SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 27, 1999
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SJNB Financial Corp
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(Exact name of registrant as specified in its charter)
California 0-11771 77-0058227
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
One North Market Street
San Jose, California 95113
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 947-7562
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Item 5. Other Events.
On August 27, 1999, the Company, Saratoga Bancorp ("Saratoga"), and
Saratoga National Bank ("SNB") entered into a definitive Agreement and Plan of
Merger (the "Merger Agreement") pursuant to which all of the outstanding shares
of Saratoga common stock will be exchanged for shares of the Company's Common
Stock pursuant to a tax-free exchange (the "Merger"), subject to dissenters'
rights under applicable law. The Merger Agreement, which has been approved by
the Board of Directors of both companies and the Board of Directors of SNB, is
subject to approval by the shareholders of both Saratoga and the Company,
clearance by regulatory authorities, including the Federal Reserve Board, and
other terms and conditions customary for transactions of this type. The parties
also entered into a Stock Option Agreement dated as of August 27, 1999 (the
"Stock Option Agreement"), as more fully described below.
Although no formal timetable for the Merger has been set, subject to
satisfaction of the conditions in the Merger Agreement, it is estimated the
closing will occur in the fourth quarter of 1999. The Merger Agreement and the
related Stock Option Agreement are attached as exhibits to this Report and are
incorporated herein by reference. The following summaries of the Merger
Agreement and the Stock Option Agreement do not purport to be complete and are
qualified in their entirety by reference to such exhibits.
The Merger Agreement provides for Saratoga shareholders to receive .70
shares of SJNB Common Stock for each outstanding share of Saratoga Common Stock.
The Merger Agreement provides that should SJNB's average price (as defined) on
the NASDAQ National Market prior to closing be below $29.3590, then Saratoga can
terminate the Merger Agreement. If, but only if, Saratoga terminates the Merger
Agreement under such a circumstance, then SJNB may, at its option, increase the
exchange ratio to a ratio which will provide approximately $29.3590 per share
for each Saratoga share and the Merger Agreement shall not be deemed terminated.
At the effective time of the Merger, stock options to acquire Saratoga Common
Stock would be converted into options to acquire SJNB Common Stock. If the
Merger were consummated as of August 27, 1999, based on the closing SJNB stock
price of $33.25 on August 27, 1999, the Merger would result in the issuance of
approximately 1,110,000 new shares of SJNB Common Stock, excluding currently
outstanding options. Based upon SJNB's closing price of $33.25 on August 27,
1999, the Merger would be valued at approximately $36.9 million. At August 25,
1999, SJNB had approximately 2,350,118 shares outstanding and Saratoga had
approximately 1,586,588 shares outstanding.
Following the execution of the Merger Agreement, Saratoga, as a condition
to, and in consideration for entering into, the Merger Agreement, entered into a
Stock Option Agreement which granted the Company an option to purchase up to
378,561 shares of Saratoga Common Stock (the "Option Shares"), subject to
adjustment, at an exercise price of $19.21 per share (the "Stock Option"). The
Option Shares, if issued pursuant to the Stock Option Agreement, would represent
approximately 19.9% of the issued and outstanding shares of Saratoga's Common
Stock after giving effect to the issuance of any shares pursuant to an exercise
of the Stock Option but in no event will the number of Option Shares exceed
19.9% of Saratoga's issued and outstanding Common Stock. The number of shares of
Saratoga's Common Stock subject to the Stock Option will be increased to the
extent that Saratoga issues additional shares of Common Stock (otherwise than
pursuant to an exercise of the Stock Option) such that the number of Option
Shares will continue to equal 19.9% of the then issued and outstanding shares of
Saratoga's Common Stock after giving effect to the issuance of shares pursuant
to an exercise of the Stock Option. In the event Saratoga issues or agrees to
issue any shares of Common Stock (other than pursuant to any warrants or options
outstanding at August 27, 1999 as permitted under the Merger Agreement) at a
price less than $19.21 per share (or lower than an adjusted price per share),
the exercise price will be equal to such lesser price. The number of shares of
Saratoga's Common Stock subject to the Stock Option, and the applicable exercise
price per Option Share, also will be appropriately adjusted in the event of any
stock dividend, split-up, merger, recapitalization, combination, subdivision,
conversion, exchange of shares, or similar event relating to Saratoga.
Provided that the Company shall not be in material breach of the Stock
Option Agreement or the Merger Agreement, and no injunction or other order
against exercise of the Stock Option or delivery of the Option Shares is
currently in effect, the Company may exercise the Stock Option, in whole or in
part, subject to regulatory approval, with written notice at any time within 30
days (subject to extension as provided in the Stock Option Agreement) after both
an "Initial Triggering Event" and a "Subsequent Triggering Event" occur prior to
termination of the Stock Option.
Termination of the Stock Option generally occurs at any of the following:
(i) the effective time of the Merger; (ii) termination of the Merger Agreement
in accordance with the provisions thereof if such termination occurs prior to
the occurrence of an Initial Triggering Event; (iii) the passage of 12 months
after termination of the Merger Agreement if such termination follows the
occurrence of an Initial Triggering Event (provided that if an Initial
Triggering Event continues or occurs beyond termination of the Merger Agreement
and prior to the passage of such 12 month period, the termination of the Stock
Option will be 12 months from the expiration of the Last Triggering Event but in
no event more than 18 months after termination of the Merger Agreement); or (iv)
August 27, 2002. The "Last Triggering Event" means the last Initial Triggering
Event to occur.
"Initial Triggering Event" is defined as the occurrence of any of the
following events: (i) Saratoga or any of its subsidiaries, without the Company's
prior written consent, enters into an agreement with any person (the term
"person" having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of
the Securities Exchange Act of 1934, and the rules and regulations
thereunder)(other than the Company or any subsidiary thereof) to engage in, or
the Board of Directors of Saratoga recommends that the shareholders of Saratoga
approve or accept (other than as contemplated by the Merger Agreement), (x) a
merger or consolidation, or any similar transaction, involving Saratoga or any
Significant Subsidiary (as defined in Rule 1-02 of Regulation S-X promulgated by
the Securities and Exchange Commission (the "SEC")) of Saratoga, (y) a purchase,
lease or other acquisition representing 15% or more of the consolidated assets
of Saratoga and its subsidiaries, or (z) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or otherwise) of
securities representing 10% or more of the voting power of Saratoga or any
Significant Subsidiary of Saratoga (each of the transactions described in the
preceding clauses (x), (y) and (z) being referred to as an "Acquisition
Transaction"); (ii) Saratoga or any of its subsidiaries or affiliates, without
having received the Company's prior written consent, authorizes, recommends,
proposes or publicly announces its intention to authorize, recommend or propose,
to engage in an Acquisition Transaction with any person other than the Company
or a subsidiary thereof, or the Board of Directors of Saratoga publicly
withdraws or modifies, or publicly announces its intent to withdraw or modify,
in any manner adverse to the Company, its recommendation that the shareholders
of Saratoga approve the transactions contemplated by the Merger Agreement; (iii)
Any person (other than the Company, any subsidiary thereof or any Saratoga
subsidiary acting in a fiduciary capacity) acquires beneficial ownership or the
right to acquire beneficial ownership of 10% or more of the outstanding shares
of Saratoga Common Stock; (iv) Any person (other than the Company or any
subsidiary thereof) makes a bona fide proposal to Saratoga or its shareholders
by public announcement or written communication that is or becomes the subject
of public disclosure to engage in an Acquisition Transaction; (v) A third party
makes a proposal to Saratoga or its shareholders to engage in an Acquisition
Transaction, followed by Saratoga breaching any covenant or obligation contained
in the Merger Agreement, such breach entitling the Company to terminate the
Merger Agreement, and such breach shall not be cured prior to the date that the
Company sends notice of its exercise of the Stock Option to Saratoga; or (vi)
Any person (other than the Company or any subsidiary thereof), other than in
connection with a transaction to which the Company has given its prior written
consent, files an application or notice with the Federal Reserve Board, or other
federal or state bank regulatory authority, which application or notice is
accepted for processing, for approval to engage in an Acquisition Transaction.
"Subsequent Triggering Event" is defined as either (A) the acquisition by
any person (other than the Company or any subsidiary thereof) of beneficial
ownership of 20% or more of the then outstanding Common Stock of Saratoga, or
(B) the occurrence of the Initial Triggering Event described in clause (i)
above, except that the percentage referenced in subclause (z) thereof shall be
20%.
The information in this report shall not constitute an offer to exchange or
the solicitation of an offer to exchange, nor shall there be any exchange of the
Company's Common Stock in any state in which such offer, solicitation, or
exchange would be unlawful prior to the registration or qualification under the
securities laws of any such state. The Company's Common Stock to be exchanged
will be offered only by means of a prospectus filed with the SEC. A registration
statement relating to the Company's Common Stock to be exchanged will be filed
with the SEC. The Company's Common Stock may not be exchanged, nor may offers to
exchange be accepted, prior to the time such registration statement becomes
effective.
Item 7: Financial Statements and Exhibits
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(c) Exhibits. The following is furnished in accordance with the provisions
of Item 601 of Regulation S-K.
Exhibit 2.1: Agreement and Plan of Merger dated as of August 27, 1999,
among the Registrant, Saratoga Bancorp and Saratoga
National Bank.
Exhibit 99.1:Stock Option Agreement dated as of August 27, 1999,
among the Registrant and Saratoga Bancorp.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: September 1, 1999
SJNB Financial Corp.
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(Registrant)
By /s/ Eugene E. Blakeslee
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Eugene E. Blakeslee
Executive Vince President and
Chief Financial Officer (Chief
Accounting Officer)