_________________________________________________________________
AGREEMENT AND PLAN OF MERGER
BETWEEN
SDNB FINANCIAL CORP.,
FBOP CORPORATION
AND
FBOP ACQUISITION COMPANY
As of July 12, 1996
_________________________________________________________________
TABLE OF CONTENTS
Page
ARTICLE I MERGER 1
(a) Merger 1
(b) Effective Time 2
(c) Effects of the Merger 2
(d) Prior Approvals 2
(e) Articles of Incorporation 2
(f) Bylaws 2
(g) Directors and Officers 3
(h) Additional Actions 3
(i) Conversion of Shares 3
(j) Total Merger Consideration 4
(k) Prepayment Penalty Reduction 5
(l) Surrender of Shares 5
(m) Designation of Paying Agent; Investment
of Funds. 5
(n) Transmittal Materials 5
(o) Dissenting Shares 5
(p) Termination of Paying Agent's Duties 6
(q) Closing of Holding Company's Transfer
Books 6
(r) Stock Options and Warrants 6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF HOLDING
COMPANY 7
(a) Organization and Standing of Holding Company 7
(b) Organization and Standing of Bank 7
(c) Holding Company Subsidiaries 7
(d) Capitalization 8
(e) Authorization 8
(f) Articles of Incorporation and Bylaws 8
(g) Consents and Approvals 8
(h) Defaults and Conflicts 9
(i) SEC Reports; Financial Statements 9
(j) Regulatory Reports 10
(k) Changes Since March 31, 1996 11
(l) Properties 11
(i) Real Estate and Mortgages 11
(ii) Investments 11
(iii) Title to Property; Zoning 12
(m) Environmental Laws 12
(n) Proprietary Rights 12
(o) Agreements 13
(p) Litigation; Claims 13
(q) Compliance with Laws 14
(r) Taxes 14
(s) Related Party Transactions 15
(t) Employee Benefit Plans 15
(u) Insurance 17
(v) Regulatory Filings 17
(w) Deposits 17
(x) Loans 18
(y) Reserves 18
(z) Agreements with Regulatory Agencies 18
(aa) Information for Regulatory Approvals 19
(ab) Governmental Notices 19
(ac) SEC Filings 19
(ad) Finders and Investment Bankers 19
(ae) Disclosure 19
ARTICLE III REPRESENTATIONS AND WARRANTIES OF ACQUISITION AND
FBOP 20
(a) Organization of Acquisition and FBOP 20
(b) Authorization 20
(c) Consents and Approvals 20
(d) Defaults and Conflicts 20
(e) SEC Filings 20
(f) Funds Available 21
(g) Finders and Investment Bankers 21
(h) Governmental Notices 21
(i) Financial Statement 21
(j) Agreements 21
(k) Articles; Bylaws. 21
ARTICLE IV RIGHT TO INVESTIGATE 21
ARTICLE V COVENANTS OF HOLDING COMPANY 22
(a) Operation in Ordinary Course 22
(b) Exclusivity 25
(c) Stockholder Meeting 25
(d) Intentionally Omitted. 26
(e) Reports. 26
(f) Notice 26
(g) Regulatory Matters 26
(h) Supplemental Information 26
(i) Cooperation 27
(j) Conditions Precedent 27
(k) Best Efforts 27
(l) Schedules 27
ARTICLE VI COVENANTS OF ACQUISITION 27
(a) Consents 27
(b) Cooperation 27
(c) Conditions Precedent 27
(d) Best Efforts 27
(e) Liability Insurance 28
ARTICLE VII CONDITIONS TO THE OBLIGATIONS OF ACQUISITION AND
FBOP 28
(a) Validity of Representation and Warranties 28
(b) Consents 28
(c) Compliance with Covenants; Schedules 28
(d) Opinion of Counsel 28
(e) Approval of Holding Company Stockholders 28
(f) Dissenting Holding Company Shares 29
(g) Resignations 29
(h) Adverse Changes 29
(i) Effective Time 29
(j) No Pension or Retirement Plans 29
(k) Stock Option Plans and Incentive Plans;
Options 29
ARTICLE VIII CONDITIONS TO THE OBLIGATIONS OF HOLDING COMPANY 29
(a) Validity of Representations and Warranties 29
(b) Consents 30
(c) Compliance with Covenants 30
(d) Opinion of Counsel 30
(e) Fairness Opinion 30
(f) Employment Agreements 30
ARTICLE IX CONDITIONS APPLICABLE TO ACQUISITION, FBOP AND
HOLDING COMPANY 30
(a) Governmental Approvals 30
(b) Injunction 31
ARTICLE X CLOSING AND CLOSING DOCUMENTS 31
(a) Closing 31
(b) Holding Company Closing Documents 31
(c) Acquisition Closing Documents 32
ARTICLE XI TERMINATION AND TERMINATION FEE 32
(a) Termination 32
(b) Termination Fee 32
(c) Survival of Rights 33
ARTICLE XII SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS 33
ARTICLE XIII MISCELLANEOUS 33
(a) Payment of Expenses 33
(b) Commitment to the San Diego Community and
to Customers and Employees 33
(c) Entire Agreement 33
(d) Modifications, Amendments and Waivers 33
(e) Assignment 34
(f) Schedules 34
(g) Press Releases 34
(h) Notices 34
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is
entered into as of the close of business on the 12th day of July,
1996, by and among SDNB Financial Corp., a bank holding company
organized under the laws of the State of California (the "Holding
Company"), FBOP Corporation, a bank holding company organized
under the laws of the State of Illinois ("FBOP"), and FBOP
Acquisition Company, a corporation organized under the laws of
the State of Illinois ("Acquisition"). Holding Company and
Acquisition are sometimes referred to herein as the "Constituent
Corporations."
W I T N E S S E T H:
WHEREAS, Acquisition is a wholly-owned subsidiary of FBOP
Corporation, an Illinois corporation; and
WHEREAS, San Diego National Bank, a federally-chartered
national banking association ("Bank"), is a wholly-owned
subsidiary of Holding Company; and
WHEREAS, the parties desire that Holding Company be acquired
by Acquisition through the merger of Holding Company with and
into Acquisition upon the terms and conditions contained herein
and in accordance with applicable laws (the "Merger"); and
WHEREAS, the Board of Directors of Holding Company deems the
Merger to be advisable and in the best interests of Holding
Company and its stockholders and has adopted a resolution
approving this Agreement and directing that this Agreement be
submitted for consideration at a meeting of its stockholders; and
WHEREAS, the Boards of Directors of Acquisition and FBOP
deem the Merger to be advisable and in the best interests of
their respective stockholders and each has adopted a resolution
approving this Agreement.
NOW, THEREFORE, for and in consideration of the premises and
the mutual agreements, representations, warranties and covenants
herein contained, and for the purpose of prescribing the terms
and conditions of the Merger (the Merger and the transactions
contemplated thereby are referred to herein as the
"Transaction"), and such other details and provisions as are
deemed desirable in connection with the Merger, the parties,
intending to be bound, hereby agree as follows:
ARTICLE I
MERGER
(a) Merger. In accordance with the provisions of this
Agreement, the Illinois Business Corporation Act of 1983 (the "IL
BCA") and the California General Corporation Law (the "CGCL"), at
the Effective Time (as herein defined), Holding Company shall be
merged with and into Acquisition and the separate existence of
Holding Company thereupon shall cease. Following the Merger,
Acquisition shall continue as the surviving corporation
("Surviving Corporation"). At Acquisition's option, the Merger
may be structured so that Holding Company merges into FBOP or
another direct or indirect wholly-owned subsidiary of FBOP (such
entity, if any, to be included in the definition of
"Acquisition"); provided, however, that Acquisition shall assign
to such entity, and such entity shall assume, all rights and
obligations of Acquisition under this Agreement.
(b) Effective Time. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Article X,
the parties hereto will file articles of merger (the "Articles of
Merger") with the Secretary of State of Illinois and make all
other filings or recordings required by the IL BCA and the CGCL
in connection with the Merger. The Merger shall become effective
at such time as (i) the Secretary of State of Illinois issues a
certificate of merger and, if applicable, the filing required by
Section 1108(d) of the CGCL is made with the Secretary of State
of California, or (ii) at such later time as is specified in the
Articles of Merger (the "Effective Time").
(c) Effects of the Merger. The Merger shall have the
effects set forth in the IL BCA and the CGCL. Without limiting
the generality of the foregoing, and subject thereto, at the
Effective Time, all the properties, rights, privileges, powers
and franchise of the Constituent Corporations shall vest in the
Surviving Corporation, and all debts, liabilities and duties of
the Constituent Corporations shall become the debts, liabilities
and duties of the Surviving Corporation.
(d) Prior Approvals. The parties hereto acknowledge that
the requisite approvals for the Transaction must be received from
or notices must be given to certain federal governmental bodies
and agencies including, but not limited to (i) the Office of the
Comptroller of the Currency of the Department of the Treasury
(the "OCC"); (ii) the Federal Deposit Insurance Corporation (the
"FDIC"); (iii) the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"); and (iv) any other
regulatory authorities having jurisdiction, which approvals or
notices shall not contain conditions that are materially
burdensome to FBOP or Acquisition (collectively, the governmental
bodies and agencies referred to in items (i)-(iv) above are
referred to herein as the "Applicable Governmental Authorities").
(e) Articles of Incorporation. The Articles of
Incorporation of Acquisition in effect at the time of the Merger
shall be the Articles of Incorporation of the Surviving
Corporation, until thereafter amended as provided thereunder and
in the IL BCA.
(f) Bylaws. The Bylaws of Acquisition in effect at the
time of the Merger shall be the Bylaws of the Surviving
Corporation until altered, amended or repealed, as provided
thereunder and in the Articles of Incorporation and the IL BCA.
(g) Directors and Officers. The directors and officers of
Acquisition at the time of the Merger shall be the directors and
officers of the Surviving Corporation, in each case to serve, in
accordance with the Articles of Incorporation and Bylaws of the
Surviving Corporation, until their successors shall have been
elected and shall qualify. If at the Effective Time a vacancy
shall exist on the Board of Directors or in any of the offices of
the Surviving Corporation, such vacancy may thereafter be filled
in the manner provided by the Bylaws of the Surviving
Corporation.
(h) Additional Actions. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be
advised that any further assignments or assurances in law or any
other acts are necessary or desirable (a) to best perfect or
confirm, of record or otherwise, in the Surviving Corporation,
title to and possession of any property or right of Acquisition
acquired or to be acquired by reason of, or as a result of, the
Merger, or (b) otherwise necessary to carry out the purposes of
this Agreement, Holding Company and its proper officers and
directors shall be deemed to have granted to the Surviving
Corporation an irrevocable power of attorney to execute and
deliver all such proper deeds, assignments and assurances in law
and to do all acts necessary or proper to vest, perfect or
confirm title to and possession of such property or rights in the
Surviving Corporation are fully authorized in the name of Holding
Company or otherwise to take any and all such actions.
(i) Conversion of Shares. The manner and basis of
converting and exchanging the shares of Holding Company Common
Stock, and the manner and basis of making distributions, if any,
to stockholders of Holding Company, shall be as follows:
(i) Each share of common stock, no par value per share, of
Holding Company (the "Common Stock") which is issued and
outstanding immediately prior to the Effective Time other than
Dissenting Shares (as defined below) shall, by virtue of the
Merger and without any action on the part of the holder thereof,
at and after the Effective Time be converted into the right to
receive the "Per Share Merger Consideration".
"Per Share Merger Consideration" shall be equal to:
Aggregate plus Supplemental plus Aggregate minus Expenses
Merger Merger Strike
Consideration Consideration Price of
Options
divided by
outstanding shares plus aggregate shares of
of Common Stock Common Stock subject to
Options
where,
Aggregate Merger
Consideration = $26,627,222 (subject to adjustment as
set forth in subpart (j) below).
Expenses = All fees and expenses incurred by Holding
Company in connection with the Merger,
including finders' and brokers' fees, legal
expenses and filing and printing fees,
but not including up to $250,000 of the
fee to Keefe, Bruyette & Woods as
described at Article XIII(a), and not
including any amounts described at
Article VI(e).
Supplemental Merger
Consideration = Defined below at subpart (k).
Aggregate Strike
Price of Options = The sum of the exercise price of each
outstanding Option (defined below).
(ii) At the Effective Time, Acquisition shall pay or cause
to be paid to each of the persons listed on Section 1(r) of
Holding Company Schedule, with respect to the outstanding
options, warrants and rights for Holding Company Common Stock
(without regard to the expiration date thereof) (collectively,
the "Options") set forth opposite such person's name therein, an
amount per share of Common Stock subject to an Option equal to
the excess of the Per Share Merger Consideration over the
exercise price per share of such Option, as set forth on Section
1(r) of Holding Company Schedule (the "Cash Consideration Per
Option"). Concurrently with the payment of the Cash
Consideration Per Option, each holder of an Option shall deliver
to Acquisition evidence satisfactory to Acquisition of the
cancellation of such Option. At the Effective Time, each Option
shall be canceled and retired and shall cease to exist and shall
be deemed to represent only the right to receive the Cash
Consideration Per Option. Payment of the Cash Consideration Per
Option in accordance with this Article I(i)(ii) shall be deemed
to be full satisfaction of all rights pertaining to the Options.
All amounts payable under this Article I(i)(ii) shall be subject
to any required withholding of taxes and shall be paid without
interest.
(j) Total Merger Consideration. Notwithstanding the
preceding subparts of this Article, except to the extent payments
made to holders of Dissenting Shares exceed the Per Share Merger
Consideration, and except for any Supplemental Merger
Consideration paid in accordance with subpart (k) below, in no
event shall the value of the total consideration paid by
Acquisition hereunder (the "Aggregate Merger Consideration")
exceed $26,627,222. To the extent that any of the Options are
exercised prior to the Closing, the Aggregate Merger
Consideration shall be increased by an amount equal to the
exercise price of such Options.
(k) Prepayment Penalty Reduction. In the event that prior
to the Closing, Holding Company obtains a decrease in the
prepayment penalty associated with the prepayment of the mortgage
loan on the main office of the Bank, then the Aggregate Merger
Consideration shall be increased by $0.60 for each $1.00 that
said penalty is reduced ("Supplemental Merger Consideration").
(l) Surrender of Shares. As promptly as practicable after
the Effective Time, each holder of shares of Holding Company
Common Stock shall, upon presentation and surrender of the
certificate or certificates therefor to the Paying Agent (as
defined below) for cancellation in accordance with the
transmittal materials described below, be entitled to receive in
exchange therefor a check or checks payable to such person
representing the payment of cash into which such holder's shares
of Holding Company Common Stock have been converted at the
Effective Time. Each certificate which represented issued and
outstanding shares of Holding Company Common Stock immediately
prior to the Effective Time shall be deemed cancelled at the
Effective Time and shall represent only the right to receive cash
for each share represented by such certificate. In no event
shall the holder of any such surrendered certificates be entitled
to receive interest on any of the funds to be received in the
Merger.
(m) Designation of Paying Agent; Investment of Funds.
Acquisition and FBOP shall make available to American Transfer to
act as paying agent (the "Paying Agent") at the Effective Time
(i) an amount in cash equal to the product of the Per Share
Merger Consideration times the number of shares of Holding
Company Common Stock outstanding immediately prior to the
Effective Time, less the number of Holding Company Dissenting
Shares whose holders have complied with the provisions of Section
1300 of the CGCL as described in subpart (o) below at or prior to
the Effective Time and less any shares owned by Acquisition or
any other subsidiary or affiliate of Acquisition plus (ii) an
amount in cash equal to the aggregate Cash Consideration Per
Option. The cash deposited with the Paying Agent shall be
invested by the Paying Agent as directed by Acquisition.
(n) Transmittal Materials. As promptly as practicable, but
in no event later than seven days following the Effective Time,
Acquisition shall send or cause to be sent to each former holder
of record of shares of Holding Company Common Stock transmittal
materials for use in surrendering their certificate or
certificates in exchange for cash. The letter of transmittal
will contain instructions with respect to the surrender of such
certificates. Acquisition shall instruct record date holders of
Holding Company Common Stock who hold such shares for the account
of others to provide the respective beneficial holders of such
shares instructions with respect to the surrender of their
shares.
(o) Dissenting Shares. Each outstanding share of Holding
Company Common Stock as to which a written demand for purchase is
made upon Holding Company in accordance with Section 1301 of the
CGCL, and with respect to which the holder complies with all
other applicable provisions of Section 1300 of the CGCL, shall
not be converted into or represent a right to receive cash
hereunder unless and until the holder shall have failed to
perfect or shall have effectively withdrawn or lost his or her
right to appraisal of and payment for such shares of Common Stock
under Section 1300 of the CGCL, at which time such shares of
Common Stock shall be converted into a right to receive cash in
the same manner and subject to the same conditions as provided
for other outstanding shares of Common Stock in this Article.
All such shares of Holding Company Common Stock as to which the
holder complies with the applicable provisions of Section 1300 of
the CGCL, except any such shares of Holding Company Common Stock
the holder of which shall have effectively withdrawn or lost his
or her right to appraisal of and payment for such shares of
Common Stock under the CGCL, are herein called "Dissenting
Shares" and each holder is herein called a "Dissenting
Shareholder." Holding Company shall give Acquisition prompt
notice upon receipt by Holding Company of any written demand for
purchase of and payment for Dissenting Shares. Holding Company
agrees that prior to the Effective Time it will not, except with
the prior written consent of Acquisition, voluntarily make any
payment with respect to, or settle or offer to settle, any such
demand. Each Dissenting Shareholder who becomes entitled,
pursuant to the provisions of the CGCL, to payment for the fair
market value of his or her shares of Holding Company Common Stock
shall receive payment therefor from Acquisition as the Surviving
Corporation (but only after the amount thereof shall have been
agreed upon or finally determined pursuant to such provisions),
and such shares of Common Stock shall be retired and cancelled.
(p) Termination of Paying Agent's Duties. Promptly
following the date which is twelve months after the Effective
Time, the Paying Agent shall deliver to FBOP all cash and other
documents in its possession relating to the transactions
described in this Agreement, and the Paying Agent's duties shall
terminate. Thereafter, each holder of a certificate formerly
representing shares of Holding Company Common Stock who has not
previously surrendered such certificate may surrender such
certificate to FBOP and (subject to applicable abandoned
property, escheat and similar laws) receive in exchange therefore
the Per Share Merger Consideration.
(q) Closing of Holding Company's Transfer Books. At the
Effective Time, the stock transfer records of Holding Company
shall be closed and no transfer of shares of Holding Company
Common Stock shall thereafter be made.
(r) Stock Options and Warrants. Section 1(r) of Holding
Company Schedule contains an accurate and complete list of all
outstanding Options, including the name of the holder thereof,
date of grant, number of shares and exercise price of each
Option.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF HOLDING COMPANY
Holding Company represents and warrants to Acquisition and
FBOP as follows:
(a) Organization and Standing of Holding Company. Holding
Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of California. Holding
Company has the corporate power and authority to own or lease all
of its properties and assets and to carry on its business as it
is now being conducted. Holding Company is duly registered as a
bank holding company under the Bank Holding Company Act of 1956,
as amended, (the "BHC Act"), and the regulations issued
thereunder. The Certificate of Incorporation and Bylaws of
Holding Company, copies of which have previously been made
available to Acquisition, are true and complete copies of such
documents as in effect as of the date of this Agreement.
(b) Organization and Standing of Bank. Bank is a national
banking association, duly organized, validly existing, and in
good standing under the laws of the United States of America.
Bank is duly authorized to conduct a banking business, and is
duly authorized to operate each of its offices, including branch
offices (collectively, the main office and each branch location
are referred to herein as the "Branches"). Bank is a wholly-
owned subsidiary of Holding Company.
(c) Holding Company Subsidiaries. Section 2(c) of Holding
Company Schedule sets forth a list of all of Holding Company's
direct and indirect subsidiaries including the Bank (hereinafter
separately called a "Subsidiary" and collectively called the
"Subsidiaries"). Unless expressly provided otherwise, each
reference to Subsidiary or Subsidiaries in this Agreement shall
include Bank. As used herein, references to "Subsidiary" or
"Subsidiaries" shall not include interests in corporations which
are less than 50% owned by Holding Company or its Subsidiaries
and which are described on such Schedule. Except as otherwise
indicated thereon, the Schedule sets forth the authorized capital
stock, the number of shares duly issued and outstanding, the
number so owned by each shareholder of the Subsidiary and the
jurisdiction of incorporation of each Subsidiary. Except as
disclosed on such Schedule, Holding Company owns 100% of the
issued and outstanding shares of the capital stock of each
Subsidiary. Except as disclosed on such Schedule, the shares of
capital stock of the Subsidiaries are validly issued, fully paid
and non-assessable (subject to statutory obligations of holders,
if any), and are owned free and clear of any liens, claims,
charges or encumbrances. Except as disclosed on such Schedule,
neither Holding Company nor any of the Subsidiaries has any
investment in any subsidiary or any investment in any
partnership, joint venture, limited liability company or similar
entity, all of which investments are owned free and clear of any
liens, claims, charges or encumbrances except as disclosed
thereon. Except as disclosed on the Schedule, each of the
Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power to own or lease its
properties and carry on its business as now being conducted.
Holding Company Schedule sets forth a true and correct
description of the activities of each of the Subsidiaries. No
certificate of authority identified in such Schedule has been
revoked, restricted, suspended, limited or modified nor is any
certificate of authority the subject of, nor to the knowledge of
Holding Company is there a basis for, a proceeding for
revocation, restriction, suspension, limitation or modification.
(d) Capitalization. The authorized capital stock of
Holding Company consists of 15,000,000 shares of Common Stock, no
par value per share, of which 3,076,737 shares are issued and
outstanding as of the date hereof. The Holding Company has no
treasury shares. All of the issued and outstanding shares of
Holding Company Common Stock have been validly issued and are
fully paid and non-assessable (subject to statutory obligations
of holders, if any) and free of preemptive rights. As of the
date hereof, 769,531 shares of Holding Company Common Stock were
reserved for issuance upon exercise of outstanding Options.
Except for the Options, Holding Company has no contract,
understanding, restriction or agreement, including any voting
trust or other agreement or understanding with respect to the
voting of any of the capital stock of Holding Company, or any
convertible, exchangeable or exercisable security, option,
warrant, call, or commitment on the part of Holding Company of
any character relating to issued or unissued shares of the
capital stock of Holding Company.
(e) Authorization. The Board of Directors of Holding
Company has adopted resolutions approving the Agreement and the
Transaction and has authorized the execution and delivery of the
Agreement and has directed by resolution that the Agreement be
submitted to a vote of the holders of shares of Holding Company
Common Stock taken at a meeting called for the purpose of
considering and acting upon this Agreement. Holding Company has
full power and authority to enter into this Agreement and, upon
appropriate consent of its stockholders in accordance with law,
subject to obtaining all required regulatory approvals, to
consummate the transactions contemplated hereby. This Agreement
has been duly executed and delivered by Holding Company and
constitutes the valid and legally binding obligation of Holding
Company, enforceable against it in accordance with its terms,
subject to bankruptcy, receivership, insolvency, reorganization,
moratorium or similar laws affecting or relating to creditors
rights generally and subject to general principles of equity.
(f) Articles of Incorporation and Bylaws. Holding Company
has delivered to Acquisition true and complete copies of its and
each of the Subsidiaries' Articles of Incorporation and Bylaws as
in effect as of the date hereof, and in the case of Bank, has
delivered true and complete copies of Bank's Charter and Bylaws.
(g) Consents and Approvals. Except for the consents and
approvals of the Applicable Governmental Authorities, no filing
with, and no permit, authorization, consent or approval of, any
public body or authority is necessary for the consummation by
Holding Company of the transactions contemplated by this
Agreement.
(h) Defaults and Conflicts. Except as disclosed in Section
2(h) of Holding Company Schedule, neither Holding Company, Bank
or any other Subsidiary is or immediately prior to the Effective
Time will be in conflict with or default under its Articles of
Incorporation (or similar organizational document) or Bylaws, or
in default under any material indenture or under any material
agreement or other material instrument to which it is a party or
by which it or any of its properties is bound or to which it is
subject. Subject to the receipt of all consents and approvals
contemplated by this Agreement, neither the execution and
delivery of this Agreement, the consummation of the Transaction
nor the fulfillment of and compliance with the terms and
provisions hereof, will (i) violate any judicial, administrative
or arbitral order, writ, award, judgment, injunction or decree
involving Holding Company, Bank or any other Subsidiary, (ii)
conflict with the terms, conditions or provisions of the charter
or Bylaws of Holding Company, Bank or any other Subsidiary, (iii)
conflict with, result in a breach of, constitute a default under
or accelerate or permit the acceleration of the performance
required by, any material agreement or other material instrument
to which Holding Company, Bank or any other Subsidiary is a party
or by which Holding Company, Bank or any other Subsidiary is
bound, (iv) result in the creation of any material lien, charge
or encumbrance upon any of the assets of Holding Company, Bank or
any other Subsidiary under any such agreement or instrument, or
(v) terminate or give any party thereto the right to terminate
any such indenture, agreement or instrument. Except as disclosed
in Section 2(h) of Holding Company Schedule, no consent of any
third party to any material indenture or any material agreement
or other material instrument to which Holding Company, Bank or
any other Subsidiary is a party is required in connection with
the Transaction. Holding Company agrees that prior to the
Effective Time it will use its best efforts to obtain all
required consents to the Transaction of parties to any such
material indenture, material agreement, or other material
instrument which is material to the business.
(i) SEC Reports; Financial Statements. Holding Company has
filed all required forms, reports, registration statements and
documents with the Securities and Exchange Commission (the
"SEC"), since December 31, 1992 (collectively, the "SEC
Reports"), each of which, as of its respective date, complied in
all material respects with all applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act") and the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
As of their respective dates, none of the SEC Reports, including,
without limitation, any financial statements or schedules
included therein, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements of
Holding Company included in its Annual Report on Form 10-K for
the years ended December 31, 1992, 1993, 1994, and 1995 and the
unaudited consolidated interim financial statements included in
its Quarterly Reports on Form 10-Q for the quarter ended March
31, 1996, fairly present in conformity with generally accepted
accounting principles applied on a consistent basis (except as
may be indicated therein or in the notes thereto), the
consolidated financial position of Holding Company and its
Subsidiaries as of the dates thereof and their consolidated
statements of operations, stockholders' equity, and cash flows
for the periods then ended (in the case of any unaudited interim
financial statements, subject to (i) normal year-end adjustments
and (ii) standard limitations on the application of generally
accepted accounting principles).
Except as and to the extent reflected in the interim
consolidated statement of financial position of Holding Company
and the Subsidiaries as of March 31, 1996, and notes thereto (the
"March 31, 1996 Balance Sheet") or in Section 2(i) of Holding
Company Schedule, neither Holding Company nor any Subsidiary had,
as of March 31, 1996, any liability or obligation (absolute,
contingent or otherwise) except for contractual liabilities
arising in the ordinary course which are not required to be
reflected in a balance sheet prepared in accordance with
generally accepted accounting principles that could have a
material adverse effect on Holding Company and its Subsidiaries
taken as a whole. Except as and to the extent disclosed in
Section 2(i) of Holding Company Schedule, neither Holding Company
nor any Subsidiary has incurred any liability or obligation
(absolute, contingent or otherwise) since March 31, 1996, other
than in the ordinary course of business that could have a
material adverse effect on Holding Company and its Subsidiaries
taken as a whole.
(j) Regulatory Reports. Holding Company and Bank each has
filed all reports, notices and other statements, together with
any amendments required to be made with respect thereto, if any,
that it was required to file with the OCC, the FDIC, the Federal
Reserve Board, and any other governmental agency or authority
with jurisdiction over Holding Company or Bank and each such
report, notice and other statement, including the financial
statements, exhibits and schedules thereto, complied in all
material respects with the relevant statutes, rules and
regulations enforced or promulgated by the regulatory authority
with which it was filed. To the extent permitted by applicable
laws or regulations, Holding Company has furnished to Acquisition
copies of all regulatory filings (and all related correspondence)
for Holding Company and Bank for the years ended December 31,
1992, 1993, 1994 and 1995 and the quarter ended March 31, 1996,
as filed with the Applicable Governmental Authorities (the
"Regulatory Reports"). The Regulatory Reports, including,
without limitation, the provisions made therein for investments
and the valuation thereof, and loan loss reserves, together with
the notes thereto, fairly present the financial position, assets,
liabilities, change in financial position, surplus and other
funds of Holding Company and Bank as of the dates thereof and the
results of its operations for the periods indicated in conformity
with regulatory accounting principles prescribed or permitted by
law or the rules and regulations of the Applicable Governmental
Authorities, applied on a consistent basis with prior periods,
except as set forth therein. Each such Regulatory Report was in
material compliance with applicable law and correct in every
material respect when filed and there were no material omissions
therefrom. Except for liabilities and obligations disclosed or
provided for in the Regulatory Reports, Bank did not have, as of
the respective dates of each such Regulatory Reports, any
liabilities or obligations (whether absolute or contingent and
whether due or to become due) except for contractual liabilities
arising in the ordinary course which are not required to be
reflected in regulatory financial statements. All books of
account of Bank and each other Subsidiary fully and fairly
disclose all the transactions, properties, assets, investments,
liabilities and obligations of Bank or the respective Subsidiary
and all such books of account are in the possession of Bank or
the respective Subsidiary and are true and complete in all
material respects.
(k) Changes Since March 31, 1996. Except as disclosed in
Section 2(k) of Holding Company Schedule, since March 31, 1996
there has been no material adverse change in the assets,
properties, business, financial condition or results of
operations of Holding Company, Bank and the Subsidiaries taken as
a whole; and neither Holding Company, Bank nor any other
Subsidiary has, since March 31, 1996 (i) made any change in its
authorized capital stock, (ii) issued any stock options, warrants
or other rights calling for the issue, transfer, sale or delivery
of its capital stock or other securities, (iii) paid any stock
dividend or made any reclassification in respect of its
outstanding shares of capital stock, (iv) issued, transferred,
sold or delivered any shares of its capital stock (or securities
convertible into or exchangeable, with or without additional
consideration, for such capital stock), (v) purchased or
otherwise acquired for consideration any outstanding shares of
its capital stock, (vi) disposed of a material portion of its
assets, properties or business other than in the ordinary course
of business, or (vii) authorized or made any distribution to
Holding Company's stockholders of any assets of Holding Company,
Bank or any other Subsidiary, by way of cash dividends or
otherwise.
(l) Properties.
(i) Real Estate and Mortgages. Section 2(l)(i) of Holding
Company Schedule sets forth a list and summary description of (a)
all real property owned by Holding Company or any Subsidiary and
all buildings and other structures located on such real property,
(b) all leases, subleases or other agreements under which Holding
Company or any Subsidiary is the lessor or lessee of any real
property, (c) all unexpired options held by Holding Company or
any Subsidiary or contractual obligations on its part to purchase
or acquire any interest in real property, (d) all unexpired
options granted by Holding Company or any Subsidiary or
contractual obligations on its part to sell or dispose of any
interest in real property, and (e) all mortgages held by Holding
Company (other than as investment securities), identifying all
such mortgages, if any, for which deficiency notices have been
issued or that are otherwise not current. Except as disclosed in
Section 2(l)(i) of Holding Company Schedule, as of the date
hereof such leases, subleases, options and other agreements are
in full force and effect and neither Holding Company nor any
Subsidiary has received any notice of any material default
thereunder.
(ii) Investments. The common stock, preferred stock, bonds,
and other investments owned by Holding Company or any Subsidiary
as of the date hereof are evidenced by appropriate written
instruments and certificates (except where in non-certificated
form), are valid and genuine in all material respects and
enforceable in accordance with their terms against all persons
against whom they purport to create an obligation, subject to
bankruptcy, receivership, insolvency, reorganization, moratorium,
or other similar laws affecting or relating to creditors' rights
generally and subject to general principles of equity. All such
bonds, stocks, and other investments conform in all material
respects to the requirements of applicable laws and regulations.
Except as disclosed in Section 2(l)(ii) of Holding Company
Schedule, none of such investments is in default on the payment
of principal, interest or other required distributions.
(iii) Title to Property; Zoning. Except as disclosed
in Section 2(l)(iii) of Holding Company Schedule, to the best
knowledge of Holding Company, Holding Company and each Subsidiary
has good and marketable title to all real properties reflected in
Section 2(l)(i) and good and marketable title to all other assets
and properties shown as owned by it on Holding Company March 31,
1996 balance sheet or acquired since that date (except properties
disposed of in the ordinary course of business subsequent to said
date), in each case free of all mortgages, liens, security
interests, charges and encumbrances of any nature whatsoever,
other than liens reflected in the Holding Company financial
statements and liens for Taxes (as defined below) not yet due and
payable. All such real property complies in all material
respects with all applicable private agreements, zoning
requirements, Environmental Laws (defined below), and other
governmental laws and regulations relating thereto, and there are
no condemnation proceedings pending or, to the best knowledge of
Holding Company, threatened with respect to the Real Property.
(m) Environmental Laws. Except as disclosed in Section
2(m) of Holding Company Schedule, to the best knowledge of
Holding Company, Holding Company and each Subsidiary has
conducted and is conducting its business in compliance in all
material respects with all applicable federal, state, and local
laws, regulations and requirements currently in force relating to
the protection of the environment ("Environmental Laws"). There
is no pending or, to the best knowledge of Holding Company,
threatened, civil or criminal litigation, written notice of
violation, or administrative proceeding relating to such
Environmental Laws involving Holding Company or any Subsidiary.
There has not been and there is no condition existing with
respect to the release, emission, discharge or presence of
hazardous substances in connection with the business of Holding
Company or any Subsidiary, which condition could subject Holding
Company or any Subsidiary to any proceeding or remediation under
such Environmental Laws or could otherwise have a material
adverse effect on the assets, properties, business, financial
condition or results of operations of Holding Company and its
Subsidiaries taken as a whole. Holding Company and each
Subsidiary has received all approvals, consents, licenses, and
permits with respect to environmental matters necessary to carry
on its business substantially as currently conducted.
(n) Proprietary Rights. Section 2(n) of Holding Company
Schedule discloses all the trademarks, trade names and service
marks (and all registrations and applications with respect
thereto) (collectively the "Proprietary Rights") used in the
business of Holding Company or any Subsidiary. Except as
otherwise disclosed in such Schedule, either Holding Company or
one of the Subsidiaries owns or is duly authorized to use all of
such Proprietary Rights. Such Proprietary Rights as used by
Holding Company or a Subsidiary in its business do not violate or
infringe upon the proprietary rights of any third party, and
there is no claim, action, proceeding or investigation pending
or, to the best of Holding Company's knowledge, threatened
against Holding Company or any of the Subsidiaries with respect
to any such Proprietary Rights.
(o) Agreements. Except as set forth in Section 2(o) of
Holding Company Schedule, neither Holding Company nor any
Subsidiary is a party to nor is Holding Company or any Subsidiary
bound by any oral or written (i) contract for the employment of
any officer or employee, or contract with a former officer or
employee pursuant to which payments are required to be made at
any time following the date hereof, or contract with any labor
union or association representing any employee, (ii) stock
ownership, profit-sharing, bonus, deferred compensation, stock
option, warrant, severance pay, pension, retirement or similar
plan or agreement, (iii) mortgage, indenture, note or installment
obligation the unpaid balance of which exceeds $25,000, or other
instrument for or relating to any borrowing of money by Holding
Company or any of the Subsidiaries, the unpaid balance of which
exceeds $25,000, (iv) guaranty of any obligation for borrowings
or otherwise which in the aggregate exceed $25,000, (v) agreement
or arrangement for the sale or lease of any material amount of
its assets or part of its business other than in the ordinary
course of business or for the grant of preferential rights to
purchase or lease any material amount of its assets or part of
its business, (vi) agreement or arrangement obligating it to
register any of its outstanding shares or other securities with
the SEC, (vii) agreement or arrangement with any officer or
director of Holding Company, any Subsidiary, or any other
affiliate of Holding Company, or (viii) contract, agreement or
other instrument which is material to the assets, properties,
business, financial condition or results of operations of Holding
Company and its Subsidiaries taken as a whole. True and correct
copies of each such document described in (i) - (viii) have been
provided to Acquisition. All contracts, plans, mortgages,
indentures, guaranties and other agreements disclosed in Section
2(o) of Holding Company Schedule are in full force and effect as
of the date hereof, and neither Holding Company nor any
Subsidiary or any other party thereto is in default in any
material respect as to any provision thereof and no event has
occurred which with the passage of time or the taking of any
action, or both, would constitute a material default under any
such agreement. No party thereto may terminate any of such
agreements by reason of the transactions contemplated by this
Agreement.
(p) Litigation; Claims. Except as disclosed in Section
2(p) of Holding Company Schedule, there are no actions, suits,
claims, investigations or proceedings pending, or to the best
knowledge of Holding Company, threatened, against or affecting
Holding Company or any Subsidiary or its properties or
businesses, at law or in equity, or before any governmental or
administrative body or agency or before any arbitrator (i) which
involve a claim in excess of $50,000 or (ii) which alone or in
the aggregate, could materially and adversely affect the assets,
properties, business, financial condition or results of
operations of Holding Company and its Subsidiaries taken as a
whole or the ability of Holding Company and its Subsidiaries
taken as a whole to carry out the transactions contemplated in
this Agreement. Holding Company is not aware of any facts that
would reasonably afford a basis for any such actions, suits,
claims, investigations or proceedings. Except as may be
disclosed on such Schedule, there are no unresolved disputes
under any contract to which Holding Company or any Subsidiary is
a party or by which Holding Company or any Subsidiary is bound
involving in the aggregate an amount in excess of $50,000.
Neither Holding Company nor any Subsidiary is in default with
respect to any order, writ, award, judgment, injunction or decree
of any court, governmental or administrative body or agency, or
arbitrator applicable to it which could have a material adverse
effect on the assets, properties, business, financial condition
or results of operations of Holding Company and its Subsidiaries,
taken as a whole.
(q) Compliance with Laws. Holding Company and each of the
Subsidiaries has complied in all material respects with all laws,
regulations, opinions, orders, ordinances, judgments or decrees
of all governmental authorities (federal, state, local, foreign
or otherwise) applicable to its businesses, including without
limitation, the OCC, FDIC and Federal Reserve Board, except where
the failure to have so complied would not, individually or in the
aggregate, have a material adverse effect on the assets,
properties, business, financial condition or results of
operations of Holding Company and its Subsidiaries taken as a
whole. Except as disclosed in Section 2(q) of Holding Company
Schedule, or as disclosed in Holding Company's proxy statement
for the 1996 annual meeting of stockholders, neither Holding
Company nor any Subsidiary has received any notification of any
asserted failure by it to comply with any of such laws.
(r) Taxes.
(i) Except as disclosed in Section 2(r)(i) of Holding
Company Schedule: (a) all Tax Returns (as defined below)
required to be filed with the appropriate taxing authorities have
been filed by or on behalf of Holding Company or any Subsidiary
and all Taxes (as defined below) shown to be due on such Tax
Returns have been paid or provided for in full; (b) there are no
liens for Taxes upon the assets of Holding Company or any
Subsidiaries except statutory liens for Taxes not yet due; (c)
there are no outstanding deficiencies in respect of Taxes
asserted or threatened or assessments of Taxes made or
threatened, nor any administrative or judicial proceedings
pending or threatened concerning Taxes, with respect to Holding
Company or any Subsidiary and any deficiencies, assessments or
proceedings shown in Holding Company Schedule are being contested
in good faith through appropriate proceedings; (d) Holding
Company has established on the financial statements described in
Section 2(i) of this Agreement reserves and accruals adequate for
the payment of all Taxes accruing with respect to or payable by
Holding Company and each Subsidiary for all periods reflected
therein; (e) there are no outstanding agreements or waivers
extending the statutory period of limitations applicable to any
Tax Returns required to be filed with respect to Holding Company
or any Subsidiary; and (f) Neither Holding Company nor any
Subsidiary has requested any extension of time within which to
file any Tax Return, which Tax Return has not been filed.
(ii) The appropriate income Tax Returns of Holding Company
and each Subsidiary have been examined by (a) the Internal
Revenue Service or the statute of limitations has expired for all
periods up to and including December 31, 1991 and (b) the taxing
authorities of all of the states disclosed in Holding Company
Schedule pursuant to Section 2(c) or the statute of limitations
has expired for all periods up to and including December 31,
1991, respectively, and there are no outstanding or unresolved
proposed adjustments.
(iii) Except as disclosed in Section 2(r)(iii) of
Holding Company Schedule, no power of attorney has been granted
by Holding Company or any Subsidiary with respect to any matter
relating to Taxes which is currently in force.
For purposes of this Agreement, the term "Taxes" shall mean
all taxes, charges, fees, levies or other assessments, including
without limitation, all net income, gross income, premium or
privilege, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment,
excise, estimated, severance, stamp, occupation, property or
other taxes, customs duties, fees, assessments, or charges of any
kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any
governmental authority (domestic or foreign) upon Holding Company
or any Subsidiary and the term "Tax Returns" shall mean all
returns, declarations, reports, estimates, and statements,
regarding Taxes, required to be filed under United States
federal, state, local or any foreign laws.
(s) Related Party Transactions. Except as disclosed in
Section 2(s) of Holding Company Schedule, or as disclosed in
Holding Company's proxy statement for the 1996 annual meeting of
stockholders, and other than transactions exclusively between or
among Holding Company and/or any of the Subsidiaries, neither
Holding Company nor any Subsidiary has made any loan to any
director, officer or other affiliate of Holding Company or a
Subsidiary which remains outstanding nor has Holding Company or
any Subsidiary entered into any agreement, other than an
agreement referred to in subpart (o) hereof, for the purchase or
sale of any property or services from or to any director, officer
or other affiliate of Holding Company or a Subsidiary.
(t) Employee Benefit Plans.
(i) Section 2(t)(i) of Holding Company Schedule sets forth
a true and complete list of each employee benefit plan, as
defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and each other plan,
arrangement and agreement providing employee benefits
(collectively the "Plans"), that covers current or former
employees of Holding Company or any Subsidiary or affiliate and
is presently maintained by Holding Company or any Subsidiary or
any affiliate thereof or by any trade or business, whether or not
incorporated (an "ERISA Affiliate"), which together with Holding
Company would be deemed a "single employer" within the meaning of
Section 4001 of ERISA. None of the Plans is a "multiemployer
plan," as defined in Section 3(37) of ERISA. Holding Company has
delivered or made available to Acquisition: copies of all such
Plans; any related trust agreements, group annuity contracts,
insurance policies or other funding agreements or arrangements
relating thereto; the most recent determination letter, if any,
from the Internal Revenue Service with respect to each of the
Plans which is subject to ERISA ("ERISA Plans"); actuarial
valuations, if applicable, for the most recent plan year for
which such valuations are available; the current summary plan
descriptions; and the annual return/report on Form 5500 and
summary annual reports for each of the Plans for each of the last
three years.
(ii) Each of the ERISA Plans is in substantial compliance
with all applicable provisions of law, including the Code and
ERISA. Neither Holding Company nor any ERISA Affiliate currently
maintains or sponsors a defined benefit pension plan as defined
in Section 414(j) of the Code and neither Holding Company nor any
ERISA Affiliate has ever maintained or sponsored any such plan
that could give rise to a liability against Holding Company or
any Subsidiary.
(iii) The written terms of each of the Plans, and any
related trust agreement, group annuity contract, insurance policy
or other funding arrangement are in substantial compliance with
all applicable laws including ERISA, the Code, and the Age
Discrimination in Employment Act, as applicable, and each of such
Plans has been administered in substantial compliance with such
requirements.
(iv) Except with respect to income taxes on benefits paid or
provided, no income, excise or other tax or penalty (federal or
state) has been waived or excused, has been paid or is owed by
any person (including, but not limited to, any Plan, any Plan
fiduciary, Holding Company and ERISA Affiliates) with respect to
the operations of, or any transactions with respect to, any Plan.
No action has been taken, nor has there been any failure to take
any action, nor is any action or failure to take action
contemplated, that would subject any person or entity to any
liability for any tax or penalty in connection with any Plan. No
reserve for any taxes or penalties has been established with
respect to any Plan, nor has any advice been given to any person
with respect to the need to establish such a reserve.
(v) There are no (A) actions, suits, arbitrations or claims
(other than routine claims for benefits), (B) legal,
administrative or other proceedings or governmental
investigations or audits, or (C) complaints to or by any
governmental entity, which are pending, anticipated or
threatened, against the Plans or their assets.
(vi) The present value of the future cost to Holding Company
and ERISA Affiliates of post-retirement medical benefits that
Holding Company or any ERISA Affiliate is obligated to provide,
calculated on the basis of actuarial assumptions Holding Company
considers reasonable estimates of future experience and which
have been provided to Acquisition, does not exceed the amount
specified in Section 2(t)(vi) of Holding Company Schedule.
(vii) Neither Holding Company nor any ERISA Affiliate,
nor any of the ERISA Plans, nor any trust created thereunder, nor
any trustee or administrator thereof has engaged in a transaction
in connection with which Holding Company or any ERISA Affiliate,
any of the ERISA Plans, any such trust, or any trustee or
administrator thereof, or any party dealing with the ERISA Plans
or any such trust could be subject to either a civil penalty
assessed pursuant to Section 409 or 502(i) of ERISA or a tax
imposed pursuant to Section 4975 or 4976 of the Code. Neither
Holding Company nor any ERISA Affiliate is, or, as a result of
any actions, omissions, occurrences or state of facts existing
prior to the Effective Time, may become liable for any tax
imposed under Section 4978 of the Code.
(u) Insurance. All properties of Holding Company and each
Subsidiary are covered by valid and currently effective insurance
policies issued in favor of Holding Company or a Subsidiary and
such insurance policies provide Holding Company and its
Subsidiaries with adequate coverage and limits for its
operations. Disclosed in Section 2(u) of Holding Company
Schedule is a true and correct list of all insurance policies
covering Holding Company and the Subsidiaries. Holding Company
or a Subsidiary is included as an insured party under such
policies or has full rights as a loss payee. No notice of
cancellation or termination has been received with respect to any
such policy. Such policies will not be terminable or cancelable
by reason of this Agreement and the consummation of the
transactions contemplated hereby.
(v) Regulatory Filings. To the extent permitted by
applicable laws or regulations, Holding Company has made
available for inspection by Acquisition all registrations,
filings or submissions made by Holding Company or any Subsidiary
with any governmental or regulatory body and delivered to
Acquisition each and every annual and quarterly report filed with
or submitted to any governmental or regulatory body since
December 31, 1992. Holding Company and each Subsidiary has filed
all reports, statements, documents, registrations, filings or
submissions required to be filed by it with any governmental or
regulatory body. All such registrations, filings and submissions
were in material compliance with applicable law when filed, and
no material deficiencies have been asserted by any such
governmental or regulatory body with respect to such
registrations, filings and submissions that have not been
satisfied. Bank duly has filed with appropriate governmental and
regulatory authorities, to the extent that filing of the same is
required by laws, rules or regulations, all annual and quarterly
statements and other statements, documents and reports required
to be filed by it. All such statements and filings are correct
in all material respects as filed, and there are no material
omissions therefrom. All issues raised in such reports have been
resolved to the satisfaction of the issuer of such reports.
(w) Deposits. Section 2(w) of the Holding Company Schedule
is a schedule of the aggregate deposit accounts of Bank, prepared
as of the date indicated thereon, listing by category and by
Branch the amount of such deposits, together with the amount of
accrued but unpaid interest thereon (the "Deposits"). All such
Deposits are insured to the fullest permissible extent by the
Bank Insurance Fund ("BIF") administered by the FDIC. All
related insurance premiums due and owing have been paid to the
FDIC as of the date hereof. As of the date hereof, with respect
to the Deposits, subject to immaterial bookkeeping errors, Bank
has administered all of the Deposits in accordance with good and
sound financial practices and procedures, and has properly made
all appropriate credits and debits thereto, has delivered to its
customers on a regular basis, statements adequately and
accurately reflecting the amount, date and nature of such credit
and debit; in the event a question, complaint or objection by any
depositors with respect to any of the Deposits has occurred, Bank
has promptly and properly reviewed and responded and taken
corrective action, in accordance with good and sound financial
practice; and to the best knowledge of Holding Company, Bank is
not liable to any depositors for any shortages, or for any
errors, acts or omissions by Bank that in the aggregate would
exceed $5,000.
(x) Loans.
(i) All loans of Bank (the "Loans") and loan commitments
extended by Bank and any extensions, renewals or continuations of
such Loans and loan commitments were made in accordance with
customary lending standards of national banking associations in
the ordinary course of business. The Loans are evidenced by
appropriate and sufficient documentation based upon customary and
ordinary past practices for national banking associations.
(ii) Except for participations purchased or sold by the Bank
or loans pledged and fully described at Section 2(x) of the
Holding Company Schedule, the note evidencing each Loan and the
collateral documents securing each Loan have not been assigned or
pledged, the Bank has good and marketable title thereto, and the
Bank is the sole owner and holder of each note evidencing a Loan
and each collateral document securing such Loan.
(y) Reserves. The loan loss reserves of Bank, as set forth
on the March 31, 1996 financial statements have been computed in
accordance with generally accepted methods and principles
consistently applied, have been properly computed and, in
management's opinion, are adequate to provide for all reasonably
foreseeable losses on Loans outstanding.
(z) Agreements with Regulatory Agencies. Except as set
forth in Section 2(z) of Holding Company Schedule, neither
Holding Company nor any of its Subsidiaries is subject to any
cease-and-desist or other order issued by, or is a party to any
written agreement, consent agreement or memorandum of
understanding (each a "Regulatory Agreement"), with any
regulatory agency or other government entity that restricts in
any respect the conduct of its business or that relates to its
capital adequacy, its credit policies or its management, nor has
Holding Company or any of its Subsidiaries been notified by any
regulatory agency or other governmental entity that it is
considering issuing or requesting any Regulatory Agreement.
Except as set forth in Section 2(z) of Holding Company Schedule
and as disclosed in the proxy statement for the 1996 annual
meeting of Holding Company's stockholders, no regulatory agency
has initiated any investigation or proceeding into the business
or operations of Holding Company or any of its Subsidiaries.
(aa) Information for Regulatory Approvals. The information
furnished or to be furnished by Holding Company or Bank in any
regulatory application filed by Holding Company, Bank, FBOP or
Acquisition in connection with the Transaction, will be true and
complete in all material respects as of the date so furnished.
(ab) Governmental Notices. Neither Holding Company nor Bank
has received notice from any federal, state, or other
governmental agency indicating that such agency would oppose or
not grant or issue its consent or approval, if requested, with
respect to the Transaction. To the best knowledge of Holding
Company, there are no facts that could reasonably be expected to
have an adverse effect on the ability of Holding Company or Bank
to obtain all requisite regulatory consents or to perform their
respective obligations under this Agreement and in connection
with the Transaction.
(ac) SEC Filings. Except with respect to written
information supplied by Acquisition or FBOP expressly for
inclusion in the Holding Company proxy statement, none of the
information contained in the proxy statement to be mailed to the
stockholders of Holding Company in connection with the Merger or
in any amendments thereof or supplements thereto (the "Proxy
Statement") will, at the time of (i) the first mailing thereof
and (ii) the meeting of stockholders to be held in connection
with the Merger, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(ad) Finders and Investment Bankers. Neither Holding
Company nor any Subsidiary has retained any broker, finder or
other agent or incurred any liability for any brokerage fees,
commissions or finders' fees with respect to the Transaction
except for Holding Company's retention of Keefe, Bruyette & Woods
and Torrey Pines Securities, Inc.
(ae) Disclosure. No representation or warranty of Holding
Company and no statement or information relating to Holding
Company or any Subsidiary or their respective businesses or
properties contained in (i) this Agreement, (ii) Holding Company
Schedule, or (iii) in any certificate furnished or to be
furnished to Acquisition pursuant to this Agreement contains or
will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the
statements made herein or therein, in light of the circumstances
in which they were made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACQUISITION AND FBOP
FBOP and Acquisition each represent and warrant to Holding
Company as follows:
(a) Organization of Acquisition and FBOP. Acquisition is a
corporation duly organized, validly existing and in good standing
under the laws of Illinois. Acquisition is a wholly-owned
subsidiary of FBOP. FBOP is a corporation duly organized,
validly existing and in good standing under the laws of Illinois.
(b) Authorization. The Boards of Directors of Acquisition
and FBOP have adopted resolutions approving the Agreement and the
Transaction and have authorized the execution and delivery of
this Agreement. Acquisition and FBOP have full power and
authority to enter into this Agreement and subject to obtaining
all required regulatory approvals, to consummate the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by Acquisition and FBOP and constitutes the valid and
legally binding obligation of Acquisition and FBOP, enforceable
against them in accordance with its terms, subject to bankruptcy,
receivership, insolvency, reorganization, moratorium or similar
laws affecting or relating to creditors rights generally and
subject to general principles of equity.
(c) Consents and Approvals. Except for consents and
approvals of the Applicable Governmental Authorities, no filing
with, and no permit, authorization, consent or approval of, any
public body or authority is necessary for the consummation by
Acquisition and FBOP of the transactions contemplated by this
Agreement.
(d) Defaults and Conflicts. Subject to the receipt
of all consents and approvals contemplated by this Agreement, the
execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby or the fulfillment of and
compliance with the terms and provisions hereof will not (i)
violate any judicial or administrative order, writ, award,
judgment, injunction or decree involving Acquisition or FBOP, or
(ii) conflict with any of the terms, conditions or provisions of
the Articles of Incorporation or Bylaws of Acquisition or FBOP.
No consent of any third party to any indenture or any material
agreement or other material instrument to which Acquisition or
FBOP is a party is required in connection with the Transaction.
(e) SEC Filings. None of the information supplied or
to be supplied by Acquisition or FBOP in writing expressly for
inclusion in the Proxy Statement will, at the time of (i) the
first mailing thereof and (ii) the meeting of stockholders to be
held in connection with the Merger, contain any untrue statement
of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
(f) Funds Available. Acquisition and FBOP has
available to it sufficient funds to perform all of its
obligations pursuant to the Merger.
(g) Finders and Investment Bankers. Acquisition and
FBOP will be responsible for any of their respective brokerage
fees, commissions or finders' fees with respect to the
Transaction.
(h) Governmental Notices. Neither Acquisition nor
FBOP has received notice from any federal, state, or other
governmental agency indicating that such agency would oppose or
not grant or issue its consent or approval, if requested, with
respect to the Transaction. To the best knowledge of Acquisition
and FBOP, there are no facts that could reasonably be expected to
have an adverse effect on the ability of Acquisition or FBOP to
obtain all requisite regulatory consents or to perform its
obligations under this Agreement.
(i) Financial Statement. Within 10 days of the date
of this Agreement, FBOP will make available to Holding Company
its audited financial statements for the year ended December 31,
1995, which have been prepared in accordance with generally
accepted accounting principles on a consistent basis throughout
the period covered by such statement (except as may be indicated
in the notes thereto), and which present fairly the consolidated
financial position and results of operations for the period
covered by such statement.
(j) Agreements. Neither FBOP nor Acquisition is a
party to any written agreement or memorandum of understanding
with, or is subject to, any order or directive by any
governmental entity.
(k) Articles; Bylaws. Within 10 days of the date of
this Agreement, FBOP will deliver to Holding Company true and
complete copies of its Articles of Incorporation and Bylaws as in
effect as of the date hereof.
ARTICLE IV
RIGHT TO INVESTIGATE
To the extent permitted by applicable laws or regulations,
Holding Company shall afford to the officers and authorized
representatives of Acquisition and FBOP reasonable access during
regular business hours and upon reasonable request to the
offices, properties, books, contracts, commitments and records of
Holding Company and its Subsidiaries in order that Acquisition
may have full opportunity to make such investigations as it shall
desire of the affairs of Holding Company, Bank and the other
Subsidiaries, and the officers of Holding Company shall furnish
Acquisition and FBOP with such additional financial and operating
data and other information as to the assets, properties and
business of Holding Company, Bank and the other Subsidiaries as
Acquisition and FBOP shall from time to time reasonably request.
Holding Company, Bank and the Subsidiaries shall consent to the
review by the officers and authorized representatives of
Acquisition of the reports and working papers of Holding
Company's independent auditors upon reasonable advance notice as
to the area of review.
ARTICLE V
COVENANTS OF HOLDING COMPANY
(a) Operation in Ordinary Course. From the date hereof to
the Effective Time, each of Holding Company, Bank and the other
Subsidiaries shall: (a) not engage in any transaction except in
the ordinary course of business and shall conduct its business
consistent with past practices; (b) maintain the Branches in a
condition substantially the same as on the date of this
Agreement, reasonable wear and use excepted; (c) maintain its
books of accounts and records in the usual, regular and ordinary
manner; and (d) duly maintain compliance in all material respects
with all laws, regulatory requirements and agreements to which it
is subject or by which it is bound. Without limiting the
generality of the foregoing, prior to the Effective Time, Holding
Company, Bank and other Subsidiaries shall not, without the prior
written consent of Acquisition;
(1) fail to maintain its tangible property and assets in their
present state of repair, order and condition, reasonable wear and
tear and damage by fire or other casualty excepted;
(2) fail to maintain its books, accounts and records in
accordance with generally accepted accounting principles
consistently applied;
(3) fail to comply in all material respects with all
applicable laws and regulations;
(4) make, renew or modify the terms (including, but not
limited to, any release or substitution of collateral, change of
the interest rate, or release or substitution of any guarantor)
of any loan, letter of credit or other extension of credit, or
commitment to make a loan, in excess of $200,000, provided,
however, that loans not in excess of $200,000 that are secured by
secondary market qualified mortgages on single-family dwellings
shall be permitted under this subsection;
(5) except as required by law or applicable regulation and
except for the exercise of the Options identified on the Holding
Company Schedule to which Acquisition hereby consents, enter
into, adopt, amend or terminate any bonus, profit sharing,
compensation, termination, stock option, stock appreciation
right, restricted stock, performance unit, pension, retirement,
deferred compensation, employment, severance or other employee
benefit agreement, trust or plan;
(6) except for pay raises pursuant to scheduled annual reviews
in the ordinary course of business not to exceed 5% of annual W-2
compensation, authorize or enter into any employee contract or
employment agreement, grant any pay raise or increase in any
manner the compensation or fringe benefits of any director,
officer or employee or pay any benefit not required by an
existing plan or arrangement or authorize or enter into any
contract, agreement, commitment or arrangement to do any of the
foregoing;
(7) authorize or enter into any contract, commitment or
obligation (excluding all loans and loan commitments) including,
but not limited to obligations for services, which provides for
the receipt or payment of amounts, in the aggregate, in excess of
$25,000;
(8) sell, transfer, convey, assign or otherwise dispose of any
material assets or properties, or authorize any of the foregoing,
or sell loans in bulk;
(9) acquire, lease or encumber any assets in excess of
$125,000 for any item or series of similar items;
(10) authorize or make any amendment to its charter or bylaws;
(11) fail to keep in force all insurance policies presently in
effect, including insurance of deposit accounts with the FDIC;
(12) do any act which, or omit to do any act the omission of
which, will cause a material breach of any contract, commitment
or obligation;
(13) make any borrowing, incur any debt (other than (i)
deposits in the ordinary course of business and consistent with
past practice and (ii) overnight borrowings from the Federal
Reserve Bank consistent with past practices), or assume,
guarantee, endorse (except for the negotiation or collection of
negotiable instruments in the ordinary course of business and
consistent with past practice) or otherwise become liable
(whether directly, contingently or otherwise) for the obligations
of any other person, or make any payment or repayment in respect
of any indebtedness (other than deposits and accrued expenses in
the ordinary course of business and consistent with past
practice);
(14) accept any deposits for which the interest rate payable
thereon exceeds by more than 0.5 percent the average interest
rate being paid on similar deposits by banks in the San Diego
area market;
(15) waive, release or cancel any claims in excess of $25,000
against third parties or debts in excess of $25,000 owing to it,
or any rights which have any value in excess of $25,000;
(16) make any changes in its accounting systems, policies or
practices;
(17) enter into, authorize, or permit any transaction, except
as now existing and disclosed to Acquisition, with any Affiliate
of Holding Company or any Subsidiary;
(18) make any capital contribution to any person or purchase or
invest in any securities issued by any person other than
securities which are issued or guaranteed by the United States
government or an agency thereof having a maturity of more than
twelve (12) months from the date of purchase;
(19) sell any investment securities;
(20) enter into or renew any data processing service contract;
(21) change or amend its schedules and policies relating to
service charges or service fees;
(22) enter into loan transactions not in accordance with sound
credit practices and not on terms and conditions which are
materially more favorable than those available to the borrower
from competitive sources in transactions in the ordinary course
of business;
(23) fail to use its best efforts to preserve the present
business organizations intact, to keep available the services of
its present officers and employees or to preserve its present
relationships with persons having business dealings with it;
(24) fail to maintain, consistent with its past practices, a
reserve for possible loan and lease losses which is adequate
under the requirements of generally accepted accounting
principles to provide for possible losses, net of recoveries
relating to loans previously charged off, on loans outstanding
(including, without limitation, accrued interest receivable);
(25) make any material change in any lease of real property;
(26) fail to file in a timely manner all required filings with
all proper regulatory authorities and fail to cause such filings
to be true and correct;
(27) foreclose upon or take deed or title to any commercial
real estate without first conducting a Phase I environmental
assessment of the property; or foreclose upon such commercial
real estate if such environmental assessment indicates the
presence of hazardous material in amounts that, if such
foreclosure were to occur, would be reasonably likely to result
in a material adverse effect on Bank;
(28) amend or modify any of its promotional, deposit account or
account loan practices, other than amendments or modifications in
the ordinary course of business; or
(29) (i) make any change in its authorized capital stock, (ii)
issue any stock options, or issue any warrants, or other rights
calling for the issue, transfer, sale or delivery of its capital
stock or other securities, (iii) pay any stock dividend or make
any reclassification in respect of its outstanding shares of
capital stock, (iv) except for the issuance of shares upon
exercise of any Options, issue, sell, exchange or deliver any
shares of its capital stock (or securities convertible into or
exchangeable, with or without additional consideration, for such
capital stock), (v) purchase or otherwise acquire for
consideration any outstanding shares of its capital stock, or
(vi) declare, pay or set apart in respect of its capital stock
any dividends or other distributions or payments.
(b) Exclusivity. Except as may be required by any
regulatory authority, or except to the extent required by
fiduciary obligations under applicable law in reliance upon a
written opinion of counsel, neither Holding Company, Bank, nor
any other Subsidiary or any of their respective directors,
officers, employees, representatives, agents or Affiliates (as
defined below) shall, directly or indirectly, solicit, initiate,
encourage or respond favorably to inquiries or proposals from, or
provide any confidential information or access to Bank's or
Holding Company's premises to, or participate in any discussions
or negotiations with, any person (other than Acquisition and FBOP
and their directors, officers, employees, representatives and
agents) concerning (i) any merger, sale of assets not in the
ordinary course of business, acquisition, business combination,
change of control or other similar transaction involving Holding
Company or Bank, or (ii) any purchase or other acquisition by any
person of any shares of capital stock of Holding Company or Bank,
or (iii) any issuance by Holding Company or Bank of any shares of
its capital stock. Holding Company will promptly advise
Acquisition or FBOP of, and communicate to Acquisition or FBOP
the terms and conditions of (and the identity of the person
making), any such inquiry or proposal received, and will promptly
furnish Acquisition or FBOP with copies of any documents received
and summaries of any other communications with respect thereto.
Holding Company will cease any such existing activities,
discussions or negotiations with any person conducted heretofore
with respect to any of the foregoing.
As used in this Agreement, the term "Affiliate" shall mean,
with respect to any specified person, (1) any other person which,
directly or indirectly, owns or controls, is under common
ownership or control with, or is owned or controlled by, such
specified person, (2) any other person which is a director,
officer or partner or is, directly or indirectly, the beneficial
owner of 5 percent or more of any class of equity securities, of
the specified person or a person described in clause (1) of this
paragraph, (3) another person of which the specified person is a
director, officer or partner or is, directly or indirectly, the
beneficial owner of 5 percent or more of any class of equity
securities, (4) another person in which the specified person has
a substantial beneficial interest or as to which the specified
person serves as trustee or in a similar capacity, or (5) any
relative or spouse of the specified person or any of the
foregoing persons, any relative of such spouse or any spouse of
any such relative.
(c) Stockholder Meeting. Subject to subpart (b) above,
Holding Company shall take all steps necessary to duly call, give
notice of, convene and hold a meeting of its stockholders to be
held as soon as is practicable for the purpose of voting upon the
approval of the Merger and this Agreement. Holding Company will,
through its Board of Directors, use its best efforts to obtain
stockholder approval and will recommend to its stockholders
approval of this Agreement and the transactions contemplated
hereby and such other matters as may be submitted to its
stockholders in connection with this Agreement. As soon as
practicable, Holding Company shall prepare and cause to be filed
with the SEC the related proxy material and shall use its best
efforts to obtain clearance by the SEC for the mailing of such
material to Holding Company stockholders. Acquisition shall have
the right to review the proxy material prior to filing with the
SEC.
(d) Intentionally Omitted.
(e) Reports. Promptly after filing with the applicable
authorities, Holding Company shall provide to Acquisition copies
of (i) all reports filed with the SEC, including its Annual
Report on Form 10-K for the year ended December 31, 1995, and its
Quarterly Report on Form 10-Q, which shall conform to the
requirements for SEC Reports specified in Article II(i) above;
and (ii) to the extent permitted by applicable laws or
regulations its Regulatory Reports, which shall conform to the
requirements for Regulatory Reports specified in Article II(j)
and (v) above.
(f) Notice. Holding Company shall give prompt notice to
Acquisition of (i) any notice of, or other communication relating
to, a default or event which with notice or lapse of time or both
would become a default, received by Holding Company or any
Subsidiary subsequent to the date of this Agreement and prior to
the Effective Time, under its charter or bylaws or any indenture,
or material instrument or agreement, to which Holding Company or
any Subsidiary is a party, by which it or any of its properties
is bound or to which it or any of its properties is subject, (ii)
any notice or other communication from any third party alleging
that the consent of such third party is or may be required in
connection with the transactions contemplated hereby and (iii)
any matter which, if it had occurred prior to the date hereof,
would have been required to be included on Holding Company
Schedule.
(g) Regulatory Matters. Holding Company shall, from the
date hereof through the Effective Time, keep Acquisition advised
with respect to any and all regulatory matters or proceedings
affecting Holding Company or Bank and shall promptly forward to
Acquisition copies of all correspondence, notices, orders,
memoranda or other written material received from any regulatory
agency (to the extent permitted by law) and shall provide
Acquisition full access to its regulatory files to the extent
permitted by law.
(h) Supplemental Information; Disclosure Supplements. From
time to time prior to the Effective Time, Holding Company will
promptly disclose in writing to Acquisition any matter hereafter
arising which, if existing, occurring or known at the date of
this Agreement would have been required to be disclosed or which
would render inaccurate any of the representations, warranties or
statements set forth in this Agreement. From time to time prior
to the Effective Time, Holding Company will promptly supplement
or amend Holding Company Schedule delivered in connection with
the execution of this Agreement to reflect any matter which, if
existing, occurring or known at the date of this Agreement, would
have been required to be set forth or described in such Schedule
or which is necessary to correct any information in such Schedule
that has been rendered inaccurate thereby.
(i) Cooperation. Holding Company and its Subsidiaries
shall execute such documents and other papers, provide such
information, and take such further actions as may be reasonably
requested by Acquisition to carry out the provisions hereof and
to consummate the Transaction.
(j) Conditions Precedent. Holding Company and the
Subsidiaries shall use their best efforts to cause all of the
conditions precedent to the consummation of the Transaction
applicable to them to be met.
(k) Best Efforts. Holding Company and the Subsidiaries
shall use their best efforts to take or cause to be taken all
actions necessary, proper or advisable to consummate the Merger
on a prompt basis.
(l) Schedules. Within 10 days of the date hereof, Holding
Company shall deliver to Acquisition final Holding Company
Schedules, which Schedules shall not be materially different from
the draft Schedules provided herewith.
ARTICLE VI
COVENANTS OF ACQUISITION AND FBOP
(a) Consents. Acquisition and FBOP shall, as soon as
practicable, prepare and make all necessary filings with all
Applicable Governmental Authorities and shall use their best
efforts to obtain all consents, waivers, approvals,
authorizations, rulings or orders from all governmental or
regulatory bodies or other entities and furnish true, correct and
complete copies of each to Holding Company.
(b) Cooperation. Acquisition and FBOP shall execute such
documents and other papers, provide such information, and take
such further actions as may be reasonably requested by Holding
Company to carry out the provisions hereof and to consummate the
transactions contemplated hereby.
(c) Conditions Precedent. Acquisition and FBOP shall use
their best efforts to cause all of the conditions precedent to
the consummation of the Transaction applicable to each to be met.
(d) Best Efforts. Acquisition and FBOP will use their best
efforts to take or cause to be taken all actions necessary,
proper or advisable to consummate the Merger on a prompt basis.
(e) Liability Insurance. FBOP or Acquisition will use its
best efforts to provide to persons who served as directors and
officers of Holding Company or any Subsidiary on or before the
Effective Time, insurance against liabilities and claims (and
related expenses) made against them resulting from their services
as such prior to the Effective Time, substantially similar in all
materials respects to the insurance coverage provided them in
such capacities at the date hereof; provided, however, that in no
event shall FBOP or Acquisition be required to spend more than
$80,000 in the aggregate (the "Insurance Amount") to maintain or
procure insurance coverage pursuant hereto, and, provided
further, that if FBOP or Acquisition is unable to maintain or
obtain the insurance called for by this section on commercially
reasonable terms, FBOP or Acquisition shall use its best efforts
to obtain as much comparable insurance as is available for the
Insurance Amount.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF ACQUISITION AND FBOP
The obligations of Acquisition and FBOP under this Agreement
to cause this Agreement to become effective and have the
transactions contemplated hereby be consummated are, at its
option, subject to the conditions that:
(a) Validity of Representation and Warranties. The
representations and warranties of Holding Company herein
contained shall be true and correct in all material respects when
made and, in addition, shall be true and correct in all material
respects on and at the Effective Time with the same force and
effect as though made on and at the Effective Time.
(b) Consents. All required consents, waivers, approvals,
authorizations or orders in connection with the Transaction shall
have been obtained by Holding Company and copies of the same
shall have been delivered to Acquisition.
(c) Compliance with Covenants; Schedules. Holding Company
shall have performed in all material respects all obligations and
agreements and complied in all material respects with all
covenants and conditions contained in this Agreement to be
performed and complied with by it at or prior to the Effective
Time; and Acquisition shall have received all of the Schedules
referred to herein, which Schedules shall not be, in the
reasonable judgment of Acquisition, materially different from the
draft Schedules provided to Acquisition on the date of this
Agreement.
(d) Opinion of Counsel. Acquisition shall have received
the opinion of Sherman & Lapidus LLP, counsel for Holding
Company, specified in Article X(b)(ii).
(e) Approval of Holding Company Stockholders. This
Agreement shall have been approved and adopted at a duly called
meeting of the stockholders of Holding Company Common Stock by at
least a majority of the issued and outstanding shares of Holding
Company Common Stock entitled to vote thereon.
(f) Dissenting Holding Company Shares. The holders of not
more than 10% of the issued and outstanding shares of Holding
Company Common Stock at the Effective Time shall have delivered
written demand for payment of the fair market value of their
shares of Holding Company Common Stock pursuant to Section 1301
of the CGCL.
(g) Resignations. The directors and officers of Holding
Company shall have tendered their resignations in writing,
effective on the Effective Time.
(h) Adverse Changes. From March 31, 1996 to the Effective
Time, there shall not have been any Material Adverse Change in
the business, operations, results of operations, assets,
liabilities, investments, properties, condition (financial or
otherwise), affairs, prospects or other attributes of Holding
Company or Bank, taken as a whole. The term "Material Adverse
Change" shall mean with respect to Holding Company, any change
that (i) is material and adverse to the business, operations,
results of operations, assets, liabilities, investments,
properties, condition (financial or otherwise), affairs,
prospects or other attributes of Holding Company, or (ii)
materially impairs the ability of Holding Company to perform its
obligations under this Agreement or consummate the Merger;
provided, however, that Material Adverse Change shall not be
deemed to include the impact of (a) changes in banking and
similar laws, (b) changes in generally accepted accounting
principles or regulatory requirements applicable to banks and
bank holding companies generally, or (c) circumstances affecting
banks and bank holding companies generally.
(i) Effective Time. The Effective Time shall be no later
than 5:00 P.M. Pacific Time on April 30, 1997.
(j) No Pension Plans. Neither Holding Company, Bank, nor
the Subsidiaries shall have in existence or have authorized a
pension plan.
(k) Stock Option Plans and Incentive Plans; Options.
Acquisition shall have received evidence satisfactory to it that
all Options and any other options or warrants for Common Stock
have been cancelled.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF HOLDING COMPANY
The obligations of Holding Company under this Agreement to
cause this Agreement to become effective and have the
transactions contemplated hereby be consummated are, at its
option, subject to the conditions that:
(a) Validity of Representations and Warranties. The
representations and warranties of Acquisition and FBOP herein
contained shall have been true and correct in all material
respects when made and, in addition, shall be true and correct in
all material respects on and at the Effective Time with the same
force and effect as though made on and at the Effective Time.
(b) Consents. All consents, waivers, approvals,
authorizations or orders required to be obtained by Acquisition
shall have been obtained and copies of the same shall have been
delivered to Holding Company.
(c) Compliance with Covenants. Acquisition and FBOP shall
have performed in all material respects all obligations and
agreements and complied in all material respects with all
covenants and conditions contained in this Agreement to be
performed and complied with by them at or prior to the Effective
Time.
(d) Opinion of Counsel. Holding Company shall have
received the opinion of Lord, Bissell & Brook, counsel for
Acquisition, specified in Article X(c)(ii).
(e) Fairness Opinion. Holding Company shall have received
an opinion from Keefe, Bruyette & Woods to the effect that, in
its opinion, the consideration to be paid to the shareholders of
Holding Company hereunder is fair to such shareholders from a
financial point of view and an update to such opinion, without
adverse change of such opinion, (i) as of a date not more than
three days prior to the date the Proxy Statement/Prospectus is
mailed to Holding Company's shareholders and (ii) as of the
Closing.
(f) Employment Agreements. FBOP shall have entered into
separate employment agreements with Messrs. Galinson, Horsman and
Brotman and Ms. Chewning effective as of the Effective Time
providing for (i) salaries not less than the salary of each on
the date hereof; (ii) three year terms; (iii) change-of-control
provisions limiting termination compensation to 299% of the
average of overall compensation for each of past five years; and
(iv) substantially the same job responsibilities as currently
held.
(g) Effective Time. The Effective Time shall be no later
than 5:00 P.M. Pacific Time on April 30, 1997.
(h) Funds to Paying Agent. FBOP or Acquisition shall have
made available to the Paying Agent the funds as described at
Article I(m) hereof.
ARTICLE IX
CONDITIONS APPLICABLE TO ACQUISITION, FBOP AND HOLDING COMPANY
The obligations of Acquisition, FBOP and Holding Company
under this Agreement to cause this Agreement to become effective
and have the transactions contemplated hereby be consummated are
subject to the following terms and conditions:
(a) Governmental Approvals. To the extent required by
applicable law or regulation, the OCC, the Federal Reserve Board,
the FDIC and/or such other state or federal agencies whose
approval of the transactions contemplated by this Agreement is so
required, shall have approved or authorized all of the
transactions contemplated by this Agreement in form and under
terms not materially burdensome to FBOP or Acquisition. All
other statutory or regulatory requirements for the valid
consummation of the Transaction shall have been satisfied and all
other required governmental consents and approvals shall have
been obtained.
(b) Injunction. The consummation of the Merger shall not
have been restrained, enjoined or prohibited by any court or
governmental authority of competent jurisdiction. No material
litigation or administrative proceeding shall be pending or
threatened as of the Effective Time seeking to restrain, enjoin
or prohibit the consummation of this Agreement, the Merger or the
Transaction.
ARTICLE X
CLOSING AND CLOSING DOCUMENTS
(a) Closing. The closing ("Closing") under this Agreement
shall be held at the Bank, as promptly as practicable after the
fulfillment or waiver of all the terms and conditions contained
in Articles VII, VIII, IX and X of this Agreement, or at such
other place and time as shall be mutually agreeable to the
parties. The required number of fully executed and verified
copies of the Articles of Merger shall be filed immediately after
the Closing with the Secretary of State of Illinois and the
parties shall make all other filings and recordings required by
the IL BCA and the CGCL in connection with the Merger.
(b) Holding Company Closing Documents. At the Closing,
Holding Company shall deliver, or cause to be delivered, to
Acquisition:
(i) A certificate of Holding Company, signed by its
President, which shall confirm the compliance by Holding Company
with its covenants and agreements contained in this Agreement and
the accuracy of the representations and warranties made by
Holding Company in this Agreement at and as of the Effective Time
as if made at such time and as contemplated by this Agreement.
(ii) The opinion of Sherman & Lapidus LLP, counsel for
Holding Company, dated the Effective Time, and in form and
substance satisfactory to FBOP and Acquisition, covering matters
customarily treated in similar merger transactions.
(iii) A certificate of Holding Company's inspector of
elections as to the vote taken at the meeting of the holders of
shares of Holding Company Common Stock with respect to this
Agreement and as to the holders of shares of Holding Company
Common Stock that shall have demanded payment of the fair value
of their shares of Holding Company Common Stock pursuant to the
CGCL.
(iv) Written resignations, effective the Effective Time, of
all of the directors and officers of Holding Company.
(v) Articles of Incorporation and Certificate of Good
Standing of Holding Company each certified by the Secretary of
State of California within ten (10) days prior to the Closing.
(c) Acquisition Closing Documents. At the Closing,
Acquisition shall deliver, or cause to be delivered, to Holding
Company:
(i) A Certificate of Acquisition, signed by its President
or Vice President, which shall confirm the compliance by
Acquisition with its covenants and agreements contained in this
Agreement and the accuracy of the representations and warranties
made by it in this Agreement at and as of the Effective Time as
if made at such time and as contemplated by this Agreement.
(ii) The opinion of Lord, Bissell & Brook, counsel for
Acquisition, dated the Effective Time, and in form and substance
satisfactory to Holding Company, covering matters customarily
treated in similar merger transactions.
ARTICLE XI
TERMINATION AND TERMINATION FEE
(a) Termination. This Agreement and the Transaction may be
terminated at any time prior to the filing of the Articles of
Merger with the Secretary of State of Illinois, whether before or
after action by the stockholders of Holding Company as
contemplated by Article V(k) of this Agreement and without
further approval by the outstanding stockholders of Holding
Company (i) by mutual written consent of the Boards of Directors
of Acquisition and Holding Company, (ii) by action of the Board
of Directors of Acquisition in the event of a failure of a
condition set forth in Article VII of this Agreement as of the
time such condition is required hereunder to be fulfilled, (iii)
by action of the Board of Directors of Holding Company in the
event of failure of a condition set forth in Article VIII of this
Agreement as of the time such condition is required hereunder to
be fulfilled, or (iv) by action of the Board of Directors of
either Acquisition or Holding Company in the event of a failure
of a condition set forth in Article IX of this Agreement as of
the time such condition is required hereunder to be fulfilled.
(b) Termination Fee. If Holding Company and Acquisition
fail to consummate the Merger and (i) Holding Company enters into
a letter of intent, commitment letter or other written agreement
with a third party regarding a merger, consolidation, sale of
assets or other similar transaction involving Holding Company
within twelve (12) months following the termination of the
Merger, and (ii) Holding Company shall not have terminated this
Agreement by reason of paragraphs (a)(iii) or (iv) above, and
(iii) Acquisition shall not have terminated this Agreement by
reason of paragraph (a)(i) above, Holding Company shall, upon
consummation of such transaction, promptly pay $2,500,000 to
Acquisition, and Holding Company shall have no further liability
or obligation to Acquisition with respect to this Agreement.
(c) Survival of Rights. Except as otherwise provided in
paragraph (b) above, nothing in this Article XI or in this
Agreement shall be construed as limiting the rights of any party
in the event of a breach by any party of this Agreement.
ARTICLE XII
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
Except for the agreements set forth in Articles I, II(ad),
V(j), VII(g), VII(h), XI, XII, XIII(a), XIII(f) and XIII(g), no
representations, warranties or agreements shall survive beyond
the Effective Time.
ARTICLE XIII
MISCELLANEOUS
(a) Payment of Expenses. Except as provided in Article XI,
whether or not the Merger shall be consummated, each party hereto
shall pay its own expenses incident to preparing for, entering
into and carrying out this Agreement and incident to the
consummation of the Merger and the Transaction, except that in
the event that Merger is consummated, Acquisition shall be
responsible for $250,000 of the broker fee of Keefe Bruyette &
Woods.
(b) Commitment to the San Diego Community and to Customers
and Employees. Each party acknowledges the importance for it to:
(i) use best efforts in good faith to offer comparable or
expanded products and services to customers and to continue the
customer service traditions of the parties; (b) continue the
tradition of community support within San Diego County; and (c)
use best efforts to treat all employees fairly and equitably.
(c) Entire Agreement. This Agreement (together with the
Schedules and Exhibits hereto and the documents referred to
herein) contains, and is intended as, a complete statement of all
of the terms of the arrangements between the parties with respect
to the matters provided for herein, and supersedes any previous
agreements and understandings between the parties with respect to
those matters.
(d) Modifications, Amendments and Waivers. At any time
prior to the Effective Time, the parties hereto may, by written
agreement, (a) extend the time for the performance of any of the
obligations or other acts of the parties hereto, (b) waive any
inaccuracies in the representations and warranties contained in
this Agreement or in any document delivered pursuant hereto, (c)
waive compliance with any of the covenants or agreements
contained in this Agreement, or (d) make any other modification
of this Agreement approved by the respective Boards of Directors
of the parties hereto. This Agreement shall not be altered or
otherwise amended except pursuant to an instrument in writing
executed and delivered on behalf of each of the parties hereto.
For the convenience of the parties hereto, this Agreement may be
executed in any number of counterparts, and each such counterpart
shall be deemed to be an original instrument, and all such
counterparts shall together constitute the same agreement.
(e) Assignment. Except as provided in Article I(a) hereto,
this Agreement shall not be assignable by any of the parties
hereto and shall be construed in accordance with the laws of the
State of California.
(f) Schedules. All information set forth in Holding
Company Schedule shall be deemed a representation and warranty of
Holding Company as to the accuracy and completeness of such
information.
(g) Press Releases. Except as may otherwise be required by
law, no publicity release or announcement concerning this
Agreement or the transactions contemplated hereby shall be made
prior to the Effective Time without advance approval thereof by
Holding Company and Acquisition. Holding Company and Acquisition
will cooperate with each other in the development and
distribution of all news releases and other public information
disclosures with respect to this Agreement, the Transaction or
any of the transactions contemplated hereby or thereby.
(h) Notices. Any notice, request, instruction or other
document to be given hereunder by any party to the others shall
be in writing and delivered personally or sent by registered or
certified mail, postage prepaid, overnight express service or
confirmed facsimile transmission as follows:
If to Holding Company: Murray L. Galinson
SDNB Financial Corp.
1420 Kettner Blvd.
San Diego, CA 92101
FAX NO: (619) 233-7017
With a copy to: Lawrence Sherman
Sherman & Lapidus LLP
350 West Ash Street
Suite 1100
San Diego, CA 92101
FAX NO: (619) 231-8770
If to Acquisition: Robert M. Heskett
FBOP Corporation
11 W. Madison Street
Oak Park, IL 60302
FAX NO: (708) 445-3223
With a copy to: Edward C. Fitzpatrick
Lord, Bissell & Brook
115 S. LaSalle Street
Chicago, IL 60603
FAX NO: (312) 443-0336
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed and delivered as of the day and year first above
written.
SDNB FINANCIAL CORP.
Attest:
/s/Howard W. Brotman By: /s/Murray L. Galinson
Name: MURRAY GALINSON
Title: PRESIDENT
FBOP ACQUISITION COMPANY
Attest:
/s/Edward C. Fitzpatrick By: /s/Robert M. Heskett
Name: R M Heskett
Title: President
FBOP CORPORATION
Attest:
/s/Edward C. Fitzpatrick By: /s/Robert M. Heskett
Name: R M Heskett
Title: President