AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
FIRST BANKS AMERICA, INC.,
A DELAWARE CORPORATION,
FIRST BANK & TRUST,
A CALIFORNIA BANKING CORPORATION,
BYL BANCORP,
A CALIFORNIA CORPORATION
AND
BYL BANK GROUP,
A CALIFORNIA BANKING CORPORATION
JUNE 22, 2001
TABLE OF CONTENTS
ARTICLE I TERMS OF THE MERGER & CLOSING; EXCHANGE OF SHARES
Section 1.01 THE MERGER.............................................................................1
Section 1.02 EFFECTS OF THE MERGERS.................................................................1
Section 1.03 CONVERSION OF SHARES...................................................................1
Section 1.04 THE CLOSING............................................................................2
Section 1.05 THE CLOSING DATE.......................................................................2
Section 1.06 ACTIONS AT CLOSING.....................................................................3
Section 1.07 EXCHANGE PROCEDURES; SURRENDER OF CERTIFICATES.........................................3
ARTICLE II REPRESENTATIONS AND WARRANTIES OF BANCORP AND BANK
Section 2.01 ORGANIZATION AND CAPITAL STOCK; STANDING AND AUTHORITY.................................4
Section 2.02 AUTHORIZATION; NO DEFAULTS.............................................................5
Section 2.03 SUBSIDIARIES...........................................................................5
Section 2.04 FINANCIAL INFORMATION..................................................................5
Section 2.05 ABSENCE OF CHANGES.....................................................................6
Section 2.06 REGULATORY ENFORCEMENT MATTERS.........................................................6
Section 2.07 TAX MATTERS............................................................................6
Section 2.08 LITIGATION.............................................................................7
Section 2.09 PROPERTIES, CONTRACTS, EMPLOYEE BENEFIT PLANS AND OTHER AGREEMENTS.....................7
Section 2.10 REPORTS................................................................................8
Section 2.11 INVESTMENT PORTFOLIO...................................................................8
Section 2.12 LOAN PORTFOLIO.........................................................................9
Section 2.13 EMPLOYEE MATTERS AND ERISA.............................................................9
Section 2.14 TITLE TO PROPERTIES; LICENSES; INSURANCE..............................................10
Section 2.15 ENVIRONMENTAL MATTERS.................................................................11
Section 2.16 COMPLIANCE WITH LAWS AND REGULATIONS..................................................12
Section 2.17 BROKERAGE.............................................................................12
Section 2.18 NO UNDISCLOSED LIABILITIES............................................................12
Section 2.19 STATEMENTS TRUE AND CORRECT...........................................................12
Section 2.20 COMMITMENTS AND CONTRACTS.............................................................12
Section 2.21 MATERIAL INTEREST OF CERTAIN PERSONS..................................................13
Section 2.22 CONDUCT TO DATE.......................................................................13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF FBA AND FB&T
Section 3.01 ORGANIZATION..........................................................................14
Section 3.02 AUTHORIZATION.........................................................................14
Section 3.03 FINANCIAL INFORMATION.................................................................15
Section 3.04 ABSENCE OF CHANGES....................................................................15
Section 3.05 LITIGATION; PROCEEDINGS...............................................................15
Section 3.06 STATEMENTS TRUE AND CORRECT...........................................................15
Section 3.07 ACCESS TO FUNDS.......................................................................15
Section 3.08 REGULATORY APPROVALS..................................................................15
ARTICLE IV AGREEMENTS OF BANCORP AND BANK
Section 4.01 BUSINESS IN ORDINARY COURSE...........................................................16
Section 4.02 BREACHES..............................................................................18
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Section 4.03 SUBMISSION TO SHAREHOLDERS............................................................18
Section 4.04 CONSUMMATION OF AGREEMENT.............................................................18
Section 4.05 ENVIRONMENTAL REPORTS.................................................................19
Section 4.06 ACCESS TO INFORMATION.................................................................19
Section 4.07 CONSENTS OF THIRD PARTIES.............................................................20
Section 4.08 SUBSEQUENT FINANCIAL STATEMENTS.......................................................20
Section 4.09 MERGER OF BANKS.......................................................................20
ARTICLE V AGREEMENTS OF FBA AND FB&T
Section 5.01 REGULATORY APPROVALS..................................................................20
Section 5.02 BREACHES..............................................................................20
Section 5.03 CONSUMMATION OF AGREEMENT.............................................................20
Section 5.04 EMPLOYEE BENEFITS.....................................................................20
Section 5.05 INDEMNIFICATION AND INSURANCE.........................................................21
Section 5.06 ACCESS TO INFORMATION.................................................................22
Section 5.07 CONDUCT OF BUSINESS...................................................................22
ARTICLE VI CONDITIONS PRECEDENT TO THE MERGER
Section 6.01 CONDITIONS TO THE OBLIGATIONS OF FBA AND FB&T.........................................22
Section 6.02 CONDITIONS TO THE OBLIGATIONS OF BANCORP AND BANK.....................................23
ARTICLE VII TERMINATION
Section 7.01 MUTUAL AGREEMENT......................................................................24
Section 7.02 BREACH OF AGREEMENTS..................................................................24
Section 7.03 FAILURE OF CONDITIONS.................................................................24
Section 7.04 DENIAL OF REGULATORY APPROVAL.........................................................24
Section 7.05 ENVIRONMENTAL REPORTS.................................................................25
Section 7.06 REGULATORY ENFORCEMENT MATTERS........................................................25
Section 7.07 UNILATERAL TERMINATION................................................................25
Section 7.08 LIQUIDATED DAMAGES....................................................................25
Section 7.09 ACQUISITION PROPOSAL..................................................................25
Section 7.10 BREAK-UP FEE..........................................................................25
ARTICLE VIII GENERAL PROVISIONS
Section 8.01 CONFIDENTIAL INFORMATION..............................................................27
Section 8.02 PUBLICITY.............................................................................28
Section 8.03 RETURN OF DOCUMENTS...................................................................28
Section 8.04 NOTICES...............................................................................28
Section 8.05 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.............................29
Section 8.06 COSTS AND EXPENSES....................................................................29
Section 8.07 ENTIRE AGREEMENT......................................................................30
Section 8.08 HEADINGS AND CAPTIONS.................................................................30
Section 8.09 WAIVER, AMENDMENT OR MODIFICATION.....................................................30
Section 8.10 RULES OF CONSTRUCTION.................................................................30
Section 8.11 COUNTERPARTS..........................................................................30
Section 8.12 SUCCESSORS AND ASSIGNS................................................................30
Section 8.13 GOVERNING LAW.........................................................................30
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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization, dated as of June 22, 2001,
is by and among First Banks America, Inc., a bank holding company organized as a
Delaware corporation ("FBA"), First Bank & Trust, a California banking
corporation which is a wholly-owned subsidiary of FBA ("FB&T"), BYL Bancorp, a
bank holding company organized as a California corporation ("Bancorp"), and BYL
Bank Group, a California banking corporation which is a wholly-owned subsidiary
of Bancorp ("Bank"). This Agreement and Plan of Reorganization is hereinafter
referred to as the "Agreement."
In consideration of the mutual representations, warranties, agreements
and covenants contained herein, FBA, FB&T, Bancorp and Bank hereby agree as
follows:
ARTICLE I
TERMS OF THE MERGER & CLOSING; EXCHANGE OF SHARES
Section 1.01 THE MERGER. FBA will organize an interim subsidiary
("Newco") and, subject to the receipt of required regulatory approvals and the
satisfaction or waiver of the conditions set forth in ARTICLE VI of this
Agreement, FBA will cause Newco to merge with and into Bancorp (the "Merger")
pursuant to the California General Corporation Law ("Corporate Law") and an
Agreement of Merger in the form attached hereto as Exhibit A (the "Merger
Agreement"). This Agreement also contemplates that, immediately following the
Effective Time (as defined in Section 1.05 hereof), the Bank Merger (as defined
in Section 4.09) will occur pursuant to an Agreement of Merger in the form
attached hereto as Exhibit B.
Section 1.02 EFFECTS OF THE MERGERS.
(a) The Merger and the Bank Merger shall have all of the effects provided
by Corporate Law and this Agreement. The separate corporate existence of Newco
shall cease on consummation of the Merger and be combined in Bancorp, and the
separate corporate existence of Bank shall cease on consummation of the Bank
Merger and be combined in FB&T.
(b) The Articles of Incorporation of Bancorp from and after the Effective
Time shall be as stated on Exhibit A attached hereto. The Bylaws of Bancorp from
and after the Effective Time shall be the same as the Bylaws of Newco
immediately prior to the Effective Time, except that the name of the corporation
shall be amended to read "BYL Bancorp." The directors and officers of Bancorp
from and after the Effective Time shall be the persons serving as the directors
and officers of Newco immediately prior to the Effective Time.
Section 1.03 CONVERSION OF SHARES.
(a) At the Effective Time, subject to the remaining provisions of this
Section 1.03 requiring that a portion of the consideration otherwise payable
upon consummation of the Merger be held in escrow, each share of common stock of
Bancorp ("Bancorp Common") issued and outstanding immediately prior to the
Effective Time shall be converted into the right to receive $18.50 (the "Per
Share Merger Price"); PROVIDED, HOWEVER, that shares of Bancorp
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Common held in the treasury of Bancorp or by any direct or indirect
subsidiary of Bancorp immediately prior to the Effective Time shall be
canceled at the Effective Time.
(b) The stock transfer books of Bancorp shall be closed, and no share
transfers will be permitted after the Effective Time. At the Effective Time, by
virtue of the Merger and without any action on the part of the holders thereof,
all of the shares of Bancorp Common shall cease to be outstanding and be
canceled, and certificates previously representing shares of Bancorp Common
shall thereafter represent solely the right to receive the consideration payable
pursuant to this Agreement.
(c) If holders of Bancorp Common are entitled to require appraisal of
their shares under applicable Corporate Law, shares held by a dissenting holder
who has perfected the right to obtain an appraisal of his shares shall not be
converted as described in this Section 1.03, but from and after the Effective
Time shall represent only the right to receive such consideration as may be
determined pursuant to applicable Corporate Law; PROVIDED, HOWEVER, that each
share of Bancorp Common outstanding immediately prior to the Effective Time and
held by a dissenting holder who after the Effective Time shall withdraw his
demand for appraisal or lose his right of appraisal shall thereafter have only
such rights as are provided under applicable Corporate Law.
(d) Any options to purchase shares of Bancorp Common which are
outstanding immediately prior to the Effective Time and exercisable at a price
less than the Per Share Merger Price ("Bancorp Options") may be surrendered to
Bancorp as of the Effective Time. FBA shall pay for each share of Bancorp Common
covered by such a surrendered option an amount equal to the difference between
the Per Share Merger Price and the exercise price per share of the options
surrendered. All options to acquire shares of Bancorp Common that are not
exercised or surrendered in accordance with the preceding sentence shall be
canceled as of the Effective Time.
(e) At the Effective Time, the outstanding shares of common stock of
Newco shall be converted into an equal number of shares of Bancorp Common, so
that immediately following the Effective Time, the number of outstanding shares
of common stock of Bancorp shall be equal to the number of outstanding shares of
common stock of Newco immediately prior to the Merger.
Section 1.04 THE CLOSING. The closing of the Merger (the "Closing")
shall take place at the location mutually agreeable to the parties hereto at
10:00 a.m. local time on the Closing Date described in Section 1.05 of this
Agreement.
Section 1.05 THE CLOSING DATE. At FBA's election, the Closing shall
take place on either (i) one of the last five (5) business days of the month or
(ii) the first business day of the month following the month, in either case,
during which each of the conditions in Section 6.01 and Section 6.02 is
satisfied or waived by the appropriate party, or on such other date as Bancorp
and FBA may agree (the "Closing Date"). The Merger shall be effective upon the
filing of the Merger Agreement with the Secretary of State of the State of
California in accordance with Corporate Law (the "Effective Time").
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Section 1.06 ACTIONS AT CLOSING.
(a) At the Closing, Bancorp shall deliver to FBA:
(i) certified copies of the Articles of Incorporation and
Bylaws of Bancorp and the Articles of Incorporation and Bylaws of each of
its subsidiaries;
(ii) certificates signed by the Presidents of Bancorp and Bank
stating that (A) each of the representations and warranties contained in
ARTICLE II is true and correct in all material respects at the time of the
Closing with the same force and effect as if such representations and
warranties had been made at the Closing, and (B) all of the conditions
set forth in Section 6.01 have been satisfied or waived as provided
therein;
(iii) certified copies of resolutions of the Boards of Directors
of Bancorp and Bank and of the shareholders of Bancorp, establishing the
requisite approvals under applicable Corporate Law of this Agreement, the
Merger and the other transactions contemplated hereby;
(iv) tax clearance certificates issued by the Franchise Tax
Board of the State of California with respect to Bancorp and each of its
subsidiaries, dated a recent date, stating that all taxes imposed under
the Bank and Corporation Law on such corporations have been paid or
adequately secured; and
(v) a legal opinion from counsel for Bancorp and Bank with
respect to the matters listed in Exhibit C hereto, in form reasonably
satisfactory to FBA and its counsel.
(b) At the Closing, FBA shall deliver to Bancorp:
(i) certificates signed by the Presidents of FBA and FB&T
stating that (A) each of the representations and warranties contained in
ARTICLE III is true and correct in all material respects at the time of
the Closing with the same force and effect as if such representations and
warranties had been made at the Closing, and (B) all of the conditions
set forth in Section 6.02 have been satisfied or waived as provided
therein;
(ii) certified copies of resolutions of the Boards of
Directors of FBA and FB&T, establishing the requisite approvals under
applicable Corporate Law of this Agreement, the Merger and the other
transactions contemplated hereby; and
(iii) a legal opinion from counsel for FBA and FB&T with
respect to the matters listed in Exhibit D hereto, in form reasonably
satisfactory to Bancorp and its counsel.
Section 1.07 EXCHANGE PROCEDURES; SURRENDER OF CERTIFICATES. As soon as
reasonably practicable after the Effective Time, FBA shall cause to be mailed to
each record holder of shares of Bancorp Common a letter of transmittal in form
reasonably satisfactory to Bancorp (which shall specify that delivery shall be
effected, and risk of loss and title to certificates shall pass, only upon
proper delivery of the certificates to FBA and shall be in such form and have
such other provisions as FBA may reasonably specify) and instructions for use in
effecting the
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surrender of certificates, and FBA shall promptly pay the appropriate
consideration to former holders of Bancorp Common who make proper delivery of
certificates or comply with FBA's reasonable instructions and requirements
with respect to any certificate that has been lost or stolen.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF BANCORP AND BANK
Bancorp and Bank each represent and warrant to FBA and FB&T as follows:
Section 2.01 ORGANIZATION AND CAPITAL STOCK; STANDING AND AUTHORITY.
(a) Bancorp and Bank are corporations duly organized, validly existing
and in good standing under the laws of California. Each of such corporations has
the power to own all of its property and assets, to incur all of its liabilities
and to carry on its business as now conducted.
(b) As of the date hereof, the authorized capital stock of Bancorp
consists of 50,000,000 shares of Bancorp Common, of which 2,542,835 are
outstanding, and 25,000,000 shares of Preferred Stock, none of which is
outstanding. All of the outstanding shares of Bancorp Common are duly and
validly issued, fully paid and non-assessable. Except as disclosed in Section
2.01(b) of that certain document delivered by Bancorp to FBA entitled the
"Disclosure Schedule" and executed by Bancorp, Bank, FBA and FB&T concurrently
with the execution and delivery of this Agreement (the "Disclosure Schedule"),
each certificate representing shares of Bancorp Common issued in replacement of
any certificate theretofore issued by it which was claimed by the record holder
thereof to have been lost, stolen or destroyed was issued only upon receipt of
an affidavit of lost stock certificate and a bond sufficient to indemnify
Bancorp against any claim that may be made against it on account of the alleged
loss, theft or destruction of a certificate or the issuance of a replacement
certificate.
(c) As of the date hereof, the authorized capital stock of Bank
consists of 6,666,666 shares of common stock ("Bank Common"), of which 100
are outstanding, duly and validly issued, fully paid and non-assessable, and
1,000,000 shares of Preferred Stock, none of which is outstanding. None of
the outstanding shares of Bank Common has been issued in violation of any
preemptive rights.
(d) Except as disclosed in Section 2.01(d) of the Disclosure
Schedule, there are no shares of capital stock or other equity securities of
Bancorp or Bank issued or outstanding and no outstanding options, warrants,
rights to subscribe for, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of capital stock of Bancorp or Bank or contracts, commitments,
understandings or arrangements by which either of them is or may be obligated
to issue additional shares of capital stock.
(e) Bank holds a current valid license to engage in the commercial
banking business at its banking offices in California, and, except as
disclosed in Section 2.01(e) of the Disclosure Schedule, Bancorp and Bank are
in material compliance with all agreements, understandings and orders of the
Federal Reserve Board, the Federal Deposit Insurance Corporation ("FDIC") and
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other regulatory authorities having jurisdiction over their business, assets
and properties. Neither the scope of the business of Bank nor the location of
its properties requires it to be licensed to do business in any jurisdiction
other than the State of California. The deposits of Bank are insured by the
FDIC to the maximum extent permitted by applicable laws and regulations.
Bancorp is a bank holding company registered pursuant to the Bank Holding
Company Act, as amended.
Section 2.02 AUTHORIZATION; NO DEFAULTS. The Boards of Directors of
Bancorp and Bank have by all requisite action approved this Agreement, the
Merger and the Bank Merger, and they have authorized the execution and
delivery hereof and thereof on behalf of such corporations by duly authorized
officers and the performance of their respective obligations thereunder.
Bancorp, in its capacity as the sole holder of outstanding capital stock of
Bank, has approved this Agreement, the Merger and the Bank Merger. Nothing in
the Articles of Incorporation or Bylaws of Bancorp or Bank or any other
agreement, instrument, decree, proceeding, law or regulation (except as
specifically referred to in this Agreement) by or to which either entity is
bound or subject would prohibit or inhibit either of such corporations from
consummating this Agreement, the Merger and the Bank Merger on the terms and
conditions herein contained. This Agreement has been duly and validly
executed and delivered by Bancorp and Bank and constitutes a legal, valid and
binding obligation of each of them, enforceable against them in accordance
with its terms. Neither Bancorp nor Bank is in default under nor in violation
of any provision of its Articles of Incorporation, Bylaws or any promissory
note, indenture or any evidence of indebtedness or security therefor, lease,
contract, purchase or other material commitment or agreement.
Section 2.03 SUBSIDIARIES. Each of Bancorp's direct and indirect
subsidiaries (hereinafter referred to singly as a "Bancorp Subsidiary" and
collectively as the "Bancorp Subsidiaries"), the names and jurisdictions of
incorporation of which are listed in Section 2.03 of the Disclosure Schedule,
is duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation, and each of the Bancorp Subsidiaries
has the corporate power to own its properties and assets, to incur its
liabilities and to carry on its business as now being conducted. The number
of issued and outstanding shares of capital stock of each Bancorp Subsidiary
and the ownership of such shares is set forth in Section 2.03 of the
Disclosure Schedule, and all of such shares are owned by Bancorp or a Bancorp
Subsidiary, free and clear of all liens, encumbrances, rights of first
refusal, options or other restrictions of any nature whatsoever, except as
disclosed in Section 2.03 of the Disclosure Schedule. There are no options,
warrants or rights outstanding to acquire any capital stock of any Bancorp
Subsidiary, and no person or entity has any other right to purchase or
acquire any unissued shares of stock of any Bancorp Subsidiary, nor does any
Bancorp Subsidiary have any obligation of any nature with respect to its
unissued shares of stock. Except as disclosed in Section 2.03 of the
Disclosure Schedule, neither Bancorp nor any Bancorp Subsidiary is a party to
any partnership or joint venture or owns an equity interest in any other
business or enterprise.
Section 2.04 FINANCIAL INFORMATION. The audited consolidated balance
sheets of Bancorp and the Bancorp Subsidiaries as of December 31, 2000 and
related consolidated income statements and statements of changes in
shareholders' equity and of cash flows for the three years ended December 31,
2000, together with the notes thereto, included in Bancorp's Annual Report on
Form 10-K for the year ended December 31, 2000 as currently on file with the
Securities and Exchange Commission (the "SEC"); the unaudited consolidated
balance sheets of
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Bancorp and the Bancorp Subsidiaries as of March 31, 2001 and related
consolidated income statements and statements of changes in shareholders'
equity and of cash flows for the three months ended March 31, 2001, together
with the notes thereto, included in Bancorp's Quarterly Report on Form 10-Q
for the three months ended March 31, 2001 as currently on file with the SEC;
and the year-end and quarter-end Reports of Condition and Reports of Income
of Bank for 2000 and for the three month period ending March 31, 2001, as
filed with the FDIC (such financial statements and notes collectively
referred to herein as the "Bancorp Financial Statements"), have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis (except as disclosed therein and except for regulatory
reporting differences required in Bank's reports) and fairly present the
consolidated financial position and the consolidated results of operations,
changes in shareholders' equity and cash flows of the respective entity and
its respective consolidated subsidiaries as of the dates and for the periods
indicated.
Section 2.05 ABSENCE OF CHANGES. Except as disclosed in Section 2.05
of the Disclosure Schedule, since December 31, 2000 there has not been any
material adverse change in the financial condition, the results of operations
or the business or prospects of Bancorp and the Bancorp Subsidiaries taken as
a whole, nor have there been any events or transactions having such a
material adverse effect which should be disclosed in order to make the
Bancorp Financial Statements not misleading. Since December 11, 2000, there
has been no material adverse change in the financial condition, the results
of operations or the business or prospects of Bancorp or Bank except for any
such changes as are disclosed in Bancorp Financial Statements filed since
such date.
Section 2.06 REGULATORY ENFORCEMENT MATTERS. Except as disclosed in
Section 2.06 of the Disclosure Schedule, neither Bancorp nor any Bancorp
Subsidiary is subject to, or has been informed that it may become subject to,
any order, agreement, memorandum of understanding or other regulatory
enforcement action or proceeding with or by any federal or state agency
charged with the supervision or regulation of banks or bank holding companies
or engaged in the insurance of bank deposits or any other governmental agency
having supervisory or regulatory authority with respect to Bancorp or any of
the Bancorp Subsidiaries.
Section 2.07 TAX MATTERS.
(a) Bancorp and the Bancorp Subsidiaries have filed all federal,
state, local and foreign income, franchise, excise, sales, use, real and
personal property and other tax returns required to be filed. All such
returns fairly reflect the information required to be presented therein. All
provisions for accrued but unpaid taxes contained in the Bancorp Financial
Statements were made in accordance with generally accepted accounting
principles and in the aggregate do not materially fail to provide for
potential tax liabilities.
(b) Bancorp has not (i) executed an extension or waiver that is
currently in effect with respect to any statute of limitations on the
assessment or collection of any tax; (ii) entered into any tax sharing or tax
allocation agreement or been a part of a consolidated group filing a
consolidated tax return (other than a group of which Bancorp is the parent);
(iii) become liable for a tax of any other person or entity pursuant to
Treasury Regulation 1.1502-6 (or any similar provision of state, local or
foreign laws) as a transferee or successor or by contract or otherwise;
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or (iv) made any payment, become obligated to make any payment or been party
to a contract or agreement that would obligate it to make any payment that
would be disallowed as a deduction under Section 280G or 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code").
(c) There has not been an ownership change of Bancorp, as defined
in Section 382(g) of the Code, that occurred during or after any taxable
period in which Bancorp incurred a net operating loss that carries over to
any taxable period ending after December 31, 2000.
(d) All material elections with respect to taxes affecting Bancorp
have been and will be timely made.
Section 2.08 LITIGATION. Except as disclosed in Section 2.08 of the
Disclosure Schedule, there is no litigation, claim or other proceeding
pending or, to the best of the knowledge of Bancorp and Bank, threatened
against Bancorp or any of the Bancorp Subsidiaries, or of which the property
of Bancorp or any of the Bancorp Subsidiaries is or would be subject.
Section 2.09 PROPERTIES, CONTRACTS, EMPLOYEE BENEFIT PLANS AND OTHER
AGREEMENTS. Section 2.09 of the Disclosure Schedule specifically identifies
the following:
(a) all real property owned by Bancorp or any Bancorp Subsidiary
and the principal buildings and structures located thereon, together with a
legal description of such real estate, and each lease of real property to
which Bancorp or any Bancorp Subsidiary is a party, identifying the parties
thereto, the annual rental payable, the expiration date thereof and a brief
description of the property covered;
(b) all loan and credit agreements, conditional sales contracts or
other title retention agreements or security agreements relating to money
borrowed by Bancorp or a Bancorp Subsidiary, exclusive of deposit agreements
with customers of Bank entered into in the ordinary course of business,
agreements for the purchase of federal funds and repurchase agreements;
(c) all agreements, loans, contracts, leases, guaranties, letters
of credit, lines of credit or commitments of Bancorp or any Bancorp
Subsidiary not referred to elsewhere in this Section 2.09 which:
(i) involve payment by Bancorp or any Bancorp Subsidiary of
more than $200,000 (other than loans, loan commitments or letters of
credit);
(ii) involve payments based on profits of Bancorp or any
Bancorp Subsidiary;
(iii) relate to the future purchase of goods or services in
excess of the requirements of its respective business at current levels or
for normal operating purposes;
(iv) were not made in the ordinary course of business;
(v) materially affect the business or financial condition of
Bancorp or any Bancorp Subsidiary; or
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(vi) require the consent or approval of any third party for
the Merger and the Bank Merger to be consummated.
(d) all contracts, agreements, plans and arrangements by which any
profit sharing, group insurance, hospitalization, stock option, pension,
retirement, bonus, deferred compensation, stock bonus, stock purchase,
collective bargaining agreements, contracts or arrangements under which
pensions, deferred compensation or other retirement benefits is being paid,
or plans or arrangements established or maintained, sponsored or undertaken
by Bancorp or any Bancorp Subsidiary for the benefit of officers, directors
or employees, including each trust or other agreement with any custodian or
any trustee for funds held under any such agreement, plan or arrangement, and
in respect to any of them, the latest reports or forms, if any, filed with
the Department of Labor and Pension Benefit Guaranty Corporation under ERISA
(as defined below), any current financial or actuarial reports and any
currently effective IRS private ruling or determination letters obtained by
or for the benefit of Bancorp or any Bancorp Subsidiary;
(e) all leases, subleases or licenses with respect to real or
personal property, whether as lessor, lessee, licensor or licensee, with
annual rental or other payments due thereunder in excess of $60,000;
(f) all agreements for the employment, retention or engagement, or
with respect to the severance, of any officer, employee, agent, consultant or
other person or entity which by its terms is not terminable by Bancorp or a
Bancorp Subsidiary on thirty (30) days written notice or less without any
payment by reason of such termination; and
(g) the name and annual salary as of January 1, 2001 of each
director or employee of Bancorp or any Bancorp Subsidiary with a salary in
excess of $125,000.
Copies of each document, plan or contract identified in Section 2.09 of
the Disclosure Schedule are appended to such Schedule and are hereby
incorporated in and constitute a part of the Disclosure Schedule.
Section 2.10 REPORTS. Bancorp and the Bancorp Subsidiaries have filed
all reports and statements, together with any amendments required to be made
with respect thereto, required to be filed with the SEC, the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"), the
Department of Financial Institutions of the State of California, the FDIC or
any other governmental authority with jurisdiction over Bancorp or any
Bancorp Subsidiary. As of the dates indicated thereon, each of such reports
and documents, including any 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 they were filed, and were accurate and complete in all material
respects.
Section 2.11 INVESTMENT PORTFOLIO. All United States Treasury
securities, obligations of other United States Government agencies and
corporations, obligations of States and political subdivisions of the United
States and other investment securities held by Bancorp or any Bancorp
Subsidiary, as reflected in the latest consolidated balance sheet of Bancorp
included in the Bancorp Financial Statements, are carried in accordance with
generally accepted accounting principles.
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Section 2.12 LOAN PORTFOLIO.
(a) All loans and discounts reflected in the Bancorp Financial
Statements as of March 31, 2001 or which were or will be entered into after
March 31, 2001 but before the Closing Date were and will be made for good,
valuable and adequate consideration in the ordinary course of the business of
Bancorp and the Bancorp Subsidiaries, in accordance with Bancorp's or the
Bancorp Subsidiaries' written lending policies, and they are not subject to
any known defenses, setoffs or counterclaims, including without limitation as
are afforded by usury or truth in lending laws, except as provided by
bankruptcy, insolvency or similar laws or by general principles of equity;
(b) the notes and other evidences of indebtedness evidencing such
loans and all forms of pledges, mortgages and other collateral documents and
security agreements are and will be in all material respects enforceable,
valid, true and genuine and what they purport to be;
(c) Except as disclosed in Section 2.12(c) of the Disclosure
Schedule, Bancorp and the Bancorp Subsidiaries have complied and will through
the Closing Date comply with all laws and regulations relating to such loans,
or to the extent there has not been such compliance, such failure to comply
will not materially interfere with the collection of any loan. All loans and
loan commitments extended by Bank and any extensions, renewals or
continuations of such loans and loan commitments were made in accordance with
its customary lending standards in the ordinary course of business. Such
loans are evidenced by appropriate and sufficient documentation based upon
customary and ordinary past practices of Bank; and
(d) Except as disclosed in Section 2.12(d) of the Disclosure
Schedule, the reserve for loan losses reflected in the Bancorp Financial
Statements as of March 31, 2001 is adequate under the requirements of
generally accepted accounting principles to provide for losses on loans
outstanding as of March 31, 2001.
Section 2.13 EMPLOYEE MATTERS AND ERISA.
(a) Except as disclosed in Section 2.13(a) of the Disclosure
Schedule, neither Bancorp nor any Bancorp Subsidiary has entered into any
collective bargaining agreement with any labor organization with respect to
any group of employees of Bancorp or any Bancorp Subsidiary, and there is no
present effort nor existing proposal to attempt to unionize any group of
employees of Bancorp or any Bancorp Subsidiary.
(b) (i) Bancorp and the Bancorp Subsidiaries have been and are in
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, including,
without limitation, any laws respecting employment discrimination and
occupational safety and health requirements, and neither Bancorp nor any
Bancorp Subsidiary is engaged in any unfair labor practice; (ii) there is no
unfair labor practice complaint against Bancorp or any Bancorp Subsidiary
pending or, to the best of Bancorp's knowledge, threatened before the
National Labor Relations Board; (iii) there is no labor dispute, strike,
slowdown or stoppage actually pending or threatened against or directly
affecting Bancorp or any Bancorp Subsidiary; and (iv) neither Bancorp nor any
Bancorp
9
Subsidiary has experienced any work stoppage or other material labor
difficulty during the past five years.
(c) Except as disclosed in Section 2.13(c) of the Disclosure
Schedule, neither Bancorp nor any Bancorp Subsidiary maintains, contributes
to or participates in or has any liability under any employee benefit plans,
as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or any nonqualified employee benefit plans or
deferred compensation, bonus, stock or incentive plans, or other employee
benefit or fringe benefit programs for the benefit of former or current
employees of Bancorp or any Bancorp Subsidiary (collectively, the "Employee
Plans"). No present or former employee of Bancorp or any Bancorp Subsidiary
has been charged with breaching nor has breached a fiduciary duty under any
Employee Plan. Neither Bancorp nor any Bancorp Subsidiary participates in,
nor has it in the past five years participated in, nor has it any present or
future obligation or liability under, any multiemployer plan (as defined at
Section 3(37) of ERISA). Except as separately disclosed in Section 2.13(c) of
the Disclosure Schedule, neither Bancorp nor any Bancorp Subsidiary
maintains, contributes to, or participates in any plan that provides health,
major medical, disability, life insurance, severance, salary continuation or
other benefits to one or more former employees or consultants.
(d) All liabilities of the Employee Plans have been funded on the
basis of consistent methods in accordance with sound actuarial assumptions
and practices, and no Employee Plan, at the end of any plan year, or at March
31, 2001 had an accumulated funding deficiency. No actuarial assumptions have
been changed since the last written report of actuaries on the Employee
Plans. All insurance premiums (including premiums to the Pension Benefit
Guaranty Corporation) have been paid in full, subject only to normal
retrospective adjustments in the ordinary course. Except as reflected in the
Bancorp Financial Statements, Bancorp and the Bancorp Subsidiaries have no
contingent or actual liabilities under Title IV of ERISA. No accumulated
funding deficiency (within the meaning of Section 302 of ERISA or Section 412
of the Code has been incurred with respect to any Employee Plan, whether or
not waived. No reportable event (as defined in Section 4043 of ERISA) has
occurred with respect to any Employee Plan as to which a notice would be
required to be filed with the Pension Benefit Guaranty Corporation. No claim
is pending, threatened or imminent with respect to any Employee Plan (other
than a routine claim for benefits for which plan administrative review
procedures have not been exhausted) for which Bancorp or any Bancorp
Subsidiary would be liable, except as is reflected in the Bancorp Financial
Statements. Bancorp and the Bancorp Subsidiaries have no liability for excise
taxes under Sections 4971, 4975, 4976, 4977, 4979 or 4980B of the Code or for
a fine under Section 502 of ERISA with respect to any Employee Plan. All
Employee Plans have in all material respects been operated, administered and
maintained in accordance with the terms thereof and in compliance with the
requirements of all applicable laws, including, without limitation, ERISA.
Section 2.14 TITLE TO PROPERTIES; LICENSES; INSURANCE.
(a) Bancorp and the Bancorp Subsidiaries have marketable title,
insurable at standard rates, free and clear of all liens, charges and
encumbrances (except taxes which are a lien but not yet payable and liens,
charges or encumbrances reflected in the Bancorp Financial Statements and
easements, rights-of-way, and other restrictions which are not material, and
further excepting
10
in the case of other Real Estate Owned, as such real estate is internally
classified on the books of Bancorp or any Bancorp Subsidiary, rights of
redemption under applicable law), to all of their real properties;
(b) all leasehold interests for real property and any material
personal property used by Bancorp or a Bancorp Subsidiary in its business are
held pursuant to lease agreements which are valid and enforceable in
accordance with their terms;
(c) all such properties comply in all material respects with all
applicable private agreements, zoning requirements and other governmental
laws and regulations relating thereto, and there are no condemnation
proceedings pending or threatened with respect to any of such properties;
(d) Except as disclosed in Section 2.14(d) of the Disclosure
Schedule, Bancorp and the Bancorp Subsidiaries have valid title or other
ownership rights under licenses to all material intangible personal or
intellectual property used by Bancorp or any Bancorp Subsidiary in its
business, free and clear of any material claim, defense or right of any other
person or entity, subject only to rights of the licensors pursuant to
applicable license agreements, which rights do not materially and adversely
interfere with the use of such property; and
(e) Bancorp and the Bancorp Subsidiaries carry the property,
liability, workers' compensation and such other types of insurance with
coverage amounts as is set forth in Section 2.14(e) of the Disclosure
Schedule. Valid and enforceable policies are outstanding and duly in force
and will remain duly in force through the Effective Time. Neither Bancorp nor
any Bancorp Subsidiary has received notice or other communication from the
issuer of any such insurance policy canceling or amending such policy or
threatening to do so.
Section 2.15 ENVIRONMENTAL MATTERS. As used in this Agreement,
"Environmental Laws" means all local, state and federal environmental, health
and safety laws and regulations in all jurisdictions in which Bancorp or any
Bancorp Subsidiary has done business or owned, leased or operated property,
including, without limitation, the Federal Resource Conservation and Recovery
Act, the Federal Comprehensive Environmental Response, Compensation and
Liability Act, the Federal Clean Water Act, the Federal Clean Air Act, and
the Federal Occupational Safety and Health Act.
Neither the conduct nor operation of Bancorp or any Bancorp Subsidiary
nor any condition of any property presently or previously owned, leased or
operated by any of them on their own behalf or in a fiduciary capacity
violates or violated any Environmental Law in any respect material to the
business of Bancorp and the Bancorp Subsidiaries, taken as a whole, and no
condition or event has occurred with respect to any of them or any property
that, with notice or the passage of time, or both, would constitute a
violation material to the business of Bancorp and the Bancorp Subsidiaries,
taken as a whole, of any Environmental Law or obligate (or potentially
obligate) Bancorp or any Bancorp Subsidiary to remedy, stabilize, neutralize
or otherwise alter the environmental condition of any property, where the
aggregate cost of such actions would be material to Bancorp and the Bancorp
Subsidiaries, taken as a whole. Neither Bancorp nor any Bancorp Subsidiary
has received notice from any person or entity that Bancorp or any Bancorp
Subsidiary, or the operation or condition of any property ever owned, leased
or
11
operated by any of them on their own behalf or in a fiduciary capacity, are
or were in violation of any Environmental Law, or that Bancorp or any Bancorp
Subsidiary is responsible (or potentially responsible) for remedying, or the
cleanup of, any pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on or beneath any such property.
Section 2.16 COMPLIANCE WITH LAWS AND REGULATIONS. Bancorp and the
Bancorp Subsidiaries have all licenses, franchises, permits and other
governmental authorizations that are necessary to enable them to conduct
their respective businesses, are qualified to conduct business in every
jurisdiction in which such qualification is legally required and are in
compliance in all material respects with all applicable laws, ordinances and
regulations.
Section 2.17 BROKERAGE. Except for fees payable by Bancorp to
Endicott Financial Advisors, L.L.C., there are no claims or agreements for
brokerage commissions, investment banking fees, financial advisory fees,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement payable by Bancorp or any Bancorp Subsidiary.
Section 2.18 NO UNDISCLOSED LIABILITIES. Neither Bancorp nor any
Bancorp Subsidiary has any material liability, whether known or unknown,
asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated, and whether due or to become due (and there is no
past or present fact, situation, circumstance, condition or other basis for
any present or future action, suit or proceeding, hearing, charge, complaint,
claim or demand against Bancorp or any Bancorp Subsidiary giving rise to any
such liability), except (i) liabilities reflected in the Bancorp Financial
Statements and (ii) liabilities of the same types incurred in the ordinary
course of business since March 31, 2001.
Section 2.19 STATEMENTS TRUE AND CORRECT. None of the information
supplied or to be supplied by Bancorp for inclusion in any document to be
filed with the SEC or any banking or other regulatory authority in connection
with the transactions contemplated hereby, at the respective times such
documents are filed, and, in the case of the Proxy Statement (as defined in
Section 4.03), when first mailed to the stockholders of Bancorp and at the
time of the Shareholders' Meeting (as defined in Section 4.03), will be false
or misleading with respect to any material fact, omit to state any material
fact necessary in order to make the statements therein not misleading or omit
to state any material fact required to be stated in order to correct any
statement in any earlier communication with respect to the solicitation of
any proxy for the Shareholders' Meeting. All documents that Bancorp is
responsible for filing with the SEC or any banking or other regulatory
authority in connection with the transactions contemplated hereby will comply
in all material respects with the provisions of applicable law and the
applicable rules and regulations thereunder.
Section 2.20 COMMITMENTS AND CONTRACTS. Except as disclosed in
Section 2.20 of the Disclosure Schedule (and with a true and correct copy of
the document or other item in question having been made available to FBA for
inspection), neither Bancorp nor any Bancorp Subsidiary is a party or subject
to any of the following (whether written or oral, express or implied):
(a) any agreement, arrangement or commitment not made in the
ordinary course of business;
12
(b) any agreement, indenture or other instrument not reflected in
the Bancorp Financial Statements relating to the borrowing of money by
Bancorp or a Bancorp Subsidiary or the guarantee by Bancorp or a Bancorp
Subsidiary of any obligation (except trade payables or instruments related to
transactions entered into in the ordinary course of business by Bancorp or a
Bancorp Subsidiary, such as deposits, federal funds borrowings and repurchase
agreements), other than agreements, indentures or instruments providing for
annual payments of less than $50,000; or
(c) any contract containing covenants which limit the ability of
Bancorp or any Bancorp Subsidiary to compete in any line of business or with
any person or containing any restriction of the geographical area in which,
or method by which, Bancorp or any Bancorp Subsidiary may carry on its
business.
Section 2.21 MATERIAL INTEREST OF CERTAIN PERSONS.
(a) Except as disclosed in Section 2.21(a) of the Disclosure
Schedule, no officer or director of Bancorp or Bank or any "associate" (as
such term is defined in Rule 14a-1 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) of any such officer or director has any
material interest in any contract or property (real or personal, tangible or
intangible), used in or pertaining to the business of Bancorp or any Bancorp
Subsidiary.
(b) All outstanding loans from Bancorp or any Bancorp Subsidiary to
any present officer, director, employee or any associate or related interest
of any person referred to in subsection (a) were approved by or reported to
the Board of Directors of the applicable entity in accordance with all
applicable laws and regulations.
Section 2.22 CONDUCT TO DATE. From and after December 31, 2000
through the date of this Agreement, except as disclosed in Section 2.22 of
the Disclosure Schedule, neither Bancorp nor any Bancorp Subsidiary has done
the following:
(a) failed to conduct its business in the ordinary and usual course
consistent with past practices;
(b) issued, sold, granted, conferred or awarded any common or other
stock, or any corporate debt securities properly classified under generally
accepted accounting principles applied on a consistent basis as long-term
debt on the balance sheets of Bancorp or Bank;
(c) effected any stock split or adjusted, combined, reclassified or
otherwise changed its capitalization;
(d) declared, set aside or paid any cash or stock dividend or other
distribution in respect of its capital stock, or purchased, redeemed,
retired, repurchased, or exchanged, or otherwise directly or indirectly
acquired or disposed of any of its capital stock;
(e) incurred any material obligation or liability (absolute or
contingent), except normal trade or business obligations or liabilities
incurred in the ordinary course of business, or subjected to lien any of its
assets or properties other than in the ordinary course of business consistent
with past practice;
13
(f) discharged or satisfied any material lien or paid any material
obligation or liability (absolute or contingent), other than in accordance
with its terms in the ordinary course of business;
(g) sold, assigned, transferred, leased, exchanged, or otherwise
disposed of any of its properties or assets other than for a fair
consideration in the ordinary course of business;
(h) except as required by contract, (A) increased the rate of
compensation of, or paid any bonus to, any of its directors, officers, or
other employees, except merit or promotion increases in accordance with
existing policy, (B) entered into any new, or amended or supplemented any
existing, employment, management, consulting, deferred compensation,
severance or other similar contract, except as described in Section 5.04(c)
and Section 5.04(d) of the Disclosure Schedule, (C) entered into, terminated
or substantially modified any of the Employee Plans or (D) agreed to do any
of the foregoing;
(i) suffered any material damage, destruction or loss, whether as
the result of fire, explosion, earthquake, accident, casualty, labor trouble,
taking of property by any governmental authority, flood, windstorm, embargo,
riot, act of God, act of war or other casualty or event, whether or not
covered by insurance;
(j) canceled or compromised any debt, except for debts charged off
or compromised in accordance with past practice;
(k) entered into any material transaction, contract or commitment
outside the ordinary course of its business; or
(l) made or guaranteed any loan to any of the Employee Plans.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FBA AND FB&T
FBA and FB&T each represents and warrants to Bancorp as follows:
Section 3.01 ORGANIZATION. FBA and FB&T are corporations duly
organized, validly existing and in good standing under the laws of the States
of Delaware and California, respectively. Each of such corporations has the
power to own all of its property and assets, to incur all of its liabilities
and to carry on its business as now conducted.
Section 3.02 AUTHORIZATION. The Boards of Directors of FBA and FB&T
have by all requisite action approved this Agreement, the Merger and the Bank
Merger and authorized the execution hereof on behalf of each corporation by
duly authorized officers and the performance of their respective obligations
hereunder. FBA, in its capacity as the sole holder of outstanding capital
stock of FB&T, has approved this Agreement, the Merger and the Bank Merger.
Nothing in the Certificate of Incorporation of FBA, the Articles of
Incorporation of FB&T, or the Bylaws of either entity or any other agreement,
instrument, decree, proceeding, law or regulation (except as specifically
referred to in this Agreement) by or to which FBA or FB&T is bound or subject
prohibits or inhibits either of them from consummating this Agreement, the
Merger and the Bank
14
Merger on the terms and conditions herein contained. This Agreement has been
duly and validly executed and delivered by FBA and FB&T and constitutes a
legal, valid and binding obligation of each of them, enforceable against them
in accordance with its terms.
Section 3.03 FINANCIAL INFORMATION. The audited consolidated balance
sheets of FBA and its subsidiaries as of December 31, 2000 and related
consolidated statements of income and statements of changes in stockholders'
equity and of cash flows for the three years ended December 31, 2000,
together with the notes thereto, included in FBA's Annual Report on Form 10-K
for the year ended December 31, 2000 as currently on file with the SEC, and
the unaudited consolidated balance sheets of FBA and its consolidated
subsidiaries as of March 31, 2001 and related consolidated statements of
income and statements of changes in stockholders' equity and of cash flows
for the three months ended March 31, 2001, together with the notes thereto,
included in FBA's Quarterly Report on Form 10-Q for the three months ended
March 31, 2001 as currently on file with the SEC have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis (except as disclosed therein) and fairly present the
consolidated financial position and the consolidated results of operations,
changes in shareholders' equity and cash flows of the FBA and its
consolidated subsidiaries as of the dates and for the periods indicated.
Section 3.04 ABSENCE OF CHANGES. Since December 31, 2000 there has
not been any material adverse change in the financial condition, the results
of operations or the business or prospects of FBA and its subsidiaries taken
as a whole, that would reasonably be expected to adversely affect FBA's
ability to consummate the transactions contemplated by this Agreement.
Section 3.05 LITIGATION; PROCEEDINGS. There is no litigation, claim
or other proceeding pending or, to the best of the knowledge of FBA or FB&T,
threatened, that would prohibit either of them from consummating the
transactions contemplated by this Agreement. There is no regulatory
proceeding pending or, to the best knowledge of FBA or FB&T, threatened, that
would prohibit either of them from consummating the transactions contemplated
by this Agreement.
Section 3.06 STATEMENTS TRUE AND CORRECT. None of the information
supplied or to be supplied by FBA or FB&T for inclusion in any document to be
filed with any regulatory authority in connection with the transactions
contemplated hereby will, at the respective times such documents are filed be
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein not
misleading. All documents that FBA and FB&T are responsible for filing with
any other regulatory authority in connection with the transactions
contemplated hereby will comply with applicable laws, rules and regulations.
Section 3.07 ACCESS TO FUNDS. As of the date of this Agreement, FBA
has, and on the Closing Date it will have, access to sufficient funds to
enable it to pay all of the consideration contemplated to be paid in
connection with the Merger and all fees and expenses contemplated by this
Agreement payable by FBA.
Section 3.08 REGULATORY APPROVALS. Neither FBA nor FB&T is aware of
any fact or circumstance related to their respective business operations that
cause either of them to believe
15
that FBA and FB&T will not be able to obtain the regulatory approvals
necessary for the consummation of the transactions contemplated by this
Agreement.
ARTICLE IV
AGREEMENTS OF BANCORP AND BANK
Section 4.01 BUSINESS IN ORDINARY COURSE. Bancorp and Bank agree
that, from the date of this Agreement until the earlier of the Closing Date
or the termination of this Agreement in accordance with its terms:
(a) Bancorp and the Bancorp Subsidiaries shall continue to carry on
their business and the discharge or incurrence of obligations and liabilities
only in the usual, regular and ordinary course of business, as heretofore
conducted, and by way of amplification and not limitation, Bancorp and each
Bancorp Subsidiary will not:
(i) declare or pay any dividend or make any other distribution
to shareholders, whether in cash, stock or other property, except for
dividends of Bancorp Subsidiaries payable to Bancorp or a Bancorp
Subsidiary; or
(ii) issue any Bancorp Stock or other capital stock or any
options, warrants, or other rights to subscribe for or purchase Bancorp
Stock or any other capital stock or any securities convertible into or
exchangeable for any capital stock (except for the issuance of Bancorp
Common in accordance with the terms of convertible securities,
exchangeable securities or Bancorp Options identified in Section 2.01(d)
of the Disclosure Schedule); or
(iii) directly or indirectly redeem, purchase or otherwise
acquire any Common Stock or any other capital stock of Bancorp or any
Bancorp Subsidiary; or
(iv) effect a reclassification, recapitalization, splitup,
exchange of shares, readjustment or other similar change in or to any
capital stock, or otherwise reorganize or recapitalize; or
(v) change its certificate or articles of incorporation, as
the case may be, or bylaws, nor enter into any agreement to merge or
consolidate with, or sell a significant portion of its assets to, any
person or entity.
(b) Bancorp and each Bancorp Subsidiary will not, without the prior
written consent of FBA:
(i) grant any increase (other than ordinary and normal
increases consistent with past practices) in the compensation payable or
to become payable to officers or salaried employees, grant any stock
options or, except as required by law or as described in Section 5.04(c)
of the Disclosure Schedule, adopt or make any change in any bonus,
insurance, pension, or other Employee Plan, agreement, payment or
arrangement made to, for or with any of such officers or employees;
16
(ii) borrow or agree to borrow any amount of funds except in
the ordinary course of business, or directly or indirectly guarantee or
agree to guarantee any obligations of others;
(iii) make or commit to make any new loan or letter of credit
or any new or additional discretionary advance under any existing line
of credit, in principal amounts in excess of $1,000,000 or that would
increase the aggregate credit outstanding to any one borrower (or group
of affiliated borrowers) to more than $2,000,000 (excluding for this
purpose any accrued interest or overdrafts);
(iv) purchase or otherwise acquire any investment security
for its own account having an average remaining life to maturity greater
than five years or any asset-backed securities other than those issued
or guaranteed by the Government National Mortgage Association, the
Federal National Mortgage Association or the Federal Home Loan Mortgage
Corporation;
(v) enter into any agreement, contract or commitment having
a term in excess of three (3) months other than letters of credit, loan
agreements, credit and deposit agreements and documents, in each case in
the ordinary course of business;
(vi) except in the ordinary course of business, place on any
of its assets or properties any mortgage, pledge, lien, charge, or other
encumbrance;
(vii) except in the ordinary course of business, cancel or
accelerate any material indebtedness owing to Bancorp or a Bancorp
Subsidiary or any claim which Bancorp or any Bancorp Subsidiary may
possess, or waive any material rights of substantial value;
(viii) sell or otherwise dispose of any real property or any
material amount of any tangible or intangible personal property, other
than properties acquired in foreclosure or otherwise in the ordinary
collection of indebtedness;
(ix) foreclose upon or otherwise take title to or possession
or control of any real property without first obtaining a phase one
environmental report thereon which indicates that the property is free
of pollutants, contaminants or hazardous or toxic waste materials;
PROVIDED, HOWEVER, that a report shall not be required with respect to
single family, non-agricultural residential property of one acre or less
to be foreclosed upon unless the entity proposing to acquire the
property has reason to believe that such property might contain any such
waste materials or otherwise might be contaminated;
(x) commit any act or fail to do any act which will cause a
breach of any agreement, contract or commitment and which will have a
material adverse effect on the business, financial condition or earnings
of Bancorp or a Bancorp Subsidiary;
(xi) violate any law, statute, rule, governmental regulation
or order, which violation might have a material adverse effect on the
business, financial condition, or earnings of Bancorp or a Bancorp
Subsidiary;
17
(xii) purchase any single piece of real or personal property
or make any other single capital expenditure where the amount paid or
committed therefor is in excess of $75,000; or
(xiii) increase or decrease the rate of interest paid on time
deposits, except in a manner consistent with past practices.
(c) Bancorp and the Bancorp Subsidiaries shall not, without the
prior written consent of FBA, engage in any transaction or take any action
that would render untrue in any material respect any of the representations
and warranties of Bancorp and Bank contained in ARTICLE II hereof, if such
representations and warranties were given immediately following such
transaction or action.
(d) Bancorp shall promptly notify FBA of the occurrence of any
matter or event known to and directly involving Bancorp that is materially
adverse to the business, operations, properties, assets, or condition
(financial or otherwise) of Bancorp and the Bancorp Subsidiaries, taken as a
whole.
(e) Bancorp shall not solicit or encourage, or, except to the
extent determined by Bancorp's Board of Directors, after consulting with
outside counsel, to be required by applicable law, hold discussions or
negotiations with or provide information to any person or entity in
connection with any proposal for the acquisition of all or a substantial
portion of the business, assets, shares of Bancorp Common or other securities
or assets of Bancorp or any Bancorp Subsidiary (an "Acquisition Proposal").
Bancorp shall promptly advise FBA of its receipt of any Acquisition Proposal
and the substance thereof.
Section 4.02 BREACHES. Bancorp and Bank shall, in the event either
has knowledge of the occurrence, or impending or threatened occurrence, of
any event or condition which would cause or constitute a breach (or would
have caused or constituted a breach had such event occurred or been known
prior to the date hereof) of any of its representations or agreements
contained or referred to herein, give prompt written notice thereof to FBA
and use their best efforts to prevent or promptly remedy the same.
Section 4.03 SUBMISSION TO SHAREHOLDERS. Bancorp shall as soon as
practicable (i) prepare and file with the SEC a Proxy Statement for a meeting
of its shareholders (such meeting together with any adjournments is referred
to as the "Shareholders' Meeting") for approval of this Agreement and the
Merger (the "Proxy Statement") and (ii) promptly cause the Shareholders'
Meeting to be duly called and held. Unless the Board of Directors of Bancorp
shall have determined, after consulting with outside counsel, that it is
required by applicable Corporate Law and fiduciary principles not to do so,
Bancorp's Board of Directors shall unanimously recommend to Bancorp's
shareholders the approval of this Agreement and the Merger, cause the Proxy
Statement to be mailed to Bancorp's shareholders and use its best efforts to
obtain such shareholder approval.
Section 4.04 CONSUMMATION OF AGREEMENT. Bancorp and Bank shall
perform and fulfill all conditions and obligations on their respective parts
to be performed or fulfilled pursuant to this Agreement and to effect the
Merger and the Bank Merger in accordance with the terms and
18
provisions hereof. Bancorp and Bank shall furnish to FBA in a timely manner
all information, data and documents reasonably requested by FBA and shall
cooperate fully with FBA and FB&T in seeking such approvals and in
consummating the transactions contemplated by this Agreement.
Section 4.05 ENVIRONMENTAL REPORTS. Bancorp and Bank shall provide to
FBA, as soon as reasonably practical, but not later than forty five (45) days
after the date hereof, a report of a phase one environmental investigation on
all real property owned, leased or operated by Bancorp or any Bancorp
Subsidiary as of the date hereof (other than space in retail and similar
establishments leased by Bancorp for automatic teller machines), and within
ten (10) days after the acquisition or lease of any real property acquired or
leased by Bancorp or any Bancorp Subsidiary after the date hereof (other than
space in retail and similar establishments leased or operated for automatic
teller machines), except as otherwise provided in Section 4.01(b)(ix). If
required by the phase one investigation, in FBA's reasonable opinion, Bancorp
shall obtain and provide to FBA a report of a phase two investigation on
properties requiring such additional study. FBA shall have fifteen (15)
business days from the receipt of any such phase two report to notify Bancorp
of any objection to the contents of such report. Should the cost of taking
all remedial and corrective actions and measures with respect to any real
property owned by Bancorp or any Bancorp Subsidiary (i) required by
applicable law or (ii) recommended or suggested by such report or prudent in
light of serious life, health or safety concerns, in the aggregate, exceed
the sum of $400,000 as reasonably estimated by an environmental expert
retained for such purpose by FBA and reasonably acceptable to Bancorp, or if
the cost of such actions and measures cannot be so reasonably estimated by
such expert to be $400,000 or less with a reasonable degree of certainty,
then FBA shall have the right pursuant to Section 7.05 hereof, for a period
of ten (10) business days following receipt of such estimate or indication
that the cost of such actions and measures can not be so reasonably
estimated, to terminate this Agreement, which shall be FBA's sole remedy in
such event.
Section 4.06 ACCESS TO INFORMATION. Bancorp and Bank shall permit FBA
reasonable access, in a manner which will avoid undue disruption or
interference with their normal operations, to their properties and shall
cause the Bancorp Subsidiaries to provide to FBA comparable access to their
properties. Bancorp and Bank shall disclose and make available to FBA all
books, documents, papers and records relating to the assets, stock ownership,
properties, operations, obligations and liabilities of Bancorp and the
Bancorp Subsidiaries including, but not limited to, all books of account
(including the general ledger), tax records, minute books of directors' and
shareholders' meetings, organizational documents, material contracts and
agreements, loan files, filings with any regulatory authority, accountants'
workpapers (if available and subject to the respective independent
accountants' consent), litigation files, plans affecting employees, and any
other business activities or prospects in which FBA may have a reasonable and
legitimate interest in furtherance of the transactions contemplated by this
Agreement. However, Bancorp and Bank shall not be required to disclose or
make available to FBA any documents or minutes that discuss FBA and the
rights of Bancorp and Bank under the terms of this Agreement. FBA will hold
any such information which is nonpublic in confidence in accordance with the
provisions of Section 8.01 hereof.
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Section 4.07 CONSENTS OF THIRD PARTIES. Bancorp and Bank shall use
their best efforts to obtain all consents of third parties necessary or
desirable for the consummation of the transactions contemplated by this
Agreement.
Section 4.08 SUBSEQUENT FINANCIAL STATEMENTS. As soon as available
after the date hereof, Bancorp shall deliver to FBA the monthly unaudited
consolidated balance sheets and profit and loss statements of Bancorp
prepared for its internal use, the Report of Condition and Income of Bank for
each quarterly period completed prior to the Closing, and all other financial
reports or statements submitted to regulatory authorities after the date
hereof, to the extent permitted by law (collectively, the "Subsequent Bancorp
Financial Statements"). The Subsequent Bancorp Financial Statements shall be
prepared on a basis consistent with past accounting practices, shall fairly
present the financial condition and results of operations for the dates and
periods presented and shall not include any material assets or omit to state
any material liabilities, absolute or contingent, or other facts, which
inclusion or omission would render such financial statements misleading in
any material respect.
Section 4.09 MERGER OF BANKS. Bancorp and Bank shall cooperate with
FBA, execute such documents and file such applications and notices as may be
required or desirable in order to enable Bank to enter into and consummate a
merger with FB&T (the "Bank Merger"), to be effective immediately following
the Effective Time or as soon thereafter as practicable.
ARTICLE V
AGREEMENTS OF FBA AND FB&T
Section 5.01 REGULATORY APPROVALS. FBA and FB&T promptly shall file
all regulatory applications required in order to consummate the Merger and
the Bank Merger, including but not limited to the necessary applications for
the prior approval of the Federal Reserve Board. FBA shall keep Bancorp
reasonably informed as to the status of such applications and make available
to Bancorp, upon reasonable request, copies of such applications and any
supplementally filed materials.
Section 5.02 BREACHES. FBA and FB&T shall, in the event either has
knowledge of the occurrence, or impending or threatened occurrence, of any
event or condition which would cause or constitute a breach (or would have
caused or constituted a breach had such event occurred or been known prior to
the date hereof) of any of its representations or agreements contained or
referred to herein, give prompt written notice thereof to Bancorp and use
their best efforts to prevent or promptly remedy the same.
Section 5.03 CONSUMMATION OF AGREEMENT. FBA and FB&T shall use their
best efforts to perform and fulfill all conditions and obligations on their
parts to be performed or fulfilled under this Agreement and to effect the
Merger and the Bank Merger in accordance with the terms and conditions of
this Agreement.
Section 5.04 EMPLOYEE BENEFITS.
(a) FBA shall provide the benefits described in this Section 5.04
with respect to each person who remains an employee of Bancorp or a Bancorp
Subsidiary following the Closing
20
Date (each a "Continued Employee"). Subject to FBA's ongoing right to adopt
subsequent amendments or modifications of any plan referred to in this
Section 5.04 or to terminate any such plan, in FBA's sole discretion, each
Continued Employee shall be entitled, as a new employee of a subsidiary of
FBA, to participate in such employee benefit plans, as defined in Section
3(3) of ERISA, or any non-qualified employee benefit plans or deferred
compensation, stock option, bonus or incentive plans, or other employee
benefit or fringe benefit programs as may be in effect generally for
employees of all of FBA's subsidiaries (the "FBA Plans"), if and as a
Continued Employee shall be eligible and, if required, selected for
participation therein under the terms thereof and otherwise shall not be
participating in a similar plan which is maintained by Bancorp after the
Effective Time. Bancorp employees shall participate therein on the same basis
as similarly situated employees of other subsidiaries of FBA. All such
participation shall be subject to the terms of such plans as may be in effect
from time to time, and this Section 5.04 shall not give Continued Employees
any rights or privileges superior to those of other employees of subsidiaries
of FBA. FBA may terminate or modify all Employee Plans, and FBA's obligation
under this Section 5.04 shall not be deemed or construed so as to provide
duplication of similar benefits but, subject to that qualification, FBA shall
credit each Continued Employee with his or her term of service with Bancorp,
for purposes of vesting and any age or period of service requirements for
commencement of participation with respect to any FBA Plan in which Continued
Employees may participate. Nothing in this Agreement shall obligate FBA,
Bancorp or any other entity to employ any person or to continue to employ any
person for any period of time.
(b) Following the consummation of the Merger, FBA will cause
Bancorp and FB&T to perform all of their obligations pursuant to the
agreements identified in Section 2.09(f) of the Disclosure Schedule relating
to severance obligations and payments required to be made upon a change of
control.
(c) Following the consummation of the Merger, FBA will provide, or
cause Bancorp to provide, the benefits set forth in Section 5.04(c) of the
Disclosure Schedule with respect to the employees of Bancorp and the Bancorp
Subsidiaries.
(d) Following the consummation of the Merger, FBA will pay, or
cause Bancorp to pay, to the employees to be listed in a supplement to
Section 5.04(d) of the Disclosure Schedule, which supplement is to be
delivered by Bancorp to FBA within 30 days of the date of this Agreement, the
retention bonuses listed on Schedule 5.04(d) of the Disclosure Schedule.
Section 5.05 INDEMNIFICATION AND INSURANCE.
(a) For five years after the Closing Date, FBA shall cause Bancorp
to indemnify, defend and hold harmless the present and former officers,
directors, employees and agents of Bancorp and the Bancorp Subsidiaries
(each, an "Indemnified Party") against all losses, expenses, claims, damages
or liabilities arising out of actions or omissions related to their positions
at Bancorp or a Bancorp Subsidiary occurring on or prior to the Closing Date
(including, without limitation, the transactions contemplated by this
Agreement) to the extent permitted by applicable Corporate Laws and required
by Bancorp's Articles of Incorporation as in effect on March 31, 2001.
21
(b) If after the Closing Date Bancorp or its successors or assigns
(i) shall consolidate with or merge into any other corporation or entity and
shall not be the continuing or surviving entity of such consolidation or
merger, or (ii) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then and in each such
case, FBA shall cause Bancorp's successors and assigns to assume any
remaining obligations set forth in this Section 5.05. If Bancorp shall
liquidate, dissolve or otherwise wind up its business, then FBA shall
indemnify, defend and hold harmless each Indemnified Party to the same extent
and on the same terms that Bancorp was so obligated pursuant to this Section
5.05.
(c) BYL shall be permitted to maintain up to $3 million in
aggregate directors' and officers' liability insurance coverage for acts or
omissions occurring prior to the Effective Time by persons who are currently
covered by the directors' and officers' liability insurance policy maintained
by BYL and to purchase an extension of the claims reporting period for the
policy providing such coverage for a period of four years following the
Effective Date. The total premium for the four-year extension of the claims
reporting period shall not exceed $40,000.
Section 5.06 ACCESS TO INFORMATION. FBA and FB&T shall disclose and
make available to Bancorp all books, documents, papers and records relating
to the assets, stock ownership, properties, operations, obligations and
liabilities of FBA and FB&T including, but not limited to, all books of
account (including the general ledger), tax records, minute books of
directors' and shareholders' meetings, organizational documents, material
contracts and agreements, loan files, filings with any regulatory authority,
accountants' workpapers (if available and subject to the respective
independent accountants' consent), litigation files, plans affecting
employees, and any other business activities or prospects in which FBA may
have a reasonable and legitimate interest in furtherance of the transactions
contemplated by this Agreement. However, FBA and FB&T shall not be required
to disclose or make available to Bancorp any documents or minutes that
discuss Bancorp or Bank and the rights of FBA and FB&T under the terms of
this Agreement. Bancorp will hold any such information which is nonpublic in
confidence in accordance with the provisions of Section 8.01 hereof.
Section 5.07 CONDUCT OF BUSINESS. From the date of this Agreement
until the Effective Time, FBA and FB&T will conduct their respective
businesses in accordance with safe and sound business practices.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.01 CONDITIONS TO THE OBLIGATIONS OF FBA AND FB&T. The
obligations of FBA and FB&T to effect the Merger and the other transactions
contemplated by this Agreement shall be subject to the satisfaction (or
waiver by FBA and FB&T) prior to or on the Closing Date of the following
conditions:
(a) the representations and warranties made by Bancorp and Bank in
this Agreement shall be true in all material respects on and as of the
Closing Date with the same effect as though such representations and
warranties had been made or given on and as of the Closing Date;
22
(b) Bancorp and Bank shall have performed and complied in all
material respects with all of its obligations and agreements required to be
performed prior to the Closing Date;
(c) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other legal restraint or prohibition preventing the consummation of the
Merger or the Bank Merger shall be in effect, nor shall any proceeding by any
regulatory authority or other person seeking any of the foregoing be pending.
There shall not be any action taken, or any statute, rule, regulation or
order enacted, entered, enforced or deemed applicable to the Merger or the
Bank Merger which makes the consummation thereof illegal;
(d) all necessary approvals, consents and authorizations required
by law for consummation of the Merger, including the requisite approvals of
the shareholders of Bancorp and all legally required regulatory approvals,
shall have been obtained, and all waiting periods required by law shall have
expired;
(e) FBA shall have received the environmental reports required by
Section 4.05 hereof and shall not have elected pursuant to Section 7.05
hereof to terminate this Agreement;
(f) FBA shall have received all documents required to be received
from Bancorp, including without limitation the consents referred to in
Section 4.07, on or prior to the Closing Date, all in form and substance
reasonably satisfactory to FBA; and
(g) the Bank Merger shall have been authorized by all necessary
parties, and any regulatory approvals required in connection therewith shall
have been granted.
Section 6.02 CONDITIONS TO THE OBLIGATIONS OF BANCORP AND BANK. The
obligations of Bancorp and Bank to effect the Merger and the other
transactions contemplated by this Agreement shall be subject to the
satisfaction (or waiver by Bancorp and Bank) prior to or on the Closing Date
of the following conditions:
(a) the representations and warranties made by FBA and FB&T in this
Agreement shall be true in all material respects on and as of the Closing
Date with the same effect as though such representations and warranties had
been made or given on the Closing Date;
(b) FBA shall have performed and complied in all material respects
with all of its obligations and agreements hereunder required to be performed
prior to the Closing Date;
(c) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other legal restraint or prohibition preventing the consummation of the
Merger shall be in effect, nor shall any proceeding by any bank regulatory
authority or other person seeking any of the foregoing be pending. There
shall not be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Merger or the Bank
Merger which makes the consummation thereof illegal;
(d) all necessary approvals, consents and authorizations required
by law for consummation of the Merger, including the requisite approvals of
the shareholders of Bancorp
23
and all legally required regulatory approvals, shall have been obtained, and
all waiting periods required by law shall have expired; and
(e) Bancorp shall have received all documents required to be
received from FBA on or prior to the Closing Date, all in form and substance
reasonably satisfactory to Bancorp.
ARTICLE VII
TERMINATION
Section 7.01 MUTUAL AGREEMENT. This Agreement may be terminated by
the mutual written agreement of the parties at any time prior to the Closing
Date, regardless of whether approval of this Agreement and the Merger by the
shareholders of Bancorp shall have been previously obtained.
Section 7.02 BREACH OF AGREEMENTS. In the event that there is a
material breach of any of the representations and warranties or agreements of
FBA or FB&T, on one hand, or Bancorp or Bank, on the other hand, which breach
is not cured within thirty (30) days after notice to cure such breach is
given to the breaching party by the non-breaching party, then the
non-breaching parties, regardless of whether approval of this Agreement and
the Merger by the shareholders of Bancorp shall have been previously
obtained, may terminate and cancel this Agreement by providing written notice
of such action to the other parties. FBA and FB&T acknowledge that the
institution by PBOC Holdings, Inc. ("PBOC") or People's Bank of California
("People's Bank") or any of their respective successors of any legal
proceedings against Bancorp or Bank related to the transactions contemplated
by the Agreement and Plan of Reorganization dated as of November 1, 2000
between PBOC, People's Bank, Bancorp and Bank shall not constitute a material
breach of the representations and warranties of Bancorp or Bank contained in
this Agreement, entitling FBA and FB&T to terminate this Agreement.
Section 7.03 FAILURE OF CONDITIONS. In the event that any of the
conditions to the obligations of a party are not satisfied or waived on or
prior to the Closing Date, and if any applicable cure period provided in
Section 7.02 hereof has lapsed, then such party may, regardless of whether
approval of the transactions contemplated by this Agreement by the
shareholders of Bancorp shall have been previously obtained, terminate and
cancel this Agreement by delivery of written notice of such action to the
other parties.
Section 7.04 DENIAL OF REGULATORY APPROVAL. If any regulatory
application filed pursuant to Section 5.01 hereof should be finally denied or
disapproved by a regulatory authority, then this Agreement thereupon shall be
deemed terminated and canceled; PROVIDED, HOWEVER, that a request for
additional information or undertaking by FBA, as a condition for approval,
shall not be deemed to be a denial or disapproval so long as FBA diligently
provides the requested information or undertaking. In the event an
application is denied pending an appeal, petition for review or similar such
act on the part of FBA (hereinafter referred to as the "Appeal"), then the
application will be deemed denied unless FBA prepares and timely files and
continues to pursue an Appeal seeking the necessary approval.
24
Section 7.05 ENVIRONMENTAL REPORTS. FBA may terminate this Agreement
to the extent provided in Section 4.05 by giving written notice of such
termination to Bancorp.
Section 7.06 REGULATORY ENFORCEMENT MATTERS. In the event that
Bancorp or any Bancorp Subsidiary shall become a party or subject to any
material written agreement, memorandum of understanding, cease and desist
order, imposition of civil money penalties or other regulatory enforcement
action or proceeding with any regulatory authority after the date of this
Agreement, then FBA may terminate this Agreement by giving written notice of
such termination to Bancorp; PROVIDED, HOWEVER, that the matters identified
in Section 2.06 of the Disclosure Schedule shall not be a basis of such a
termination.
Section 7.07 UNILATERAL TERMINATION. If the Closing Date shall not
have occurred on or prior to the day which is 240 days after the date of this
Agreement, then this Agreement may be terminated by any party by giving
written notice to the other parties.
Section 7.08 LIQUIDATED DAMAGES. In the event that either FBA or
Bancorp shall have breached any provision of this Agreement and the other
party shall have properly terminated this Agreement pursuant to Section 7.02,
then the party breaching this Agreement shall be liable to the non-breaching
party for liquidated damages in the amount of $2,500,000.00. The amount of
liquidated damages has been agreed to by the parties based upon their good
faith analysis of the range of actual damages likely to be sustained by a
non-breaching party, recognizing that the actual damages, including but not
limited to fees of attorneys and other advisers, other out-of-pocket costs,
opportunity costs and other potential direct and consequential damages would
be difficult to ascertain with certainty; that the amount of liquidated
damages is a reasonable amount as of the time this Agreement has been
negotiated; and that no portion of such damages is intended to operate as a
penalty to any party.
Section 7.09 ACQUISITION PROPOSAL. Bancorp may terminate this
Agreement if its Board of Directors shall have approved an Acquisition
Proposal after determining, upon the basis of the written legal advice of
outside counsel (who may be Bancorp's regular outside counsel), that such
approval is required in the exercise of its fiduciary obligations under
applicable law.
Section 7.10 BREAK-UP FEE.
(a) Bancorp hereby agrees to pay to FBA, and FBA shall be entitled
to payment of, a fee in the amount of $2,500,000.00 (the "Fee") in
immediately available funds within five (5) business days following the
occurrence of a Purchase Event (as defined herein), PROVIDED that the right
to receive the Fee shall terminate if any of the following (a "Fee
Termination Event") occurs prior to the occurrence of a Purchase Event: (i)
the Effective Time of the Merger; (ii) termination of this Agreement in
accordance with the provisions hereof if such termination occurs prior to the
occurrence of a Preliminary Purchase Event (as defined herein), except a
termination by FBA pursuant to Section 7.02 hereof; or (iii) the expiration
of eighteen months after termination of this Agreement if such termination
follows the occurrence of a Preliminary Purchase Event or a termination by
FBA pursuant to Section 7.02 hereof (PROVIDED that if a Preliminary Purchase
Event continues or occurs beyond such termination, the Fee Termination Event
shall be eighteen months after the expiration of the Last Preliminary
Purchase Event but in
25
no event more than 24 months after such termination). The "Last Preliminary
Purchase Event" shall mean the last Preliminary Purchase Event to expire.
(b) The term "Preliminary Purchase Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Bancorp, without having received FBA's prior written
consent, shall have entered into an agreement to engage in an
Acquisition Transaction (as defined herein) with any person (the term
"person" for purposes of this Section 7.10 having the meaning assigned
thereto in Sections 3(a)(9) and 13(d)(3) of the Exchange Act and the
rules and regulations thereunder) other than FBA or a subsidiary of FBA
(an "FBA Subsidiary"), or the Board of Directors of Bancorp shall have
approved or recommended that the shareholders of Bancorp approve or
accept any Acquisition Transaction with any person other than FBA or an
FBA Subsidiary. For purposes of this Agreement, "Acquisition
Transaction" shall mean (A) a merger, consolidation or any similar
transaction involving Bancorp or a Bancorp Subsidiary, (B) a purchase,
lease or other acquisition of all or substantially all of the assets of
Bancorp or a Bancorp Subsidiary, (C) a purchase or other acquisition in
compliance with applicable laws and regulations (including by way of
merger, consolidation, share exchange or otherwise) of securities
representing 10% or more of the voting power of Bancorp or a Bancorp
Subsidiary, or (D) any transaction substantially similar in effect to
any of the foregoing;
(ii) (A) any person (other than FBA, or an FBA Subsidiary,
James F. Dierberg ("Dierberg"), any member of Dierberg's immediate
family or any entity controlled by Dierberg or any member of Dierberg's
immediate family) shall have acquired beneficial ownership or the right
to acquire beneficial ownership of 10% or more of any class of voting
securities of Bancorp or a Bancorp Subsidiary (the term "beneficial
ownership" for purposes of this Agreement having the meaning assigned
thereto under Section 13(d) of the Exchange Act and the rules and
regulations thereunder), or (B) any group (as such term is defined in
Section 13(d) of the Exchange Act) other than a group of which FBA or an
FBA Subsidiary is a member, shall have been formed that beneficially
owns 10% or more of any class of voting securities of Bancorp or a
Bancorp Subsidiary;
(iii) any person other than FBA or an FBA Subsidiary shall
have made a bona fide proposal to Bancorp or its shareholders, by public
announcement or written communication, to engage in an Acquisition
Transaction (including, without limitation, any transaction which any
person other than FBA or an FBA Subsidiary shall have commenced, or
shall have filed a registration statement under the Securities Act of
1933, as amended, with respect to a tender offer or exchange offer to
purchase any shares of Bancorp Common such that, upon consummation of
the offer, such person would own or control 25% or more of the then
outstanding shares of Bancorp Common (such an offer being referred to
herein as a "Tender Offer" or an "Exchange Offer," respectively);
(iv) after a proposal is made by a third party to Bancorp or
its shareholders to engage in an Acquisition Transaction, Bancorp shall
have breached any covenant or obligation contained in this Agreement,
such breach would entitle FBA to terminate this
26
Agreement under Section 7.02 of this Agreement and such breach shall not
have been cured within thirty (30) days after written notice thereof from
FBA;
(v) any person other than FBA or an FBA Subsidiary, other
than in connection with a transaction to which FBA has given its prior
written consent, shall have filed an application or notice with a
governmental authority or regulatory or administrative agency or
commission, domestic or foreign, for approval to engage in an
Acquisition Transaction; or
(vi) the holders of Bancorp Common shall not have approved
this Agreement at the meeting of shareholders held for the purpose of
voting on this Agreement, such meeting shall not have been held or shall
have been canceled or adjourned prior to termination of this Agreement,
or Bancorp's Board of Directors shall have withdrawn or modified in a
manner adverse to FBA the recommendation of Bancorp's Board of Directors
with respect to this Agreement, in each case after any person (other
than FBA or an FBA Subsidiary) shall have (A) made or disclosed an
intention to make a proposal to engage in an Acquisition Transaction or
(B) commenced a Tender Offer or an Exchange Offer.
(c) the Term "Purchase Event" shall mean either of the following
events or transactions occurring after the date hereof:
(i) the acquisition by any person, other than FBA or an FBA
Subsidiary, alone or together with such person's affiliates and
associates, or any group (as defined in Section 13(d) of the Exchange
Act), of beneficial ownership of 25% or more of the then outstanding
voting securities of Bancorp; or
(ii) the occurrence of a Preliminary Purchase Event described
in Section 7.10(b)(i), except that the percentage referred to in clause
(C) shall be 25%.
(d) Bancorp shall notify FBA promptly in writing of its knowledge
of the occurrence of any Preliminary Purchase Event or Purchase Event, but
such notice by Bancorp shall not be a condition precedent to the right of FBA
to receive payment of the Fee.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01 CONFIDENTIAL INFORMATION. The parties acknowledge the
confidential and proprietary nature of the "Information" (as herein defined)
which has heretofore been exchanged and which will be received from each
other hereunder and agree to hold and keep the same confidential. Such
Information will include any and all financial, technical, commercial,
marketing, customer or other information concerning the business, operations
and affairs of a party that may be provided to the others, irrespective of
the form of the communications, by such party's employees or agents. Such
Information shall not include information which is or becomes generally
available to the public other than as a result of a disclosure by a party or
its representatives in violation of this Agreement. The parties agree that
the Information will be used solely for the purposes contemplated by this
Agreement and that such Information will not
27
be disclosed to any person other than employees and agents of a party who are
directly involved in implementing the Merger, who shall be informed of the
confidential nature of the Information and directed individually to abide by
the restrictions set forth in this Section 8.01. The Information shall not be
used in any way detrimental to a party, including use directly or indirectly
in the conduct of the other party's business or any business or enterprise in
which such party may have an interest, now or in the future, and whether or
not now in competition with such other party. Neither FBA nor Bancorp will
purchase or sell any security issued by the other party for so long as this
Agreement remains in effect.
Section 8.02 PUBLICITY. FBA and Bancorp shall cooperate with each
other in the development and distribution of all news releases and other
public disclosures concerning this Agreement and the Merger. No party shall
issue any news release or make any other public disclosure without the prior
consent of the other parties, unless such is required by law upon the written
advice of counsel or is in response to published newspaper or other mass
media reports regarding the transactions contemplated hereby, in which latter
event the parties shall consult with each other to the extent practicable
regarding such responsive disclosure.
Section 8.03 RETURN OF DOCUMENTS. Upon termination of this Agreement
without the Merger becoming effective, each party shall deliver to the others
originals and all copies of all Information made available to such party and
will not retain any copies, extracts or other reproductions, in whole or in
part, of such Information.
Section 8.04 NOTICES. Any notice or other communication shall be in
writing and shall be deemed to have been given or made on the date of
delivery, in the case of hand delivery, or three (3) business days after
deposit in the United States registered or certified mail, return receipt
requested, postage prepaid, or upon receipt if transmitted by facsimile
telecopy or any other means, addressed (in any case) as follows:
(a) if to FBA:
First Banks America, Inc.
600 James S. McDonnell Boulevard
Mail Stop 014
Hazelwood, Missouri 63042
Attention: Mr. Allen H. Blake
Facsimile: (314) 592-6627
(b) if to FB&T:
First Bank & Trust
550 Montgomery Street
San Francisco, California 94111
Attention: Mr. Terrance M. McCarthy, President
Facsimile: (415) 782-0536
with a copy to:
28
John S. Daniels
Attorney at Law
6440 North Central Expressway
Suite 503
Dallas, Texas 75206
Facsimile: (214) 368-9094
(c) if to Bancorp:
BYL Bancorp
1875 N. Tustin Avenue
Orange, California 92865
Attn: Robert Ucciferri
President and Chief Executive Officer
Facsimile: (714) 685-1372
(d) if to Bank
BYL Bank Group
1875 N. Tustin Avenue
Orange, California 92865
Attn: Robert Ucciferri
President and Chief Executive Officer
Facsimile: (714) 685-1372
with a copy to:
Knecht & Hansen
1301 Dove Street
Suite 900
Newport Beach, California
Attn: Loren P. Hansen, Esq.
Facsimile: (949) 851-1732
or to such other address as any party may from time to time designate by notice
to the others.
Section 8.05 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. Except for the agreements set forth in Section 5.04, Section
5.05, Section 8.01 and Section 8.06 hereof, no representation, warranty or
agreement contained in this Agreement shall survive the Closing. In the event
that this Agreement is terminated prior to Closing, the representations,
warranties and agreements set forth herein shall survive such termination.
Section 8.06 COSTS AND EXPENSES. Except as otherwise provided herein,
each party shall pay its own costs and expenses incurred in connection with
this Agreement and the matters contemplated hereby, including without
limitation all fees and expenses of attorneys, accountants, brokers,
financial advisors and other professionals.
29
Section 8.07 ENTIRE AGREEMENT. This Agreement, together with the
Escrow Agreement, constitutes the entire agreement among the parties and
supersedes and cancels any and all prior discussions, negotiations,
undertakings, agreements in principle and other agreements among the parties
relating to the subject matter hereof.
Section 8.08 HEADINGS AND CAPTIONS. The captions of Articles and
Sections hereof are for convenience only and shall not control or affect the
meaning or construction of any of the provisions of this Agreement.
Section 8.09 WAIVER, AMENDMENT OR MODIFICATION. The conditions of
this Agreement which may be waived may only be waived by a written instrument
delivered to the other party. The failure of any party at any time or times
to require performance of any provision hereof shall in no manner affect the
right at a later time to enforce the same. This Agreement may not be amended
or modified except by a written document duly executed by the parties hereto.
Section 8.10 RULES OF CONSTRUCTION. Unless the context otherwise
requires: (a) a term has the meaning assigned to it; (b) an accounting term
not otherwise defined has the meaning assigned to it in accordance with
generally accepted accounting principles; (c) "or" is not exclusive; and (d)
words in the singular may include the plural and in the plural include the
singular.
Section 8.11 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which
shall be deemed one and the same instrument.
Section 8.12 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. There shall be no third party beneficiaries hereof.
Section 8.13 GOVERNING LAW. This Agreement shall be governed by the
laws of the State of California and any applicable federal laws and
regulations.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their respective officers thereunto duly authorized, all as of the date first
written above.
FIRST BANKS AMERICA, INC.
By: /s/ Allen H. Blake
------------------------------------
Its: Executive Vice President and
Chief Executive Officer
FIRST BANK & TRUST
By: /s/ Allen H. Blake
------------------------------------
Its: Vice President
BYL BANCORP
By: /s/ Robert Ucciferri
------------------------------------
Its: President and Chief Executive Officer
BYL BANK GROUP
By: /s/ Robert Ucciferri
------------------------------------
Its: President and Chief Executive Officer
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EXHIBIT A
AGREEMENT OF MERGER
This Agreement of Merger is entered into between Newco, a California
corporation ("Merging Corporation"), and BYL Bancorp, a California corporation
("Surviving Corporation").
1. Merging Corporation shall be merged into Surviving
Corporation.
2. _______ The outstanding shares of Surviving Corporation shall be
converted into the right to receive cash consideration of $ _________ per share.
3. _______ The outstanding shares of Merging Corporation shall be
converted into an equal number of shares of Surviving Corporation, so that
immediately following the effective time of the merger, the number of
outstanding shares of common stock of the Surviving Corporation shall be equal
to the number of outstanding shares of common stock of the Merging Corporation
immediately prior to the merger.
4. _______ Until amended in accordance with applicable law, the
Articles of Incorporation and Bylaws of Surviving Corporation remain the same as
those of the Surviving Corporation immediately prior to the merger.
5. _______ The effect and the effective date of the merger shall be as
prescribed by applicable law.
In Witness Whereof, the parties have executed this Agreement of Merger as
of , 2001.
NEWCO BYL BANCORP
- ----------------------------- ---------------------------------
- ------------------- ------------------
President President
- ----------------------------- ---------------------------------
- ------------------- ------------------
Secretary Secretary
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EXHIBIT B
AGREEMENT OF MERGER
This Agreement of Merger is entered into between BYL Bank Group, a
California banking corporation ("Merging Corporation"), and First Bank & Trust,
a California banking corporation ("Surviving Corporation").
1. Merging Corporation shall be merged into Surviving
Corporation.
2. _______ The outstanding shares of Surviving Corporation shall be
converted into the right to receive cash consideration of $ _________ per share.
3. _______ The outstanding shares of Merging Corporation shall be
converted into an equal number of shares of Surviving Corporation, so that
immediately following the effective time of the merger, the number of
outstanding shares of common stock of the Surviving Corporation shall be equal
to the number of outstanding shares of common stock of the Merging Corporation
immediately prior to the merger.
4. _______ Until amended in accordance with applicable law, the
Articles of Incorporation and Bylaws of Surviving Corporation remain the same as
those of the Surviving Corporation immediately prior to the merger.
5. _______ The effect and the effective date of the merger shall be as
prescribed by applicable law.
In Witness Whereof, the parties have executed this Agreement of Merger as
of , 2001.
BYL BANK GROUP FIRST BANK & TRUST
- ----------------------------- ---------------------------------
- ------------------- ------------------
President President
- ----------------------------- ---------------------------------
- ------------------- ------------------
Secretary Secretary
B-1
EXHIBIT C
LEGAL OPINION MATTERS
BANCORP AND BANK
1. The due incorporation, valid existence and good standing of Bancorp
and Bank under the laws of the State of California, their corporate power and
authority to own and operate their respective properties and to carry on their
businesses as now conducted, and their corporate power and authority to enter
into the Agreement and the Merger Agreement and to consummate the transactions
contemplated thereby.
2. The due incorporation, valid existence and good standing of each of
the Bancorp Subsidiaries other than Bank, their power and authority to own and
operate their properties and the possession of all licenses, permits and
authorizations required to carry on their respective businesses as now
conducted.
3. With respect to Bancorp: (i) the number of authorized, issued and
outstanding shares of capital stock of Bancorp immediately prior to the Closing,
(ii) the nonexistence of any violation of the preemptive or subscription rights
of any person, (iii) the nonexistence of any outstanding options, warrants, or
other rights to acquire, or securities convertible into, any equity security of
Bancorp, except as set forth in Section 2.01 of the Agreement and (iv) the
nonexistence of any obligation, contingent or otherwise, to reacquire any shares
of capital stock of Bancorp.
4. With respect to each of the Bancorp Subsidiaries: (i) the number of
authorized, issued and outstanding shares of capital stock of such subsidiary;
(ii) the valid ownership by Bancorp of all outstanding shares thereof, free and
clear of any claims, interests, liens, security interests and encumbrances;
(iii) the nonexistence of any outstanding options, warrants, or other rights to
acquire, or securities convertible into, any equity security of such subsidiary;
and (iv) the nonexistence of any obligation, contingent or otherwise, to
reacquire any shares of capital stock of such subsidiary.
5. The due and proper performance of all corporate acts and other
corporate proceedings necessary or required to be taken by Bancorp and Bank to
authorize the execution, delivery and performance of the Agreement and the
Merger Agreement, the due execution and delivery of the Agreement and the Merger
Agreement by Bancorp and Bank, and the Agreement and the Merger Agreement as
valid and binding obligations of Bancorp and Bank, enforceable against them in
accordance with their respective terms (subject to the provisions of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar laws
affecting the enforceability of creditors' rights generally from time to time in
effect, and equitable principles relating to the granting of specific
performance and other equitable remedies as a matter of judicial discretion).
6. The execution of the Agreement and the Merger Agreement by Bancorp
and Bank and the consummation of the Merger do not violate or cause a default
under their respective Articles of Incorporation or Bylaws, any statute,
regulation or rule applicable to Bancorp or Bank or any judgment, order or
decree known to counsel against, or any agreement binding upon Bancorp or Bank.
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7. The receipt of all required consents, approvals, orders and
authorizations of, and registrations, declaration and filings with and notices
to, any court, administrative agency and commission and other governmental
authority and instrumentality, domestic and foreign, and the approval of
Bancorp's shareholders, in connection with the execution and delivery of the
Agreement and the Merger Agreement by Bancorp, the performance of its
obligations thereunder and the consummation of the transactions contemplated
therein.
8. The nonexistence of knowledge of any material actions, suits,
proceedings, orders, investigations or claims pending or threatened against or
affecting Bancorp or any Bancorp Subsidiary which, if adversely determined,
would have a material adverse effect upon their respective properties or assets
or the consummation of the Merger.
C-2
EXHIBIT D
LEGAL OPINION MATTERS
FBA AND FB&T
1. The due incorporation, valid existence and good standing of FBA and
FB&T under the laws of the States of Delaware and California, respectively,
their corporate power and authority to own and operate their respective
properties and to carry on their businesses as now conducted, and their
corporate power and authority to enter into the Agreement and the Merger
Agreement and to consummate the transactions contemplated by the Agreement and
the Merger Agreement.
2. The due incorporation or organization, valid existence and good
standing of Newco and its power and authority to enter into and consummate the
Merger Agreement.
3. The due and proper performance of all corporate acts and other
corporate proceedings necessary or required to be taken by FBA and FB&T to
authorize the execution, delivery and performance of the Agreement and the
Merger Agreement, the due execution and delivery of the Agreement and the Merger
Agreement by FBA and FB&T, and the Agreement and the Merger Agreement as the
valid and binding obligations of FBA and FB&T, enforceable against them in
accordance with their respective terms (subject to the provisions of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar laws
affecting the enforceability of creditors' rights generally from time to time in
effect, and equitable principles relating to the granting of specific
performance and other equitable remedies as a matter of judicial discretion).
4. The execution of the Agreement by FBA and FB&T and of the Merger
Agreement by Newco, and the consummation of the Merger do not violate or cause a
default under their respective Certificate or Articles of incorporation or
Bylaws, any statute, regulation or rule applicable to FBA, FB&T or Newco or any
judgment, order or decree known to counsel against, or any material agreement
known to counsel and binding upon, FBA, FB&T or Newco.
5. The receipt of all required consents, approvals, orders and
authorizations of, and registrations, declaration and filings with and notices
to, any court, administrative agency and commission and other governmental
authority and instrumentality, domestic and foreign, and every other person and
entity known by counsel to be required to be obtained or made by FBA, FB&T or
Newco in connection with the execution and delivery of the Agreement and the
Merger Agreement, the performance of their respective obligations thereunder or
the consummation of the transactions contemplated therein.
6. The nonexistence of any material actions, suits, proceedings,
orders, investigations or claims pending or threatened against or affecting FBA,
FB&T or Newco which, if adversely determined, would have a material adverse
effect upon the consummation of the Merger.
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