incorporation or Bylaws of NVBancorp, respectively, or
violate in any material respect any provision of federal or state law
or any government rule or regulation (assuming receipt of the
Government Approvals and receipt of appropriate permits or approvals
under state securities or "blue sky" laws, and (b) do not require any
consent of any person under, conflict in any material respect with or
result in a material breach of, or accelerate the performance required
by any of the terms of, any material debt instrument, lease, license,
covenant, agreement or understanding to which NVBancorp is a party or
by which it is bound or any order, ruling, decree, judgment,
arbitration award or stipulation to which NVBancorp is subject, or
constitute a material default thereunder or result in the creation of
any lien, claim, security interest, encumbrance, charge, restriction or
right of any third party of any kind whatsoever upon any of the
properties or assets of NVBancorp.
5.s. Retention of Broker or Consultant. No broker, agent, finder,
consultant or other party (other than legal, compliance, loan reviewers and
accounting advisors) has been retained by NVBancorp or is entitled to be paid
based upon any agreements, arrangements or understandings made by NVBancorp in
connection with any of the transactions contemplated by this Agreement or the
Agreement of Merger, except that NVBancorp has engaged the firm of Sandler
X'Xxxxx & Partners, LP to act as its financial advisor and to render an opinion
regarding the fairness of the Merger Consideration in the Merger, from a
financial point of view, to NVBancorp shareholders. NVBancorp has provided YCB
with a true and accurate copy of its agreement(s) with Sandler X'Xxxxx &
Partners, LP.
5.t. Insurance. NVBancorp is and continuously since its inception
has been, insured with reputable insurers against all risks normally insured
against by bank holding companies and banks, and all of the insurance policies
and bonds maintained by NVBancorp are in full force and effect, NVBancorp is not
in default thereunder and all material claims thereunder have been filed in due
and timely fashion. In the best judgment of the management of NVBancorp, such
insurance coverage is adequate for NVBancorp. Since March 31, 2004, there has
not been any damage to, destruction of, or loss of any assets of NVBancorp not
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covered by insurance that could reasonably be expected to have a material
adverse effect on the business, financial condition, properties, assets or
results of operations of NVBancorp.
5.u. Loan Loss Reserves. The NVB loan loss reserve shall be adequate
to cover the risk identified in the loan portfolio based on the NVB's policy and
methodology, which has been previously provided.
5.v. Transactions With Affiliates. Except in the Ordinary Course of
Business, NVBancorp has not extended credit, committed itself to extend credit,
or transferred any asset to or assumed or guaranteed any liability of the
employees or directors of NVBancorp, or to any spouse or child of any of them,
or to any of their "affiliates" or "associates" as such terms are defined in
Rule 405 under the 1933 Act. NVBancorp has not entered into any other
transactions with the employees or directors of NVBancorp or any spouse or child
of any of them, or any of their affiliates or associates, except as disclosed in
writing to YCB. Any such transactions have been on terms no less favorable to
NVBancorp than those which would prevail in an arms-length transaction with an
independent third party. NVBancorp has not violated any applicable regulation of
any government agency or regulatory authority having jurisdiction over NVBancorp
in connection with any such transactions described in this subsection.
5.w. Risk Management Instruments. All interest rate swaps, caps,
floors, option agreements, futures and forward contracts and other similar risk
management arrangements, whether entered into for NVBancorp's own account, or
for the account of one or more of NVBancorp's subsidiaries or their customers
(all of which are listed on the NVBancorp Disclosure Schedule), if any, were
entered into in accordance with prudent business practices and all applicable
laws, rules, regulations and regulatory policies and with counterparties
believed to be financially responsible at the time; and each of them constitutes
the valid and legally binding obligation of NVBancorp or one of its
subsidiaries, enforceable in accordance with its terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles), and are in full
force and effect. Neither NVBancorp nor its subsidiaries, nor to NVBancorp's
knowledge, any other party thereto, is in breach of any of its obligations under
any such agreement or arrangement.
5.x. Information in Proxy Statement/Prospectus. The information
pertaining to NVBancorp which has been or will be furnished to YCB for inclusion
in the Proxy Statement/Prospectus to be provided to the shareholders of YCB, or
in the applications to be filed to obtain the Government Approvals (the
"Applications"), does not and will not contain any untrue statement of any
material fact or omit or will omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading; provided, however, that
information of a later date shall be deemed to modify contrary information as of
an earlier date. All financial statements of NVBancorp included in or
accompanying the Proxy Statement/Prospectus to be provided to the shareholders
of YCB, or the Applications, will present fairly the financial condition and
results of operations of NVBancorp at the dates and for the periods covered by
such statements in accordance with generally accepted accounting principles
consistently applied throughout the periods covered by such statements.
NVBancorp shall promptly advise YCB in writing if, at any time prior to the
Effective Time of the Merger, NVBancorp shall obtain knowledge of any facts that
would make it necessary to amend or supplement the Proxy Statement/Prospectus
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provided to the shareholders of YCB or any Application, in order to make the
statements therein not misleading or to comply with applicable laws and
regulations.
5.y. Community Reinvestment Act Compliance. NVBancorp is in
substantial compliance with the applicable provisions of the Community
Reinvestment Act of 1977 and the regulations promulgated thereunder
(collectively, the "CRA") and has received a CRA rating of "satisfactory" from
the FDIC in its most recent examination, and neither NVBancorp nor NVB has no
knowledge of the existence of any fact or circumstance or set of facts or
circumstances which could be reasonably expected to result in NVBancorp failing
to be in substantial compliance with such provisions or having its current
rating lowered.
5.z Accuracy and Effective Date of Representations and Warranties,
Covenants and Agreements. Each representation, warranty, covenant and agreement
of NVBancorp set forth in this Agreement shall be deemed to be made on and as of
the date hereof (except to the extent that a representation or warranty is
qualified as set forth in the NVBancorp Disclosure Schedule in a section
corresponding in number with the applicable section of such representation or
warranty), the Closing Date and the Effective Time of the Merger. No
representation or warranty by NVBancorp, and no statement by NVBancorp in any
certificate, agreement, schedule or other document furnished or to be furnished
in connection with the transactions contemplated by this Agreement or the
Agreement of Merger, was or will be inaccurate, incomplete or incorrect in any
material respect as of the date furnished or contains or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
necessary to make such representation, warranty or statement not misleading to
YCB.
6. SECURITIES ACT OF 1933; SECURITIES EXCHANGE ACT OF 1934.
-------------------------------------------------------
6.a. Preparation and Filing of Permit Application. NVBancorp and YCB
contemplate that all NVBancorp Shares exchanged for YCB Shares in the Merger
shall be exempt from the 1933 Act under the provisions of Section 3(a)(10) of
the 1933 Act. NVBancorp shall promptly prepare and file an appropriate
application with the Commissioner of Corporations of the State of California
(the "Commissioner of Corporations") for a permit to issue exchange securities
as described in Section 25142 of the Corporations Code and as will be in
compliance with the California Corporate Securities Law of 1968. Said permit is
expected to approve the issuance of a sufficient number of NVBancorp Shares to
complete the exchange of YCB Stock Election Shares for the 741,700 NVBancorp
Shares pursuant to the Merger Consideration and the provisions of Section 2.1,
plus all outstanding options for YCB Shares pursuant to Section 2.7.a. NVB
Bancorp shall also prepare and file with the Commission, in sufficient time to
be effective on or before the Effective Time of the Merger, one or more
registration statements or amendments to existing registration statements on
Form S-8 under the 1933 Act for the purpose of registering the maximum number of
NVBancorp Shares to which the holders of Substitute Options may be entitled
pursuant to Section 2.7 above at or after the Effective Time of the Merger.
NVBancorp and YCB shall promptly prepare a Proxy Statement/Prospectus for the
purpose of submitting the principal terms of the Merger, this Agreement and the
Agreement of Merger to the shareholders of YCB for their approval. NVBancorp and
YCB shall cooperate in all reasonable respects with regard to the preparation of
the Proxy Statement/Prospectus and will promptly prepare and file preliminary
proxy materials, including the proposed form of Proxy Statement/Prospectus, with
the Commissioner of Corporations for purposes of the permit application
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described in Section 25142 of the Corporations Code. The Proxy
Statement/Prospectus in definitive form shall be distributed to the YCB
shareholders and NVBancorp and YCB shall each provide promptly to the other such
information concerning its business and financial condition and affairs as may
be required or appropriate for inclusion in the permit application or in the
Proxy Statement/Prospectus or other YCB proxy materials, and shall cause its
legal counsel and independent auditors to cooperate with the other party's legal
counsel and auditors in the preparation of the permit application and the Proxy
Statement/Prospectus and any other YCB proxy materials.
6.b. Issuance of Permit. NVBancorp and YCB shall use their best
efforts to have the permit described in Section 25142 of the Corporations Code
(and any necessary or appropriate amendments or supplements thereto) issued by
the Commissioner of Corporations under the California Corporate Securities Law
of 1968 as soon as practicable, and thereafter NVBancorp and YCB shall
distribute the Proxy Statement/Prospectus to holders of YCB Shares in accordance
with applicable laws and the YCB Articles of Incorporation and Bylaws.
6.c. Sales and Resales of Common Stock. NVBancorp shall not be
required to prepare or file with the Commission any registration statement under
the 1933 Act, or to prepare or file with the Commissioner of Corporations any
permit application under the California Corporate Securities Law of 1968, for
the purpose of the sale or resale of the NVBancorp Shares by any person.
6.d. Rule 145. Securities representing NVBancorp Shares issued to
affiliates of YCB (as determined by legal counsel to NVBancorp and YCB) under
Rule 145 of the 1933 Act pursuant to the Agreement of Merger shall be subject to
stop transfer orders and restrictive legends which confirm and state that such
securities representing NVBancorp Shares have been issued or transferred to the
registered holder as the result of a transaction to which Rule 145 under the
1933 Act applies, and that such securities may not be sold, hypothecated,
transferred or assigned, and the issuer or its transfer agent shall not be
required to give effect to any attempted sale, hypothecation, transfer or
assignment, except (i) pursuant to a then current effective registration
statement under the 1933 Act, (ii) in a transaction permitted by Rule 145 as to
which the issuer has, in the opinion of its counsel, received reasonably
satisfactory evidence of compliance with the provisions of Rule 145, or (iii) in
a transaction which, in the opinion of legal counsel satisfactory to the issuer
or as described in a "no action" or interpretive letter from the staff of the
Securities and Exchange Commission, is not required to be registered under the
0000 Xxx.
7. CONDITIONS TO THE OBLIGATIONS OF NVBancorp.
------------------------------------------
The obligations of NVBancorp under this Agreement are, at its option,
subject to fulfillment at or prior to the Effective Time of the Merger of each
of the following conditions; provided, however, that any one or more of such
conditions may be waived by the Board of Directors of NVBancorp at any time at
or prior to the Effective Time of the Merger:
7.a. Representations and Warranties. The representations and
warranties of YCB in Section 4 hereof shall be true and correct in all material
respects on and as of the date of this Agreement (except to the extent that a
representation or warranty is qualified as set forth in the YCB Disclosure
Schedule corresponding in number with the applicable section of such
representation or warranty), the Closing Date and the Effective Time of the
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Merger, with the same effect as though such representations and warranties had
been made on and as of each such date or time except as to any representation or
warranty which specifically relates to an earlier date or time.
7.b. Compliance and Performance Under Agreement. YCB shall have
performed and complied in all material respects with all terms, agreements,
covenants and conditions of this Agreement and the Agreement of Merger required
to be performed or complied with by it at or prior to the Effective Time of the
Merger.
7.c. Material Adverse Change. No material adverse change shall have
occurred since March 31, 2004, in the business, financial condition, results of
operations or assets of YCB. Other than as set forth in the YCB Disclosure
Schedule, YCB shall not be a party to or threatened with, and to the best of
YCB's knowledge there is no reasonable basis for, any legal action or other
proceeding before any court, any arbitrator of any kind or any government
agency. No material adverse change shall have occurred as a result of any
subsequent legal actions or proceedings, or any subsequent developments in the
legal actions or proceedings as set forth in the YCB Disclosure Schedule, which
in the reasonable judgment of NVBancorp, would have a material adverse effect on
the business, financial condition, results of operations or assets of YCB.
7.d. Approval of Agreement. The principal terms of the Merger, this
Agreement, the Agreement of Merger and termination of the YCB Stockholders
Agreements shall have been duly approved by the affirmative vote or consent of
the holders of not less than seventy-five percent (75%) of the outstanding YCB
Shares.
7.e. Officer's Certificate. NVBancorp shall have received a
certificate, dated the Effective Date, signed on behalf of YCB by its President
and Chief Executive Officer and its Chief Financial Officer, in substantially
the form delivered to NVBancorp with the YCB Disclosure Schedule.
7.f. Opinion of Counsel. Xxxxxx, Eng & Xxxxxxxx, counsel to YCB,
shall have delivered to NVBancorp its opinion dated the Effective Date in
substantially the form attached hereto as Exhibit F.
7.g. Absence of Proceedings. No legal, administrative, arbitration,
investigatory or other proceeding by any government agency or regulatory
authority shall have been instituted or threatened to restrain or prohibit the
Merger or the transactions contemplated by this Agreement.
7.h. Issuance of Permit. The permit described in Section 6(a) of
this Agreement (and any necessary or appropriate amendments or supplements
thereto) shall have been issued by the Commissioner, after a hearing before the
Department of Corporations upon the fairness of the terms and conditions of the
issuance and exchange of NVBancorp Shares for YCB Shares, no stop order denying
effectiveness to, or suspending or revoking the effectiveness of such
qualification shall be in effect and no proceedings for such purpose shall have
been initiated or threatened by or before the Commissioner, and the NVBancorp
Shares qualified under the permit issued by the Commissioner shall have received
all state securities and "Blue Sky" permits or approvals required to consummate
the transactions contemplated by this Agreement and the Agreement of Merger.
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7.i. Government Approvals. All Government Approvals shall be in
effect, and all conditions or requirements prescribed by law or by any such
Approvals shall have been satisfied; provided, however, that no Government
Approval shall be deemed to have been received if it shall require the
divestiture or cessation of any of the present businesses or operations
conducted by any of the parties hereto or shall impose any other condition or
requirement, which condition or requirement NVBancorp in its reasonable judgment
shall deem to be materially burdensome. In which case NVBancorp shall promptly
notify YCB. For purposes of this agreement no condition or requirement shall be
deemed to be "materially burdensome" if such condition or requirement does not
materially differ from conditions or requirements regularly imposed in orders
approving transactions of the type contemplated by this Agreement and compliance
with such condition or requirement would not:
(i) require the taking of any action materially inconsistent
with the manner in which NVBancorp, NVB or YCB has conducted its
business previously;
(ii) have a material adverse effect on the business,
financial condition or results of operations of NVBancorp, NVB or YCB;
or
(iii) preclude satisfaction of any of the conditions to
consummation of the transactions contemplated by this Agreement.
7.j. Tax Opinion. Receipt by the parties of the opinion of Xxxxx-
Xxxxx, LLP to the effect that:
(i) The Merger constitutes a "reorganization" within the
meaning of IRC Section 368(a)(1)(A) by reason of the application of IRC
Section 368(a)(2)(D);
(ii) NVBancorp, YCB and New YCB Bank are each a "party" to a
reorganization within the meaning of IRC Section 368(b);
(iii) Neither NVBancorp, New YCB Bank nor YCB will recognize
federal taxable gain or loss as a result of the Merger;
(iv) The federal income tax basis and holding periods of the
assets exchanged between the parties to the Merger will be the same as
the federal income tax basis and holding periods of those assets prior
to the Merger;
(v) To the extent that YCB stockholders exchange YCB Stock
in the Merger solely for NVBancorp Stock, (i) no gain or loss will be
recognized on the exchange, (ii) the federal income tax basis of the
shares of NVBancorp Stock received by former holders of YCB Stock will
equal the federal income tax basis of such stockholders' shares of YCB
Stock (reduced by any amount allocable to fractional share interests
for which cash is received) exchanged, and (iii) the holding period for
the shares of NVBancorp Stock received will include the holding period
for the shares of YCB Stock exchanged, provided that the YCB Stock
exchanged was held as a "capital asset" as such term is defined in IRC
Section 1221;
(vi) To the extent that holders of YCB Stock exchange YCB
Stock in the Merger solely for cash, (i) gain or loss will be
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recognized equal to the difference between the amount of cash received
and the federal income tax basis in their shares of YCB Stock
exchanged, and (ii) the nature of the gain or loss recognized will be
capital gain or loss if the shares of YCB Stock exchanged were held as
a capital asset;
(vii) To the extent that holders of YCB Stock receive a
combination of cash and NVBancorp Stock (other than cash in lieu of
fractional shares), (i) loss, if any, will not be recognized, (ii)
gain, if any, will be recognized in an amount equal to the lesser of
(1) the difference between the fair market value of all consideration
received in the exchange (NVBancorp Stock plus cash) and the basis in
the YCB Stock surrendered or (2) the amount of cash received in the
exchange; (iii) the federal income tax basis of the NVBancorp Stock
received by holders of YCB Stock in the Merger will be equal to the
total federal income tax basis of the YCB Stock exchanged, decreased by
the amount of cash (other than cash received in lieu of fractional
share interests) received in the exchange, and increased by the amount
of gain recognized in the exchange, if any, and (iv) the holding period
of the NVBancorp Stock received in the Merger will include the holding
period for which holders of YCB Stock held their YCB Stock provided,
that such YCB Stock was held as a capital asset; and
(viii) To the extent that cash is received by holders of YCB
Stock in lieu of fractional share interests in NVBancorp Stock, the
cash will be treated as being received by the holders of YCB Stock as a
distribution in redemption of such stockholders' fractional share
interests, subject to the provisions and limitations of IRC Section
302.
7.k. Accountant's Letters. On or before the date of the mailing of
the Proxy Statement/Prospectus to the YCB shareholders, NVBancorp shall have
received, in form and substance satisfactory to NVBancorp, a letter addressed to
NVBancorp from Xxxxx-Xxxxx LLP, independent public accountants for YCB, as to
such matters, as of the end of the most recent fiscal quarter, as NVBancorp may
reasonably request. Further, as of a specified date not more than five (5)
business days prior to the Effective Date, NVBancorp shall have received from
Xxxxx-Xxxxx LLP a letter dated the Effective Date, in form and substance
satisfactory to NVBancorp, as to such matters, as NVBancorp may reasonably
request.
7.l. Affiliate Agreements. NVBancorp shall have received signed
affiliate agreements, in substantially the form attached as Exhibit D, on or
before the date of the mailing of the Proxy Statement/Prospectus to the
shareholders of YCB, from each person who, in the opinion of counsel to
NVBancorp, might be deemed to be an "affiliate" of NVBancorp within the meaning
of Rule 144 of the 1933 Act.
7.m. Dissenting Shares. Holders of not more than twenty-five percent
(25%) of the outstanding YCB shares shall have voted against approval of, or
given notice in writing to YCB at or prior to the YCB meeting of shareholders
that they dissent from, the Merger and the transactions contemplated by this
Agreement and the Agreement of Merger and have otherwise complied with the
requirements under Chapter 13 of the California General Corporation Law.
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7.n. Unaudited Financials. Not later than five (5) business days
prior to the Effective Date, YCB shall have furnished NVBancorp a copy of its
most recently prepared unaudited month-end consolidated financial statements,
including a balance sheet and statement of income of YCB, for the month ending
at least ten (10) business days prior to the Effective Date.
7.o. Closing Documents. NVBancorp shall have received such
certificates and other closing documents as counsel for NVBancorp shall
reasonably request.
7.p. Consents. YCB shall have received, or NVBancorp shall have
satisfied itself that YCB will receive, all consents of third parties as may be
required including consents of other parties to and required by material
mortgages, notes, leases, franchises, agreements, licenses and permits
applicable to YCB, in each case in form and substance reasonably satisfactory to
NVBancorp and its counsel, and no such consent or license or permit shall have
been withdrawn or suspended.
7.q. Director-Shareholder Agreements. NVBancorp shall have received
signed director-shareholder agreements, in substantially the form attached
hereto as Exhibit E, from all of the members of the YCB Board of Directors and
all of the executive officers of YCB, on or before the date of the mailing of
the Proxy Statement/Prospectus to the shareholders of YCB, pursuant to which
each such person in his or her capacity as a shareholder commits to vote all of
his or her YCB Shares in favor of the Merger and the transactions contemplated
by this Agreement and the Agreement of Merger, and to recommend to all other YCB
shareholders, subject to the exercise of fiduciary duties, a vote in favor of
the Merger and the transactions contemplated by this Agreement and the Agreement
of Merger.
7.r. Employment Agreements. As of the Closing Date, the YCB
employment agreements with Xxxx XxXxxxxxx, Xxxx Xxxxx, Xxxx Xxx, and Xxxxx
Xxxxxx (each, a "YCB Executive") shall be terminated by YCB, and YCB shall make
payments to each YCB Executive, pursuant to the schedule attached as Exhibit L.
Merged Bank shall enter into new employment agreements in substantially the
forms attached hereto as Exhibits H, I, J, and K, with the YCB Executives as of
the Closing Date.
8. CONDITIONS TO THE OBLIGATIONS OF YCB.
------------------------------------
The obligations of YCB under this Agreement are, at its option, subject
to the fulfillment at or prior to the Effective Time of the Merger of each of
the following conditions provided, however, that any one or more of such
conditions may be waived by the Board of Directors of YCB at any time at or
prior to the Effective Time of the Merger:
8.a. Representations and Warranties. The representations and
warranties of NVBancorp in Section 5 hereof shall be true and correct in all
material respects on and as of the date of this Agreement (except to the extent
that a representation or warranty is qualified as set forth in the NVBancorp
Disclosure Schedule corresponding in number with the applicable section of such
representation or warranty), the Closing Date and the Effective Time of the
Merger, with the same effect as though such representations and warranties had
been made on and as of each such date or time except as to any representation or
warranty which specifically relates to an earlier date or time.
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8.b. Compliance and Performance Under Agreement. NVBancorp shall
have performed and complied in all material respects with all terms, agreements,
covenants and conditions of this Agreement and the Agreement of Merger required
to be performed or complied with by NVBancorp at or prior to the Effective Time
of the Merger.
8.c. Material Adverse Change. No material adverse change shall have
occurred since March 31, 2004, in the business, financial condition, results of
operations or assets of NVBancorp and NVB taken as a whole, and NVBancorp shall
not be a party to or threatened with, and to the best of NVBancorp's knowledge
there is no reasonable basis for, any legal action or other proceeding before
any court, any arbitrator of any kind or any government agency, which legal
action or proceeding, in the reasonable judgment of YCB, could have a material
adverse effect on the business, financial condition, results of operations or
assets of NVBancorp and NVB taken as a whole.
8.d. Approval of Agreement. The principal terms of the Merger, this
Agreement, the Agreement of Merger and the termination of the YCB Stockholders
Agreements shall have been duly approved by the affirmative vote or consent of
the holders of not less than seventy-five percent (75%) of the outstanding YCB
Shares.
8.e. Officer's Certificate. YCB shall have received a certificate,
dated the Effective Date, signed on behalf of NVBancorp by its President and its
Chief Financial Officer, in substantially the form delivered to YCB with the
NVBancorp Disclosure Schedule.
8.f. Opinion of Counsel. Xxxx Xxxxx Xxxxxx LLP, NVBancorp's counsel,
shall have delivered to YCB its opinion dated the Effective Date in
substantially the form attached hereto as Exhibit G.
8.g. Absence of Proceedings. No legal, administrative, arbitration,
investigatory or other proceeding by any government agency or regulatory
authority shall have been instituted or threatened to restrain or prohibit the
Merger or the transactions contemplated by this Agreement.
8.h. Issuance of Permit. The permit described in Section 6.a. of
this Agreement (and any necessary or appropriate amendments or supplements
thereto) shall have been issued by the Commissioner, after a hearing before the
Department of Corporations upon the fairness of the terms and conditions of the
issuance and exchange of NVBancorp Shares for YCB Shares, no stop order denying
effectiveness to, or suspending or revoking the effectiveness of such
qualification shall be in effect and no proceedings for such purpose shall have
been initiated or threatened by or before the Commissioner, and the NVBancorp
Shares qualified under the permit issued by the Commissioner shall have received
all state securities and "Blue Sky" permits or approvals required to consummate
the transactions contemplated by this Agreement and the Agreement of Merger.
8.i. Government Approvals. All Government Approvals shall be in
effect, and all conditions or requirements prescribed by law or by any such
Approvals shall have been satisfied; provided, however, that no Government
Approval shall be deemed to have been received if it shall require the
divestiture or cessation of any of the present businesses or operations
conducted by any of the parties hereto or shall impose any other condition or
requirement, which condition or requirement YCB in its reasonable judgment shall
deem to be materially burdensome. In which case YCB shall promptly notify
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NVBancorp. For purposes of this agreement no condition or requirement shall be
deemed to be "materially burdensome" if such condition or requirement does not
materially differ from conditions or requirements regularly imposed in orders
approving transactions of the type contemplated by this Agreement and compliance
with such condition or requirement would not:
(i) require the taking of any action materially inconsistent
with the manner in which YCB, NVBancorp or NVB has conducted its
business previously;
(ii) result in a material adverse change on the business,
financial condition or results of operations of YCB, NVBancorp or NVB;
or
(iii) preclude satisfaction of any of the conditions to
consummation of the transactions contemplated by this Agreement.
8.j. Tax Opinion. Receipt by the parties of the opinion of Xxxxx-
Xxxxx, LLP to the effect that:
(i) The Merger constitutes a "reorganization" within the
meaning of IRC Section 368(a)(1)(A) by reason of the application of IRC
Section 368(a)(2)(D);
(ii) NVBancorp, YCB and New YCB Bank are each a "party" to a
reorganization within the meaning of IRC Section 368(b);
(iii) Neither NVBancorp, New YCB Bank nor YCB will recognize
federal taxable gain or loss as a result of the Merger;
(iv) The federal income tax basis and holding periods of the
assets exchanged between the parties to the Merger will be the same as
the federal income tax basis and holding periods of those assets prior
to the Merger;
(v) To the extent that YCB stockholders exchange YCB Stock
in the Merger solely for NVBancorp Stock, (i) no gain or loss will be
recognized on the exchange, (ii) the federal income tax basis of the
shares of NVBancorp Stock received by former holders of YCB Stock will
equal the federal income tax basis of such stockholders' shares of YCB
Stock (reduced by any amount allocable to fractional share interests
for which cash is received) exchanged, and (iii) the holding period for
the shares of NVBancorp Stock received will include the holding period
for the shares of YCB Stock exchanged, provided that the YCB Stock
exchanged was held as a "capital asset" as such term is defined in IRC
Section 1221;
(vi) To the extent that holders of YCB Stock exchange YCB
Stock in the Merger solely for cash, (i) gain or loss will be
recognized equal to the difference between the amount of cash received
and the federal income tax basis in their shares of YCB Stock
exchanged, and (ii) the nature of the gain or loss recognized will be
capital gain or loss if the shares of YCB Stock exchanged were held as
a capital asset;
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(vii) To the extent that holders of YCB Stock receive a
combination of cash and NVBancorp Stock (other than cash in lieu of
fractional shares), (i) loss, if any, will not be recognized, (ii)
gain, if any, will be recognized in an amount equal to the lesser of
(1) the difference between the fair market value of all consideration
received in the exchange (NVBancorp Stock plus cash) and the basis in
the YCB Stock surrendered or (2) the amount of cash received in the
exchange; (iii) the federal income tax basis of the NVBancorp Stock
received by holders of YCB Stock in the Merger will be equal to the
total federal income tax basis of the YCB Stock exchanged, decreased by
the amount of cash (other than cash received in lieu of fractional
share interests) received in the exchange, and increased by the amount
of gain recognized in the exchange, if any, and (iv) the holding period
of the NVBancorp Stock received in the Merger will include the holding
period for which holders of YCB Stock held their YCB Stock provided,
that such YCB Stock was held as a capital asset; and
(viii) To the extent that cash is received by holders of YCB
Stock in lieu of fractional share interests in NVBancorp Stock, the
cash will be treated as being received by the holders of YCB Stock as a
distribution in redemption of such stockholders' fractional share
interests, subject to the provisions and limitations of IRC Section
302.
8.k. Accountant's Letters. On or before the date of the mailing of
the Proxy Statement/Prospectus to the YCB shareholders, YCB shall have received,
in form and substance satisfactory to YCB, a letter addressed to YCB from
Xxxxx-Xxxxx LLP, independent public accountants for NVBancorp, as to such
matters, as of the end of the most recent fiscal quarter, as YCB may reasonably
request. Further, as of a specified date not more than five (5) business days
prior to the Effective Date, YCB shall have received from Xxxxx-Xxxxx LLP a
letter dated the Effective Date, in form and substance satisfactory to YCB, as
to such matters, as YCB may reasonably request.
8.l. Unaudited Financials. Not later than five (5) business days
prior to the Effective Date, NVBancorp shall have furnished YCB a copy of its
most recently prepared unaudited month-end consolidated financial statements,
including a balance sheet and statement of income of NVBancorp, for the month
ending at least ten (10) business days prior to the Effective Date.
8.m. (Intentionally Omitted)
8.n. Closing Documents. YCB shall have received such certificates
and other closing documents as counsel for YCB shall reasonably request.
8.o. Consents. NVBancorp shall have received, or YCB shall have
satisfied itself that NVBancorp will receive, all consents of third parties as
may be required including consents of other parties to and required by material
mortgages, notes, leases, franchises, agreements, licenses and permits
applicable to NVBancorp, in each case in form and substance reasonably
satisfactory to YCB, and no such consent or license or permit shall have been
withdrawn or suspended.
8.p. Fairness Opinion. The Board of Directors of YCB shall have
received an opinion of Professional Bank Services, dated the date of this
Agreement and the date of mailing or a date within three (3) days prior to the
date of mailing the Proxy Statement/Prospectus to the shareholders of YCB, to
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the effect that the Merger Consideration in the Merger is fair, from a financial
point of view, to YCB and its shareholders, and such opinion shall not have been
withdrawn by the Effective Time of the Merger.
9. CLOSING.
-------
9.a. Closing Date. On the third business day following receipt of
all required Government Approvals (not including any applicable waiting
periods), the parties shall select a proposed date for the consummation of the
Merger (the "Proposed Closing Date") which the parties shall use their
reasonable best efforts to cause to be the Closing Date. The closing (the
"Closing") shall, unless another date, time or place is agreed to in writing by
NVBancorp and YCB, be held at the offices of NVBancorp, 000 Xxxx Xxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxxx 00000, at a time mutually agreed upon between the parties
and on a date as soon as practicable but not less than fifteen (15) days
following the last to occur of (i) the expiration of any waiting periods under
applicable law or regulation, and (ii) the date on which all conditions to the
obligations of the parties to consummate the Merger have been satisfied (the
"Closing Date").
9.b. Delivery of Documents. At the Closing, the parties shall use
their respective best efforts to deliver or cause to be delivered the opinions,
certificates and other documents required to be delivered by this Agreement.
9.c. Filings. At the Closing, NVBancorp and YCB shall instruct their
respective representatives to make or confirm such filings as shall be required
in the opinion of counsel to NVBancorp and YCB to give effect to the Merger.
10. POST-CLOSING MATTERS.
--------------------
NVBancorp will prepare and file with the Commission on the appropriate
form as soon as practicable the results of combined operations of NVBancorp, NVB
and the Resulting Corporation for the first full calendar quarter after the
Effective Date.
11. EXPENSES.
--------
NVBancorp and YCB agree that NVBancorp and YCB shall each bear their
own expenses incurred in connection with the negotiation, preparation, and
performance of this Agreement, including legal and accounting fees, printing
costs, filing fees, and other necessary expenses regardless of whether the
merger or any other transactions contemplated under this Agreement are
consummated.
12. AMENDMENT; TERMINATION.
----------------------
12.a. Amendment. This Agreement and the Agreement of Merger may be
amended by mutual written agreement of NVBancorp and YCB at any time prior to
the Effective Time of the Merger without the approval of the shareholders of YCB
with respect to any of their terms except the terms relating to the Merger
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Consideration or the form or amount of consideration to be delivered to the YCB
shareholders in the Merger or otherwise as required by applicable law.
12.b. Termination. This Agreement and the Agreement of Merger may be
terminated as follows:
(i) By the mutual consent of the Boards of Directors of
NVBancorp and YCB at any time prior to the Effective Time of the
Merger.
(ii) By the Boards of Directors of NVBancorp or YCB upon the
failure of the shareholders of YCB to give the requisite approval of
this Agreement and the transactions contemplated hereby.
(iii) By the Boards of Directors of NVBancorp or YCB upon the
expiration of thirty (30) days after any government agency or
regulatory authority denies or refuses to grant any approval, consent
or qualification required to be obtained in order to consummate the
transactions contemplated by this Agreement unless, within said thirty
(30) day period after such denial or refusal, NVBancorp and YCB agree
to appeal such denial or refusal or agree to amend and re-submit the
application to the government agency or regulatory authority that has
denied or refused to grant the approval, consent or qualification
requested.
(iv) (Intentionally Omitted)
(v) By the Board of Directors of NVBancorp on or after the
Termination Date, if any of the conditions in Section 7 to which the
obligations of NVBancorp are subject have not been fulfilled.
(vi) By the Board of Directors of NVBancorp if there shall
have been a material breach of any of the representations or warranties
of YCB set forth in this Agreement, which breach, in the reasonable
opinion of YCB, by its nature cannot be cured or is not cured prior to
the Closing Date and which breach would, in the reasonable opinion of
NVBancorp, individually or in the aggregate, have, or be reasonably
likely to have, a Material Adverse Effect on NVBancorp, taken as a
whole, or upon the consummation of the transactions contemplated
hereby.
By the Board of Directors of NVBancorp if a material adverse
change shall have occurred since March 31, 2004, in the business,
financial condition, results of operations or assets of YCB.
(vii) By the Board of Directors of NVBancorp in the event YCB
or its affiliates enter into a Business Combination prior to the
Closing Date.
(viii) By the Board of Directors of NVBancorp upon the
expiration of forty-five (45) days from delivery of written notice by
NVBancorp to YCB of YCB's breach of or failure to satisfy any covenant,
condition to closing, or agreement contained in this Agreement
resulting in a material impairment of the benefit reasonably expected
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to be derived by NVBancorp and NVB from the performance or satisfaction
of such covenant, condition to closing, or agreement (provided that
such breach has not been waived by NVBancorp or cured by YCB prior to
expiration of such forty-five (45) day period).
(ix) (Intentionally Omitted)
(x) (Intentionally Deleted)
(xi) By the Board of Directors of YCB on or after the
Termination Date, if any of the conditions contained in Section 8 to
which the obligations of YCB are subject have not been fulfilled.
(xii) By YCB if there shall have been a material breach of any
of the representations or warranties of NVBancorp set forth in this
Agreement, which breach, in the reasonable opinion of NVBancorp, by its
nature cannot be cured or is not cured prior to the Cloding and which
breach would, in the reasonable opinion of YBC, individually or in the
aggregate, have, or be reasonably likely to have, a Material Adverse
Effect on YCB's shareholders, taken as a whole, or upon the
consummation of the transactions contemplated hereby.
By the Board of Directors of YCB if a material adverse change
shall have occurred since March 31, 2004, in the business, financial
condition, results of operations or assets of NVBancorp and NVB taken
as a whole.
(xiii) By the Board of Directors of YCB upon the expiration of
forty-five (45) days from delivery of written notice by YCB to
NVBancorp of NVBancorp's breach of or failure to satisfy any covenant,
condition to closing, or agreement contained in this Agreement
resulting in a material impairment of the benefit reasonably expected
to be derived by YCB from the performance or satisfaction of such
covenant, condition to closing, or agreement (provided that such breach
has not been waived by YCB or cured by NVBancorp prior to expiration of
such forty-five (45) day period).
(xiv) By the Board of Directors of NVBancorp in the event that
YCB shall fail to deliver or cause to be delivered to NVBancorp the
following signed documents, in form and substance reasonably acceptable
to NVBancorp and its counsel: (a) the affiliate agreementsto be
delivered pursuant to Section 7.l. hereof; and (b) the
Director-Shareholder agreements to be delivered pursuant to Section
7.q. hereof; and (iii) the form of the following documents, in form and
substance reasonably acceptable to NVBancorp and its counsel: (a) the
officer's certificate to be delivered pursuant to Section 7.e. hereof;
and (b) the opinion of counsel to YCB to be delivered pursuant to
Section 7.f. hereof.
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(xv) By the Board of Directors of YCB in the event that
NVBancorp shall fail to deliver or cause to be delivered to YCB the
following signed documents, in form and substance reasonably acceptable
to YCB and its counsel: (a) the officer's certificate to be delivered
pursuant to Section 8..e. hereof; and (b) the opinion of counsel to
NVBancorp to be delivered pursuant to Section 8.f. hereof.
(xvi) Decline in Parent Common Stock Price. By YCB, if (1)
NVBancorp Measuring Price is less than $12.75, (2) YCB delivers written
notice to NVBancorp of its intention to terminate this Agreement within
24 hours following the date of such event and (3) NVBancorp does not
elect to pursue a Decline Adjustment as set forth below; provided,
however, that, if NVBancorp effects a stock dividend, reclassification,
recapitalization, stock split, combination, exchange of shares or
similar transaction after the date hereof and prior to the date on
which the NVBancorp Measuring Price is determined, the provisions of
this Section 12.b.(xvi) shall be appropriately adjusted so that such
event does not in and of itself trigger a termination right on behalf
of YCB.
Notwithstanding any decline in the price of NVBancorp Common
Stock, as set forth in this Section 12.b.(xvi), YCB shall not be
permitted to terminate this Agreement pursuant to this Section
12.b.(xvi) if NVBancorp elects to adjust the Per Share Consideration (a
"Decline Adjustment") through the issuance of additional shares of
NVBancorp common stock in an amount such that the value of the Per
Share Consideration received will at least equal the Per Share
Consideration a holder of YCB Common Stock would have received for a
Stock Election or Combination Stock Election had the NVBancorp
Measuring Price been $12.75.
12.c. Termination Date. This Agreement shall be terminated if the
Closing shall not have occurred on or before October 31, 2004, or such other
date approved by the Boards of Directors of NVBancorp, YCB and the New YCB Bank;
provided, however, that if the only conditions to the Closing which remain
unsatisfied at October 31, 2004, are the receipt of the Government Approvals or
the expiration of any waiting periods under applicable law or regulation, the
Closing Date shall be automatically extended to December 31, 2004, or such other
date as the parties may mutually agree upon (the "Termination Date"), for the
purpose of obtaining such Government Approvals or the expiration of such waiting
periods.
12.d. Notice. The power of termination hereunder may be exercised by
NVBancorp or YCB, as the case may be, only by giving written notice of
termination to NVBancorp or YCB, as applicable, signed on behalf of each such
party by its Chairman of the Board or President.
12.e. Effect of Termination; Liquidated Damages.
-----------------------------------------
(i) If this Agreement is terminated for any reason, the
Agreement of Merger shall automatically terminate. Termination of this
Agreement shall not terminate or affect the obligations of the parties
to pay expenses as provided in Section 11, to maintain the
confidentiality of the each party's information obtained pursuant to
this Agreement and the Confidentiality Agreement between the parties
dated April 6, 2004, or the provisions of this Section 12(e) or the
applicable provisions of Section 14.
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(ii) If NVBancorp terminates this Agreement pursuant to
Section 12.b.(vii), or pursuant to Section 12.b.(viii) or Section
12.b.(xiv) as a result of YCB's willful or deliberate failure to comply
with Section 12.b.(viii) or Section 12.b.(xiv), which compliance was
not beyond the reasonable control of YCB, YCB shall pay to NVBancorp,
on demand, the sum of One Million Dollars ($1,000,000.00). In each such
case, the amount indicated shall be deemed liquidated damages for
expenses incurred and the lost opportunity cost for time devoted to the
transactions contemplated by this Agreement and shall be NVBancorp's
sole remedy for such actions.
(iii) If YCB terminates this Agreement pursuant to Section
12.b.(xiii) or Section 12.b.(xv) as a result of NVBancorp's willful or
deliberate failure to comply with Section 12.b.(xiii) or Section
12.b.(xv), which compliance was not beyond the reasonable control of
NVBancorp, then NVBancorp shall pay to YCB, on demand, the sum of Four
Hundred Thousand Dollars ($400,000.00). In each such case, the amount
indicated shall be deemed liquidated damages for expenses incurred and
the lost opportunity cost for time devoted to the transactions
contemplated by this Agreement and shall be YCB's sole remedy for such
actions.
(iv) In the event that the Merger is not consummated as a
direct result of NVBancorp entering into a Business Combination with a
third party, which party had contacted NVBancorp with an expression of
interest in discussing a possible Business Combination prior to the
Termination Date, and NVBancorp within six (6) months following the
termination of this Agreement enters into a definitive agreement to
complete a Business Combination with such third party, NVBancorp shall
pay to YCB, on demand, the sum of $1,000,000.00. In such case, the
amount indicated shall be deemed liquidated damages for any damages and
expenses incurred and the lost opportunity cost for time devoted to the
transactions contemplated by this Agreement and shall be YCB's sole
remedy for such actions. NVBancorp shall promptly notify YCB of any
contact by a third party expressing an interest in discussing a
possible Business Combination.
13. INDEMNIFICATION.
---------------
13.1. By NVBancorp. NVBancorp agrees to defend, indemnify and hold
harmless YCB, its respective officers and directors, attorneys, accountants, and
each person who controls YCB (within the meaning of the 0000 Xxx) from and
against any costs, damages, liabilities and expenses of any nature, insofar as
such costs, damages, liabilities and expenses arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Proxy Statement/Prospectus or any amendments or supplements thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that NVBancorp shall be
liable in any such case only to the extent that any such cost, damage, liability
or expense arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in the Proxy Statement/Prospectus
or amendments or supplements thereto, in reliance upon and in conformity with
-52-
information provided by and with respect to NVBancorp for use in preparing the
Proxy Statement/Prospectus. If and to the extent such agreement to indemnify may
be unenforceable for any reason, NVBancorp shall make the maximum contribution
to the payment and satisfaction of each of the indemnified liabilities which may
be permitted under applicable law.
13.2. By YCB. YCB agrees to defend, indemnify and hold harmless
NVBancorp, its officers and directors, attorneys, accountants, and each person
who controls NVBancorp (within the meaning of the 0000 Xxx) from and against any
costs, damages, liabilities and expenses of any nature, insofar as such costs,
damages, liabilities and expenses arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Proxy Statement/Prospectus or any amendments or supplements thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that YCB shall be liable in any such
case only to the extent that any such cost, damage, liability or expense arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in the Proxy Statement/Prospectus or
amendments or supplements thereto, in reliance upon and in conformity with
information provided by and with respect to YCB for use in preparing the Proxy
Statement/Prospectus. If and to the extent such agreement to indemnify may be
unenforceable for any reason, YCB shall make the maximum contribution to the
payment and satisfaction of each of the indemnified liabilities which may be
permitted under applicable law.
13.3. Notification. Promptly after receipt by any party to be
indemnified pursuant to this sub-article (the "Indemnified Party") of notice of
(i) any claim or (ii) the commencement of any action or proceeding, the
Indemnified Party will give the other party (the "Indemnifying Party") written
notice of such claim or the commencement of such action or proceeding. The
Indemnifying Party shall have the right, at its option, to compromise or defend,
by its own counsel, any such matter involving the Indemnified Party's asserted
liability. In the event that the Indemnifying Party shall undertake to
compromise or defend any such asserted liability, it shall promptly notify the
Indemnified Party of its intention to do so, and the Indemnified Party agrees to
cooperate fully with the Indemnifying Party and its legal counsel in the
compromise of, or defense against, any such asserted liability. In any event,
the Indemnifying Party shall have the right to participate in the defense of
such asserted liability.
14. MISCELLANEOUS.
-------------
14.a. Notices. Any notice or other communication required or
permitted under this Agreement shall be effective only if it is in writing and
delivered personally, or by Federal Express or similar overnight courier, or by
facsimile or sent by first class United States mail, postage prepaid, registered
or certified mail, addressed as follows:
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To NVBancorp: To YCB:
North Valley Bancorp Yolo Community Bank
Attn: Xxxxxxx X. Xxxxxxx Attn: Xxxx XxXxxxxxx
000 Xxxx Xxxxxx Xxxxxx 000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000 Xxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Telecopier: (000) 000-0000 Telecopier: (000) 000-0000
With a copy to: With a copy to:
Xxxx Xxxxx Xxxxxx LLP Xxxxxx, Eng & Xxxxxxxx
Attn: Xxxxxx X. Xxxxx Xxxxxx X. Eng
000 Xxxxxxx Xxxxxx Xxxxx, #000 0000 Xxxxxx Xxx, Xxxxx 000
Xxx Xxxx, Xxxxxxxxxx 00000-0000 Xxxxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Telecopier: (000) 000-0000 Telecopier: (000) 000-0000
or to such other address as either party may designate by notice to the other,
and shall be deemed to have been given upon receipt.
14.b. Knowledge. Whenever the term "knowledge" or "to the best
knowledge" or words of similar import are used in this Agreement in connection
with a party's representations and warranties, it shall mean the actual
knowledge of a party after due inquiry of a party's directors and executive
officers.
14.c. Binding Agreement. This Agreement is binding upon and is for
the benefit of NVBancorp and YCB and their respective successors and permitted
assigns. This Agreement is not made for the benefit of any person, firm,
corporation or association not a party hereto, and no other person, firm,
corporation or association shall acquire or have any right under or by virtue of
this Agreement. No party may assign this Agreement or any of its rights,
privileges, duties or obligations hereunder without the prior written consent of
the other party to this Agreement.
14.d. Material Adverse Effect. As used in this Agreement, any
reference to any event, change or effect being "material" with respect to any
entity means an event, change or effect which is material in relation to the
condition (financial or otherwise), properties, assets, liabilities, businesses,
results of operations of such entity and its subsidiaries taken as a whole, and
the term "material adverse effect" means, with respect to any entity, a material
adverse effect (whether or not required to be accrued or disclosed under
Statement of Financial Accounting Standards No. 5 ("SFAS No. 5")) (i) on the
condition (financial or otherwise), properties, assets, liabilities, businesses,
results of operations of such entity and its subsidiaries taken as a whole (but
does not include any such effect resulting from or attributable to any action or
omission by NVBancorp or YCB or any subsidiary of either of them taken with the
prior written consent of the other parties hereto, in contemplation of the
transactions contemplated hereby), or (ii) on the ability of such entity to
perform its obligations hereunder on a timely basis.
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14.e. Survival of Representations and Warranties. No investigation by
NVBancorp or YCB made before or after the date of this Agreement shall affect
the representations and warranties which are contained in this Agreement and
such representations and warranties shall survive such investigation, provided
that, except with respect to covenants, agreements and indemnification to be
performed in whole or in part subsequent to the Effective Time of the Merger (as
to which the related representations and warranties shall survive until their
performance) which covenants, agreements and indemnification shall survive the
Effective Time of the Merger, the representations, warranties, covenants and
agreements of NVBancorp and YCB contained in this Agreement shall terminate upon
the Effective Time of the Merger.
14.f. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
14.g. Attorneys' Fees. In any action at law or suit in equity in
relation to this Agreement, the prevailing party in such action or suit shall be
entitled to receive a reasonable sum for its attorneys' fees and all other
reasonable costs and expenses incurred in such action or suit.
14.h. Entire Agreement; Severability. This Agreement and the
documents, certificates, agreements, letters, schedules and exhibits attached or
required to be delivered pursuant hereto set forth the entire agreement and
understandings of the parties in respect of the transactions contemplated
hereby, and supersede all prior agreements, arrangements and understanding
relating to the subject matter hereof, excluding that certain Confidentiality
Agreement between the parties dated April 6, 2004. Each provision of this
Agreement shall be interpreted in a manner to be effective and valid under
applicable law, but if any provision hereof shall be prohibited or ruled invalid
under applicable law, the validity, legality and enforceability of the remaining
provisions shall not, except as otherwise required by law, be affected or
impaired as a result of such prohibition or ruling.
14.i. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
///
///
///
///
///
///
///
IN WITNESS WHEREOF, NVBancorp and YCB have caused this Agreement and
Plan of Reorganization and Merger to be signed by their duly authorized officers
as of the day and year first above written.
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NORTH VALLEY BANCORP YOLO COMMUNITY BANK
By: /s/ XXXXXXX X. XXXXXXX By: /s/ XXXX X. XXXXXXXXX
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Xxxxxxx X. Xxxxxxx, Xxxx X. XxXxxxxxx,
President and CEO President and CEO
By: /s/ X.X. XXXXX, XX. By: /s/ XXXXXXXX XXXXXX
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X. X. Xxxxx, Xx., Xxxxxxxx Xxxxxx,
Secretary Asst. Corporate Secretary
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