EXHIBIT 2.0
REORGANIZATION AGREEMENT
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
HOME INTERSTATE BANCORP,
HOME BANK,
CU BANCORP AND
CALIFORNIA UNITED BANK, NATIONAL ASSOCIATION
January 10, 1996
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II THE MERGER AND RELATED MATTERS. . . . . . . . . . . . . . . . . 7
2.1. The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2. Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . 8
2.3. Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . 8
2.4. Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . 9
2.5. Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . 9
2.6. Name of Surviving Company . . . . . . . . . . . . . . . . . . . 9
2.7. Articles of Incorporation and Bylaws of Surviving Company . . . 9
2.8. Directors and Officers of Surviving Company . . . . . . . . . . 9
2.9. Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.10. Warrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE III THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.1. Closing Date. . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2. Execution of Merger Agreements. . . . . . . . . . . . . . . . . 11
3.3. Documents to be Delivered . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF HOME AND HOME BANK. . . . . . 11
4.1. Incorporation, Standing and Power. . . . . . . . . . . . . . . 11
4.2. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . 12
4.3. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . 12
4.4. Financial Statements. . . . . . . . . . . . . . . . . . . . . 12
4.5. SEC/Regulatory Filings. . . . . . . . . . . . . . . . . . . . 12
4.6. Authority of Home and Home Bank. . . . . . . . . . . . . . . . 13
4.7. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.8. Title to Assets. . . . . . . . . . . . . . . . . . . . . . . 14
4.9. Real Estate. . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.10. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.11. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.12. Compliance with Laws and Regulations . . . . . . . . . . . . . 15
4.13. Performance of Obligations. . . . . . . . . . . . . . . . . . 15
4.14. Employees. . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.15. Brokers and Finders. . . . . . . . . . . . . . . . . . . . . 16
4.16. Material Contracts. . . . . . . . . . . . . . . . . . . . . . 16
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TABLE OF CONTENTS (Cont'd.)
PAGE
4.17. Absence of Material Change. . . . . . . . . . . . . . . . . . 18
4.18. Licenses and Permits. . . . . . . . . . . . . . . . . . . . . 18
4.19. No Material Liabilities; Environmental. . . . . . . . . . . . 18
4.20. Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . 18
4.21. Corporate Records . . . . . . . . . . . . . . . . . . . . . . 21
4.22. Offices and ATMs. . . . . . . . . . . . . . . . . . . . . . . 21
4.23. Operating Losses. . . . . . . . . . . . . . . . . . . . . . . 21
4.24. Loan Portfolio. . . . . . . . . . . . . . . . . . . . . . . . 21
4.25. Power of Attorney . . . . . . . . . . . . . . . . . . . . . . 22
4.26. Disclosure Documents and Applications . . . . . . . . . . . . 22
4.27. Accuracy and Currentness of Information Furnished . . . . . . 22
4.28. Loan Servicing Portfolio. . . . . . . . . . . . . . . . . . . 22
4.29. Certain Interests . . . . . . . . . . . . . . . . . . . . . . 22
4.30. Investment Securities . . . . . . . . . . . . . . . . . . . . 22
ARTICLE V REPRESENTATIONS AND WARRANTIES OF CU AND CU BANK. . . . . . . 23
5.1. Incorporation, Standing and Power . . . . . . . . . . . . . . 23
5.2. Capitalization. . . . . . . . . . . . . . . . . . . . . . . . 23
5.3. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . 23
5.4. Financial Statements. . . . . . . . . . . . . . . . . . . . . 24
5.5. SEC/Regulatory Filings. . . . . . . . . . . . . . . . . . . . 24
5.6. Authority of CU and CU Bank . . . . . . . . . . . . . . . . . 24
5.7. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.8. Title to Assets . . . . . . . . . . . . . . . . . . . . . . . 25
5.9. Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.10. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.11. Taxes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.12. Compliance with Laws and Regulations. . . . . . . . . . . . . 27
5.13. Performance of Obligations. . . . . . . . . . . . . . . . . . 27
5.14. Employees. . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.15. Brokers and Finders . . . . . . . . . . . . . . . . . . . . . 27
5.16. Material Contracts. . . . . . . . . . . . . . . . . . . . . . 27
5.17. Absence of Material Change. . . . . . . . . . . . . . . . . 29
5.18. Licenses and Permits. . . . . . . . . . . . . . . . . . . . 29
5.19. No Material Liabilities; Environmental. . . . . . . . . . . . 29
5.20. Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . 30
5.21. Corporate Records . . . . . . . . . . . . . . . . . . . . . . 32
5.22. Offices and ATMs. . . . . . . . . . . . . . . . . . . . . . . 32
5.23. Operating Losses. . . . . . . . . . . . . . . . . . . . . . 32
5.24. Loan Portfolio. . . . . . . . . . . . . . . . . . . . . . . . 32
5.25. Power of Attorney . . . . . . . . . . . . . . . . . . . . . . 33
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TABLE OF CONTENTS (Cont'd.)
PAGE
5.26. Disclosure Documents and Applications . . . . . . . . . . . . 33
5.27. Accuracy and Currentness of Information Furnished . . . . . . 33
5.28. Loan Servicing Portfolio. . . . . . . . . . . . . . . . . . . 33
5.29. Certain Interests . . . . . . . . . . . . . . . . . . . . . . 33
5.30. Investment Securities. . . . . . . . . . . . . . . . . . . . 34
ARTICLE VI COVENANTS OF HOME AND HOME BANK PENDING EFFECTIVE TIME
OF THE MERGERS. . . . . . . . . . . . . . . . . . . . . . . . 34
6.1. Limitation on Home's and Home Bank's Conduct Prior to
Effective Time . . . . . . . . . . . . . . . . . . . . . . . 34
6.2. No Solicitation, etc.. . . . . . . . . . . . . . . . . . . . 36
6.3. Affirmative Conduct of Home and Home Bank Prior to
Effective Time . . . . . . . . . . . . . . . . . . . . . . . 36
6.4. Access to Information. . . . . . . . . . . . . . . . . . . . 38
6.5. Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.6. Notices; Reports . . . . . . . . . . . . . . . . . . . . . . 38
6.7. Home Shareholders' Meeting . . . . . . . . . . . . . . . . . 39
6.8. Bank Merger. . . . . . . . . . . . . . . . . . . . . . . . . 39
6.9. Filings; Applications. . . . . . . . . . . . . . . . . . . . 39
6.10. Certain Loans and Other Extensions of Credit . . . . . . . . 39
6.11. Termination of Home Stock Option Plan. . . . . . . . . . . . 40
6.12. Environmental Audit. . . . . . . . . . . . . . . . . . . . . 40
6.13. D&O Coverage . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE VII COVENANTS OF CU AND CU BANK PENDING EFFECTIVE TIME
OF THE MERGERS . . . . . . . . . . . . . . . . . . . . . . . 40
7.1. Limitation on CU's and CU Bank's Conduct Prior to
Effective Time . . . . . . . . . . . . . . . . . . . . . . . 40
7.2. No Solicitation, etc.. . . . . . . . . . . . . . . . . . . . 42
7.3. Affirmative Conduct of CU and CU Bank Prior to
Effective Time . . . . . . . . . . . . . . . . . . . . . . . 43
7.4. Access to Information. . . . . . . . . . . . . . . . . . . . 45
7.5. Filings. . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.6. Notices; Reports . . . . . . . . . . . . . . . . . . . . . . 45
7.7. CU Shareholders' Meeting.. . . . . . . . . . . . . . . . . . 46
7.8. Bank Merger. . . . . . . . . . . . . . . . . . . . . . . . . 46
7.9. Filings; Applications. . . . . . . . . . . . . . . . . . . . 46
7.10. Certain Loans and Other Extensions of Credit . . . . . . . . 46
7.11. CU Stock Option Plan . . . . . . . . . . . . . . . . . . . . 47
7.12. Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.13. Articles of Incorporation. . . . . . . . . . . . . . . . . . 47
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TABLE OF CONTENTS (Cont'd.)
PAGE
ARTICLE VIII GENERAL COVENANTS. . . . . . . . . . . . . . . . . . . . . . 47
8.1. Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . 47
8.2. Public Announcements . . . . . . . . . . . . . . . . . . . . 47
8.3. S-4 and the Proxy Statement. . . . . . . . . . . . . . . . . 47
8.4. Merger of Home Bank and CU Bank. . . . . . . . . . . . . . . 47
ARTICLE IX CONDITIONS PRECEDENT TO THE MERGERS. . . . . . . . . . . . . 48
9.1. Shareholder Approval . . . . . . . . . . . . . . . . . . . . 48
9.2. No Judgments or Orders . . . . . . . . . . . . . . . . . . . 48
9.3. Regulatory Approvals . . . . . . . . . . . . . . . . . . . . 48
9.4. Tax Opinion. . . . . . . . . . . . . . . . . . . . . . . . . 48
9.5. Pooling of Interests Accounting Treatment. . . . . . . . . . 48
9.6. S-4 and Proxy Statement. . . . . . . . . . . . . . . . . . . 48
9.7. Dissenters . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE X CONDITIONS PRECEDENT TO THE OBLIGATIONS OF HOME AND
HOME BANK. . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.1. Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . 49
10.2. Representations and Warranties; Performance of Covenants . . 49
10.3. Authorization of Mergers; Option Plan. . . . . . . . . . . . 49
10.4. Absence of Certain Changes . . . . . . . . . . . . . . . . . 49
10.5. Officers' Certificate. . . . . . . . . . . . . . . . . . . . 49
10.6. Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . 50
10.7. Directors' Voting Agreements . . . . . . . . . . . . . . . . 50
10.8. Home Warrant Agreement . . . . . . . . . . . . . . . . . . . 50
10.9. Appointment of Directors . . . . . . . . . . . . . . . . . . 50
10.10. Validity of Transactions . . . . . . . . . . . . . . . . . . 50
10.11. Third Party Consents . . . . . . . . . . . . . . . . . . . . 50
10.12. NASDAQ Listing . . . . . . . . . . . . . . . . . . . . . . . 50
10.13. CU Board . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.14. Non-Performing Loans . . . . . . . . . . . . . . . . . . . . 50
ARTICLE XI CONDITIONS PRECEDENT TO OBLIGATIONS OF CU AND CU BANK. . . . 50
11.1. Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . 51
11.2. Representations and Warranties; Performance of Covenants. . 51
11.3. Authorization of Mergers. . . . . . . . . . . . . . . . . . 51
11.4. Regulatory Approvals and Related Conditions . . . . . . . . 51
11.5. Third Party Consents. . . . . . . . . . . . . . . . . . . . 51
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TABLE OF CONTENTS (Cont'd.)
PAGE
11.6. Absence of Certain Changes. . . . . . . . . . . . . . . . . 51
11.7. Officers' Certificate . . . . . . . . . . . . . . . . . . . 51
11.8. Fairness Opinion. . . . . . . . . . . . . . . . . . . . . . 51
11.9. Validity of Transactions. . . . . . . . . . . . . . . . . . 52
11.10. Blue Sky Matters. . . . . . . . . . . . . . . . . . . . . . 52
11.11. Insurance Coverage. . . . . . . . . . . . . . . . . . . . . 52
11.12. Directors' Voting Agreements. . . . . . . . . . . . . . . . 52
11.13. CU Warrant Agreement. . . . . . . . . . . . . . . . . . . . 52
11.14. Affiliate Agreements. . . . . . . . . . . . . . . . . . . . 52
11.15. Non-Performing Loans. . . . . . . . . . . . . . . . . . . . 52
11.16. Absence of Excess Remediation . . . . . . . . . . . . . . . 52
ARTICLE XII EMPLOYEE BENEFITS . . . . . . . . . . . . . . . . . . . . . 52
12.1. Employee Benefits . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE XIII TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . 53
13.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . 53
13.2. Termination Date. . . . . . . . . . . . . . . . . . . . . . 53
13.3. Effect of Termination . . . . . . . . . . . . . . . . . . . 54
ARTICLE XIV MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 54
14.1. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 54
14.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 54
14.3. Successors and Assigns. . . . . . . . . . . . . . . . . . . 55
14.4. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 55
14.5. Effect of Representations and Warranties. . . . . . . . . . 55
14.6. Third Parties . . . . . . . . . . . . . . . . . . . . . . . 55
14.7. Lists; Exhibits; Integration. . . . . . . . . . . . . . . . 55
14.8. Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . 55
14.9. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 55
14.10. Schedules . . . . . . . . . . . . . . . . . . . . . . . . . 55
14.11. Captions. . . . . . . . . . . . . . . . . . . . . . . . . . 55
14.12. Severability. . . . . . . . . . . . . . . . . . . . . . . . 55
14.13. Waiver and Modification . . . . . . . . . . . . . . . . . . 56
14.14. Attorney's Fees . . . . . . . . . . . . . . . . . . . . . . 56
14.15. Jury Waiver . . . . . . . . . . . . . . . . . . . . . . . . 57
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TABLE OF CONTENTS (Cont'd.)
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EXHIBITS
Exhibit A Agreement of Merger
Exhibit B Bank Merger Agreement
Exhibit C CU Warrant Agreement
Exhibit D Home Warrant Agreement
Exhibit E CU Legal Opinion
Exhibit F CU Shareholders' Agreement
Exhibit G Manatt, Phelps & Phillips Legal Opinion
Exhibit H Home Shareholders' Agreement
Exhibit I Home Affiliate Letter
ANNEX I List of Home Directors Signing Affiliate Agreement
vi
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made and
entered into as of the 10th day of January, 1996, by and between Home
Interstate Bancorp, a California corporation ("Home"), and Home Bank, a
California chartered commercial bank ("Home Bank"), and CU Bancorp, a
California corporation ("CU"), and California United Bank, National
Association, a national banking association ("CU Bank").
R E C I T A L S
WHEREAS, Home and CU desire to effect a merger (the "Merger") in
accordance with the terms of this Agreement and the Agreement of Merger (as
defined herein).
WHEREAS, the respective Boards of Directors of Home and CU believe
that the proposed Merger, on the terms and conditions set forth herein, is in
the best interests of their respective corporations and shareholders.
WHEREAS, Home and CU intend to cause the Merger (the "Bank Merger")
of Home Bank and CU Bank at the Effective Time (as hereinafter defined) or as
soon thereafter as practicable.
WHEREAS, Home, Home Bank, CU Bancorp and CU Bank desire to make
certain representations, warranties, covenants and agreements in connection
with the transactions contemplated by this Agreement.
NOW, THEREFORE, on the basis of the foregoing recitals and in
consideration of the mutual representations, warranties, covenants and
agreements contained herein, the parties hereto do agree as follows:
ARTICLE I
DEFINITIONS
Except as otherwise expressly provided for in this Agreement, or unless
the context otherwise requires, as used throughout this Agreement the
following terms shall have the respective meanings specified below:
1.1. "Affiliate" of, or a person "Affiliated" with, a specific person is
a person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the person
specified.
1.2. "Agreement of Merger" means the Agreement of Merger to be entered
into by and between Home and CU substantially in the form of Exhibit A
hereto, but subject to any changes that may be necessary to conform to any
requirements of any regulatory agency having authority over the Merger.
1.3. "Alternative Transaction" means any of the following involving Home
or Home Bank for purposes of Section 6.2 or CU or CU Bank for purposes of
Section 7.2: any merger, consolidation, share exchange or other business
combination; a sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets of Home or Home Bank or CU or CU Bank (as applicable)
representing 10% or more of consolidated assets; a sale of shares of capital
stock (or securities convertible or exchangeable into or otherwise evidencing,
or any agreement or instrument evidencing, the right to acquire capital
stock), representing 10% or more of the voting power of Home or Home Bank or
CU or CU Bank (as applicable); a tender offer or exchange offer for at least
10% of the outstanding shares of Home or CU (as applicable); a solicitation
of proxies in opposition to approval of the Merger by Home's shareholders or
CU's shareholders (as applicable); or a public announcement of a proposal,
plan, or intention to do any of the foregoing.
1.4. "Arthur Andersen" means Arthur Andersen, LLP.
1.5. "ATM" has the meaning set forth in Section 4.22.
1.6. "Average Price of CU Stock" means the average of the Closing Price
of CU Stock (as defined below) for the 10 consecutive trading days
immediately preceding the one trading day prior to the Effective Time
(subject to adjustment as provided below). The term "trading day" shall mean
a day on which trading generally takes place on the NASDAQ and on which
trading in CU Stock has not been halted or suspended. In the event CU pays,
declares or otherwise effects a stock split, reverse stock split,
reclassification or stock dividend or distribution with respect to the CU
Stock between the date of this Agreement and the Effective Time, appropriate
adjustments will be made to the Average Price of CU Stock.
1.7. "Bank Merger" means the merger of Home Bank with and into CU Bank.
1.8. "Bank Merger Agreement" means the Agreement of Merger between CU
Bank and Home Bank, substantially in the form of Exhibit B hereto.
1.9. "BHC Act" means the Bank Holding Company Act of 1956, as amended.
1.10. "Business Day" means any day other than Saturday, Sunday or a day
on which commercial banks in California are authorized or required to be
closed.
1.11. "California Secretary" means the Secretary of State of the State
of California.
1.12. "Closing" means the consummation of the Merger (as defined herein)
on the Closing Date (as defined herein) at the offices of Manatt, Phelps &
Phillips, 11355 West Olympic Boulevard, Los Angeles, California, or at such
other place as the parties may agree upon.
1.13. "Closing Date" means a Business Day to be designated by the
Parties.
1.14. "Closing Price of CU Stock" means the closing price of CU Stock as
reported on the NASDAQ and reprinted in the Western Edition of the Wall
Street Journal.
1.15. "Code" means the Internal Revenue Code of 1986, as amended.
1.16. "Conversion Ratio" has the meaning set forth in Section 2.1(c).
1.17. "Corporate Bank Merger" means the proposed merger of Corporate
Bank, a California banking corporation, with and into CU Bank.
1.18. "Covered Loan" has the meaning set forth in Section 4.24.
2
1.19. "CU Bank Stock" means the common stock, $5.00 par value, of CU
Bank.
1.20. "CU Options" means options to purchase CU Stock pursuant to the CU
Stock Option Plan.
1.21. "CU Schedules" has the meaning set forth in Section 7.3(k).
1.22. "CU Scheduled Contracts" has the meaning set forth in Section 5.16.
1.23. "CU Shareholders' Meeting" means the meeting of CU's shareholders
referred to in Section 7.7 hereof.
1.24. "CU Stock" means the common stock, no par value, of CU.
1.25. "CU Stock Option Plan" means, collectively, the (i) the 1983
Employee Stock Option Plan, (ii) 1985 Employee Stock Option Plan, (iii) 1987
Special Stock Option Plan, (iv) 1993 Employee Stock Option Plan, (v) Non
Employee Director Stock Option Plan, and (vi) 1995 Restricted Stock Plan.
1.26. "CU Supplied Information" has the meaning set forth in Section
5.26.
1.27. "CU Warrant" means the warrant issued to CU pursuant to the CU
Warrant Agreement.
1.28. "CU Warrant Agreement" means the Warrant Agreement entered into
between CU and Home and attached hereto as Exhibit C, pursuant to which the
CU Warrant is issued.
1.29. "Dissenting Shares" means any shares of CU Stock or Home Stock (as
defined herein) that are (i) issued and outstanding immediately prior to the
Effective Time of the Merger and (ii) "dissenting shares" as that term is
defined in Section 1301 (b) of the California Corporations Code.
1.30. "Effective Time" means the date and time of the filing of the
Agreement of Merger with the California Secretary.
1.31. "Environmental Law" means any federal, state, provincial or local
statute, law, ordinance, rule, regulation, order, consent, decree, judicial
or administrative decision or directive of the United States or other
jurisdiction whether now existing or as hereinafter promulgated, issued or
enacted relating to: (A) pollution or protection of the environment,
including natural resources; (B) exposure of persons, including employees, to
Hazardous Substances or other products, materials or chemicals; (C)
protection of the public health or welfare from the effects of products,
by-products, wastes, emissions, discharges or releases of chemical or other
substances from industrial or commercial activities; or (D) regulation of the
manufacture, use or introduction into commerce of substances, including,
without limitation, their manufacture, formulation, packaging, labeling,
distribution transportation, handling, storage and disposal. For the
purposes of this definition the term "Environmental Law" shall include,
without limiting the foregoing, the following statutes, as amended from time
to time: (1) the Clean Air Act, as amended, 42 U.S.C. Section 7401 ET SEQ.;
(2) the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section
1251 ET SEQ.; (3) the Resource Conservation and Recovery Act of 1976, as
amended, 42 U.S.C. Section 6901 ET SEQ., (4) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (including the
Superfund Amendments and Reauthorization Act of 1986), 42 U.S.C. Section 2601
ET SEQ; (5) the Toxic Substances Control Act, as amended, 15 U.S.C. Section
2601 ET SEQ.; (6) The Occupational
3
Safety and Health Act, as amended, 29 U.S.C. Section 651; (7) the Emergency
Planning and Community Right-To-Know Act of 1986, 42 U.S.C. Section 1101 ET
SEQ.; (8) the Mine Safety and Health Act of 1977, as amended, 30 U.S.C.
Section 801 ET SEQ.; (9) the Safe Drinking Water Act, 42 U.S.C. Section 300f
ET SEQ.; and (10) all comparable state and local laws, laws of other
jurisdictions or orders and regulations including, but not limited to, the
Carpenter-Presley-Tanner Hazardous Substance Account Act, Cal. Health &
Safety Code Section 25300 ET SEQ.
1.32. "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.33. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
1.34. "Exchange Agent" means the financial institution appointed by CU
with the consent of Home, to effect the exchange contemplated by Article II
hereof.
1.35. "FDIC" means the Federal Deposit Insurance Corporation.
1.36. "FDIC Filings of Home" means all reports, registration statements,
proxy statements or other filings made by Home or Home Bank with the FDIC
during the time period from January 1, 1992 through the date of this
Agreement.
1.37. "Financial Statements of CU" means (i) the audited consolidated
financial statements and notes thereto of CU and the related opinions thereon
included in CU's Annual Reports on Form 10-K for the years ended December 31,
1992, 1993 and 1994, (ii) the unaudited consolidated interim financial
statements and notes thereto of CU included in CU's Quarterly Report on Form
10-Q for the quarters ended March 31, June 30 and September 30, 1995.
1.38. "Financial Statements of Home" means (i) the audited consolidated
financial statements and notes thereto of Home and the related opinions
thereon included in Home's Annual Reports on Form 10-K for the years ended
December 31, 1992, 1993 and 1994 and (ii) the unaudited consolidated interim
financial statements and notes thereto of Home included in Home's Quarterly
Reports on Form 1O-Q for the quarters ended March 31, June 30 and September
30, 1995.
1.39. "FRB" means the Board of Governors of the Federal Reserve System.
1.40. "FRB Filings of CU" means all reports, registration statements,
proxy statements or other filings made by CU or CU Bank with the FRB during
the time period from January 1, 1992 through the date of this Agreement.
1.41. "FRB Filings of Home" means all reports, registration statements,
proxy statements or other filings made by Home or Home Bank with the FRB
during the time period from January 1, 1992 through the date of this
Agreement.
1.42. "Hazardous Substances" means (i) substances that are defined or
listed in, or otherwise classified pursuant to, or the use or disposal of
which are regulated by, any Environmental Law as "hazardous substances,"
"hazardous materials," "hazardous wastes," "toxic substances," or any other
formulation intended to define, list, or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, reproductive toxicity, or "EP toxicity;" (ii) oil, petroleum
or petroleum derived from substances and drilling fluids, produced waters,
and other wastes associated with the exploration, development, or production
4
of crude oil, natural gas, or geothermal resources; (iii) any flammable
substances or explosives, any radioactive materials, any hazardous wastes or
substances, any toxic wastes or substances or any other materials or
pollutants which pose a hazard to any property or to Persons on or about such
property; and (iv) asbestos in any form or electrical equipment which
contains any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of 50 parts per million.
1.43. "Home Bank Stock" means the common stock, $0.40 par value per
share, of Home Bank.
1.44. "Home Employee Plans" has the meaning set forth in Section 4.20.
1.45. "Home Options" means options to purchase Home Stock pursuant to
the Home Stock Option Plan.
1.46. "Home Real Property" has the meaning set forth in Section 4.9.
1.47. "Home Scheduled Contracts" has the meaning set forth in Section
4.16.
1.48. "Home Schedules" has the meaning set forth in Section 6.3(k).
1.49. "Home Shareholders' Meeting" means the meeting of Home's
shareholders referred to in Section 6.7 hereof.
1.50. "Home Stock" means the common stock, no par value, of Home.
1.51. "Home Stock Option Plan" means the Home Interstate Bancorp Stock
Option Plan, which plan expired on March 12, 1995.
1.52. "Home Supplied Information" has the meaning set forth in Section
4.26.
1.53. "Home Warrant" means the warrant issued to Home pursuant to the
Home Warrant Agreement.
1.54. "Home Warrant Agreement" means the Warrant Agreement entered
between Home and CU and attached hereto as Exhibit D, pursuant to which the
Home Warrant is issued.
1.55. "Immediate Family" means a person's spouse, parents, in-laws,
children and siblings.
1.56. "IRS" means the Internal Revenue Service.
1.57. "Montgomery" means Montgomery Securities.
1.58. "NASDAQ" means the National Association of Securities Dealers
Automated Quotation System.
1.59. "New Stock Option Plan" means the CU Stock Option Plan to be
established in connection with the Merger.
1.60. "Non-Performing Loans" means loans or investments held by Home
Bank or CU Bank which are (i) more than ninety (90) days past due with
respect to any scheduled payment of principal or interest,
5
(ii) classified as "loss," "doubtful," "substandard," "other assets
especially mentioned" or "special mention," or (iii) on non-accrual status in
accordance with Home Bank's or CU Bank's, as the case may be, loan review
procedures.
1.61. "OCC" means the Office of the Comptroller of the Currency.
1.62. "OCC Filings of CU" means all reports, registration statements,
proxy statements or other filings made by CU or CU Bank with the OCC during
the time period from January 1, 1992 through the date of this Agreement.
1.63. "Operating Loss" has the meaning set forth in Section 4.23.
1.64. "Other Real Estate Owned" means any real property owned or
acquired by foreclosure or otherwise, in the ordinary course of collecting a
debt previously contracted for in good faith.
1.65. "Party" means either Home, Home Bank, CU or CU Bank and "Parties"
shall mean Home, Home Bank, CU and CU Bank.
1.66. "Person" means any individual, corporation, association,
partnership, joint venture, other entity, government or governmental
department or agency.
1.67. "Phase I Reports" has the meaning set forth in Sesction 6.12.
1.68. "Phase II Assessments" has the meaning set forth in Section 6.12.
1.69. "Proposed Retention Agreements" means the Retention Agreements to
be entered into between Home Bank and certain executive officers of Home
Bank, pursuant to which certain key employees of Home Bank shall receive
certain payments as a result of the transactions contemplated hereby.
1.70. "Proxy Statement" means the Joint Proxy Statement and Prospectus
that is used to solicit proxies for the Home Shareholders' Meeting and CU
Shareholders' Meeting and to offer and sell the shares of CU Stock to be
issued in connection with the Merger.
1.71. "Related Group of Persons" means Affiliates, members of an
Immediate Family or Persons the obligations of whom would be attributed to
another Person pursuant to the regulations promulgated by the SEC (as defined
herein).
1.72. "SEC" means the Securities and Exchange Commission.
1.73. "SEC Filings of CU" means all reports, registration statements,
proxy statements or other filings made by CU with the SEC during the time
period from January 1, 1992 through the date of this Agreement.
1.74. "SEC Filings of Home" means all reports, registration statements,
proxy statements or other filings made by Home with the SEC during the time
period from January 1, 1992 through the date of this Agreement.
1.75. "Secured Loan" has the meaning set forth in Section 4.24.
6
1.76. "Securities Act" means the Securities Act of 1933, as amended.
1.77. "S-4" means the registration statement on Form S-4 to be filed
with the SEC relating to the registration under the Securities Act of the CU
Stock to be issued in connection with the Merger.
1.78. "Superintendent" means the Superintendent of Banks of the State of
California.
1.79. "Surviving Company" means the corporation surviving the Merger.
1.80. "Transferred Employees" has the meaning set forth in Section 12.1.
1.81. "Understanding" means any contract, agreement, understanding,
commitment or offer, whether written or oral, which may become a binding
obligation if accepted by another Person.
ARTICLE II
THE MERGER AND RELATED MATTERS
2.1. THE MERGER. The Merger shall become effective upon the filing of
the Agreement of Merger with the California Secretary in accordance with the
provisions of the California Corporations Code. At the Effective Time, the
following transactions will be deemed to have occurred simultaneously:
(a) Home shall be merged with and into CU, and the separate
corporate existence of Home shall cease.
(b) Subject to Section 2.4(a), each share of CU Stock issued and
outstanding immediately prior to the Effective Time shall remain an issued
and outstanding share of common stock of the Surviving Company and shall
not be converted or otherwise affected by the Merger.
(c) Subject to Sections 2.2 and 2.4(b), each share of Home Stock
issued and outstanding immediately prior to the Effective Time shall, on
and after the Effective Time, be automatically canceled and cease to be an
issued and outstanding share of Home Stock and shall be converted into
1.409 shares of CU Stock (the "Conversion Ratio").
2.2. FRACTIONAL SHARES. No fractional shares of CU Stock shall be
issued in the Merger. In lieu thereof, each holder of Home Stock who would
otherwise be entitled to receive a fractional share shall receive an amount
in cash equal to the product (calculated to the nearest thousandth) obtained
by multiplying (a) the Average Price of CU Stock times (b) the fraction of
the share of CU Stock to which such holder would otherwise be entitled. No
such holder shall be entitled to dividends or other rights in respect of any
such fraction.
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2.3. EXCHANGE PROCEDURES.
(a) On or before the Effective Time, CU will deliver to the Exchange
Agent certificates representing a sufficient number of shares of CU Stock
issuable in the Merger and funds representing a sufficient amount of cash
payable in lieu of fractional shares in the Merger.
(b) Upon surrender for cancellation to the Exchange Agent of one or
more certificates for shares of Home Stock ("Old Certificates"),
accompanied by a duly executed letter of transmittal in proper form, the
Exchange Agent shall, promptly after the Effective Time, deliver to each
holder of such surrendered Old Certificates new certificates representing
the appropriate number of shares of CU Stock ("New Certificates"), together
with checks for payment of cash in lieu of fractional interests to be
issued in respect of the Old Certificates.
(c) Until Old Certificates have been surrendered and exchanged as
herein provided, each outstanding Old Certificate shall represent, on and
after the Effective Time, the right to receive the shares of CU Stock
and/or the cash into which the number of shares of Home Stock shown thereon
have been converted, as provided herein. No dividends or other
distributions that are declared on CU Stock will be paid to Persons
otherwise entitled to receive the same until the Old Certificates have been
surrendered in exchange for New Certificates in the manner herein provided,
but upon such surrender, such dividends or other distributions, from and
after the Effective Time, will be paid to such Persons in accordance with
the terms of such CU Stock. In no event shall the Persons entitled to
receive such dividends or other distributions be entitled to receive
interest on such dividends or other distributions.
(d) No transfer taxes shall be payable by any shareholder in respect
of the issuance of New Certificates, except that if any New Certificate is
to be issued in a name other than that in which the Old Certificate
surrendered shall have been registered, it shall be a condition of such
issuance that the Person requesting such issuance shall properly endorse
the certificate or certificates and shall pay to CU any transfer taxes
payable by reason thereof, or of any prior transfer of such surrendered
certificate, or establish to the satisfaction of CU that such taxes have
been paid or are not payable.
(e) Any CU Stock or cash delivered to the Exchange Agent (together
with any interest or profits earned thereon) and not issued pursuant to
this Section 2.3 at the end of six months from the Effective Time shall be
returned to CU.
(f) Notwithstanding anything to the contrary set forth in Sections
2.3(c) and 2.3(d) hereof, if any holder of Home Stock shall be unable to
surrender his Old Certificates because such certificates have been lost or
destroyed, such holder may deliver in lieu thereof an indemnity bond in
form and substance reasonably satisfactory to CU.
(g) The Exchange Agent shall not be entitled to vote or exercise any
rights of ownership with respect to the shares of CU Stock held by it from
time to time hereunder, except that it shall receive and hold all dividends
or other distributions paid or distributed with respect to such shares of
CU Stock for the account of the Persons entitled thereto.
2.4. DISSENTING SHARES.
(a) Notwithstanding anything to the contrary contained in this
Agreement, Dissenting Shares of CU Stock which have not effectively
withdrawn or lost their rights under Section 1309 shall remain issued and
outstanding shares of common stock of Surviving Company after the Effective
Time,
8
subject to the right to receive such consideration as shall be
determined pursuant to Chapter 13 of the California Corporations Code.
(b) Notwithstanding anything to the contrary contained in this
Agreement, Dissenting Shares of Home Stock which have not effectively
withdrawn or lost their rights under Section 1309 shall not be converted
pursuant to Section 2.1 (c), but shall be entitled to receive such
consideration as shall be determined pursuant to Chapter 13 of the
California Corporations Code.
2.5. EFFECT OF MERGER. By virtue the Merger and at the Effective Time,
all of the rights, privileges, powers and franchises and all property and
assets of every kind and description of Home and CU shall be vested in and be
held and enjoyed by the Surviving Company, without further act or deed, and
all the estates and interests of every kind of Home and CU, including all
debts due to either of them, shall be as effectively the property of the
Surviving Company as they were of Home and CU, and the title to any real
estate vested by deed or otherwise in either Home or CU shall not revert or
be in any way impaired by reason of the Merger; and all rights of creditors
and liens upon any property of Home and CU shall be preserved unimpaired and
all debts, liabilities and duties of Home and CU shall be debts, liabilities
and duties of the Surviving Company and may be enforced against it to the
same extent as if such debts, liabilities and duties had been incurred or
contracted by it, and none of such debts, liabilities or duties shall be
expanded, increased, broadened or enlarged by reason of the Merger.
2.6. NAME OF SURVIVING COMPANY. The name of the Surviving Company shall
be mutually agreed upon by the Parties.
2.7. ARTICLES OF INCORPORATION AND BYLAWS OF SURVIVING COMPANY. Subject
to any changes in the Articles of Incorporation resulting from the Parties'
agreement as to the name of the Surviving Company as provided in Section 2.6,
the Articles of Incorporation and Bylaws of CU as in effect immediately prior
to the Effective Time shall continue to be the Articles of Incorporation and
Bylaws of the Surviving Company.
2.8. DIRECTORS AND OFFICERS OF SURVIVING COMPANY.
(a) At the Effective Time, the Board of Directors of the Surviving
Company will consist of the five directors designated by the Board of
Directors of Home and the five directors designated by the Board of
Directors of CU.
(b) At the Effective Time, Stephen Carpenter will become the Chairman
and Chief Executive Officer, James Staes will become Vice Chairman and
David Rainer will become President and Chief Operating Officer of the
Surviving Company.
2.9. OPTIONS.
(a) Subject to Section 2.9(b), (c) and (d), each Home Option issued
and outstanding immediately prior to the Effective Time shall, on and after
the Effective Time, be assumed by and be deemed to be options granted by
the Surviving Company pursuant to the New Stock Option Plan to purchase
that number of shares of CU Stock equal to the Conversion Ratio times the
number of shares of Home Stock subject to the option; provided, however,
that no option shall be deemed granted by the Surviving Company to acquire
a fractional share of CU Stock.
9
(b) Assumption of such options shall be contingent upon the Closing
and upon the execution prior to the Closing by the particular optionee, CU
and Home of a new option agreement providing for the assumption and
conversion of the Home Options. Assumption by CU of the Home Options will
be pursuant to the terms of the New Stock Option Plan providing for the
assumption of such options, which plan shall be contingent upon approval of
the CU shareholders.
(c) To the extent that the assumption of a Home Option by the
Surviving Company would result in the issuance of an option to purchase a
fractional share of CU Stock, such fractional share option shall be
canceled, and the aggregate exercise price of the option to purchase shares
of CU Stock shall be reduced by the proportionate amount of the aggregate
exercise price attributable to the fractional share.
(d) The assumption by the Surviving Company of Home Options pursuant
to the New Stock Option Plan shall be subject to the following limitations:
(i) The excess of the aggregate fair market value of the shares
of CU Stock subject to an option immediately after the assumption over
the aggregate option exercise price of such shares of CU Stock shall
not be greater than the excess of the aggregate fair market value of
the shares subject to the Home Option immediately before the
assumption over the aggregate option exercise price of such shares of
Home Stock.
(ii) For any option, on a share by share comparison, the ratio of
the option exercise price to the fair market value of the CU Stock
subject to the option immediately after the assumption shall not be
more favorable to the optionee than the ratio of the Home Option
exercise price to the fair market value on the Home Stock subject to
the option immediately before the assumption.
(iii) The optionee shall not receive additional benefits
under the Surviving Company option which he did not have under the
Home Option.
(e) Each CU Option issued and outstanding immediately prior to the
Effective Time shall not be affected by the Merger.
2.10. WARRANT. Concurrent with the execution of this Agreement, CU and
Home have executed each of the Home Warrant Agreement and the CU Warrant
Agreement, pursuant to which agreements CU has issued to Home the Home
Warrant and Home has issued to CU the CU Warrant, granting the holder of each
such warrant the right to purchase up to 19.9% of the issued and outstanding
shares of capital stock of the other party, on a fully diluted basis (as more
specifically set forth in the Home Warrant Agreement and CU Warrant
Agreement), on the terms, and subject to the conditions set forth in such
agreements.
ARTICLE III
THE CLOSING
3.1. CLOSING DATE. The Closing shall take place on the Closing Date.
10
3.2. EXECUTION OF MERGER AGREEMENTS. As soon as practicable after
execution of this Agreement, the Agreement of Merger shall be executed by
Home and CU. On the Closing Date, the Agreement of Merger, together with all
requisite certificates, shall be duly filed with the California Secretary as
required by applicable laws and regulations.
3.3. DOCUMENTS TO BE DELIVERED. At the Closing, the parties hereto
shall deliver, or cause to be delivered, such documents or certificates as
may be necessary, in the reasonable opinion of counsel for any of the
parties, to effectuate the transactions contemplated by this Agreement. From
and after the Effective Time, each of the parties hereto hereby covenants and
agrees, without the necessity of any further consideration whatsoever, to
execute, acknowledge and deliver any and all other documents and instruments
and take any and all such other action as may be reasonably necessary or
desirable to effectuate the transactions set forth herein or contemplated
hereby, and the officers and directors of the parties hereto shall execute
and deliver, or cause to be executed and delivered, all such documents as may
reasonably be required to effectuate such transactions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HOME AND HOME BANK
Home and Home Bank represent and warrant to CU as follows:
4.1. INCORPORATION, STANDING AND POWER. Home has been duly
incorporated and is validly existing as a corporation in good standing under
the laws of the State of California and is registered as a bank holding
company under the BHC Act. Home Bank has been duly incorporated and is
validly existing as a state chartered Bank under the laws of the State of
California and is a member of the Federal Reserve System, and its deposits
are insured by the FDIC in the manner and to the extent provided by law.
Home and Home Bank have all requisite corporate power and authority to own,
lease and operate their respective properties and assets and to carry on
their respective businesses as presently conducted. Neither the scope of the
business of Home or Home Bank nor the location of any of their respective
properties requires that Home or Home Bank be licensed to do business in any
jurisdiction other than the State of California where the failure to be so
licensed would, individually or in the aggregate, have a materially adverse
effect on the financial condition, results of operation or business of Home
on a consolidated basis.
4.2. CAPITALIZATION.
(a) As of the date of this Agreement, the authorized capital stock of
Home consists of 20,000,000 shares of Home Stock, of which 4,187,954
shares are outstanding, and 3,000,000 shares of serial preferred stock,
none of which is outstanding. All of the outstanding shares of Home Stock
are duly authorized, validly issued, fully paid and nonassessable. As of
the date of this Agreement, except for Home Options covering 168,134 shares
of Home Stock granted pursuant to the Home Stock Option Plan, and 1,082,224
shares covered by the CU Warrant, there were no outstanding options,
warrants or other rights in or with respect to the unissued shares of Home
Stock or Home serial preferred stock nor any securities convertible into
such stock, and Home is not obligated to issue any additional shares of
Home Stock or preferred stock or any additional options, warrants or other
rights in or with respect to the unissued shares of such stock or any other
securities convertible into such stock. SCHEDULE 4.2 sets
11
forth the name of each holder of a Home Option, the number of shares of
Home Stock covered by each such Home Option, the exercise price per share
and the expiration date of each such Home Option.
(b) As of the date of this Agreement, the authorized capital stock of
Home Bank consists of 4,000,000 shares of Home Bank Stock, of
which 1,938,746 shares are outstanding and all of which are owned of record
by Home. All the outstanding shares of Home Bank Stock are duly
authorized, validly issued, fully paid and nonassessable (except for
assessments that may be made by order of the Superintendent pursuant to the
Section 662 of the California Finance Code). There are no outstanding
options, warrants or other rights in or with respect to the unissued shares
of Home Bank Stock or any other securities convertible into such stock, and
Home Bank is not obligated to issue any additional shares of its common
stock or any options, warrants or other rights in or with respect to the
unissued shares of its common stock or any other securities convertible
into such stock.
4.3. SUBSIDIARIES. Except for Home Bank, a wholly owned subsidiary of
Home, Home does not own, directly or indirectly (except as pledgee pursuant
to loans or upon acquisition in satisfaction of debt previously contracted),
the outstanding stock or other voting interest in any corporation,
partnership, joint venture or other entity.
4.4. FINANCIAL STATEMENTS. Home has previously furnished to CU a copy
of the Financial Statements of Home. The Financial Statements of Home: (a)
present fairly the consolidated financial condition of Home as of the
respective dates indicated and its consolidated results of operations and
changes in financial position/cash flow, as applicable, for the respective
periods then ended, subject, in the case of the unaudited consolidated
interim financial statements, to normal recurring adjustments; (b) have been
prepared in accordance with generally accepted accounting principles
consistently applied (except as otherwise indicated therein); (c) set forth
as of the respective dates indicated adequate reserves for all foreseeable
loan losses and other contingencies; and (d) are based on the books and
records of Home and Home Bank.
4.5. SEC/REGULATORY FILINGS. Since January 1, 1990, Home and Home Bank
have filed all reports, registrations and statements that were required to be
filed with the (i) FDIC; (ii) the FRB; (iii) the SEC; and (iv) any other
applicable federal, state or local governmental or regulatory authority.
Home has previously furnished to CU a copy of the SEC Filings, FDIC Filings
and FRB Filings of Home. As of their respective dates, the SEC Filings,
FDIC Filings and FRB Filings of Home complied in all material respects with
the requirements of their respective forms and did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.6. AUTHORITY OF HOME AND HOME BANK. The execution and delivery by
Home and Home Bank of this Agreement, by Home of the Agreement of Merger and
by Home Bank of the Bank Merger Agreement and, subject to the requisite
approval of the shareholders of Home and the sole shareholder of Home Bank,
the consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary corporate action on the
part of Home and Home Bank, and this Agreement is, and the Agreement of
Merger and Bank Merger Agreement will be upon execution by the respective
parties thereto, a valid and binding obligation of Home or Home Bank or both
of them, as the case may be, enforceable in accordance with their respective
terms, except as the enforceability thereof may be limited by bankruptcy,
liquidation, receivership, conservatorship, insolvency, moratorium or other
similar laws affecting the rights of creditors generally and by general
equitable principles and by Section 8(b)(6)(D) of the Federal Deposit
Insurance Act, 12 U.S.C. Section 1818(b) (6) (D). Except as set forth in
SCHEDULE 4.6, neither the (i) execution and delivery by Home and Home
12
Bank of this Agreement, by Home of the Agreement of Merger or by Home Bank of
the Bank Merger Agreement; (ii) the consummation of the Merger or Bank Merger
or the transactions contemplated herein or therein; nor (iii) compliance by
Home and Home Bank with any of the provisions hereof or thereof, will: (a)
conflict with or result in a breach of any provision of their respective
Articles of Incorporation, as amended, or Bylaws, as amended; (b) constitute
a breach of or result in a default (or give rise to any rights of
termination, cancellation or acceleration, or any right to acquire any
securities or assets) under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, franchise, license, permit, agreement or
other instrument or obligation to which Home or Home Bank is a party, or by
which Home or Home Bank or any of their respective properties or assets is
bound, if in any such circumstances, such event could have consequences
materially adverse to Home on a consolidated basis; or (c) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to Home or
Home Bank or any of their respective properties or assets, if such violation
could have consequences materially adverse to Home on a consolidated basis.
Except as set forth in the Home Schedules, no consent of, approval of, notice
to or filing with any governmental authority having jurisdiction over any
aspect of the business or assets of Home or Home Bank, and no consent of,
approval of or notice to any other Person, is required in connection with the
execution and delivery by Home and Home Bank of this Agreement, by Home of
the Agreement of Merger, by Home and Home Bank of the Bank Merger Agreement,
or the consummation by Home and Home Bank of the Merger or Bank Merger or
the transactions contemplated hereby or thereby, except (i) the approval of
this Agreement and the transactions contemplated hereby by the shareholders
of Home and the sole shareholder of Home Bank; (ii) such approvals as may be
required by the FRB and the OCC; (iii) the filing of the Agreement of Merger
with the California Secretary; (iv) the filing of the Bank Merger Agreement
with the OCC; and (v) the filing with and the approval by the SEC of the S-4
and Proxy Statement.
4.7. INSURANCE. Home and Home Bank have policies of insurance and bonds
with respect to their respective assets and businesses against such
casualties and contingencies and in such amounts, types and forms as are
appropriate for their respective businesses, operations, properties and
assets. All such insurance policies and bonds are in full force and effect.
To the knowledge of Home and Home Bank and except as set forth on SCHEDULE
4.7, no insurer under any such policy or bond has canceled or indicated an
intention to cancel or not to renew any such policy or bond or generally
disclaimed liability thereunder. To the knowledge of Home and Home Bank and
except as set forth on SCHEDULE 4.7, neither Home nor Home Bank is in default
under any such policy or bond and all material claims thereunder have been
filed in a timely fashion. Set forth on SCHEDULE 4.7 is a list of all
policies of insurance carried and owned by Home or Home Bank, showing the
name of the insurance company, the nature of the coverage, the policy limit,
the annual premiums and the expiration dates. Home has delivered to CU a
copy of each such policy of insurance.
4.8. TITLE TO ASSETS. Home and Home Bank have good and marketable title
to all their respective material properties and assets, other than real
property, owned or stated to be owned by Home or Home Bank, free and clear of
all mortgages, liens, encumbrances, pledges or charges of any kind or nature
except: (a) as set forth in the Financial Statements of Home; (b) for liens
or encumbrances for current taxes not yet due; (c) for liens or encumbrances
incurred in the ordinary course of business; (d) for liens that are not
substantial in character, amount or extent or that do not materially detract
from the value, or interfere with present use, of the property subject
thereto or affected thereby, or otherwise materially impair the conduct of
business of Home on a consolidated basis; or (e) as set forth on SCHEDULE 4.8.
4.9. REAL ESTATE. SCHEDULE 4.9 sets forth a list of real property,
including leaseholds, owned or leased by Home or Home Bank (the "Home Real
Property"). Home or Home Bank has good and marketable title to the Home Real
Property, and valid leasehold interests in the leaseholds, described on
SCHEDULE 4.9, free and clear of all mortgages, covenants, conditions,
restrictions, easements, liens, security interests, charges, claims,
13
assessments and encumbrances, except (a) for rights of lessors, co-lessees or
sublessees in such matters that are reflected in the lease; (b) for current
taxes not yet due and payable; (c) for liens and encumbrances of public
record; (d) for such imperfections of title, liens and encumbrances, if any,
as do not materially detract from the value of or materially interfere with
the present use of such property; and (e) as described on SCHEDULE 4.9.
4.10. LITIGATION. Except as set forth in the SEC Filings of Home or
SCHEDULE 4.10, there is no private or governmental suit, claim, action or
proceeding pending, nor to Home's or Home Bank's knowledge, threatened
against Home or Home Bank or against any of their respective directors,
officers or employees relating to the performance of their duties in such
capacities or against or affecting any properties of Home or Home Bank that
has had or may have a material adverse effect upon the business, financial
condition or results of operations of Home on a consolidated basis or the
transactions contemplated hereby or which may involve a payment by Home in
excess of $50,000 of applicable insurance coverage. Also, except as
disclosed in the SEC Filings of Home or on SCHEDULE 4.10, there are no
material judgments, decrees, stipulations or orders against Home or Home Bank
enjoining either of them or any of their respective directors, officers or
employees in respect of, or the effect of which is to prohibit, any business
practice or the acquisition of any property or the conduct of business in any
area. Home has previously provided to CU summary reports of Home's and Home
Bank's attorneys relating to all pending litigation to which Home or Home
Bank is a party and which names Home or Home Bank as a defendant or
cross-defendant and a true, correct and complete list of all pending
litigation in which Home or Home Bank is a named party.
4.11. TAXES.
(a) Home and/or Home Bank have filed all federal and foreign income
tax returns, all state and local franchise and income tax, real and
personal property tax, sales and use tax, premium tax, excise tax and other
tax returns of every character required to be filed by it and have paid all
taxes, together with any interest and penalties owing in connection
therewith, shown on such returns to be due in respect of the periods
covered by such returns, other than taxes which are being contested in good
faith and for which adequate reserves have been established. Home and/or
Home Bank have filed all required payroll tax returns, have fulfilled all
tax withholding obligations and have paid over to the appropriate
governmental authorities the proper amounts with respect to the foregoing.
The tax and audit positions taken by Home and/or Home Bank in connection
with the tax returns described in the preceding sentence were reasonable
and asserted in good faith. Adequate provision has been made in the books
and records of Home and/or Home Bank and, to the extent required by
generally accepted accounting procedures, reflected in the Financial
Statements of Home, for all tax liabilities, including interest or
penalties, whether or not due and payable and whether or not disputed, with
respect to any and all federal, foreign, state, local and other taxes for
the periods covered by such financial statements and for all prior periods.
SCHEDULE 4.11 sets forth the date or dates through which the IRS has
examined the federal tax returns of Home and/or Home Bank and the date or
dates through which any foreign, state, local or other taxing authority has
examined any other tax returns of Home and/or Home Bank. SCHEDULE 4.11
also contains a complete list of each year for which any federal, state,
local or foreign tax authority has obtained or has requested an extension
of the statute of limitations from Home and/or Home Bank and lists each tax
case of Home and/or Home Bank currently pending in audit, at the
administrative appeals level or in litigation. SCHEDULE 4.11 further lists
the date and issuing authority of each statutory notice of deficiency,
notice of proposed assessment and revenue agent's report issued to Home
and/or Home Bank within the last twelve (12) months. Except as set forth
in SCHEDULE 4.11, neither the IRS nor any foreign, state, local or other
taxing authority has, during the past three years, examined or is in the
process of examining any federal, foreign, state, local or other tax
returns of Home. To the knowledge of Home,
14
neither the IRS nor any foreign, state, local or other taxing authority
is now asserting or threatening to assert any deficiency or claim for
additional taxes (or interest thereon or penalties in connection therewith)
except as set forth on SCHEDULE 4.11.
(b) Except as set forth on SCHEDULE 4.11(B), neither Home nor Home
Bank is a party to any safe harbor lease within the meaning of Section
168(f)(8) of the Code, as in effect prior to amendment by the Tax Equity
and Fiscal Responsibility Act of 1982. Neither Home nor Home Bank is or
has been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code. Neither Home nor Home
Bank is a "consenting corporation" under Section 341(f) of the Code.
Neither Home nor Home Bank has agreed, nor is it required to make, any
adjustment under Section 481(a) of the Code by reason of a change in
accounting method or otherwise.
4.12. COMPLIANCE WITH LAWS AND REGULATIONS. To Home's and Home Bank's
knowledge, neither of them is in default under or in breach of any provision
of their respective Articles of Incorporation, as amended, or Bylaws, as
amended, or law, ordinance, rule or regulation promulgated by any
governmental agency having authority over either of them, where such default
or breach would have a material adverse effect on the business, financial
condition or results of operations of Home on a consolidated basis. No
investigation or review by any governmental entity or regulatory authority
with respect to Home or Home Bank is pending or, to the knowledge of Home or
Home Bank, threatened, nor has any such governmental entity or regulatory
authority indicated to Home or any Affiliate of Home any intention to conduct
the same, other than those the outcome of which would not have a material
adverse affect on the business, financial condition or results of operations
of Home on a consolidated basis.
4.13. PERFORMANCE OF OBLIGATIONS. Home and Home Bank have performed in
all material respects all of the obligations required to be performed by them
to date, and to the best of their knowledge, are not in default under or in
breach of any term or provision of any covenant, contract, lease, indenture
or any other covenant to which either of them is a party, is subject or is
otherwise bound, and no event has occurred that, with the giving of notice or
the passage of time or both, would constitute such default or breach, where
such default or breach would have a material adverse effect on the business,
financial condition or results of operations of Home on a consolidated basis.
Except for loans and leases made by Home Bank in the ordinary course of
business, to Home's or Home Bank's knowledge, no party with whom Home or Home
Bank has an agreement that is of material importance to the business of Home
on a consolidated basis is in default thereunder.
4.14. EMPLOYEES. There are no controversies pending or threatened
between Home or Home Bank and any of their respective employees that are
likely to have a material adverse effect on the business, financial condition
or results of operation of Home on a consolidated basis. Neither Home nor
Home Bank is a party to any collective bargaining agreement with respect to
any of their respective employees or any labor organization to which their
respective employees or any of them belong. Except as previously disclosed
in writing to CU, there are no Understandings with respect to the employment
of any officer or employee of Home or Home Bank which are not terminable by
Home or Home Bank without liability on not more than thirty (30) days'
notice. Except as disclosed in the Home Financial Statements or as
previously disclosed in writing to CU, all material sums due for employee
compensation have been paid or accrued and all employer contributions for
employee benefits, including deferred compensation obligations, and any
benefits under any Home Employee Plan have been duly and adequately paid or
provided for in accordance with plan documents. Except for the Proposed
Retention Agreements and as set forth on SCHEDULE 4.14, as of the date
hereof, no director, officer or employee of Home or Home Bank is entitled to
receive any payment or any amount under any existing Home Employee Plan,
15
Understanding, severance plan or other benefit plan as a result of the
consummation of any transaction contemplated by this Agreement, the Agreement
of Merger or the Bank Merger.
4.15. BROKERS AND FINDERS. Except for any agreements among Home, CU and
Montgomery, and any fees payable thereunder, neither Home nor Home Bank is a
party to or obligated under any agreement with any broker or finder relating
to the transactions contemplated hereby, and neither the execution of this
Agreement nor the consummation of the transactions provided for herein or
therein will result in any liability to any broker or finder.
4.16. MATERIAL CONTRACTS. Except as set forth on SCHEDULE 4.16 hereto
(all items listed or required to be listed on SCHEDULE 4.16 being referred to
herein as "Home Scheduled Contracts"), neither Home nor Home Bank is a party
or otherwise subject to:
(a) any employment, deferred compensation, bonus or consulting
contract that requires payment by Home or Home Bank of $50,000 or more per
annum;
(b) any advertising, brokerage, licensing, dealership, representative
or agency relationship or contract not terminable by Home on 30 days' or
less notice and which requires payment by Home or Home Bank of $10,000 or
more per annum;
(c) any contract or agreement that restricts Home (or would restrict
any Affiliate of Home after the Effective Time) from competing in any line
of business with any Person or using or employing the services of any
Person;
(d) any lease of real or personal property providing for annual lease
payments by or to Home or Home Bank in excess of $100,000 per annum other
than (i) financing leases entered into in the ordinary course of business
in which Home or Home Bank is lessor and (ii) leases of real property
presently used by Home Bank as banking offices;
(e) any mortgage, pledge, conditional sales contract, security
agreement, option, or any other similar agreement with respect to any
interest of Home or Home Bank (other than as mortgagor or pledgor in the
ordinary course of their banking business or as mortgagee, secured party or
deed of trust beneficiary in the ordinary course of their business) in
personal property having a value of $100,000 or more;
(f) any agreement to acquire equipment or any commitment to make
capital expenditures of $100,000 or more;
(g) other than agreements entered into in the ordinary course of
business, including sales of Other Real Estate Owned, any agreement for the
sale of any property or assets in which Home or Home Bank has an ownership
interest or for the grant of any preferential right to purchase any such
property or asset;
(h) any agreement for the borrowing of any money (other than
liabilities or interbank borrowings made in the ordinary course of their
banking business and reflected in the Financial Statements of Home);
16
(i) any restrictive covenant contained in any deed to or lease of
real property owned or leased by Home or Home Bank (as lessee) that
materially restricts the use, transferability or value of such property;
(j) any guarantee or indemnification which involves the sum of
$100,000 or more, other than letters of credit or loan commitments issued
in the normal course of business;
(k) any supply, maintenance or landscape contracts not terminable by
Home or Home Bank without penalty on 30 days' or less notice and which
provides for payments in excess of $25,000 per annum;
(l) any agreement which would be terminable other than by Home or
Home Bank as a result of the consummation of the transactions contemplated
by this Agreement;
(m) any contract of participation with any other bank in any loan
entered into by Home or Home Bank subsequent to December 31, 1994 in excess
of $100,000 or any sales of assets of Home or Home Bank with recourse of
any kind to Home or Home Bank except the sale of mortgage loans, servicing
rights, repurchase or reverse repurchase agreements, securities or other
financial transactions in the ordinary course of business;
(n) any other Understanding of any other kind not terminable on 30
days' or less notice which involves future payments or receipts or
performances of services or delivery of items requiring payment of $25,000
or more to or by Home or Home Bank other than payments made under or
pursuant to loan agreements, participation agreements and other agreements
for the extension of credit in the ordinary course of their business; or
(o) any Understanding that is otherwise material to the business,
financial condition, results of operations or prospects of Home or Home
Bank.
Home has delivered to CU copies of all Home Scheduled Contracts, including all
amendments and supplements thereto.
4.17. ABSENCE OF MATERIAL CHANGE. Since December 31, 1994, the
businesses of Home and Home Bank have been conducted, only in the ordinary
course, in the same manner as theretofore conducted and there has not
occurred any event that has had or may reasonably be expected to have a
material adverse effect on the business, financial condition or results of
operation of Home on a consolidated basis.
4.18. LICENSES AND PERMITS. Home and Home Bank have all material
licenses and permits that are necessary for the conduct of their respective
businesses, and such licenses are in full force and effect, except for any
failure to be in full force and effect that would not, individually or in the
aggregate, have a material adverse effect on the business, financial
condition or results of operations of Home on a consolidated basis. The
properties and operations of Home and Home Bank are and have been maintained
and conducted, in all material respects, in compliance with all applicable
laws and regulations.
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4.19. NO MATERIAL LIABILITIES; ENVIRONMENTAL.
(a) SCHEDULE 4.19 sets forth all material liabilities of Home and
Home Bank, including liabilities for Hazardous Substances or under any
Environmental Law, contingent or otherwise, that are not reflected or
reserved against in the Home Financial Statements, except for liabilities
incurred or accrued since December 31, 1994 in the ordinary course of
business, none of which has had or could reasonably be expected to have a
material adverse effect on the business, financial condition, results of
operations or prospects of Home on a consolidated basis. Except as set
forth in SCHEDULE 4.19, neither Home nor Home Bank knows of any basis for
the asserting against it of any liability, obligation or claim that could
reasonably be expected to have a material adverse effect on the business,
financial condition, or results of operations of Home on a consolidated
basis.
(b) Except as set forth on SCHEDULE 4.19(b) or the Phase I Reports or
Phase II Assessments, to the actual knowledge of the executive officers of
Home and Home Bank, (i) there has not been any generation, use, handling,
transportation, treatment, storage, release, or disposal of any Hazardous
Substance in connection with the conduct of business of Home or Home Bank
that has resulted or is likely to result in any liability under any
Environmental Law in excess of $1,000,000; (ii) there has never been a use
of the Home Real Property that has resulted, or is likely to result in any
liability under any Environmental Law in excess of $1,000,000; (iii) no
underground storage tanks or surface impoundments are on or in the Home
Real Property; and (iv) no Hazardous Substances are contained on, under or
migrating from or located on any of the Home Real Property.
4.20. EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE 4.20 sets forth and describes all employee benefit plans
and any collective bargaining agreements or labor contracts in which Home
or Home Bank participates, or by which they are bound, including, without
limitation; (i) any profit sharing, deferred compensation, bonus, stock
option, stock purchase, pension, retainer consulting, retirement, welfare
or incentive plan or agreement whether legally binding or not; (ii) any
plan providing for "fringe benefits" to its employees, including but not
limited to vacation, sick leave, medical, hospitalization, life insurance
and other insurance plans, and related benefits; (iii) any written
employment agreement and any other employment agreement not terminable at
will; or (iv) any other "employee benefit plan" (within the meaning of
Section 3(3) of ERISA) (collectively, the "Home Employee Plans"). Except
as set forth in SCHEDULE 4.20, (i) there are no negotiations, demands or
proposals that are pending or threatened that concern matters now covered,
or that would be covered, by any employment agreements or employee benefit
plans other than amendments to plans qualified under Section 401 of the
Code that are required by the Tax Reform Act of 1986 and later legislation;
(ii) Home is in compliance with the material reporting and disclosure
requirements of Part 1 of Subtitle IB of ERISA and the corresponding
provisions of the Code to the extent applicable to all such employee
benefit plans; (iii) Home has performed all of its obligations under all
such employee benefit plans and employment agreements required to be
performed heretofore; and (iv) there are no actions, suits or claims (other
than routine claims for benefits) pending or, to the best knowledge of Home
and Home Bank, threatened against any such employee benefit plans and
employment agreements or the assets of such plans, and to the best
knowledge of Home, no facts exist which could give rise to any actions,
suits or claims (other than routine claims for benefits) against such plans
or the assets of such plans.
(b) The "employee pension benefit plans" (within the meaning of
Section 3(2) of ERISA) described on SCHEDULE 4.20 have been duly authorized
by the Board of Directors of Home. Except as set forth in SCHEDULE 4.20,
each such plan and associated trust intended to be qualified under Section
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401(a) and to be exempt from tax under Section 501(a) of the Code,
respectively, has either received a favorable determination letter from the
IRS, has applied for such a determination letter or will apply for such a
determination letter before the expiration of the remedial amendment period
set forth in Section 401(b) of the Code, as the IRS may extend such period,
and to the best knowledge of Home and Home Bank, no event has occurred that
will or could give rise to disqualification of any such plan which is
intended to be qualified under Section 401(a) of the Code or loss of the
exemption from tax of any such trust which is intended to be exempt from
tax under Section 501(a) of the Code. No event has occurred that will or
could subject any such plans to tax under Section 511 of the Code. None of
such plans has engaged in a merger or consolidation with any other plan or
transferred assets or liabilities from any other plan. No prohibited
transaction (within the meaning of Section 409 or 502(i) of ERISA or
Section 4975 of the Code) or party-in-interest transaction (within the
meaning of Section 406 of ERISA) has occurred with respect to any of such
plans which could subject Home or Home Bank to an excise tax or penalty.
To the best knowledge of Home and Home Bank, no employee of Home or Home
Bank has engaged in any transactions which could subject Home or Home Bank
to indemnify such person against liability. All costs of plans have been
provided for on the basis of consistent methods in accordance with sound
actuarial assumptions and practices. No employee benefit plan has incurred
any "accumulated funding deficiency" (as defined in Section 302(2) of
ERISA), whether or not waived, taking into account contributions made
within the period described in Section 412(c)(10) of the Code; nor are
there any unfunded amounts under any employee benefit plan which is
required to be funded under Part 3 of Subtitle IB of ERISA and Section 412
of the Code); nor has Home or Home Bank failed to make any contributions or
pay any amount due and owing as required by law or the terms of any
employee benefit plan or employment agreement. Subject to amendments that
are required by the Tax Reform Act of 1986 and later legislation, since the
last valuation date for each employee pension benefit plan, there has been
no amendment or change to such plan that would increase the amount of
benefits thereunder.
(c) Neither Home nor Home Bank sponsors or participates in, or has
sponsored or participated in, any employee benefit pension plan to which
Section 4021 of ERISA applies that would create a liability under Title IV
of ERISA.
(d) Neither Home nor Home Bank sponsors or participates in, or has
sponsored or participated in, any employee benefit pension plan that is a
"multi-employer plan" (within the meaning of Section 3(37) of ERISA) that
would subject such Person to any liability with respect to any such plan.
(e) All group health plans of Home or Home Bank (including any plans
of Affiliates of Home that must be taken into account under Section 162(i)
or (k) of the Code as in effect immediately prior to the Technical and
Miscellaneous Revenue Act of 1988 and Section 4980B of the Code) have been
operated in compliance with the group health plan continuation coverage
requirements of Section 4980B of the Code to the extent such requirements
are applicable.
(f) There have been no acts or omissions by Home or Home Bank that
have given rise to or may give rise to fines, penalties, taxes, or related
charges under Sections 502(c) or (i) or 4071 of ERISA or Chapter 43 of the
Code which could be imposed on Home or Home Bank.
(g) Except as described in Section 4.20(j), neither Home or Home Bank
maintains any employee benefit plan or employment agreement pursuant to
which any benefit plan or other payment will be required to be made by Home
or Home Bank or pursuant to which any other benefit will accrue
19
or vest in any director, officer or employee of Home or Home Bank, in
either case as a result of the consummation of the transactions
contemplated by the Agreement.
(h) No "reportable event," as defined in ERISA, has occurred with
respect to any of the employee benefit plans.
(i) All amendments required to bring each of the employee benefit
plans into conformity with all of the provisions of ERISA and the Code and
all other applicable laws, rules and regulations have been made, or will be
made before the expiration of the remedial amendment period set forth under
Section 401(b) of the Code, as such period may be extended by the IRS.
(j) SCHEDULE 4.20 sets forth the name of each director, officer,
employee, agent or representative of Home or Home Bank and every other
person entitled to receive any benefit or any payment of any amount under
any existing employment agreement, severance plan or other benefit plan or
Understanding as a result of the consummation of any transaction
contemplated in this Agreement, and with respect to each such person, the
nature of such benefit or the amount of such payment, the event triggering
the benefit or payment, and the date of, and parties to, such employment
agreement, severance or other benefit plan or Understanding. Home has
furnished CU with true and correct copies of all documents with respect to
the plans and agreements referred to in SCHEDULE 4.20 delivered as of the
date of the Agreement, including all amendments and supplements thereto,
and all related summary plan descriptions. For each of the employee
pension benefit plans of Home and Home Bank referred to in SCHEDULE 4.20
delivered as of the date of the Agreement, Home has furnished CU with true
and correct copies of (i) a copy of the Form 5500 which was filed in each
of the three most recent plan years, including without limitation, all
schedules thereto and all financial statements with attached opinions of
independent accountants to the extent required; (ii) the most recent
determination letter from the IRS; (iii) the statement of assets and
liabilities as of the most recent valuation date; and (iv) the statement of
changes in fund balance and in financial position or the statement of
changes in net assets available for benefits under each of said plans for
the most recently ended plan year. The documents referred to in
subdivisions (iii) and (iv) fairly present the financial condition of each
of said plans as of and at such dates and the results of operations of each
of said plans, all in accordance with generally accepted accounting
principles or on the cash method of accounting applied on a consistent
basis.
4.21. CORPORATE RECORDS. The minute books of Home and Home Bank
accurately reflect all material actions taken to this date by the respective
shareholders, boards of directors and committees of Home and Home Bank and
contain true and complete copies of the Articles of Incorporation, Bylaws and
other charter documents, and all amendments thereto.
4.22. OFFICES AND ATMS. SCHEDULE 4.22 sets forth the headquarters of
Home and Home Bank (identified as such) and each of the offices and automated
teller machines ("ATMs") maintained and operated by Home Bank (including,
without limitation, representative and loan production offices and operations
centers) and the location thereof. Except as set forth on SCHEDULE 4.22,
neither Home nor Home Bank maintains any other office or ATM nor conducts
business at any other location. Neither Home nor Home Bank has applied for
or received permission to open any additional branch or operate at any other
location.
4.23. OPERATING LOSSES. SCHEDULE 4.23 sets forth a list of any
Operating Loss (as herein defined) which has occurred at Home Bank during the
period after September 30, 1995. To the knowledge of Home or Home Bank, no
action has been taken or omitted to be taken by any employee of Home or Home
Bank that has
20
resulted in the incurrence by Home Bank of an Operating Loss or that might
reasonably be expected to result in the incurrence of any individual
Operating Loss after September 30, 1995, which, net of any insurance proceeds
payable in respect thereof, would exceed $25,000. For purposes of this
Agreement "Operating Loss" means any loss resulting from cash shortages, lost
or misposted items, disputed clerical and accounting errors, forged checks,
payment of checks over stop payment orders, merchant credit card processing,
counterfeit money, wire transfers made in error, theft, robberies,
defalcations, check kiting, fraudulent use of credit cards or electronic
teller machines or other similar acts or occurrences.
4.24. LOAN PORTFOLIO. All loans or other extensions of credit, and
guaranties, security agreements or other agreements supporting any loans or
extensions of credit, and investments of Home or Home Bank are, in all
material respects, legal, enforceable and authorized under applicable federal
and state laws and regulations, except as the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting
the rights of creditors generally and by general equitable principles.
Except as previously disclosed in writing to CU, no loans or investments
held by Home Bank are, as of September 30, 1995 (i) more than ninety (90)
days past due with respect to any scheduled payment of principal or interest;
(ii) classified as "loss," "doubtful," "substandard," "special mention," or
"criticized" by any federal or state banking regulators; or (iii) on a
non-accrual status in accordance with Home Bank's loan review procedures.
None of such investments are subject to any restrictions, contractual,
statutory or other, that would materially impair the ability of the entity
holding such investment to dispose freely of any such investment at any time,
except restrictions on the public distribution or transfer of any such
investments under the Securities Act and the regulations thereunder or state
securities laws and pledges or security interests given in connection with
government deposits. Except as previously disclosed in writing to CU, Home
Bank has no loans, leases or other extensions of credit outstanding, or
commitments to make any loans, leases or other extensions of credit to any
Affiliates of Home Bank which are not on substantially the same terms
(including interest rates, repayment terms and collateral) as would be
available for comparable transactions with persons of similar
creditworthiness who are not Affiliates of Home Bank. For each outstanding
loan or extension of credit or commitment to make a loan or extension of
credit where the original principal amount is in excess of $50,000 and which
by its terms is either secured by collateral ("Secured Loan") or supported by
a guaranty or similar obligation ("Covered Loan"), in the case of each
Secured Loan, to the best knowledge of Home Bank, the security interest has
been perfected and, in the case of each Covered Loan, the guaranty or similar
obligation has been executed and delivered to Home Bank and is still in full
force and effect.
4.25. POWER OF ATTORNEY. Neither Home nor Home Bank has granted any
Person a power of attorney or similar authorization that is presently in
effect or outstanding.
4.26. DISCLOSURE DOCUMENTS AND APPLICATIONS. None of the information
supplied or to be supplied by or on behalf of Home or Home Bank ("Home
Supplied Information") for inclusion in the documents to be filed with the
SEC, FRB, the FDIC, or any other governmental entity in connection with the
transactions contemplated in this Agreement will, at the respective times
such documents are filed or become effective, contain any untrue statement of
a material fact, or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.27. ACCURACY AND CURRENTNESS OF INFORMATION FURNISHED. The
representations and warranties made by Home or Home Bank hereby or in the
schedules hereto contain no statements of fact which are untrue or
misleading, or omit to state any material fact which is necessary under the
circumstances to prevent the statements contained herein or in such schedules
from being misleading.
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4.28. LOAN SERVICING PORTFOLIO. Except as set forth on SCHEDULE 4.28,
Home Bank services no loans owned in whole or in part by other parties.
4.29. CERTAIN INTERESTS. SCHEDULE 4.29 sets forth a description of each
instance in which an executive officer or director of Home or Home Bank (a)
has any material interest in any property, real or personal, tangible or
intangible, used by or in connection with the business of Home or Home Bank;
(b) is indebted to Home or Home Bank except for normal business expense
advances; or (c) is a creditor (other than as a deposit holder of Home Bank)
of Home or Home Bank except for amounts due under normal salary and related
benefits or reimbursement of ordinary business expenses. Except as set forth
in SCHEDULE 4.29, all such arrangements are arm's length transactions
pursuant to normal commercial terms and conditions.
4.30. INVESTMENT SECURITIES. Except as set forth on SCHEDULE 4.30, all
investment securities held by Home or Home Bank are legal investments under
applicable law and regulations.
22
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CU AND CU BANK
CU and CU Bank represent and warrant to Home and Home Bank as follows:
5.1. INCORPORATION, STANDING AND POWER. CU has been duly incorporated
and is validly existing as a corporation in good standing under the laws of
the State of California and is registered as a bank holding company under the
BHC Act. CU Bank has been duly incorporated and is validly existing as a
national banking association under the laws of the United States, and is
authorized by the OCC to conduct a general banking business; CU Bank's
deposits are insured by the FDIC in the manner and to the extent provided by
law. CU and CU Bank have all requisite corporate power and authority to own,
lease and operate their respective properties and assets and to carry on
their respective businesses as presently conducted. Neither the scope of the
business of CU or CU Bank nor the location of any of their respective
properties requires that CU or CU Bank be licensed to do business in any
jurisdiction other than the State of California where the failure to be so
licensed would, individually or in the aggregate, have a materially adverse
effect on the financial condition, results of operation or business of CU on
a consolidated basis.
5.2. CAPITALIZATION.
(a) As of the date of this Agreement, the authorized capital stock of
CU consists of 24,000,000 shares of CU Stock, of which 4,621,450 shares are
outstanding, and 10,000,000 shares of serial preferred stock, none of which
are outstanding. All of the outstanding shares of CU Stock are duly
authorized, validly issued, fully paid and nonassessable. As of the date
of this Agreement, except for employee stock options covering 729,240
shares of CU Stock granted pursuant to the CU Stock Option Plan,
outstanding warrants covering 7,500 shares of CU Stock and 1,492,390
shares covered by the Home Warrant, there were no outstanding options,
warrants or other rights in or with respect to the unissued shares of CU
Stock or CU serial preferred stock nor any securities convertible into such
stock. Except with respect to the approximately 648,871 shares of CU Stock
to be issued in connection with the Corporate Bank Merger, CU is not
obligated to issue any additional shares of CU Stock or preferred stock or
any additional options, warrants or other rights in or with respect to the
unissued shares of such stock or any other securities convertible into such
stock. SCHEDULE 5.2 sets forth the name of each holder of a CU Option, the
number of shares of CU Stock covered by each such CU Option, the exercise
price per share and the expiration date of each CU Option.
(b) As of the date of this Agreement, the authorized capital stock of
CU Bank consists of 540,000 shares of CU Bank Stock, of which 472,973
shares are outstanding and all of which are owned of record by CU. All
the outstanding shares of CU Bank Stock are duly authorized, validly
issued, fully paid and nonassessable (except as provided for in 12 U.S.C.
Section 55). There are no outstanding options, warrants or other rights
in or with respect to the unissued shares of CU Bank Stock or any other
securities convertible into such stock, and CU Bank is not obligated to
issue any additional shares of its common stock or any options, warrants or
other rights in or with respect to the unissued shares of its common stock
or any other securities convertible into such stock.
5.3. SUBSIDIARIES. Except for CU Bank, a wholly owned subsidiary of CU, CU
does not own, directly or indirectly (except as pledgee pursuant to loans or
upon acquisition in satisfaction of debt previously
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contracted), the outstanding stock or other voting interest in any
corporation, partnership, joint venture or other entity.
5.4. FINANCIAL STATEMENTS. CU has previously furnished to Home a copy of
the Financial Statements of CU. The Financial Statements of CU: (a) present
fairly the consolidated financial condition of CU as of the respective dates
indicated and its consolidated results of operations and changes in financial
position/cash flow, as applicable, for the respective periods then ended,
subject, in the case of the unaudited consolidated interim financial statements,
to normal recurring adjustments; (b) have been prepared in accordance with
generally accepted accounting principles consistently applied (except as
otherwise indicated therein); (c) set forth as of the respective dates indicated
adequate reserves for all foreseeable loan losses and other contingencies; and
(d) are based on the books and records of CU and CU Bank.
5.5. SEC/REGULATORY FILINGS. Since January 1, 1990, CU and CU Bank have
filed all reports, registrations, and statements that were required to be filed
with the (i) OCC; (ii) the FRB; (iii) the SEC; and (iv) any other applicable
federal, state or local or governmental or regulatory authority. CU has
previously furnished to Home a copy of the SEC Filings of CU, OCC Filings of CU,
and the FRB Filings of CU. As of their respective dates, the SEC Filings of
CU, the OCC Filings of CU and the FRB Filings of CU complied in all material
respects with the requirements of their respective forms and did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
5.6. AUTHORITY OF CU AND CU BANK. The execution and delivery by CU and CU
Bank of this Agreement, by CU of the Agreement of Merger and by CU Bank of the
Bank Merger Agreement and, subject to the requisite approval of the shareholders
of CU and the sole shareholder of CU Bank, the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action on the part of CU and CU Bank, and this Agreement is,
and the Agreement of Merger and Bank Merger Agreement will be upon execution by
the respective parties thereto, a valid and binding obligation of CU or CU Bank
or both of them, as the case may be, enforceable in accordance with their
respective terms, except as the enforceability thereof may be limited by
bankruptcy, liquidation, receivership, conservatorship, insolvency, moratorium
or other similar laws affecting the rights of creditors generally and by general
equitable principles and by Section 8(b)(6)(D) of the Federal Deposit Insurance
Act, 12 U.S.C. Section 1818(b) (6) (D). Except as set forth in SCHEDULE 5.6,
neither the (i) execution and delivery by CU and CU Bank of this Agreement, by
CU of the Agreement of Merger or by CU Bank of the Bank Merger Agreement; (ii)
the consummation of the Merger or Bank Merger or the transactions contemplated
herein or therein; nor (iii) compliance by CU and CU Bank with any of the
provisions hereof or thereof, will: (a) conflict with or result in a breach of
any provision of their respective Articles of Incorporation or Association, as
amended, as the case may be, or Bylaws, as amended; (b) constitute a breach of
or result in a default (or give rise to any rights of termination, cancellation
or acceleration, or any right to acquire any securities or assets) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
franchise, license, permit, agreement or other instrument or obligation to which
CU or CU Bank is a party, or by which CU or CU Bank or any of their respective
properties or assets is bound, if in any such circumstances, such event could
have consequences materially adverse to CU on a consolidated basis; or (c)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to CU or CU Bank or any of their respective properties or assets, if
such violation could have consequences materially adverse to CU on a
consolidated basis. Except as set forth in the CU Schedules, no consent of,
approval of, notice to or filing with any governmental authority having
jurisdiction over any aspect of the business or assets of CU or CU Bank, and no
consent of, approval of or notice to any other Person, is required in connection
with the execution and delivery by CU and CU Bank of this Agreement, by CU of
the Agreement of Merger, by CU Bank of the Bank Merger
24
Agreement, or the consummation by CU and CU Bank of the Merger or Bank
Merger or the transactions contemplated hereby or thereby, except (i) the
approval of this Agreement and the transactions contemplated hereby by the
shareholders of CU and the sole shareholder of CU Bank; (ii) such approvals
as may be required by the FRB and the OCC; (iii) the filing of the Agreement
of Merger with the California Secretary; (iv) the filing of the Bank Merger
Agreement with the OCC; and (v) the filing with and the approval by the SEC
of the S-4 and the Proxy Statement.
5.7. INSURANCE. CU and CU Bank have policies of insurance and bonds with
respect to their respective assets and businesses against such casualties and
contingencies and in such amounts, types and forms as are appropriate for their
respective businesses, operations, properties and assets. All such insurance
policies and bonds are in full force and effect. To the knowledge of CU and CU
Bank and except as set forth on SCHEDULE 5.7, no insurer under any such policy
or bond has canceled or indicated an intention to cancel or not to renew any
such policy or bond or generally disclaimed liability thereunder. To the
knowledge of CU and CU Bank and except as set forth on SCHEDULE 5.7, neither CU
nor CU Bank is in default under any such policy or bond and all material claims
thereunder have been filed in a timely fashion. Set forth on SCHEDULE 5.7 is a
list of all policies of insurance carried and owned by CU or CU Bank, showing
the name of the insurance company, the nature of the coverage, the policy limit,
the annual premiums and the expiration dates. CU has delivered to Home a copy
of each such policy of insurance.
5.8. TITLE TO ASSETS. CU and CU Bank have good and marketable title to all
their respective material properties and assets, other than real property, owned
or stated to be owned by CU or CU Bank, free and clear of all mortgages, liens,
encumbrances, pledges or charges of any kind or nature except: (a) as set forth
in the Financial Statements of CU; (b) for liens or encumbrances for current
taxes not yet due; (c) for liens or encumbrances incurred in the ordinary course
of business; (d) for liens that are not substantial in character, amount or
extent or that do not materially detract from the value, or interfere with
present use, of the property subject thereto or affected thereby, or otherwise
materially impair the conduct of business of CU on a consolidated basis; or (e)
as set forth on SCHEDULE 5.8.
5.9. REAL ESTATE. SCHEDULE 5.9 sets forth a list of real property,
including leaseholds, owned or leased by CU or CU Bank (the "CU Real Property").
CU or CU Bank has good and marketable title to the CU Real Property, and valid
leasehold interests in the leaseholds, described on SCHEDULE 5.9, free and clear
of all mortgages, covenants, conditions, restrictions, easements, liens,
security interests, charges, claims, assessments and encumbrances, except (a)
for rights of lessors, co-lessees or sublessees in such matters that are
reflected in the lease; (b) for current taxes not yet due and payable; (c) for
liens and encumbrances of public record; (d) for such imperfections of title,
liens and encumbrances, if any, as do not materially detract from the value of
or materially interfere with the present use of such property; and (e) as
described on SCHEDULE 5.9.
5.10. LITIGATION. Except as set forth in the SEC Filings of CU or
SCHEDULE 5.10, there is no private or governmental suit, claim, action or
proceeding pending, nor to CU's or CU Bank's knowledge, threatened against CU
or CU Bank or against any of their respective directors, officers or
employees relating to the performance of their duties in such capacities or
against or affecting any properties of CU or CU Bank that has had or may have
a material adverse effect upon the business, financial condition or results
of operations of CU on a consolidated basis or the transactions contemplated
hereby or which may involve a payment by CU in excess of $50,000 of
applicable insurance coverage. Also, except as disclosed in the SEC Filings
of CU or on SCHEDULE 5.10, there are no material judgments, decrees,
stipulations or orders against CU or CU Bank enjoining either of them or any
of their respective directors, officers or employees in respect of, or the
effect of which is to prohibit, any business practice or the acquisition of
any property or the conduct of business in any area. CU has previously
25
provided to Home summary reports of CU's and CU Bank's attorneys relating to
all pending litigation to which CU or CU Bank is a party and which names CU
or CU Bank as a defendant or cross-defendant and a true, correct and complete
list of all pending litigation in which CU or CU Bank is a named party.
5.11. TAXES.
(a) CU and/or CU Bank have filed all federal and foreign income tax
returns, all state and local franchise and income tax, real and personal
property tax, sales and use tax, premium tax, excise tax and other tax
returns of every character required to be filed by it and have paid all
taxes, together with any interest and penalties owing in connection
therewith, shown on such returns to be due in respect of the periods
covered by such returns, other than taxes which are being contested in good
faith and for which adequate reserves have been established. CU and/or CU
Bank have filed all required payroll tax returns, have fulfilled all tax
withholding obligations and have paid over to the appropriate governmental
authorities the proper amounts with respect to the foregoing. The tax and
audit positions taken by CU and/or CU Bank in connection with the tax
returns described in the preceding sentence were reasonable and asserted in
good faith. Adequate provision has been made in the books and records of
CU and/or CU Bank and, to the extent required by generally accepted
accounting procedures, reflected in the Financial Statements of CU, for all
tax liabilities, including interest or penalties, whether or not due and
payable and whether or not disputed, with respect to any and all federal,
foreign, state, local and other taxes for the periods covered by such
financial statements and for all prior periods. SCHEDULE 5.11 sets forth
the date or dates through which the IRS has examined the federal tax
returns of CU and/or CU Bank and the date or dates through which any
foreign, state, local or other taxing authority has examined any other tax
returns of CU and/or CU Bank. SCHEDULE 5.11 also contains a complete list
of each year for which any federal, state, local or foreign tax authority
has obtained or has requested an extension of the statute of limitations
from CU and/or CU Bank and lists each tax case of CU and/or CU Bank
currently pending in audit, at the administrative appeals level or in
litigation. SCHEDULE 5.11 further lists the date and issuing authority of
each statutory notice of deficiency, notice of proposed assessment and
revenue agent's report issued to CU and/or CU Bank within the last twelve
(12) months. Except as set forth in SCHEDULE 5.11, neither the IRS nor any
foreign, state, local or other taxing authority has, during the past three
years, examined or is in the process of examining any federal, foreign,
state, local or other tax returns of CU. To the knowledge of CU, neither
the IRS nor any foreign, state, local or other taxing authority is now
asserting or threatening to assert any deficiency or claim for additional
taxes (or interest thereon or penalties in connection therewith) except as
set forth on SCHEDULE 5.11.
(b) Neither CU nor CU Bank is a party to any safe harbor lease within
the meaning of Section 168(f)(8) of the Code, as in effect prior to
amendment by the Tax Equity and Fiscal Responsibility Act of 1982. Neither
CU nor CU Bank is or has been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(i)(A)(ii) of the Code.
Neither CU nor CU Bank is a "consenting corporation" under Section 341(f)
of the Code. Neither CU nor CU Bank has agreed, nor is it required to
make, any adjustment under Section 481(a) of the Code by reason of a change
in accounting method or otherwise.
5.12. COMPLIANCE WITH LAWS AND REGULATIONS. To CU's and CU Bank's
knowledge, neither of them is in default under or in breach of any provision
of their respective Articles of Incorporation or Association, as amended, as
the case may be, or Bylaws, as amended, or law, ordinance, rule or regulation
promulgated by any governmental agency having authority over either of them,
where such default or breach would have a material adverse effect on the
business, financial condition or results of operations of CU on a
consolidated basis. No
26
investigation or review by any governmental entity or regulatory authority
with respect to CU or CU Bank is pending or, to the knowledge of CU or CU
Bank, threatened, nor has any such governmental entity or regulatory
authority indicated to CU or any Affiliate of CU an intention to conduct the
same, other than those the outcome of which would not have a material adverse
affect on the business, financial condition or results of operation of CU on
a consolidated basis.
5.13. PERFORMANCE OF OBLIGATIONS. CU and CU Bank have performed in all
material respects all of the obligations required to be performed by them to
date, and to the best of their knowledge, are not in default under or in
breach of any term or provision of any covenant, contract, lease, indenture
or any other covenant to which either of them is a party, is subject or is
otherwise bound, and no event has occurred that, with the giving of notice or
the passage of time or both, would constitute such default or breach, where
such default or breach would have a material adverse effect on the business,
financial condition or results of operations of CU on a consolidated basis.
Except for loans and leases made by CU Bank in the ordinary course of
business, to CU's or CU Bank's knowledge, no party with whom CU or CU Bank
has an agreement that is of material importance to the business of CU on a
consolidated basis is in default thereunder.
5.14. EMPLOYEES. There are no controversies pending or threatened
between CU or CU Bank and any of their respective employees that are likely
to have a material adverse effect on the business, financial condition or
results of operation of CU on a consolidated basis. Neither CU nor CU Bank
is a party to any collective bargaining agreement with respect to any of
their respective employees or any labor organization to which their
respective employees or any of them belong. Except as previously disclosed
in writing to Home, there are no understandings with respect to the
employment of any officer or employee of CU or CU Bank which are not
terminable by CU or CU Bank without liability on not more than thirty (30)
days notice. Except as disclosed in the CU Financial Statements or as
previously disclosed in writing to CU, all material sums due for employee
compensation have been paid or accrued and all employer contributions for
employee benefits, including deferred compensation obligations, and any
benefits under any CU Employee Plan have been duly and adequately paid or
provided for in accordance with plan documents. Except as set forth on
SCHEDULE 5.14, as of the date hereof, no director, officer or employee of CU
or CU Bank is entitled to receive any payment or any amount under any
existing CU Employee Plan, Understanding, agreement, severance plan or other
benefit plan as a result of the consummation of any transaction contemplated
by this Agreement, the Agreement of Merger or the Bank Merger.
5.15. BROKERS AND FINDERS. Except for any agreements among CU, Home and
Montgomery, and any fees payable thereunder, neither CU nor CU Bank is a
party to or obligated under any agreement with any broker or finder relating
to the transactions contemplated hereby, and neither the execution of this
Agreement nor the consummation of the transactions provided for herein or
therein will result in any liability to any broker or finder.
5.16. MATERIAL CONTRACTS. Except as set forth on SCHEDULE 5.16 hereto
(all items listed or required to be listed on SCHEDULE 5.16 being referred to
herein as "CU Scheduled Contracts"), neither CU nor CU Bank is a party or
otherwise subject to:
(a) any employment, deferred compensation, bonus or consulting
contract that requires payment by CU or CU Bank of $50,000 or more per
annum;
(b) any advertising, brokerage, licensing, dealership, representative
or agency relationship or contract not terminable by CU on 30 days' or less
notice and which requires payment by CU or CU Bank of $10,000 or more per
annum;
27
(c) any contract or agreement that restricts CU (or would restrict
any Affiliate of CU after the Effective Time) from competing in any line of
business with any Person or using or employing the services of any Person;
(d) any lease of real or personal property providing for annual lease
payments by or to CU or CU Bank in excess of $100,000 per annum other than
(i) financing leases entered into in the ordinary course of business in
which CU or CU Bank is lessor and (ii) leases of real property presently
used by CU Bank as banking offices;
(e) any mortgage, pledge, conditional sales contract, security
agreement, option, or any other similar agreement with respect to any
interest of CU or CU Bank (other than as mortgagor or pledgor in the
ordinary course of their banking business or as mortgagee, secured party or
deed of trust beneficiary in the ordinary course of their business) in
personal property having a value of $100,000 or more;
(f) any agreement to acquire equipment or any commitment to make
capital expenditures of $100,000 or more;
(g) other than agreements entered into in the ordinary course of
business, including sales of Other Real Estate Owned, any agreement for the
sale of any property or assets in which CU or CU Bank has an ownership
interest or for the grant of any preferential right to purchase any such
property or asset;
(h) except for any subordinated debt that may be assumed by CU Bank
in connection with the Corporate Bank Merger, any agreement for the
borrowing of any money (other than liabilities or interbank borrowings made
in the ordinary course of their banking business and reflected in the
Financial Statements of CU);
(i) any restrictive covenant contained in any deed to or lease of
real property owned or leased by CU or CU Bank (as lessee) that materially
restricts the use, transferability or value of such property;
(j) any guarantee or indemnification which involves the sume of
$100,000 or more, other than letters of credit or loan commitments issued
in the normal course of business;
(k) any supply, maintenance or landscape contracts not terminable by
CU or CU Bank without penalty on 30 days or less notice and which provides
for payments in excess of $25,000 per annum;
(l) any agreement which would be terminable other than by CU or CU
Bank as a result of the consummation of the transactions contemplated by
this Agreement;
(m) any contract of participation with any other bank in any loan
entered into by CU or CU Bank subsequent to December 31, 1994 in excess of
$100,000 or any sales of assets of CU or CU Bank with recourse of any kind
to CU or CU Bank except the sale of mortgage loans, servicing rights,
repurchase or reverse repurchase agreements, securities or other financial
transactions in the ordinary course of business;
28
(n) any other Understanding of any other kind not terminable on 30
days' or less notice which involves future payments or receipts or
performances of services or delivery of items requiring payment of $25,000
or more to or by CU or CU Bank other than payments made under or pursuant
to loan agreements, participation agreements and other agreements for the
extension of credit in the ordinary course of their business; or
(o) any Understanding that is otherwise material to the business,
financial condition, results of operations or prospects of CU or CU Bank.
CU has delivered to Home copies of all Scheduled Contracts, including all
amendments and supplements thereto.
5.17. ABSENCE OF MATERIAL CHANGE. Since December 31, 1994, the
businesses of CU and CU Bank have been conducted, only in the ordinary
course, in the same manner as theretofore conducted and there has not
occurred any event that has had or may reasonably be expected to have a
material adverse effect in the business, financial condition or results of
operation of CU on a consolidated basis.
5.18. LICENSES AND PERMITS. CU and CU Bank have all material licenses
and permits that are necessary for the conduct of their respective
businesses, and such licenses are in full force and effect, except for any
failure to be in full force and effect that would not, individually or in the
aggregate, have a material adverse effect on the business, financial
condition or results of operations of CU on a consolidated basis. The
properties and operations of CU and CU Bank are and have been maintained and
conducted, in all material respects, in compliance with all applicable laws
and regulations.
5.19. NO MATERIAL LIABILITIES; ENVIRONMENTAL.
(a) SCHEDULE 5.19 sets forth all material liabilities of CU and CU
Bank, including liabilities for Hazardous Substances or under any
Environmental Law, contingent or otherwise, that are not reflected or
reserved against in the CU Financial Statements, except for liabilities
incurred or accrued since December 31, 1994 in the ordinary course of
business, none of which has had or could reasonably be expected to have had
a material adverse effect on the business, financial condition, results of
operations or prospects of CU on a consolidated basis. Except as set forth
in SCHEDULE 5.19, neither CU nor CU Bank knows of any basis for the
asserting against it of any liability, obligation or claim that could
reasonably be expected to have a material adverse effect on the business,
financial condition, or results of operations of CU on a consolidated
basis.
(b) Except as set forth on SCHEDULE 5.19(b), to the actual knowledge
of the executive officers of CU and CU Bank, (i) there has not been any
generation, use, handling, transportation, treatment, storage, release, or
disposal of any Hazardous Substance in connection with the conduct of
business of CU or CU Bank that has resulted or is likely to result in any
liability under any Environmental Law in excess of $1,000,000; (ii) there
has never been a use of the CU Real Property that has resulted, or is
likely to result in any liability under any Environmental Law in excess of
$1,000,000; (iii) no underground storage tanks or surface impoundments are
on or in the CU Real Property; and (iv) no Hazardous Substances are
contained or located on any of the CU Real Property.
29
5.20. EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE 5.20 sets forth and describes all employee benefit plans
and any collective bargaining agreements or labor contracts in which CU or
CU Bank participates, or by which they are bound, including, without
limitation, (i) any profit sharing, deferred compensation, bonus, stock
option, stock purchase, pension, retainer consulting, retirement, welfare
or incentive plan or agreement whether legally binding or not; (ii) any
plan providing for "fringe benefits" to its employees, including but not
limited to vacation, sick leave, medical, hospitalization, life insurance
and other insurance plans, and related benefits; (iii) any written
employment agreement and any other employment agreement not terminable at
will; or (iv) any other "employee benefit plan" (within the meaning of
Section 3(3) of ERISA) (collectively, the "CU Employee Plans"). Except as
set forth in SCHEDULE 5.20, (i) there are no negotiations, demands or
proposals that are pending or threatened that concern matters now covered,
or that would be covered, by any employment agreements or employee benefit
plans other than amendments to plans qualified under Section 401 of the
Code that are required by the Tax Reform Act of 1986 and later legislation;
(ii) CU is in compliance with the material reporting and disclosure
requirements of Part 1 of Subtitle IB of ERISA and the corresponding
provisions of the Code to the extent applicable to all such employee
benefit plans; (iii) CU has performed all of its obligations under all such
employee benefit plans and employment agreements required to be performed
heretofore; and (iv) there are no actions, suits or claims (other than
routine claims for benefits) pending or, to the best knowledge of CU and CU
Bank, threatened against any such employee benefit plans and employment
agreements or the assets of such plans, and to the best knowledge of CU, no
facts exist which could give rise to any actions, suits or claims (other
than routine claims for benefits) against such plans or the assets of such
plans.
(b) The "employee pension benefit plans" (within the meaning of
Section 3(2) of ERISA) described on SCHEDULE 5.20 have been duly authorized
by the Board of Directors of CU. Except as set forth in SCHEDULE 5.20,
each such plan and associated trust intended to be qualified under Section
401(a) and to be exempt from tax under Section 501(a) of the Code,
respectively, has either received a favorable determination letter from the
IRS, has applied for such a determination letter or will apply for such a
determination letter before the expiration of the remedial amendment period
set forth in Section 401(b) of the Code, as the IRS may extend such period,
and to the best knowledge of CU and CU Bank, no event has occurred that
will or could give rise to disqualification of any such plan which is
intended to be qualified under Section 401(a) of the Code or loss of the
exemption from tax of any such trust which is intended to be exempt from
tax under Section 501(a) of the Code. No event has occurred that will or
could subject any such plans to tax under Section 511 of the Code. None of
such plans has engaged in a merger or consolidation with any other plan or
transferred assets or liabilities from any other plan. No prohibited
transaction (within the meaning of Section 409 or 502(i) of ERISA or
Section 4975 of the Code) or party-in-interest transaction (within the
meaning of Section 406 of ERISA) has occurred with respect to any of such
plans which could subject CU of CU Bank to an excise tax or penalty. To
the best knowledge of CU and CU Bank, no employee of CU or CU Bank has
engaged in any transactions which could subject CU or CU Bank to indemnify
such person against liability. All costs of plans have been provided for
on the basis of consistent methods in accordance with sound actuarial
assumptions and practices. No employee benefit plan has incurred any
"accumulated funding deficiency" (as defined in Section 302(2) of ERISA),
whether or not waived, taking into account contributions made within the
period described in Section 412(c)(10) of the Code; nor are there any
unfunded amounts under any employee benefit plan which is required to be
funded under Part 3 of Subtitle IB of ERISA and Section 412 of the Code);
nor has CU or CU Bank failed to make any contributions or pay any amount
due and owing as required by law or the terms of any employee benefit plan
or employment agreement. Subject to amendments that are required by the
Tax Reform Act of 1986 and later legislation, since the
30
last valuation date for each employee pension benefit plan, there has been
no amendment or change to such plan that would increase the amount of
benefits thereunder.
(c) Neither CU nor CU Bank sponsors or participates in, or has
sponsored or participated in, any employee benefit pension plan to which
Section 4021 of ERISA applies that would create a liability under Title IV
of ERISA.
(d) Neither CU nor CU Bank sponsors or participates in, or has
sponsored or participated in, any employee benefit pension plan that is a
"multi-employer plan" (within the meaning of Section 3(37) of ERISA) that
would subject such Person to any liability with respect to any such plan.
(e) All group health plans of CU or CU Bank (including any plans of
Affiliates of CU that must be taken into account under Section 162(i) or
(k) of the Code as in effect immediately prior to the Technical and
Miscellaneous Revenue Act of 1988 and Section 4980B of the Code) have been
operated in compliance with the group health plan continuation coverage
requirements of Section 4980B of the Code to the extent such requirements
are applicable.
(f) There have been no acts or omissions by CU or CU Bank that have
given rise to or may give rise to fines, penalties, taxes, or related
charges under Sections 502(c) or (i) or 4071 of ERISA or Chapter 43 of the
Code which could be imposed on CU or CU Bank.
(g) Except as described in Section 5.20(j), neither CU or CU Bank
maintains any employee benefit plan or employment agreement pursuant to
which any benefit plan or other payment will be required to be made by CU
or CU Bank or pursuant to which any other benefit will accrue or vest in
any director, officer or employee of CU or CU Bank, in either case as a
result of the consummation of the transactions contemplated by the
Agreement.
(h) No "reportable event," as defined in ERISA, has occurred with
respect to any of the employee benefit plans.
(i) All amendments required to bring each of the employee benefit
plans into conformity with all of the provisions of ERISA and the Code and
all other applicable laws, rules and regulations have been made, or will be
made before the expiration of the remedial amendment period set forth under
Section 401(b) of the Code, as such period may be extended by the IRS.
(j) SCHEDULE 5.20 sets forth the name of each director, officer,
employee, agent or representative of CU or CU Bank and every other person
entitled to receive any benefit or any payment of any amount under any
existing employment agreement, severance plan or other benefit plan or
Understanding as a result of the consummation of any transaction
contemplated in this Agreement, and with respect to each such person, the
nature of such benefit or the amount of such payment, the event triggering
the benefit or payment, and the date of, and parties to, such employment
agreement, severance or other benefit plan or Understanding. CU has
furnished Home with true and correct copies of all documents with respect
to the plans and agreements referred to in SCHEDULE 5.20 delivered as of
the date of the Agreement, including all amendments and supplements
thereto, and all related summary plan descriptions. For each of the
employee pension benefit plans of CU and CU Bank referred to in SCHEDULE
5.20 delivered as of the date of the Agreement, CU has furnished Home with
true and correct copies of (i) a copy of the Form 5500 which was filed in
each of the three most recent plan years, including without
31
limitation, all schedules thereto and all financial statements with
attached opinions of independent accountants to the extent required;
(ii) the most recent determination letter from the IRS; (iii) the
statement of assets and liabilities as of the most recent valuation date;
and (iv) the statement of changes in fund balance and in financial
position or the statement of changes in net assets available for benefits
under each of said plans for the most recently ended plan year. The
documents referred to in subdivisions (iii) and (iv) fairly present the
financial condition of each of said plans as of and at such dates and
the results of operations of each of said plans, all in accordance with
generally accepted accounting principles or on the cash method of
accounting applied on a consistent basis.
5.21. CORPORATE RECORDS. The minute books of CU and CU Bank accurately
reflect all material actions taken to this date by the respective
shareholders, boards of directors and committees of CU and CU Bank and
contain true and complete copies of the Articles of Incorporation or
Association, Bylaws and other charter documents, and all amendments thereto.
5.22. OFFICES AND ATMS. SCHEDULE 5.22 sets forth the headquarters of CU
and CU Bank (identified as such) and each of the offices and automated teller
machines ("ATMs") maintained and operated by CU Bank (including, without
limitation, representative and loan production offices and operations
centers) and the location thereof. Except as set forth on SCHEDULE 5.22,
neither CU nor CU Bank maintains any other office or ATM nor conducts
business at any other location. Neither CU nor CU Bank has applied for or
received permission to open any additional branch nor operate at any other
location.
5.23. OPERATING LOSSES. SCHEDULE 5.23 sets forth a list of any
Operating Loss (as herein defined) which has occurred at CU Bank during the
period after September 30, 1995. To the knowledge of CU or CU Bank, no
action has been taken or omitted to be taken by any employee of CU Bank that
has resulted in the incurrence by CU Bank of an Operating Loss or that might
reasonably be expected to result in the incurrence of any individual
Operating Loss after September 30, 1995, which, net of any insurance proceeds
payable in respect thereof, would exceed $25,000. For purposes of this
Agreement "Operating Loss" means any loss resulting from cash shortages, lost
or misposted items, disputed clerical and accounting errors, forged checks,
payment of checks over stop payment orders, merchant credit card processing,
counterfeit money, wire transfers made in error, theft, robberies,
defalcations, check kiting, fraudulent use of credit cards or electronic
teller machines or other similar acts or occurrences.
5.24. LOAN PORTFOLIO. All loans or other extensions of credit, and
guaranties, security agreements or other agreements supporting any loans or
extensions of credit, and investments of CU or CU Bank are, in all material
respects, legal, enforceable and authorized under applicable federal and
state laws and regulations, except as the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting
the rights of creditors generally and by general equitable principles.
Except as previously disclosed in writing to Home, no loans or investments
held by CU Bank are, as of September 30, 1995 (i) more than ninety (90) days
past due with respect to any scheduled payment of principal or interest; (ii)
classified as "loss," "doubtful," "substandard," "special mention," or
"criticized" by any federal or state banking regulators; or (iii) on a
non-accrual status in accordance with CU Bank's loan review procedures. None
of such investments are subject to any restrictions, contractual, statutory
or other, that would materially impair the ability of the entity holding such
investment to dispose freely of any such investment at any time, except
restrictions on the public distribution or transfer of any such investments
under the Securities Act and the regulations thereunder or state securities
laws and pledges or security interests given in connection with government
deposits. Except as previously disclosed in writing to Home, CU Bank has no
loans, leases or other extensions of credit outstanding, or commitments to
make any loans, leases or other extensions of credit to any Affiliates of CU
Bank which are
32
not on substantially the same terms (including interest rates, repayment
terms and collateral) as would be available for comparable transactions with
persons of similar creditworthiness who are not Affiliates of CU Bank. In
the case of each Secured Loan, to the best knowledge of CU Bank, the security
interest has been perfected and, in the case of each Covered Loan, the
guaranty or similar obligation has been executed and delivered to CU Bank and
is still in full force and effect.
5.25. POWER OF ATTORNEY. Neither CU nor CU Bank has granted any Person
a power of attorney or similar authorization that is presently in effect or
outstanding.
5.26. DISCLOSURE DOCUMENTS AND APPLICATIONS. None of the information
supplied or to be supplied by or on behalf of CU or CU Bank ("CU Supplied
Information") for inclusion in the documents to be filed with the SEC, FRB,
the OCC, or any other governmental entity in connection with the transactions
contemplated in this Agreement will, at the respective times such documents
are filed or become effective, contain any untrue statement of a material
fact, or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
5.27. ACCURACY AND CURRENTNESS OF INFORMATION FURNISHED. The
representations and warranties made by CU or CU Bank hereby or in the
schedules hereto contain no statements of fact which are untrue or
misleading, or omit to state any material fact which is necessary under the
circumstances to prevent the statements contained herein or in such schedules
from being misleading.
5.28. LOAN SERVICING PORTFOLIO. Except as set forth on SCHEDULE 5.28,
CU Bank services no loans owned in whole or in part by other parties.
5.29. CERTAIN INTERESTS. SCHEDULE 5.29 sets forth a description of each
instance in which an executive officer or director of CU or CU Bank (a) has
any material interest in any property, real or personal, tangible or
intangible, used by or in connection with the business of CU or CU Bank; (b)
is indebted to CU or CU Bank except for normal business expense advances; or
(c) is a creditor (other than as a deposit holder of CU Bank) of CU or CU
Bank except for amounts due under normal salary and related benefits or
reimbursement of ordinary business expenses. Except as set forth in SCHEDULE
5.29, all such arrangements are arm's length transactions pursuant to normal
commercial terms and conditions.
ARTICLE VI
COVENANTS OF HOME AND HOME BANK
PENDING EFFECTIVE TIME OF THE MERGERS
Home and Home Bank covenant and agree with CU and CU Bank as follows:
6.1. LIMITATION ON HOME'S AND HOME BANK'S CONDUCT PRIOR TO EFFECTIVE
TIME. Between the date hereof and the Effective Time, except as contemplated
by this Agreement, Home and Home Bank agree to conduct their respective
businesses only in the normal and customary manner and in accordance with
sound
33
banking practices, and Home and Home Bank shall not, without the prior
written consent of CU (which consent shall not be unreasonably withheld and
which consent (except with respect to subparagraph (h) of this Section 6.1)
shall be deemed granted if within five (5) business days of CU's receipt of
written notice of a request for prior written consent, written notice of
objection is not received by Home):
(a) issue any Home Stock (except pursuant to the exercise of Home
Options outstanding as of the date hereof), Home preferred stock, Home Bank
Stock, Home Bank preferred stock, any other securities (including long term
debt) of Home or Home Bank or any rights, options or securities to acquire
any Home Stock, Home preferred stock, Home Bank Stock, Home Bank preferred
stock or any other securities (including long term debt) of Home or Home
Bank;
(b) except in accordance with Home's customary and past practice of
paying dividends in an amount equal to $.085 per quarter, declare, set
aside or pay any dividend or make any other distribution upon, or purchase
or redeem any shares of, Home Stock;
(c) except as may be required to effect the transactions contemplated
herein, amend its respective Articles of Incorporation or its Bylaws;
(d) grant any general or uniform increase in the rate of pay of
employees or employee benefits;
(e) grant any material increase in salary, incentive compensation or
employee benefits or pay any bonus to any Person except for payments in the
ordinary course of business consistent with past practices or pursuant to
the Proposed Retention Agreements or any pre-existing contract, arrangement
or bonus plan;
(f) make any capital expenditure in excess of $100,000, except for
ordinary repairs, renewals and replacements;
(g) compromise or otherwise settle or adjust any assertion or claim
of a deficiency in taxes (or interest thereon or penalties in connection
therewith), extend the statute of limitations with any tax authority or
file any pleading in court in any tax litigation or any appeal from an
asserted deficiency;
(h) grant or commit to grant any new extension of credit or amend the
terms of any such credit outstanding on the date hereof to any executive
officer, director or holder of ten percent (10%) or more of the outstanding
Home Stock, or to any corporation, partnership, trust or other entity
controlled by any such person, except consistent with practices and
policies in existence as of the date of this Agreement;
(i) close or open any offices at which business is conducted;
(j) adopt or amend any Home Employee Plan or other benefit plan or
arrangement of any such type except for such amendments as are required by
law or do not materially increase the costs or benefits of such plan or
arrangement, except for the Proposed Retention Agreements;
(k) change any of Home's or Home Bank's policies and practices with
respect to liquidity management and cash flow planning, lending, personnel
practices, accounting or any other material
34
aspect of Home's business or operations on a consolidated basis,
except such changes as may be required in the opinion of Home's or Home
Bank's management to respond to economic or market conditions or as may be
required by the rules of the American Institute of Certified Public
Accountants or Financial Accounting Standards Board or by applicable
governmental authorities;
(l) grant any Person a power of attorney or similar authority;
(m) make any material investment by purchase of stock or securities,
contributions to capital, property transfers or otherwise in any other
Person, except for investments made in the ordinary course of business
consistent with past practice;
(n) amend, modify or terminate, except in accordance with its terms,
any Home Scheduled Contract or enter into any agreement or contract that
would be a Home Scheduled Contract under Section 4.16;
(o) create or incur or suffer to exist any mortgage, lien, pledge,
security interest, charge, encumbrance or restraint of any kind against or
in respect of any property or right of Home and/or Home Bank;
(p) sell, lease or otherwise dispose of any of its assets which are
material, individually or in the aggregate, to Home or Home Bank, except in
the ordinary course of business consistent with past practice;
(q) make any extraordinary payment to any Person, other than with
respect to the Proposed Retention Agreements; or
(r) except as required by law, take or cause to be taken any action
which would prevent the transactions contemplated hereby from qualifying as
tax free reorganizations under Section 368 of the Code.
6.2. NO SOLICITATION, ETC.
(a) Home and Home Bank shall not, and shall cause each of their
respective officers, directors, employees, agents, legal and financial
advisors and Affiliates not to, directly or indirectly, solicit, initiate
or, except as contemplated by Section 6.2(b) hereof, encourage, entertain
or enter into any agreement or agreement in principle, or announce any
intention to do any of the foregoing, with respect to any Alternative
Transaction, other than the Alternative Transaction contemplated by this
Agreement.
(b) Home or Home Bank shall not, and shall cause each of its
officers, directors, employees, agents, legal and financial advisors and
Affiliates not to, directly or indirectly, participate in any negotiations
or discussions regarding, or furnish any information with respect to, or
otherwise cooperate in any way in connection with, or assist or participate
in, facilitate or encourage, any effort or attempt to effect, any
Alternative Transaction with or involving any Person other than CU or CU
Bank, unless Home or Home Bank shall have received an unsolicited written
offer from a Person other than CU or CU Bank to effect an Alternative
Transaction and the Board of Directors of Home determines, based on an
opinion of counsel, that in the exercise of the fiduciary obligations of
the Board of Directors such
35
information should be provided to or such discussions or negotiations
undertaken with the Person submitting such unsolicited written offer.
(c) Home will promptly communicate to CU the terms of any proposal
which it may receive in respect of any Alternative Transaction and will
keep CU informed as to the status of any actions, including negotiations or
discussions, taken pursuant to subsection (b) of this Section 6.2.
6.3. AFFIRMATIVE CONDUCT OF HOME AND HOME BANK PRIOR TO EFFECTIVE TIME.
Between the date hereof and the Effective Time, Home and Home Bank shall:
(a) use and devote their respective best efforts consistent with this
Agreement to maintain and preserve intact their respective present business
organizations and to maintain and preserve their respective relationships
and goodwill with account holders, borrowers, employees and others having
business relationships with Home or Home Bank;
(b) use their respective best efforts to keep in full force and
effect all of the existing material permits and licenses of Home or Home
Bank;
(c) use their respective best efforts to maintain insurance coverage
at least equal to that now in effect on all properties for which they are
responsible and on their respective business operations;
(d) perform their respective material contractual obligations and not
become in material default on any thereof;
(e) duly and timely file all reports and returns required to be filed
with any federal, state or local governmental authority, unless any
extensions have been duly granted by such authority;
(f) duly observe and conform to all lawful requirements applicable to
their respective businesses that are material to the business of Home on a
consolidated basis;
(g) maintain their respective assets and properties in good condition
and repair, normal wear and tear excepted;
(h) promptly advise CU in writing of any event or any other
transaction within Home's or Home Bank's knowledge whereby any Person or
Related Group of Persons acquires, directly or indirectly, record or
beneficial ownership or control (as defined in Rule 13d-3 promulgated by
the SEC under the Exchange Act) of five percent (5%) or more of the
outstanding Home Stock prior to the record date fixed for the Home
Shareholders' Meeting or any adjourned meeting thereof to approve this
Agreement and the transactions contemplated herein;
(i) promptly notify CU regarding receipt from any tax authority of
any notification of the commencement of an audit, any request to extend the
statute of limitations, any statutory notice of deficiency, any revenue
agent's report, any notice of proposed assessment, or any other similar
notification of potential adjustments to the tax liabilities of Home and/or
Home Bank, or any actual or threatened collection enforcement activity by
any tax authority with respect to tax liabilities of Home and/or Home Bank;
36
(j) furnish to CU, as soon as practicable, and in any event within
fifteen days after it is prepared, (i) a copy of any report submitted to
the board of directors of Home or Home Bank, provided, however, that Home
need not furnish to CU communications of Home's legal counsel regarding
Home's rights and obligations under this Agreement or books, records and
documents covered by the attorney-client privilege, or which are attorneys'
work product, (ii) copies of all reports, filings, certificates,
correspondence and other documents filed with or received from the SEC,
FRB, FDIC, Superintendent or any other governmental or regulatory entity,
and (iii) monthly unaudited consolidated balance sheets and consolidated
statements of operations of Home;
(k) not later than the 25th day of each calendar month, amend or
supplement the Schedules prepared and delivered pursuant to Article IV (the
"Home Schedules") to ensure that the information set forth in such Home
Schedules accurately reflects the then-current status of Home and Home
Bank. Home shall further amend or supplement the Home Schedules as of the
Closing Date if necessary to reflect any additional information that needs
to be included in the Home Schedules;
(l) use their respective best efforts to obtain any third party
consent with respect to any contract, agreement, lease, license, amendment,
permit or release that is material to the business of Home on a
consolidated basis or that is contemplated or required in connection with
this Agreement, the Merger or Bank Merger;
(m) promptly notify CU of the filing of any material litigation, or
the filing of any governmental or regulatory action, including any
investigation or notice of investigation, or similar proceeding or notice
of any claim against Home or Home Bank or any of their assets; and
(n) prepare and timely file all tax returns and amendments thereto
required to be filed by them on or before the Closing Date. CU shall have
a reasonable opportunity to review all such returns and amendments thereto
on a pre-filing basis. Home and Home Bank shall discharge all taxes,
assessments and governmental charges in the nature of taxes upon or against
it or any of its properties or assets, and all tax liabilities at any time
existing, before the same shall become delinquent and before penalties
accrue thereon, except to the extent and as long as: (i) the same are
being contested in good faith and by appropriate proceedings pursued
diligently and in such manner not to cause any material adverse effect upon
the condition (financial or otherwise) or operations of Home or Home Bank;
and (ii) Home and Home Bank shall have set aside on their books appropriate
reserves in the amount of the demanded principal imposition together with
interest and penalties relating thereto, if any.
6.4. ACCESS TO INFORMATION. Home and Home Bank will afford CU and its
representatives, counsel, accountants, agents and employees access during normal
business hours to all of their respective businesses, operations, properties,
books, files and records and will do everything reasonably necessary to enable
CU and its representatives, counsel, accountants, agents and employees to make a
complete examination of the financial statements, businesses, assets and
properties of Home and Home Bank and the condition thereof and to update such
examination at such intervals as CU shall deem appropriate. Such examination
shall be conducted in cooperation with the officers of Home and Home Bank and in
such a manner as to minimize any disruption of, or interference with, the normal
business operations of Home and Home Bank. Upon the request of CU, Home will
request that Arthur Andersen provide reasonable access to auditors' work papers
with respect to the businesses and properties of Home and Home Bank, including
tax accrual work papers prepared for Home and/or Home Bank during the preceding
sixty (60) months, other than (a) books, records and documents covered by the
attorney-client privilege, or that are attorneys' work product, and (b) books,
records and documents that Home
37
or Home Bank is legally obligated to keep confidential. No examination or
review conducted under this section shall constitute a waiver or
relinquishment on the part of CU of the right to rely upon the
representations and warranties made by Home and Home Bank herein; provided,
that CU shall disclose in writing to Home any fact or circumstance it may
discover which CU believes renders any representation or warranty made by
Home or Home Bank hereunder incorrect in any respect. CU covenants and
agrees that it and its representatives, counsel, accountants, agents and
employees will hold in strict confidence all documents and information
concerning Home and Home Bank so obtained (except to the extent that such
documents or information are a matter of public record or require disclosure
in the Proxy Statement or any of the public information of any applications
required to be filed with any governmental or regulatory agency to obtain the
approvals and consents required to effect the transactions contemplated
hereby), and if the transactions contemplated herein are not consummated,
such confidence shall be maintained and all such documents shall be returned
to Home and Home Bank.
6.5. FILINGS. Home and Home Bank agree that through the Effective Time,
each of their respective reports, registrations, statements and other filings
required to be filed with any applicable governmental or regulatory authority
will comply in all material respects with all the applicable statutes, rules and
regulations enforced or promulgated by the governmental or regulatory body with
which it will be filed and none will contain any untrue statement of material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. Any financial statement contained in any such
report, registration, statement or other filing that is intended to present the
financial position of the entity or entities to which it relates will fairly
present the financial position of such entities or entity and will be prepared
in accordance with generally accepted accounting principles consistently applied
during the periods involved.
6.6. NOTICES; REPORTS. Home and Home Bank will promptly notify CU of any
event of which Home or Home Bank obtains knowledge which has had or may
reasonably be expected to have a materially adverse effect on the financial
condition, operations, business or prospects of Home on a consolidated basis or
in the event that Home or Home Bank determines that either is unable to fulfill
any of the conditions to the performance of CU's obligations hereunder, as set
forth in Articles IX or XI herein, and Home and Home Bank will furnish CU (i) as
soon as available, and in any event within thirty (30) days after it is
prepared, any report by Home or Home Bank for submission to the Board of
Directors of Home or Home Bank, (ii) as soon as available, all proxy statements,
information statements, financial statements, reports, letters and
communications sent by Home to its shareholders or other security holders, and
all reports filed by Home or Home Bank with the SEC, FRB or FDIC, and (iii) such
other existing reports as CU may reasonably request relating to Home or Home
Bank.
6.7. HOME SHAREHOLDERS' MEETING. Promptly after the execution of this
Agreement, Home will take all action necessary in accordance with applicable law
and its Articles of Incorporation and Bylaws to convene a meeting of its
shareholders to consider and vote upon this Agreement and the transactions
contemplated hereby. The Board of Directors of Home shall, subject to its
fiduciary duties, recommend that its shareholders approve this Agreement and the
transactions contemplated hereby, and the Board of Directors of Home shall,
subject to its fiduciary duties, use its best efforts to obtain the affirmative
vote of the holders of the largest possible percentage of the outstanding Home
Stock to approve this Agreement and the transactions contemplated hereby.
6.8. BANK MERGER. Home and Home Bank shall (i) take all necessary
corporate and other action, to effect the Bank Merger; (ii) execute, deliver
and, where appropriate, file any and all documents necessary or desirable to
effect the Bank Merger; and (iii) take and cause Home Bank to take any other
action to permit the consummation of any transactions contemplated in connection
with the Bank Merger. Neither Home nor Home Bank shall take any action that
would prevent the performance of the Bank Merger.
38
6.9. FILINGS; APPLICATIONS. Home and Home Bank will cooperate with CU in
the preparation of the Proxy Statement and S-4 and the statements or
applications to be filed to obtain the necessary regulatory approvals to
consummate the transactions contemplated by this Agreement. Home and Home Bank
covenant and agree that all information furnished by Home or Home Bank for
inclusion in the Proxy Statement and S-4 and in all applications or statements
filed with the appropriate regulatory authorities for approval of, or consent
to, the Merger and the Bank Merger will comply in all material respects with the
provisions of applicable law, and will not contain any untrue statement of
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
6.10. CERTAIN LOANS AND OTHER EXTENSIONS OF CREDIT. Home Bank will
promptly inform CU of the amounts and categories of any loans, leases or other
extensions of credit that have been classified by any bank regulatory authority
or by any unit of Home or Home Bank as "Criticized," "Specially Mentioned,"
"Substandard," "Doubtful," "Loss" or any comparable classification ("Classified
Credits"). Home Bank will furnish CU, as soon as practicable, and in any event
within 15 days after the end of each calendar month, schedules, including the
following: (a) Classified Credits (including with respect to each credit its
classification category and the originating unit); (b) nonaccrual credits
(including the originating unit); (c) accrual exception credits that are
delinquent 90 or more days and have not been placed on nonaccrual status
(including its originating unit); (d) credits delinquent as to payment of
principal or interest (including its originating unit), including an aging into
30-89 and 90+ day categories; (e) participating loans and leases, stating, with
respect to each, whether it is purchased or sold and the originating unit; (f)
loans or leases (including any commitments) by Home or Home Bank to any Home or
Home Bank director, officer at or above the senior vice president level, or
shareholder holding ten percent (10%) or more of the capital stock of Home,
including with respect to each such loan or lease the identity and, to the
knowledge of Home, the relation of the borrower to Home or Home Bank, and the
outstanding and undrawn amounts; (g) letters of credit (including the
originating unit); (h) loans or leases wholly or partially charged off during
the previous month (including with respect to each loan or lease, the
originating amount, the write-off amount and its originating unit); and (i)
other real estate or assets acquired in satisfaction of debt.
6.11. TERMINATION OF HOME STOCK OPTION PLAN. Home will take all steps
necessary to cause the Home Stock Option Plan to be terminated as of or prior
to the Effective Time, and will cause any options outstanding thereunder to
be either exercised (accompanied with the payment provided for in such
exercised option) on or before the Effective Time, or for those options not
so exercised, to obtain at the earliest practicable date and prior to the
Effective Time a revised stock option contract with each holder of such
unexercised options, incorporating such terms as may be necessary in order to
make such option contracts consistent with the New Stock Option Plan.
6.12. ENVIRONMENTAL AUDIT. Home shall deliver to CU a Phase I
Environmental Assessment Report with respect to the property listed on
Schedule 4.9 (the "Phase I Reports"), in a form reasonably satisfactory to
CU. The Parties agree to share equally any and all costs incurred in
obtaining the Phase 1 Reports requested after the date hereof in connection
with this Section 6.12. Based on the Parties' review of the Phase I Reports,
the Parties shall determine, in good faith based on a reasonable assessment
of the results of the Phase I Reports, whether to obtain Phase II Site
Assessments ("Phase II Assessments") for any Home Real Property. The Parties
shall mutually agree on the environmental consultant to prepare any such
Phase II Assessment and shall share equally any and all costs incurred in
obtaining such Phase II Assessments. If the amount of remediation expenses
related to the Home Real Property, as set forth in the Phase II Assessments,
is estimated to exceed $1,000,000,
39
then Home shall have an additional ninety (90) days from the date of receipt
of such Phase II Assessments within which to cure the excessive remediation
costs and to reduce the estimated costs of remediation to an amount below
$1,000,000.
6.13. D&O COVERAGE. Home shall obtain (i) coverage for a period of 36
months following the Effective Time for the directors and officers of Home
and Home Bank under a directors' and officers' liability insurance policy
which is no less protective in terms of coverage or limitations then now
possessed by Home covering acts or omissions occurring prior to the Effective
Time and (ii) coverage for a period of at least 36 months following the
Effective Time under a bankers' blanket bond which is no less protective in
terms of coverage or limitations then now possessed by Home which covers
losses incurred prior to the Effective Time and actions related to this
Agreement.
ARTICLE VII
COVENANTS OF CU AND CU BANK
PENDING EFFECTIVE TIME OF THE MERGERS
CU and CU Bank covenant and agree with Home and Home Bank as follows:
7.1. LIMITATION ON CU'S AND CU BANK'S CONDUCT PRIOR TO EFFECTIVE TIME.
Between the date hereof and the Effective Time, except as contemplated by this
Agreement, CU and CU Bank agree to conduct their respective businesses only in
the normal and customary manner and in accordance with sound banking practices,
and CU and CU Bank shall not, without prior written consent of Home (which
consent shall not be unreasonably withheld and which consent (except with
respect to subparagraph (h) of this Section 7.1) shall be deemed granted if
within five (5) business days of Home's receipt of written notice of a request
for prior written consent, written notice of objection is not received by CU):
(a) except in connection with the Corporate Bank Merger, issue any CU
Stock (except pursuant to the exercise of CU Options outstanding as of the
date hereof), CU preferred stock, CU Bank Stock, CU Bank preferred stock,
any other securities (including long term debt) of CU or CU Bank or any
rights, options or securities to acquire any CU Stock, CU preferred stock,
CU Bank Stock, CU Bank preferred stock or any other securities (including
long term debt) of CU or CU Bank;
(b) except in accordance with CU's customary and past practice of
paying dividends in an amount equal to $.02 per quarter, declare, set aside
or pay any dividend or make any other distribution upon, or purchase or
redeem any shares of, CU Stock;
(c) except as may be required to effect the transactions contemplated
herein, amend its Articles of Incorporation or Association, as the case may
be, or its Bylaws; provided, however, that CU Bank shall be permitted to
amend and restate its Articles of Association in the form previously
submitted to Home's counsel;
(d) grant any general or uniform increase in the rate of pay of
employees or employee benefits;
40
(e) grant any material increase in salary, incentive compensation or
employee benefits or pay any bonus to any Person except for payments in the
ordinary course of business consistent with past practices or pursuant to
any pre-existing contract, arrangement or bonus plan;
(f) make any capital expenditure in excess of $100,000, except for
ordinary repairs, renewals and replacements;
(g) compromise or otherwise settle or adjust any assertion or claim
of a deficiency in taxes (or interest thereon or penalties in connection
therewith), extend the statute of limitations with any tax authority or
file any pleading in court in any tax litigation or any appeal from an
asserted deficiency;
(h) grant or commit to grant any new extension of credit or amend the
terms of any such credit outstanding on the date hereof to any executive
officer, director or holder of ten percent (10%) or more of the outstanding
CU Stock, or to any corporation, partnership, trust or other entity
controlled by any such person, except consistent with practices and
policies in existence as of the date of this Agreement;
(i) close or open any offices at which business is conducted except
in connection with Corporate Bank Merger;
(j) adopt or amend any CU Employee Plan or other benefit plan or
arrangement of any such type except for such amendments as are required by
law or do not materially increase the costs or benefits of such plan or
arrangement;
(k) change any of CU's or CU Bank's policies and practices with
respect to liquidity management and cash flow planning, lending, personnel
practices, accounting or any other material aspect of CU's business or
operations on a consolidated basis, except such changes as may be required
in the opinion of CU's or CU Bank's management to respond to economic or
market conditions or as may be required by the rules of the American
Institute of Certified Public Accountants or Financial Accounting Standards
Board or by applicable governmental authorities;
(l) grant any Person a power of attorney or similar authority;
(m) make any material investment by purchase of stock or securities,
contributions to capital, property transfers or otherwise in any other
Person, except for investments made in the ordinary course of business
consistent with past practice;
(n) amend, modify or terminate, except in accordance with its terms,
any CU Scheduled Contract or enter into any agreement or contract that
would be a CU Scheduled Contract under Section 5.16;
(o) create or incur or suffer to exist any mortgage, lien, pledge,
security interest, charge, encumbrance or restraint of any kind against or
in respect of any property or right of CU and/or CU Bank;
41
(p) sell, lease or otherwise dispose of any of its assets which are
material, individually or in the aggregate, to CU or CU Bank, except in the
ordinary course of business consistent with past practice;
(q) make any extraordinary payment to any Person; or
(r) except as required by law, take or cause to be taken any action
which would prevent the transactions contemplated hereby form qualifying as
tax free reorganizations under Section 368 of the Code.
7.2. NO SOLICITATION, ETC.
(a) CU and CU Bank shall not, and shall cause each of their
respective officers, directors, employees, agents, legal and financial
advisors and Affiliates not to, directly or indirectly, solicit, initiate
or, except as contemplated by Section 7.2(b) hereof, encourage, entertain
or enter into any agreement or agreement in principle, or announce any
intention to do any of the foregoing, with respect to any Alternative
Transaction, other than the Alternative Transaction contemplated by this
Agreement.
(b) CU or CU Bank shall not, and shall cause each of its officers,
directors, employees, agents, legal and financial advisors and Affiliates
not to, directly or indirectly, participate in any negotiations or
discussions regarding, or furnish any information with respect to, or
otherwise cooperate in any way in connection with, or assist or participate
in, facilitate or encourage, any effort or attempt to effect any
Alternative Transaction with or involving any Person other than Home or
Home Bank, unless CU or CU Bank shall have received an unsolicited written
offer from a Person other than Home or Home Bank to effect an Alternative
Transaction and the Board of Directors of CU determines, based on an
opinion of counsel, that in the exercise of the fiduciary obligations of
the Board of Directors such information should be provided to or such
discussions or negotiations undertaken with the Person submitting such
unsolicited written offer.
(c) CU will promptly communicate to Home the terms of any proposal
which it may receive in respect of any Alternative Transaction and will
keep Home informed as to the status of any actions, including negotiations
or discussions, taken pursuant to subsection (b) of this Section 7.2.
7.3. AFFIRMATIVE CONDUCT OF CU AND CU BANK PRIOR TO EFFECTIVE TIME.
Between the date hereof and the Effective Time, CU and CU Bank shall:
(a) use and devote their respective best efforts consistent with this
Agreement to maintain and preserve intact their respective present business
organizations and to maintain and preserve their respective relationships
and goodwill with account holders, borrowers, employees and others having
business relationships with CU or CU Bank;
(b) use their respective best efforts to keep in full force and
effect all of the existing material permits and licenses of CU or CU Bank;
(c) use their respective best efforts to maintain insurance coverage
at least equal to that now in effect on all properties for which they are
responsible and on their respective business operations;
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(d) perform their respective material contractual obligations and not
become in material default on any thereof;
(e) duly and timely file all reports and returns required to be filed
with any federal, state or local governmental authority, unless any
extensions have been duly granted by such authority;
(f) duly observe and conform to all lawful requirements applicable to
their respective businesses that are material to the business of CU on a
consolidated basis;
(g) maintain their respective assets and properties in good condition
and repair, normal wear and tear excepted;
(h) promptly advise Home in writing of any event or any other
transaction within CU's or CU Bank's knowledge whereby any Person or
Related Group of Persons acquires, directly or indirectly, record or
beneficial ownership or control (as defined in Rule 13d-3 promulgated by
the SEC under the Exchange Act) of five percent (5%) or more of the
outstanding CU Stock prior to the record date fixed for the CU
Shareholders' Meeting or any adjourned meeting thereof to approve this
Agreement and the transactions contemplated herein;
(i) promptly notify Home regarding receipt from any tax authority of
any notification of the commencement of an audit, any request to extend the
statute of limitations, any statutory notice of deficiency, any revenue
agent's report, any notice of proposed assessment, or any other similar
notification of potential adjustments to the tax liabilities of CU and/or
CU Bank, or any actual or threatened collection enforcement activity by any
tax authority with respect to tax liabilities of CU and/or CU Bank;
(j) furnish to Home, as soon as practicable, and in any event within
fifteen days after it is prepared (i) a copy of any report submitted to the
board of directors of CU or CU Bank, provided, however, that CU need not
furnish to Home communications of CU's legal counsel regarding CU's rights
and obligations under this Agreement or books, records and documents
covered by the attorney-client privilege, or which are attorneys' work
product, (ii) copies of all reports, filings, certificates, correspondence
and other documents filed with or received from the SEC, FRB, FDIC, OCC or
any other governmental or regulatory entity, and (iii) monthly unaudited
consolidated balance sheets and consolidated statements of operations of
CU;
(k) not later than the 25th day of each calendar month, amend or
supplement the Schedules prepared and delivered pursuant to Article IV (the
"CU Schedules") to ensure that the information set forth in such CU
Schedules accurately reflects the then-current status of CU and CU Bank;
provided, however, that any such amendment or supplement required solely as
a result of the Corporate Bank Merger shall be due not later than the 60th
day after the consummation of the Corporate Bank Merger. CU shall further
amend or supplement the CU Schedules as of the Closing Date if necessary to
reflect any additional information that needs to be included in the CU
Schedules;
(l) use their respective best efforts to obtain any third party
consent with respect to any contract, agreement, lease, license, amendment,
permit or release that is material to the business of CU on a consolidated
basis or that is contemplated or required in connection with the Merger or
Bank Merger;
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(m) promptly notify Home of the filing of any material litigation, or
the filing of any governmental or regulatory action, including any
investigation or notice of investigation, or similar proceeding, or notice
of any claim against CU or CU Bank or any of their assets; and
(n) prepare and timely file all tax returns and amendments thereto
required to be filed by them on or before the Closing Date. Home shall
have a reasonable opportunity to review all such returns and amendments
thereto on a pre-filing basis. CU and CU Bank shall discharge all taxes,
assessments and governmental charges in the nature of taxes upon or against
it or any of its properties or assets, and all tax liabilities at any time
existing, before the same shall become delinquent and before penalties
accrue thereon, except to the extent and as long as: (i) the same are
being contested in good faith and by appropriate proceedings pursued
diligently and in such manner not to cause any material adverse effect upon
the condition (financial or otherwise) or operations of CU or CU Bank; and
(ii) CU and CU Bank shall have set aside on their books appropriate
reserves in the amount of the demanded principal imposition together with
interest and penalties relating thereto, if any.
7.4. ACCESS TO INFORMATION. CU and CU Bank will afford Home and its
representatives, counsel, accountants, agents and employees access during normal
business hours to all of their respective businesses, operations, properties,
books, files and records and will do everything reasonably necessary to enable
Home and its representatives, counsel, accountants, agents and employees to make
a complete examination of the financial statements, businesses, assets and
properties of CU and CU Bank and the condition thereof and to update such
examination at such intervals as Home shall deem appropriate. Upon the
consummation of the Corporate Bank Merger, CU and CU Bank will afford Home and
its representatives everything reasonably necessary to evaluate and make a
complete examination of the Corporate Bank Merger. Such examination shall be
conducted in cooperation with the officers of CU and CU Bank and in such a
manner as to minimize any disruption of, or interference with, the normal
business operations of CU and CU Bank. Upon the request of Home, CU will
request that Arthur Andersen provide reasonable access to auditors' work papers
with respect to the businesses and properties of CU and CU Bank, including tax
accrual work papers prepared for CU and/or CU Bank during the preceding sixty
(60) months, other than (a) books, records and documents covered by the
attorney-client privilege, or that are attorneys' work product, and (b) books,
records and documents that CU or CU Bank is legally obligated to keep
confidential. No examination or review conducted under this section shall
constitute a waiver or relinquishment on the part of Home of the right to rely
upon the representations and warranties made by CU and CU Bank herein; provided,
that Home shall disclose in writing to CU any fact or circumstance it may
discover which Home believes renders any representation or warranty made by CU
or CU Bank hereunder incorrect in any respect. Home covenants and agrees that
it and its representatives, counsel, accountants, agents and employees will hold
in strict confidence all documents and information concerning CU and CU Bank so
obtained (except to the extent that such documents or information are a matter
of public record or require disclosure in the Proxy Statement or any of the
public information of any applications required to be filed with any
governmental or regulatory agency to obtain the approvals and consents required
to effect the transactions contemplated hereby), and if the transactions
contemplated herein are not consummated, such confidence shall be maintained
and all such documents shall be returned to CU and CU Bank.
7.5. FILINGS. CU and CU Bank agree that through the Effective Time, each
of their respective reports, registrations, statements and other filings
required to be filed with any applicable governmental or regulatory authority
will comply in all material respects with all the applicable statutes, rules and
regulations enforced or promulgated by the governmental or regulatory body with
which it will be filed and none will contain any untrue statement of material
fact or omit to state a material fact required to be stated therein or necessary
to
44
make the statements therein, in light of the circumstances under which they
were made, not misleading. Any financial statement contained in any such
report, registration, statement or other filing that is intended to present
the financial position of the entity or entities to which it relates will
fairly present the financial position of such entities or entity and will be
prepared in accordance with generally accepted accounting principles
consistently applied during the periods involved.
7.6. NOTICES; REPORTS. CU and CU Bank will promptly notify Home of any
event of which CU or CU Bank obtains knowledge which has had or may reasonably
be expected to have a materially adverse effect on the financial condition,
operations, business or prospects of CU on a consolidated basis or in the event
that CU or CU Bank determines that either is unable to fulfill any of the
conditions to the performance of Home's obligations hereunder, as set forth in
Articles IX or XI herein, and CU and CU Bank will furnish Home (i) as soon as
available, and in any event within thirty (30) days after it is prepared, any
report by CU or CU Bank for submission to the Board of Directors of CU or CU
Bank, (ii) as soon as available, all proxy statements, information statements,
financial statements, reports, letters and communications sent by CU to its
shareholders or other security holders, and all reports filed by CU or CU Bank
with the SEC, FRB or FDIC, and (iii) such other existing reports as Home may
reasonably request relating to CU or CU Bank.
7.7. CU SHAREHOLDERS' MEETING. Promptly after the execution of this
Agreement, CU will take all action necessary in accordance with applicable
law and its Articles of Incorporation and Bylaws to convene a meeting of its
shareholders to consider and vote upon this Agreement and the transactions
contemplated hereby. The Board of Directors of CU shall, subject to its
fiduciary duties, recommend that its shareholders approve this Agreement and
the transactions contemplated hereby, and the Board of Directors of CU shall,
subject to its fiduciary duties, use its best efforts to obtain the
affirmative vote of the holders of the largest possible percentage of the
outstanding CU Stock to approve this Agreement and the transactions
contemplated hereby.
7.8. BANK MERGER. CU and CU Bank shall (i) take all necessary corporate
and other action to effect the Bank Merger; (ii) execute, deliver and, where
appropriate, file any and all documents necessary or desirable to permit the
Bank Merger; and (iii) take and cause CU Bank to take any other action to permit
the consummation of the Bank Merger. Neither CU nor CU Bank shall take any
action that would prevent performance of the Bank Merger.
7.9. FILINGS; APPLICATIONS. CU and CU Bank will prepare promptly and file
the Proxy Statement, the S-4 and any statements or applications necessary to
obtain the regulatory approvals required to consummate the transactions
contemplated by this Agreement. CU and CU Bank covenant and agree that all
information included by CU or CU Bank in the Proxy Statement and S-4 and in all
applications or statements filed with the appropriate regulatory authorities for
approval of, or consent to, the Merger and the Bank Merger, and other
transactions contemplated by this Agreement, will comply in all material
respects with the provisions of applicable law, and will not contain any untrue
statement of material fact or omit to state any material fact required to be
stated therein or necessary to make the statements contained therein, in light
of the circumstances under which they were made, not misleading.
7.10. CERTAIN LOANS AND OTHER EXTENSIONS OF CREDIT. CU Bank will
promptly inform Home of the amounts and categories of any loans, leases or
other extensions of credit that have been classified by any bank regulatory
authority or by any unit of CU or CU Bank as "Criticized," "Specially
Mentioned," "Substandard," "Doubtful," "Loss" or any comparable
classification ("Classified Credits"). CU Bank will furnish Home, as soon
as practicable, and in any event within 15 days after the end of each
calendar month, schedules including the following: (a) Classified Credits
(including with respect to each credit its classification category and the
45
originating unit); (b) nonaccrual credits (including the originating unit);
(c) accrual exception credits that are delinquent 90 or more days and have
not been placed on nonaccrual status (including its originating unit); (d)
credits delinquent as to payment of principal or interest (including its
originating unit), including an aging into 30-89, and 90+ day categories; (e)
participating loans and leases, stating, with respect to each, whether it is
purchased or sold and the originating unit; (f) loans or leases (including
any commitments) by CU or CU Bank to any CU or CU Bank director, officer at
or above the senior vice president level, or shareholder holding ten percent
(10%) or more of the capital stock of CU, including with respect to each such
loan or lease the identity and, to the knowledge of CU, the relation of the
borrower to CU or CU Bank, and the outstanding and undrawn amounts; (g)
letters of credit (including the originating unit); (h) loans or leases
wholly or partially charged off during the previous month (including with
respect to each loan or lease, the originating amount, the write-off amount
and its originating unit); and (i) other real estate or assets acquired in
satisfaction of debt.
7.11. CU STOCK OPTION PLAN. CU will take all steps necessary to adopt
the New Stock Option Plan and take any other actions necessary or appropriate
as of or prior to the Effective Time, in order to effect the transactions
contemplated by Section 2.9. CU shall recommend that its shareholders
approve the New Stock Option Plan and the Board of Directors of CU shall,
subject to its fiduciary duties, use its best efforts to obtain the
affirmative vote of the outstanding CU Stock to approve such New Stock Option
Plan.
7.12. DIVIDENDS. Subject to applicable law and regulations and the good
faith determination of the Surviving Company Board of Directors, it is the
intention of CU that the Surviving Company shall pay quarterly dividends to
its shareholders for each of the eight quarters following the Effective Time
in an amount per share which is no less than $.06 per share.
7.13. ARTICLES OF INCORPORATION. CU will take all steps necessary to
amend its Articles of Incorporation, including without limitation obtaining
shareholder approval at the CU Shareholders' meeting, to effect any name
change of the Surviving Company agreed upon by the Parties in accordance with
Section 2.6.
ARTICLE VIII
GENERAL COVENANTS
The parties hereto hereby mutually covenant and agree with each other as
follows:
8.1. BEST EFFORTS. Subject to the terms and conditions of this Agreement,
each party will use its best efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate the transactions contemplated by
this Agreement as promptly as practical.
8.2. PUBLIC ANNOUNCEMENTS. CU and Home will consult with each other before
any Party hereto issues any press release or makes any public statement with
respect to this Agreement or the transactions contemplated hereby, and except as
may be required by applicable law or any listing agreement, neither CU nor Home
will issue any such press release or make any such public statement prior to
such consultation.
8.3. S-4 AND THE PROXY STATEMENT. Home and CU shall use their respective
best efforts to have the S-4 declared effective under the Securities Act as
promptly as practicable. CU shall take any action required to be taken under
any applicable state securities laws in connection with the issuance of CU Stock
in the Merger,
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and Home shall furnish all information concerning Home as may be reasonably
requested in connection with any such action. Each Party shall immediately
notify the other Party in writing in the event that such Party becomes aware
that the S-4 or Proxy Statement at any time contains any untrue statement of
a material fact or omits to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading or that the S-4
or the Proxy Statement otherwise is required to be amended or supplemented,
which notice shall specify, in reasonable detail, the circumstances thereof.
8.4. MERGER OF HOME BANK AND CU BANK. The parties agree to use their
reasonable efforts between the date of this Agreement and the Closing to take
all actions necessary or desirable, including the filing of any regulatory
applications, so that the Bank Merger will occur substantially concurrently
with, or as soon as practicable after, the Effective Time. A copy of the Bank
Merger Agreement is attached hereto as Exhibit B. The original of such Bank
Merger Agreement shall be executed and delivered as soon as practicable after
the execution and delivery of this Agreement.
ARTICLE IX
CONDITIONS PRECEDENT TO THE MERGERS
The obligations of each of the Parties hereto to consummate the
transactions contemplated herein are subject to the satisfaction, on or before
the Closing Date, of the following conditions:
9.1. SHAREHOLDER APPROVAL. The transactions contemplated hereby shall have
received all requisite approvals of the shareholders of CU, CU Bank, Home and
Home Bank.
9.2. NO JUDGMENTS OR ORDERS. No judgment, decree, injunction, order or
proceeding shall be outstanding or threatened by any governmental entity
which prohibits or restricts the effectuation of, or threatens to invalidate
or set aside, the Merger or the Bank Merger substantially in the form
contemplated by this Agreement, unless counsel to the party against whom such
action or proceeding was instituted or threatened renders to the other
parties hereto a favorable opinion that such judgment, decree, injunction,
order or proceeding is without merit.
9.3. REGULATORY APPROVALS. To the extent required by applicable law or
regulation, all approvals or consents of any governmental authority, including,
without limitation, those of the FRB and the OCC shall have been obtained or
granted for the Merger and Bank Merger and the transactions contemplated hereby,
and the applicable waiting period under all laws shall have expired. All other
statutory or regulatory requirements for the valid completion of the
transactions contemplated hereby shall have been satisfied.
9.4. TAX OPINION. CU and Home shall have received an opinion from Manatt,
Phelps & Phillips or Arthur Andersen that the Merger and the Bank Merger will
not result in the recognition of gain or loss for federal income tax purposes to
CU, CU Bank, Home or Home Bank, nor will the issuance of the CU Stock result in
the recognition of gain or loss by the holders of Home Stock who receive such
stock in connection with the Merger.
9.5. POOLING OF INTERESTS ACCOUNTING TREATMENT. Arthur Andersen shall have
confirmed in writing to CU and Home that the Merger and Bank Merger will qualify
for pooling of interests accounting treatment.
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9.6. S-4 AND PROXY STATEMENT. The S-4 shall have become effective under
the Securities Act and shall not be subject to any stop order or proceeding
seeking a stop order and copies of the Proxy Statement shall have been mailed to
every shareholder of record of CU and Home on the record date not less than 20
days prior to the date of the shareholders' meetings called to act upon the
Merger.
9.7. DISSENTERS. The sum of (i) the shares of Home Stock that will not be
converted into CU Stock due to the exercise of dissenters' rights granted under
the California Corporations Code and (ii) the shares of CU Stock that become
Dissenting Shares shall not exceed 10% of the aggregate number of issued and
outstanding shares of Home Stock and CU Stock.
ARTICLE X
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF HOME AND HOME BANK
All of the obligations of Home and Home Bank to effect the transactions
contemplated hereby shall be subject to the satisfaction, on or before the
Closing Date, of the following conditions, any of which may be waived in writing
by Home and Home Bank:
10.1. LEGAL OPINION. Home and Home Bank shall have received the opinion
of Anita Wolman, general counsel of CU and CU Bank, dated as of the Closing
Date, in substantially the form of Exhibit E hereto.
10.2. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF COVENANTS. All
covenants, terms and conditions of this Agreement to be complied with and
performed by CU and CU Bank at or before the Closing Date shall have been
complied with and performed in all material respects; the representations and
warranties of CU and CU Bank contained in Article V hereof shall have been
true and correct in all material respects on and as of the date of this
Agreement and on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of the Closing
Date. It is understood and acknowledged that the representations being made
on and as of the Closing Date shall be made with respect to the CU Schedules
as updated in accordance with Section 7.3(k).
10.3. AUTHORIZATION OF MERGERS; OPTION PLAN.
(a) All actions necessary to authorize the execution, delivery and
performance of this Agreement, the Agreement of Merger and the Bank Merger
Agreement by CU and CU Bank, as the case may be, and the consummation of the
transactions contemplated hereby and thereby shall have been duly and validly
taken by the Board of Directors and shareholders of CU and CU Bank, as the case
may be, as required by applicable law, and CU and CU Bank shall have full power
and right to merge pursuant to the Agreement of Merger and Bank Merger
Agreement, respectively.
(b) The shareholders of CU shall have voted in favor of the adoption
of the New Stock Option Plan.
10.4. ABSENCE OF CERTAIN CHANGES. Between the date of this Agreement
and the Effective Time, there shall not have occurred any event that has had
or could reasonably be expected to have a material adverse effect on the
business, financial condition, results of operations or prospects of CU on a
consolidated basis, whether or not such event, change or effect is reflected
in the CU Schedules as amended or supplemented after the date of this
Agreement.
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10.5. OFFICERS' CERTIFICATE. There shall have been delivered to Home
and Home Bank on the Closing Date a certificate executed by the Chief
Executive Officer and the Chief Financial Officer of CU certifying , to the
best of their knowledge, compliance with all of the provisions of Sections
10.2, 10.3 and 10.4.
10.6. FAIRNESS OPINION. Home shall have received a letter from Piper
Jaffray Inc., dated as of a date within five (5) days of the mailing of the
Proxy Statement and S-4 to the shareholders of Home, to the effect that the
transactions contemplated by this Agreement are fair from a financial point
of view to the shareholders of Home.
10.7. SHAREHOLDER'S VOTING AGREEMENTS. Concurrently with the execution
of this Agreement, the CU directors shall have executed and delivered to Home
an agreement substantially in the form of Exhibit F.
10.8. HOME WARRANT AGREEMENT. Concurrently with the execution of this
Agreement, CU shall have executed and delivered to Home the Home Warrant and
the Home Warrant Agreement.
10.9. APPOINTMENT OF DIRECTORS. All necessary action shall have been
taken to have the five persons designated by Home elected or appointed to
serve, from and after the Effective Time, as directors of Surviving Company.
10.10. VALIDITY OF TRANSACTIONS. The validity of all transactions herein
contemplated, as well as the form and substance of all opinions,
certificates, instruments of transfer and other documents to be delivered to
Home or Home Bank hereunder, shall be subject to the approval, to be
reasonably exercised, of Manatt, Phelps & Phillips, special counsel for Home
and Home Bank.
10.11. THIRD PARTY CONSENTS. CU and CU Bank shall have obtained all
consents of other parties to their respective material mortgages, notes,
leases, franchises, agreements, licenses and permits as may be necessary to
permit the Merger and the Bank Merger and the transactions contemplated
herein to be consummated without a material default, acceleration, breach or
loss of rights or benefits thereunder.
10.12. NASDAQ LISTING. The shares of CU Stock issuable pursuant to this
Agreement shall have been duly authorized for listing, subject to notice of
issuance, on the NASDAQ, National Market System or any other national
exchange on which the shares of CU Stock may be listed.
10.13. CU BOARD. All necessary action shall have been taken to have the
five persons designated by CU elected or appointed to serve, from and after
the Effective Time, as directors of the Surviving Company and CU shall have
delivered to Home the written resignations of those directors of CU who will
not be serving on the Surviving Company's Board of Directors.
10.14. NON-PERFORMING LOANS. CU Bank's Non-Performing Loans shall not
exceed 75% of (i) the shareholders' equity of CU Bank plus (ii) the loan loss
reserves of CU Bank.
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ARTICLE XI
CONDITIONS PRECEDENT TO OBLIGATIONS OF CU AND CU BANK
All of the obligations of CU and CU Bank to effect the transactions
contemplated hereby shall be subject to the satisfaction, on or before the
Closing Date, of the following conditions, any of which may be waived in writing
by CU and CU Bank:
11.1. LEGAL OPINION. CU and CU Bank shall have received the opinion of
Manatt, Phelps & Phillips., special counsel to Home and Home Bank, dated as
of the Closing Date, in substantially the form of Exhibit G hereto.
11.2. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF COVENANTS. All the
covenants, terms and conditions of this Agreement to be complied with and
performed by Home or Home Bank at or before the Closing Date shall have been
complied with and performed in all material respects; the representations and
warranties of Home and Home Bank contained in Article IV hereof shall have
been true and correct in all material respects on and as of the date of this
Agreement and on and as of the Closing Date, with the same effect as though
such representations and warranties had been made on and as of the Closing
Date. It is understood and acknowledged that the representations being made
on and as of the Closing Date shall be made with respect to the Home
Schedules as updated in accordance with Section 7.3(j).
11.3. AUTHORIZATION OF MERGERS. All actions necessary to authorize the
execution, delivery and performance of this Agreement, the Agreement of
Merger and the Bank Merger Agreement by Home and Home Bank, as the case may
be, and the consummation of the transactions contemplated hereby and thereby
shall have been duly and validly taken by the Boards of Directors and
shareholders of Home and Home Bank, as the case may be, as required by
applicable law, and Home and Home Bank shall have full power and right to
merge pursuant to the Agreement of Merger and Bank Merger Agreement,
respectively.
11.4. REGULATORY APPROVALS AND RELATED CONDITIONS. Any governmental and
regulatory approvals and consents which are referred to in this Agreement and
are required to consummate the Merger and the Bank Merger shall have been
granted without the imposition of conditions that are or would have become
applicable to CU or the Surviving Bank and that CU reasonably and in good
faith concludes would materially adversely affect the consolidated financial
condition or operations of CU or otherwise would be materially burdensome to
CU on a consolidated basis and all applicable waiting periods shall have
expired.
11.5. THIRD PARTY CONSENTS. Home and Home Bank shall have obtained all
consents of other parties to their respective material mortgages, notes,
leases, franchises, agreements, licenses and permits as may be necessary to
permit the Merger and Bank Merger and the transactions contemplated herein to
be consummated without a material default, acceleration, breach or loss of
rights or benefits thereunder.
11.6. ABSENCE OF CERTAIN CHANGES. Between the date of this Agreement
and the Effective Time, there shall not have occurred any event that has had
or could reasonably be expected to have a material adverse effect on the
business, financial condition, results of operations or prospects of Home on
a consolidated basis, whether or not such event, change or effect is
reflected in the Home Schedules as amended or supplemented after the date of
this Agreement.
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11.7. OFFICERS' CERTIFICATE. There shall have been delivered to CU on
the Closing Date a certificate executed by the President and the Chief
Financial Officer of each of Home and Home Bank certifying, to the best of
their knowledge, compliance with all of the provisions of Sections 11.2,
11.3, 11.5 and 11.6.
11.8. FAIRNESS OPINION. CU shall have received a letter from Van Kasper
& Company dated as of a date within five (5) days of the mailing of the Proxy
Statement to the shareholders of CU, to the effect that the transactions
contemplated by this Agreement are fair from a financial point of view to the
shareholders of CU.
11.9. VALIDITY OF TRANSACTIONS. The validity of all transactions herein
contemplated, as well as the form and substance of all opinions,
certificates, instruments of transfer and other documents to be delivered to
CU hereunder, shall be subject to the approval, to be reasonably exercised,
of Anita Wolman, general counsel of CU.
11.10. BLUE SKY MATTERS. The issuance of the CU Stock in the Merger
shall have been qualified or registered with the appropriate governmental
entity under state securities or Blue Sky laws, and such qualifications or
registrations are in effect on the Closing Date.
11.11. INSURANCE COVERAGE. Home shall have obtained (i) coverage for a
period of 36 months following the Effective Time for the directors and
officers of Home and Home Bank under a directors' and officers' liability
insurance policy covering acts or omissions occurring prior to the Effective
Time and (ii) coverage for a period of at least 36 months following the
Effective Time under a bankers' blanket bond which is no less protective in
terms of coverage or limitations than possessed by Home prior to the
Effective Time which covers losses incurred prior to the Effective Time and
actions related to this Agreement.
11.12. SHAREHOLDER'S VOTING AGREEMENTS. Concurrently with the execution
of this Agreement, the Home directors shall have executed and delivered to CU
an agreement substantially in the form of Exhibit H.
11.13. CU WARRANT AGREEMENT. Concurrently with the execution of this
Agreement, Home shall have executed and delivered to CU the CU Warrant and
the CU Warrant Agreement.
11.14. AFFILIATE AGREEMENTS. Those persons listed on Annex I hereto
shall have executed and delivered to CU an agreement in substantially the
form of Exhibit I.
11.15. NON-PERFORMING LOANS. Home Bank's Non-Performing Loans shall not
exceed 75% of (i) the shareholders' equity of Home Bank as of the month end
prior to the Effective Time plus (ii) the loan loss reserves of Home Bank.
11.16. ABSENCE OF EXCESS REMEDIATION. Subject to Home's right to cure
pursuant to Section 6.12 hereto, the Home Real Property, based on a
reasonable analysis of the Phase II Assessments, shall not require
remediation expenses in excess of $1,000,000.
51
ARTICLE XII
EMPLOYEE BENEFITS
12.1. EMPLOYEE BENEFITS. At and as of the Effective Time the former
officers and employees of Home and Home Bank who become officers and
employees of the Surviving Bank ("Transferred Employees") shall, in that
capacity, be entitled to participate in all employee benefits and benefit
programs of the Surviving Bank in accordance with the terms of such employee
benefit programs. Surviving Bank shall recognize such Transferred Employees'
service with Home and Home Bank for purposes of eligibility and vesting under
all such benefit programs. Surviving Bank shall also cover under its health
plans, without the application of any pre-existing limitation or exclusion,
all Transferred Employees and their covered dependents who are covered under
similar Home or Home Bank health plans as of the Closing Date and who change
coverage to Surviving Bank's health plans at the time such Transferred
Employees are first provided the option to enroll in Surviving Bank's health
plans.
ARTICLE XIII
TERMINATION
13.1. TERMINATION. This Agreement may be terminated at any time prior
to the Effective Time of the Merger upon the occurrence of any of the
following:
(a) By mutual agreement of the parties, in writing;
(b) By Home or CU immediately upon the failure of the shareholders of
Home or CU to approve this Agreement and the transactions contemplated
hereby;
(c) By Home immediately upon expiration of twenty (20) days from
delivery of written notice by Home to CU of CU's breach of or failure to
satisfy any covenant or agreement contained herein resulting in a material
impairment of the benefit reasonably expected to be derived by Home from
the performance or satisfaction of such covenant or agreement (provided
that such breach has not been waived by Home and Home Bank or cured by CU
prior to expiration of such twenty (20) day period);
(d) By CU immediately upon expiration of twenty (20) days from
delivery of written notice by CU to Home of Home's or Home Bank's breach of
or failure to satisfy any covenant or agreement contained herein resulting
in a material impairment of the benefit reasonably expected to be derived
by CU and CU Bank from the performance or satisfaction of such covenant or
agreement (provided that such breach has not been waived by CU or cured by
Home or Home Bank, as the case may be, prior to expiration of such twenty
(20) day period);
(e) By Home or CU upon the expiration of thirty (30) days after any
governmental or regulatory authority denies or refuses to grant any
approval, consent or authorization required to be obtained in order to
consummate the transactions contemplated by this Agreement unless, within
said thirty (30) day period after such denial or refusal, all parties
hereto agree to submit the application to the regulatory authority that has
denied; or refused to grant the approval, consent or qualification
requested; or
(f) By Home, if any conditions set forth in Article X shall not have
been met, by CU if any conditions set forth in Article XI shall not have
been met, or by Home or CU, if any conditions set forth
52
in Article IX shall not have been met by September 30, 1996, or such
earlier time as it becomes apparent that such conditions cannot be met.
13.2. TERMINATION DATE. This Agreement shall be terminated if the
Closing Date shall not have occurred by September 30, 1996, unless extended
in writing by the parties.
13.3. EFFECT OF TERMINATION. No termination of this Agreement under
this Article XIII for any reason or in any manner shall release, or be
construed as so releasing, CU or CU Bank or Home or Home Bank from
their respective obligations under the CU Warrant Agreement or Home Warrant
Agreement, the last sentence of Section 6.4, Section 7.4 or under Section
14.1 hereof, or any party hereto from any liability or damage to any other
party hereto arising out of in connection with or otherwise relating to,
directly or indirectly, said party's material breach, default or failure in
performance of any of its covenants, agreements, duties or obligations
arising hereunder.
ARTICLE XIV
MISCELLANEOUS
14.1. EXPENSES. Each party hereto shall pay its own costs and expenses,
including but not limited to those of its attorneys and accountants, in
connection with this Agreement, the Agreement of Merger, the Bank Merger and
the transactions covered and contemplated hereby and thereby. Notwithstanding
the foregoing, CU and Home shall share equally the cost of printing the
Proxy Statement and S-4.
14.2. NOTICES. Any notice, request, instruction or other document to be
given hereunder by any party hereto to another shall be in writing and
delivered personally or by facsimile transmission or sent by registered or
certified mail, postage prepaid, with return receipt requested, addressed as
follows:
To CU or CU Bank: 16030 Ventura Boulevard
Encino, California 91436-4487
Attention: Stephen G. Carpenter
Facsimile Number: (818) 907-5024
With a copy to: Anita Wolman, Esq.
16030 Ventura Boulevard
Encino, California 91436-4487
To Home or Home Bank: Home Bancorp
2633 Cherry Avenue
Signal Hill, California 90806
Attention: Jim Staes
Facsimile Number: (310) 426-4526
With copies to: Manatt, Phelps & Phillips
11355 West Olympic Boulevard
Los Angeles, California 90064
Attention: Barbara S. Polsky, Esq.
Facsimile Number: (310) 312-4224
53
Any such notice, request, instruction or other document shall be deemed
received on the date delivered personally or sent by facsimile transmission, or
on the third business day after it was sent by registered or certified mail,
postage prepaid. Any of the persons shown above may change its address for
purposes of this section by giving notice in accordance herewith.
14.3. SUCCESSORS AND ASSIGNS. All terms and conditions of this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective transferees, successors and assigns; provided,
however, that this Agreement and all rights, privileges, duties and
obligations of the parties hereto may not be assigned or delegated by any
party hereto without the prior written consent of the other parties hereto.
14.4. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which, taken together, shall constitute one original
document.
14.5. EFFECT OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in this Agreement or the Schedules shall terminate
immediately after the Effective Time.
14.6. THIRD PARTIES. Each party hereto intends that this Agreement
shall not benefit or create any right or cause of action to any person other
than parties hereto.
14.7. LISTS; EXHIBITS; INTEGRATION. Each Schedule, exhibit and letter
delivered pursuant to this Agreement shall be in writing and shall constitute
a part of the Agreement, although Schedules and letters need not be attached
to each copy of this Agreement. This Agreement, together with such
Schedules, exhibits and letters, constitutes the entire agreement between the
parties pertaining to the subject matter hereof and supersedes all prior
agreements and understandings of the parties in connection therewith.
14.8. KNOWLEDGE. In all representations and warranties concerning the
knowledge of Home, Home Bank, CU or CU Bank, wherever included herein, the
only knowledge imputed to Home, Home Bank, CU or CU Bank shall be the
knowledge of their respective officers at the level of senior vice-president
and above.
14.9. GOVERNING LAW. This Agreement is made and entered into in the
State of California, except to the extent that the provisions of federal law
are mandatorily applicable, and the laws of the State of California shall
govern the validity and interpretation hereof and the performance of the
parties hereto of their respective duties and obligations hereunder.
14.10. SCHEDULES. The Schedules are an integral part of this Agreement,
and each Schedule shall be applicable as if set forth in full in the text
hereof. In the event there is any absolute unconditional representation
contained in this Agreement, said representation shall be modified by any
contrary information set forth in any Schedule. In the event there is any
representation contained in this Agreement that is modified by a Schedule,
said representation shall also be modified by any other applicable
information contained in any other Schedule.
14.11. CAPTIONS. The captions contained in this Agreement are for
convenience of reference only and do not form a part of this Agreement and
shall not affect the interpretation hereof.
14.12. SEVERABILITY. If any portion of this Agreement shall be deemed by
a court of competent jurisdiction to be unenforceable, the remaining portions
shall be valid and enforceable only if, after excluding the
54
portion deemed to be unenforceable, the remaining terms hereof shall provide
for the consummation of the transactions contemplated herein in substantially
the same manner as originally set forth at the date this Agreement was
executed.
14.13. WAIVER AND MODIFICATION. No waiver of any term, provision or
condition of this Agreement, whether by conduct or otherwise, in any one or
more instances, shall be deemed to be or construed as a further or continuing
waiver of any such term, provision or condition of this Agreement. Except as
otherwise required by law, this Agreement, the Agreement of Merger and Bank
Merger Agreement, when executed and delivered, may be modified or amended by
action of the Boards of Directors of CU, CU Bank, Home or Home Bank without
action by their respective shareholders. This Agreement may be modified or
amended only by an instrument of equal formality signed by the parties or
their duly authorized agents.
14.14. ATTORNEY'S FEES. In the event any of the parties to this
Agreement brings an action or suit against any other party by reason of any
breach of any covenant, agreement, representation, warranty or other
provision hereof, or any breach of any duty or obligation created hereunder
by such other party, the prevailing party, as determined by the court or
other body having jurisdiction, shall be entitled to have and recover of and
from the losing party, as determined by the court or other body having
jurisdiction, all reasonable costs and expenses incurred or sustained by such
prevailing party in connection with such suit or action, including, without
limitation, legal fees and court costs (whether or not taxable as such).
55
14.15. JURY WAIVER. THE PARTIES HERETO WAIVE TRIAL BY JURY IN ANY MATTER
ARISING OUT OF THIS AGREEMENT OR RELATED TO THIS AGREEMENT OR IN CONNECTION
WITH ANY TRANSACTION OR MATTER CONTEMPLATED IN THIS AGREEMENT.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed this
Agreement as of the day and year first above written.
CU BANCORP
By: /S/ David I. Rainer
---------------------------------------
Name: David I. Rainer
Title: President and Chief
Operating Officer
CALIFORNIA UNITED BANK,
NATIONAL ASSOCIATION
By: /s/ David I. Rainer
---------------------------------------
Name: David I. Rainer
Title: President and Chief
Operating Officer
HOME INTERSTATE BANCORP
By: /s/ James P. Staes
---------------------------------------
Name: James P. Staes
Title: President and Chief
Executive Officer
HOME BANK
By: /s/ James P. Staes
---------------------------------------
Name: James P. Staes
Title: President and Chief
Executive Officer
56
EXHIBIT A
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (the "Merger Agreement") is made and entered
into as of this _____ day of ___________, 1996, by and between CU Bancorp, a
California corporation ("CU") and Home Interstate Bancorp, a California
corporation ("Home"), with reference to the following facts:
RECITALS
1. CU is a California corporation duly organized, validly existing
and in good standing under the laws of the State of California, with authorized
capital of 24,000,000 shares of no par value common stock ("CU Stock") of
which, on the date hereof, there are [4,467,318] shares issued and outstanding
and 10,000,000 shares of serial preferred stock, none of which is outstanding..
2. Home is a corporation duly organized, validly existing and in
good standing under the laws of the State of California with authorized capital
of 20,000,000 shares of common stock, no par value ("Home Stock") of which, on
the date hereof, there are [4,187,954] shares issued and outstanding.
3. The respective Boards of Directors of CU and Home deem it
desirable and in the best interests of their respective corporations and
stockholders that Home be merged (the "Merger") with and into CU as provided in
this Merger Agreement pursuant to the laws of the State of California and that
CU be the surviving company (the "Surviving Company").
4. In connection with the Merger, CU and Home, and their respective
wholly-owned banking subsidiaries, entered into an Agreement and Plan of
Reorganization, dated as of January 10, 1996 (the "Reorganization Agreement").
NOW THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein set forth and for the purpose of prescribing the
terms and conditions of such Merger, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Upon consummation of the Merger at the Effective Time (as defined in
Article IX hereof), Home shall be merged with and into CU which shall thereupon
be the Surviving Company, and the separate corporate existence of Home shall
cease.
ARTICLE II
NAME
The name of the Surviving Company shall be "_____________".
A-1
ARTICLE III
ARTICLES OF INCORPORATION
The Articles of Incorporation of CU as in effect immediately prior to
the Effective Time shall, at and after the Effective Time, continue to be the
Articles of Incorporation of the Surviving Company.
ARTICLE IV
BYLAWS
The Bylaws of CU as in effect immediately prior to the Effective Time
shall, at and after the Effective Time, continue to be the Bylaws of the
Surviving Company.
ARTICLE V
DIRECTORS
The following persons shall, at and after the Effective Time, serve as
the Directors of the Surviving Company until its next annual meeting of
shareholders or until such time as their successors have been elected and
qualified:
[insert names of directors]
ARTICLE VI
RIGHTS AND DUTIES OF SURVIVING COMPANY
At and after the Effective Time, all rights, privileges, powers and
franchises and all property and assets of every kind and description of CU and
Home shall be vested in and be held and enjoyed by the Surviving Company,
without further act or deed, and all the estates and interests of every kind of
CU and Home, including all debts due to either of them, shall be as effectively
the property of the Surviving Company as they were of CU and Home, and the title
to any real estate vested by deed or otherwise in either CU or Home shall not
revert or be in any way impaired by reason of the Merger; and all rights of
creditors and liens upon any property of CU and Home shall be preserved
unimpaired and all debts, liabilities and duties of CU and Home shall be debts,
liabilities and duties of the Surviving Company and may be enforced against it
to the same extent as if said debts, liabilities and duties had been incurred or
contracted by it.
ARTICLE VII
CONVERSION OF SHARES
In and by virtue of the Merger and at the Effective Time, pursuant to
this Merger Agreement, the shares of CU Stock and Home Stock outstanding at the
Effective Time shall be converted as follows:
(a) EFFECT ON THE HOME STOCK. Each share of Home Stock issued and
outstanding immediately prior to the Effective Time shall, on and after the
Effective Time, be automatically canceled and cease to be an issued and
outstanding share of Home Stock and shall be converted into the right to receive
1.409 shares of CU Stock. No fractional shares of CU Stock shall be issued in
the Merger. CU will pay or cause to be paid cash in lieu of fractional shares
of CU Stock which would otherwise be issuable as provided above.
A-2
(b) EFFECT ON CU STOCK. Each share of CU Stock issued and
outstanding immediately prior to the Effective Time shall, on and after the
Effective Time, remain outstanding and shall for all purposes be deemed to
represent, one share of common stock of the Surviving Company.
ARTICLE VIII
FURTHER ACTION
The parties hereto shall execute and deliver, or cause to be executed
and delivered, all such deeds and other instruments, and will take or cause to
be taken all further or other action as they may deem necessary or desirable, in
order to vest in and confirm to the Surviving Company title to and possession of
all of CU's and Home's property, rights, privileges, powers and franchises
hereunder, and otherwise to carry out the intent and purposes of this Merger
Agreement.
ARTICLE IX
EFFECTIVE TIME
The Merger will become effective upon the filing, in accordance with
Section 1103 of the California Corporations Code, of a copy of this Merger
Agreement and all other requisite accompanying certificates in the office of the
California Secretary of State (the "Secretary"). The date and time of such
filing with the Secretary is referred to herein as to the "Effective Time."
ARTICLE X
SUCCESSORS AND ASSIGNS
This Merger Agreement shall be binding upon and enforceable by the
parties hereto and their respective successors, assigns and transferees, but
this Merger Agreement may not be assigned by either party without the written
consent of the other.
ARTICLE XI
GOVERNING LAW
This Merger Agreement has been executed in the State of California,
and the laws of the State of California shall govern the validity and
interpretation hereof and the performance by the parties hereto.
A-3
ARTICLE XII
TERMINATION
This Merger Agreement may, by the mutual consent and action of the
Boards of Directors of CU and Home, be abandoned at any time before or after
approval thereof by the shareholders of CU and Home, but not later than the
filing of this Merger Agreement with the Secretary pursuant to Section 1103 of
the California Corporations Code.
IN WITNESS WHEREOF, CU and Home, pursuant to the approval and
authority duly given by resolution of their respective Board of Directors, have
caused this Merger Agreement to be signed by their respective Presidents and
Secretaries on the day and year first above written.
CU BANCORP
By:_________________________
President
____________________________
Secretary
HOME INTERSTATE BANCORP
By:__________________________
President
_____________________________
Secretary
A-4
EXHIBIT B
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (the "Bank Merger Agreement") is made and
entered into as of this _____ day of ___________, 1996, by and between
California United Bank, National Association, a national banking association
("CU Bank") and Home Bank, a California corporation ("Home Bank"), with
reference to the following facts:
RECITALS
1. CU Bank is a national banking association duly organized, validly
existing and in good standing under the laws of the United States, with
authorized capital of 540,000 shares of $5.00 par value common stock ("CU Bank
Stock") of which, on the date hereof, there are [472,973] shares issued and
outstanding. CU Bank has surplus of $____ and undivided profits, including
capital reserves, of $______ as of _____________. CU Bank is the wholly owned
subsidiary of CU Bancorp, a California corporation.
2. Home Bank is a corporation duly organized, validly existing and
in good standing under the laws of the State of California with authorized
capital of [ ] shares of common stock, [ ] par value ("Home Stock") of
which, on the date hereof, there are [ ] shares issued and outstanding.
Home Bank has surplus of $______ and undivided profits, including capital
reserves, of $_____ as of _______. Home Bank is the wholly owned subsidiary of
Home Interstate Bancorp, a California corporation.
3. The respective Boards of Directors of CU Bank and Home Bank, each
acting pursuant to a resolution of its board of directors, adopted by the vote
of a majority of its directors, pursuant to the authority given by and in
accordance with the provisions of 12 U.S.C. Section 215a, deem it desirable and
in the best interests of their respective corporations and shareholders that
Home Bank be merged (the "Bank Merger") with and into CU Bank as provided in
this Bank Merger Agreement pursuant to the laws of the United States of America
and that CU Bank be the surviving bank (the "Surviving Bank").
4. In connection with the Merger, CU Bank, CU Bancorp, a California
corporation ("CU"), Home Bank and Home Interstate Bancorp, a California
corporation ("Home"), entered into an Agreement and Plan of Reorganization,
dated as of January 10, 1996 (the "Reorganization Agreement").
NOW THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein set forth and for the purpose of prescribing the
terms and conditions of such Bank Merger, the parties hereto agree as follows:
B-1
ARTICLE I
THE BANK MERGER
Upon consummation of the Bank Merger at the Effective Time of the Bank
Merger (as defined in Article XI hereof), Home Bank shall be merged with and
into CU Bank which shall thereupon be the Surviving Bank, and the separate
corporate existence of Home Bank shall cease.
ARTICLE II
SHAREHOLDER APPROVAL
This Agreement shall be ratified and approved by the written consent
of the shareholders of each of Home Bank and CU Bank owning at least two-thirds
of the outstanding capital stock.
ARTICLE III
NAME
The name of the Surviving Bank shall be "___________."
ARTICLE IV
ARTICLES OF ASSOCIATION
The Articles of Association of CU Bank as in effect immediately prior
to the Effective Time of the Bank Merger shall, at and after the Effective Time
of the Bank Merger, continue to be the Articles of Association of the Surviving
Bank.
ARTICLE V
BYLAWS
The Bylaws of CU Bank as in effect immediately prior to the Effective
Time of the Bank Merger shall, at and after the Effective Time of the Bank
Merger, continue to be the Bylaws of the Surviving Bank.
ARTICLE VI
DIRECTORS
The following persons shall, at and after the Effective Time of the
Bank Merger, serve as the Directors of the Surviving Bank until its next annual
meeting of shareholders or until such time as their successors have been elected
and qualified:
[insert names of directors]
ARTICLE VII
RIGHTS AND DUTIES OF SURVIVING BANK
At and after the Effective Time of the Bank Merger, all rights,
privileges, powers and franchises and all property and assets of every kind and
description of CU Bank and Home Bank shall be vested in and be held and enjoyed
by the Surviving Bank, without further act or deed, and all the estates
B-2
and interests of every kind of CU Bank and Home Bank, including all debts due to
either of them, shall be as effectively the property of the Surviving Company as
they were of CU Bank and Home Bank, and the title to any real estate vested by
deed or otherwise in either CU Bank or Home Bank shall not revert or be in any
way impaired by reason of the Bank Merger; and all rights of creditors and liens
upon any property of CU Bank and Home Bank shall be preserved unimpaired and all
debts, liabilities and duties of CU Bank and Home Bank shall be debts,
liabilities and duties of the Surviving Bank and may be enforced against it to
the same extent as if said debts, liabilities and duties had been incurred or
contracted by it.
ARTICLE VIII
CONVERSION OF SHARES
In and by virtue of the Bank Merger and at the Effective Time of the
Bank Merger, pursuant to this Bank Merger Agreement, the shares of CU Bank Stock
and Home Bank Stock outstanding at the Effective Time of the Bank Merger shall
be converted as follows:
(a) EFFECT ON THE HOME BANK STOCK. Each share of Home Bank Stock
issued and outstanding immediately prior to the Effective Time of the Bank
Merger, except for shares as to which dissenters' rights are perfected pursuant
to 12 U.S.C. 215a(b) ("Perfected Dissenting Shares") shall, on and after the
Effective Time of the Bank Merger, be automatically canceled and cease to be an
issued and outstanding share of Home Bank Stock.
(b) EFFECT ON CU BANK STOCK. Each share of CU Bank Stock issued and
outstanding immediately prior to the Effective Time of the Bank Merger, except
for Perfected Dissenting Shares, shall, on and after the Effective Time of the
Bank Merger, remain outstanding and shall for all purposes be deemed to
represent, one share of common stock of the Surviving Bank.
ARTICLE IX
CAPITAL STRUCTURE OF SURVIVING BANK
The amount of capital stock of the Surviving Bank shall be $_____,
divided into ____ shares of common stock, each of $___ par value, and at the
time the Bank Merger shall become effective the Surviving Bank shall have a
surplus of $____ and undivided profits of $______, including capital reserves,
which when combined with the Surviving Bank's capital and surplus will be equal
to the combined capital structures of Home Bank and CU Bank as stated in the
preamble of this Agreement, adjusted, however, for normal earnings and expenses
between ______ and the Effective Time of the Bank Merger.
ARTICLE X
FURTHER ACTION
The parties hereto shall execute and deliver, or cause to be executed
and delivered, all such deeds and other instruments, and will take or cause to
be taken all further or other action as they may deem necessary or desirable, in
order to vest in and confirm to the Surviving Bank title to and possession of
all of CU Bank's and Home Bank's property, rights, privileges, powers and
franchises hereunder, and otherwise to carry out the intent and purposes of this
Agreement.
B-3
CU Bank and Home Bank agree that solely for the purpose of completing
the merger of Home Bank with and into CU Bank or obtaining any necessary
regulatory approval therefor or approving, signing, ratifying or confirming any
related Bank Merger Agreement or conferring any necessary or appropriate
corporate authority related thereto or taking any other corporate act or
satisfying any other corporate requirement necessary therefor, the board of
directors of the Surviving Bank, as it will be constituted upon the
effectiveness of the Bank Merger, may act as such in advance of such
effectiveness, and CU, the shareholder of the Surviving Bank upon such
effectiveness, may act as such in advance of such effectiveness.
ARTICLE XI
EFFECTIVE TIME OF THE BANK MERGER
The Bank Merger will become effective in accordance with 12 U.S.C.
215a at the time specified in the approval to be issued by the Comptroller of
the Currency. The date and time of such approval specified by the Comptroller is
referred to herein as to the "Effective Time of the Bank Merger."
ARTICLE XII
SUCCESSORS AND ASSIGNS
This Bank Merger Agreement shall be binding upon and enforceable by
the parties hereto and their respective successors, assigns and transferees, but
this Bank Merger Agreement may not be assigned by either party without the
written consent of the other.
ARTICLE XIII
TERMINATION
This Bank Merger Agreement may, by the mutual consent and action of
the Boards of Directors of CU Bank and Home Bank, be abandoned at any time
before or after approval thereof by the shareholders of CU Bank and Home Bank,
but not later than the Effective Time of the Bank Merger. This Agreement shall
automatically be terminated and of no further force and effect if, prior to the
Effective Time of the Bank Merger, the Reorganization Agreement is terminated in
accordance with the terms thereof.
ARTICLE XIV
SATISFACTION OF CONDITION AND OBLIGATIONS
(a) The obligations of CU Bank to proceed with the Closing are
subject to the satisfaction at or prior to the Closing of all of the conditions
to the obligations of CU Bank and CU under the Reorganization Agreement, any one
or more of which, to the extent it is or they are waivable, may be waived, in
whole or in part, by CU Bank.
(b) The obligations of Home Bank to proceed with the Closing are
subject to the satisfaction at or prior to the Closing of all of the conditions
to the obligations of Home and Home Bank under the Reorganization Agreement, any
one or more of which, to the extent it is or they are waivable, may be waived,
in whole or in party, by Home Bank.
B-4
IN WITNESS WHEREOF, CU Bank and Home Bank, pursuant to the approval
and authority duly given by resolution of their respective Board of Directors,
have caused this Bank Merger Agreement to be signed by their respective
Presidents and Secretaries on the day and year first above written.
CALIFORNIA UNITED BANK,
NATIONAL ASSOCIATION
By:_________________________
President
____________________________
Secretary
DIRECTORS OF
CALIFORNIA UNITED BANK, N.A.
_______________________________
_______________________________
_______________________________
_______________________________
_______________________________
_______________________________
B-5
HOME BANK
By:__________________________
President
_____________________________
Secretary
DIRECTORS OF HOME BANK
_______________________________
_______________________________
_______________________________
_______________________________
_______________________________
_______________________________
B-6
EXHIBIT C
WARRANT PURCHASE AGREEMENT
This WARRANT PURCHASE AGREEMENT (the "Agreement"), dated as of January
10, 1996, between CU Bancorp, a California corporation ("CU"), and Home
Interstate Bancorp, a California corporation ("Home") is made with reference to
the following:
RECITALS
A. CU, California United Bank, National Association, a wholly owned
subsidiary of CU ("CU Bank"), Home and Home Bank, a wholly owned subsidiary
of Home ("Home Bank"), have entered into an Agreement and Plan of
Reorganization (the "Merger Agreement") whereby Home and Home Bank would be
merged with and into CU and CU Bank, respectively (collectively, the
"Merger").
B. As partial consideration to Home for entering into the Merger
Agreement, CU has agreed to issue to Home a warrant entitling the holder thereof
to purchase up to 19.9% (or 1,492,390) of the outstanding common stock of CU
("Common Stock"), assuming the exercise of all Warrants (as hereafter defined),
and all other options, warrants or other securities convertible into Common
Stock, subject to such restrictions and conditions as may be imposed by bank
regulatory authorities having jurisdiction over Home and CU, respectively.
C. Concurrent with the execution of this Agreement, Home and CU shall
enter into a separate warrant agreement, with substantially identical terms and
conditions as are set forth in this Agreement, pursuant to which Home shall
issue to CU a warrant entitling the holder thereof, upon the occurrence of
certain events as set forth in such agreement, to purchase up to 19.9% (on a
fully diluted basis) of the outstanding common stock of Home.
D. Terms used herein and not otherwise defined shall have the meanings
ascribed to them in Article VI hereof.
In consideration of these premises and of the representations, covenants
and agreements hereinafter set forth, CU and Home hereby agree as follows:
ARTICLE I
ISSUANCE AND SALE OF WARRANT
Section 1.1 ISSUANCE AND SALE OF THE WARRANT. Subject to the terms
and conditions of this Agreement, and in reliance upon the representations and
warranties hereinafter set forth, and in consideration for the execution and
delivery of the Merger Agreement, CU hereby issues to Home one or more warrants
(such warrants, together with any warrants issued pursuant to Section 1.4, the
"Warrants") entitling the holder thereof to purchase in the aggregate 1,492,390
duly authorized and
C-1
newly issued shares of Common Stock, subject to adjustment as provided below.
The Warrants being issued at the time of the execution of this Agreement
will be evidenced by a single certificate in the form of Exhibit A hereto.
All Warrants issued pursuant to Section 1.4 will be evidenced by one or, at
Home's request, more certificates in the form of Exhibit A hereto, dated the
date of their issuance, exercisable at the adjusted exercise price at the
time in effect for the Warrants issued pursuant to this Section 1.1.
Section 1.2 WARRANT PRICE. The initial exercise price at which shares
of Common Stock may be acquired pursuant to exercise of the Warrants shall be
$9.834 per share (the "Warrant Price"), subject to adjustment as provided in
Section 1.4.
Section 1.3 EXERCISE OF WARRANTS.
(a) The Warrants may be exercised in whole or in part only after the
occurrence of an Acquisition Event.
(b) As used herein, an "Acquisition Event" means any of the following
events:
(i) any person (other than Home or an Affiliate of Home) shall
have commenced (as such term is defined in Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), or
shall have filed a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), with respect to, a tender
offer or exchange offer to purchase any shares of Common Stock such
that, upon consummation of such offer, such person would own or
control 10% or more of the then outstanding Common Stock;
(ii) CU or CU Bank, without having received Home's prior written
consent or except as permitted by the Merger Agreement, shall have
authorized, recommended, proposed or publicly announced an intention
to authorize, recommend or propose, or entered into, an agreement with
any person (other than Home or any Affiliate of Home to (A) effect a
merger, consolidation or similar transaction involving CU or CU Bank,
(B) sell, lease or otherwise dispose of assets of CU or CU Bank
representing 10% or more of the consolidated assets of CU or CU Bank,
or (C) issue, sell or otherwise dispose of (including by way of
merger, consolidation, share exchange or any similar transaction)
securities representing 10% or more of the voting power of CU or CU
Bank (any of the foregoing an "Acquisition Transaction");
(iii) any person (other than Home or Home Bank or CU or CU
Bank in a fiduciary capacity) shall have acquired beneficial ownership
(as such term is defined in Rule 13d-3 under the Exchange Act) or the
right to acquire beneficial ownership of, or any "group" (as such term
is defined in the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of,
10% or more of the then outstanding Common Stock; or
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(iv) the holders of Common Stock shall not have approved the
Merger Agreement at the meeting of such stockholders held for the
purpose of voting on the Merger Agreement, such meeting shall not have
been held or shall have been canceled prior to termination of the
Merger Agreement or CU's Board of Directors shall have withdrawn or
modified in a manner adverse to Home the recommendation of CU's Board
of Directors with respect to the Merger Agreement, in each case after
any person (other than Home) shall have (A) publicly announced a
proposal, or publicly disclosed an intention to make a proposal, to
engage in an Acquisition Transaction or (B) filed an application (or
given a notice), whether in draft or final form, under the BHC Act or
the Change in Bank Control Act for approval to engage in an
Acquisition Transaction.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(c) In the event Home is entitled to and wishes to exercise the
Warrants, it shall send to CU a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of shares it
will purchase pursuant to such exercise and (ii) a place and date not earlier
than three Business Days nor later than 60 Business Days from the Notice Date
for the closing of such purchase (the "Closing Date"); provided that if prior
notification to or approval of the Federal Reserve Board or any other regulatory
agency is required in connection with such purchase, Home shall promptly file
the required notice or application for approval, shall promptly notify CU of
such filing, and shall expeditiously process the same and the period of time
that otherwise would run pursuant to this sentence shall run instead from the
date on which any required notification periods have expired or been terminated
or such approvals have been obtained and any requisite waiting period or periods
shall have passed.
(d) At the closing referred to in subsection (c), Home shall pay to
CU the aggregate purchase price for the shares of Common Stock purchased
pursuant to the exercise of the Warrants in immediately available funds by wire
transfer to a bank account designated by CU, provided that failure or refusal of
CU to designate such a bank account shall not preclude Home from exercising the
Warrants.
(e) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (d), CU shall deliver to Home a
certificate or certificates representing the number of shares of Common stock
purchased by Home.
(f) Upon the giving by Home to CU of the written notice of exercise
of the Warrants provided for under subsection (c) and the tender of the
applicable purchase price in immediately available funds, Home shall be deemed
to be the holder of record of the shares of Common Stock issuable upon such
exercise, notwithstanding that the stock transfer books of CU shall then be
closed or that certificates representing such shares of Common Stock shall not
then be
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actually delivered to Home. CU shall pay all expenses, and any and all
federal, state and local taxes or other charges that may be payable in
connection with the preparation, issue and delivery of stock certificates
hereunder in the name of Home.
Section 1.4 ADDITIONAL WARRANTS; ADJUSTMENTS TO WARRANT PRICE AND
NUMBER OF SHARES. The number of shares to which the Warrants may be exercised
and the Warrant Price shall be subject to adjustment as provided below:
(a) ADDITIONAL WARRANTS. If CU shall, on one or more occasions
after the date hereof, issue additional shares of Common Stock, and if, as a
result of any such issuance the shares of Common Stock issued or issuable upon
the exercise of Warrants issued pursuant to Section 1.1 hereof shall represent
less than 19.9% of the outstanding Common Stock, assuming the exercise of all
Warrants and all other options, warrants or other securities convertible into
Common Stock, CU shall issue to Home, promptly upon Home's demand, without
further consideration, Warrants to purchase a number of authorized but unissued
shares of Common Stock which, when added to the shares issued or issuable upon
the exercise of such previously issued Warrants, would represent 19.9% as the
case may be of the outstanding Common Stock.
(b) ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If CU at any
time or from time to time after the date of this Agreement effects a subdivision
of the Common Stock, the Warrant Price then in effect immediately before that
subdivision shall be proportionately decreased, and conversely, if CU at any
time or from time to time after the date of this Agreement combines the
outstanding shares of Common Stock, the Warrant Price then in effect immediately
before the combination shall be proportionately increased. Any adjustment under
this subsection (b) shall become effective at the close of business on the date
the subdivision or combination becomes effective.
(c) ADJUSTMENT FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. In the
event CU at any time or from time to time after the date of this Agreement
makes, or fixes a record date for the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in additional
shares of Common Stock, then and in each such event the Warrant Price then in
effect shall be decreased as of the time of such issuance or, in the event such
a record date is fixed, as of the close of business on such record date, by
multiplying the Warrant Price then in effect by a fraction (i) the numerator of
which is the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of business on such
record date, and (ii) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date plus the number of
shares of Common Stock issuable in payment of such dividend or distribution;
PROVIDED, however, that if such record date is fixed and such dividend is not
fully paid or if such distribution is not fully made on the date fixed therefor,
the Warrant Price shall be recomputed accordingly as of the close of business on
such record date and thereafter the Warrant Price shall be adjusted pursuant to
this subsection (c) as of the time of actual payment of such dividends or
distributions.
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(d) ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. In the
event CU at any time or from time to time after the date of this Agreement
makes, or fixes a record date for the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in securities of CU
other than shares of Common Stock, then in each such event provision shall be
made so that the holders of Warrants shall receive upon exercise thereof, in
addition to the number of shares of Common Stock receivable thereupon, the
amount of securities of CU which they would have received had their Warrants
been converted into Common Stock on the date of such event and had they
thereafter, during the period from the date of such event to and including the
date of exercise of the Warrants, retained such securities receivable by them as
aforesaid during such period, subject to all other adjustments called for during
such period under this Section 1.4.
(e) ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION.
If the Common Stock issuable upon the exercise of the Warrants is changed into
the same or a different number of shares of any class or classes of stock,
whether by recapitalization, reclassification or otherwise (other than a
subdivision or combination of shares or stock dividend or a reorganization,
merger, consolidation or sale of assets provided for elsewhere in this Section
1.4), then and in any such event each holder of Warrants shall have the right
thereafter to receive upon exercise of the Warrants the kind and amount of stock
and other securities and property receivable upon such reorganization,
reclassification or other change by holders of the number of shares of Common
Stock into which such Warrants might have been exercised immediately prior to
such reorganization, reclassification or change, all subject to further
adjustment as provided in this Section 1.4.
(f) REORGANIZATION, MERGERS, CONSOLIDATIONS AND SALES OF ASSETS.
If at any time or from time to time there is a capital reorganization of the
Common Stock (other than a recapitalization, subdivision, combination,
reclassification or exchange of shares provided for elsewhere in this Section
1.4), or a merger or consolidation of CU with or into another corporation, or
the sale of all or substantially all of CU's properties and assets to any other
person, then, as a part of such reorganization, merger, consolidation or sale,
provision shall be made so that the holders of the Warrants shall thereafter be
entitled to receive upon exercise of the Warrants the number of shares of stock
or other securities or property of CU, or of the successor corporation resulting
from such merger or consolidation or sale, to which a holder of Common Stock
deliverable upon exercise of the Warrants would have been entitled in such
capital reorganization, merger, consolidation or sale. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 1.4 and the other terms and conditions with respect to the rights
of the holders of the Warrants after the reorganization, merger, consolidation
or sale to the end that the provisions of this Agreement, including this Section
1.4 (including adjustment of the Warrant Price then in effect and number of
shares purchasable upon exercise of the Warrants) shall be applicable after that
event and be as nearly equivalent to the provisions hereof as may be
practicable.
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(g) SALE OF SHARES BELOW WARRANT PRICE.
(i) If at any time or from time to time after the date of
this Agreement, CU issues or sells, or is deemed by the express provisions of
this subsection (g) to have issued or sold, Additional Shares of Common Stock
(as hereinafter defined), other than as a dividend or other distribution on any
class of stock as provided in subsection (c) above and other than upon a
subdivision or combination of shares of Common Stock as provided in subsection
(b) above, for an Effective Price (as hereinafter defined) less than the Warrant
Price (or, if an adjusted Warrant Price shall be in effect by reason of a
previous adjustment, then less than such adjusted Warrant Price) then and in
each such case the then existing Warrant Price shall be reduced, as of the
opening of business on the date of such issuance or sale, to a price determined
by multiplying that Warrant Price by a fraction (i) the numerator of which shall
be (A) the number of shares of Common Stock Deemed Outstanding at the close of
business on the day next preceding the date of such issue or sale plus (B) the
number of shares of Common Stock which the aggregate consideration received (or
by express provision hereof deemed to have been received) by CU for the total
number of Additional Shares of Common Stock so issued would purchase at such
Warrant Price, and (ii) the denominator of which shall be the number of shares
of Common Stock Deemed Outstanding at the close of business on the date of such
issuance after giving effect to such issuance of Additional Shares of Common
Stock. For purposes of this paragraph (i), "Common Stock Deemed Outstanding" at
any given time shall mean the sum of (1) the number of shares of Common Stock
actually outstanding at that time, (2) the number of Additional Shares of Common
Stock then deemed to have been issued under paragraphs (iii) or (iv) of this
subsection (g) and (3) the number of shares of Common Stock then issuable upon
exercise of stock options to the extent not already deemed to have been issued
under paragraphs (iii) or (iv) of this subsection (g).
(ii) For the purpose of making any adjustment required under
this subsection (g), the consideration received by CU for any issuance or sale
of securities shall (i) to the extent it consists of cash be computed at the net
amount of cash received by CU after deduction of any expenses payable by CU and
any underwriting or similar commissions, compensation or concessions paid or
allowed by CU in connection with such issue or sale, (ii) to the extent it
consists of property other than cash, be computed at the fair value of that
property as determined in good faith by the Board and (iii) if Additional Shares
of Common Stock, Convertible Securities (as hereinafter defined) or rights or
options to purchase either Additional Shares of Common Stock or Convertible
Securities are issued or sold together with other stock or securities or other
assets of CU for a consideration which covers both, be computed as the portion
of the consideration so received that may be reasonably determined in good faith
by the Board to be allocable to such Additional Shares of Common Stock,
Convertible Securities or rights or options.
(iii) For the purpose of the adjustment required under
this subsection (g), if at any time or from time to time after the date of this
Agreement CU issues or sells any rights or options for the purchase of, or stock
or other securities convertible into, Additional Shares of Common Stock (such
convertible stock or securities being hereinafter referred to as "Convertible
Securities"), then in each case CU shall be deemed to have issued at the time of
the
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issuance of such rights or options or Convertible Securities the maximum
number of Additional Shares of Common Stock issuable upon exercise or conversion
thereof and to have received as consideration for the issuance of such shares an
amount equal to the total amount of the consideration, if any, received by CU
for the issuance of such rights or options or Convertible Securities plus, in
the case of such options or rights, the amounts of consideration, if any,
payable to CU upon the exercise of such options or rights and, in the case of
Convertible Securities, the amounts of consideration, if any, payable to CU upon
conversion (other than by cancellation of liabilities or obligations evidenced
by such Convertible Securities). No further adjustment of the Warrant Price,
adjusted upon the issuance of such rights, options or Convertible Securities,
shall be made as a result of the actual issuance of Additional Shares of Common
Stock on the exercise of any such rights or options or the conversion of any
such Convertible Securities. If any such rights or options or the conversion
privilege represented by any such Convertible Securities shall expire or be
canceled without having been exercised, the Warrant Price adjusted upon the
issuance of such options, rights or Convertible Securities shall be readjusted
to the Warrant Price which would have been in effect had an adjustment been made
on the basis that the only Additional Shares of Common Stock so issued were the
Additional Shares of Common Stock, if any, actually issued or sold on the
exercise of such rights or options or rights of conversion of such Convertible
Securities, and such Additional Shares of Common Stock, if any, were issued or
sold for the consideration actually received by CU upon such exercise, plus the
consideration, if any, actually received by CU for the granting of all such
rights or options, whether or not exercised, plus the consideration received for
issuing or selling the Convertible Securities actually converted plus the
consideration, if any, actually received by CU (other than by cancellation of
liabilities or obligations evidenced by such Convertible Securities) on the
conversion of such Convertible Securities.
(iv) For the purpose of the adjustment required under this
subsection (g), if at any time or from time to time after the date of this
Agreement CU issues or sells any rights or options for the purchase of
Convertible Securities, then in each such case CU shall be deemed to have issued
at the time of the issuance of such rights or options the maximum number of
Additional Shares of Common Stock issuable upon conversion of the total amount
of Convertible Securities covered by such rights or options and to have received
as consideration for the issuance of such Additional Shares of Common Stock an
amount equal to the amount of consideration, if any, received by CU for the
issuance of such rights or options, plus the minimum amounts of consideration,
if any, payable to CU upon the exercise of such rights or options and plus the
minimum amount of consideration, if any, payable to CU (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities) upon the conversion of such Convertible Securities. No further
adjustment of the Warrant Price, adjusted upon the issuance of such rights or
options, shall be made as a result of the actual issuance of the Convertible
Securities upon the exercise of such rights or options or upon the actual
issuance of Additional Shares of Common Stock upon the conversion of such
Convertible Securities. The provisions of paragraph (iii) above for the
readjustment of the Warrant Price upon the expiration of rights or options or
the rights of conversion of Convertible Securities shall apply in like manner to
the rights, options and Convertible Securities referred to in this paragraph
(iv).
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(v) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued by CU after the date of this Agreement whether or
not subsequently reacquired or retired by CU, other than (i) shares of Common
Stock issued upon exercise of the Warrants and (ii) shares issued by way of
dividend or other distribution on shares of Common Stock excluded from the
definition of Additional Shares of Common Stock by the foregoing clause or
shares of Common Stock resulting from any subdivision or combination of shares
of Common Stock so excluded, or shares issued by way of dividend or other
distribution on, or resulting from any subdivision or combination of, shares of
Common stock excluded from the definition of "Additional Shares of Common Stock"
by the foregoing provision. The "Effective Price" of Additional Shares of
Common Stock shall mean the quotient determined by dividing the total number of
Additional Shares of Common Stock issued or sold, or deemed to have been issued
or sold by CU under this subsection (g), into the aggregate consideration
received or deemed to have been received by CU for such issue under this
subsection (i).
ARTICLE II
REPURCHASE OF WARRANTS AND LIMITATIONS ON SALE
Section 2.1 REPURCHASE OF WARRANTS.
(a) Prior to the occurrence of an Acquisition Event, CU shall
have no right to repurchase the Warrants and Home shall have no right to require
CU to repurchase the Warrants.
(b) At any time after the occurrence of an Acquisition Event, CU
shall have the right to purchase (or to cause a person designated by CU to
purchase), and Home shall have the right to require that CU repurchase (or, if
CU shall so elect, cause a person designated by CU to purchase), (i) all (but
not fewer than all) the Warrants at the time beneficially owned by Home and its
Affiliates at the Warrant Call Price in effect for such Warrants on the date of
closing (as provided below) and (ii) all (but not fewer than all) of the shares
of Common Stock purchased by Home and its Affiliates pursuant to this Agreement
with respect to which Home has beneficial ownership at a price equal to the
aggregate market value for such shares as of the date of closing (as provided
below). Any purchase pursuant hereto shall take place on a Business Day
specified in a notice given by CU to Home or by Home to CU, as the case may be
(but in no event prior to the 30th day following the date of any such notice to
Home or later than the 30th day following the date of any such notice to CU).
(c) The closing of any repurchase of Warrants pursuant to this
Section 2.1 shall take place at 10:00 a.m. Los Angeles Time, on the date set
forth in the applicable notice given by CU or Home, as the case may be, at the
office of Home at the address set forth in Section 8.1. The amount payable to
Home and its Affiliates upon any repurchase of Warrants shall be paid in lawful
money of the United States by a federal funds check or a wire transfer of
immediately available funds to an account designated by Home. Upon receipt of
such payment, Home shall deliver or cause
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to be delivered to CU the certificates representing all the Warrants being
repurchased free and clear of any liens, security interests, charges or
encumbrances.
Section 2.2 CERTAIN DETERMINATIONS OF MARKET VALUE. The calculation
of the Market Value, as required herein, shall be calculated in accordance with
this Section 2.2. In the event that Market Value is to be determined pursuant
to the terms hereof and there is not an established trading market for shares of
Common Stock, or more than 50% of the outstanding shares of Common Stock are
held beneficially or of record by persons, each of whom owns (individually or
together with members of any group of which such persons are members) 5% or more
of the outstanding shares of Common Stock, then Home may elect to have an
investment banking firm mutually agreeable to CU and Home determine (i) whether,
in the opinion of such investment banking firm, as a result of the absence of an
established trading market or the concentration of stock holdings, Market Value
(determined in accordance with the provisions of the definition of Market Value
in Article VI) does not accurately reflect the fair market value of a block of
1,000 shares of Common Stock on the date as of which Market Value is to be
determined, and (ii) if such investment banking firm determines that Market
Value (as so determined) does not accurately reflect such fair market value,
such investment banking firm shall make determination of the fair market value
of a share of Common Stock on the date as of which Market Value is to be
determined, based on whatever factors it deems relevant, as soon as possible and
shall promptly give written notice to Home and CU of its determination. The
fees of such investment banking firm in connection with such determination shall
be paid by Home. Such determination shall be final and binding on the parties
hereto and the fair market value so determined shall, if higher than the Market
Value that would otherwise apply, be the Market Value of a share of Common
Stock. In the event such determination is not transmitted to Home and CU prior
to the scheduled closing date with respect to any repurchase of Warrants or
Common Stock, the scheduled closing of such transaction shall not be postponed,
and CU shall make such payments on the closing date as are required based on the
Market Value of a share of Common Stock determined as if Home had not made an
election under this Section 2.4. Within three Business Days after such
investment banking firm's determination is made and conveyed to Home and CU in
writing, CU shall make a payment to Home, or Home shall make a payment to CU, as
the case may be, equal to the difference between the amount paid on the closing
date and the amount that would have been so payable had such amount been
determined on the basis of such investment banking firm's determination of the
Market Value of a share of Common Stock.
Section 2.3 LIMIT ON PROCEEDS. Home agrees, as long as CU shall not
have defaulted in its obligations to repurchase Warrants pursuant to Section
2.1, to pay over to CU any amount by which the profits received by Home and its
Affiliates upon the sale or transfer of Warrants (net of all selling expenses,
underwriting discounts, and commissions and other expenses incurred by Home in
connection with such exercise and sale) shall exceed $5,000,000.
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ARTICLE III
RESTRICTIONS ON TRANSFERABILITY OF STOCK;
COMPLIANCE WITH SECURITIES ACT OF 1933
Section 3.1 RESTRICTIONS ON TRANSFERABILITY. The Warrants acquired by
Home or any Affiliate of Home pursuant to this Agreement and the Common Stock
issuable upon exercise of such Warrants and any shares of capital stock received
or issued in respect thereof, including, without limitation, securities issued
upon any stock split, stock dividend, recapitalization, merger, consolidation or
similar event (such Warrants and all such shares of Common Stock and securities
being collectively called the "Restricted Stock") shall not be hypothecated, nor
shall any claim or liability exist, nor shall any agreement, written or oral, be
entered into by Home or any Affiliate of Home which would cause any claim or
liability to exist with respect to the Restricted Stock, and the Restricted
Stock shall not be transferred except upon the conditions, to the extent
applicable, specified in this Article III. Home will cause any proposed
transferee of Restricted Stock held by Home or any other Affiliate of Home to
agree to take ownership of such Restricted Stock subject to the provisions, to
the extent applicable, of this Article III; provided, however, that the
provisions of this Article shall cease to apply to any Restricted Stock which
shall have been sold in a registered public offering in accordance with the
provisions of this Article III. Home represents that it is purchasing the
Restricted Stock for its own account and not with a view to or for sale in
connection with any distribution of such Restricted Stock.
Section 3.2 RESTRICTIVE LEGEND; NOTICE OF PROPOSED TRANSFERS.
(a) Each certificate representing Restricted Stock shall (unless
otherwise permitted by the provisions of paragraph (b) of this Section) be
stamped or otherwise imprinted with a legend in substantially the following
form:
THESE SHARES/WARRANTS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. THESE SHARES/WARRANTS MAY NOT BE SOLD OR TRANSFERRED
EXCEPT PURSUANT TO (i) A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES
WHICH IS EFFECTIVE UNDER SAID ACT OR (ii) AN OPINION OF COUNSEL THAT AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT IS AVAILABLE. THE
TRANSFERABILITY OF THESE SHARES/ WARRANTS IS FURTHER SUBJECT TO THE PROVISIONS
OF A WARRANT PURCHASE AGREEMENT DATED AS OF JANUARY 10, 1996, A COPY OF WHICH IS
AVAILABLE FOR INSPECTION AT THE OFFICE OF THE SECRETARY OF CU BANCORP.
(b) Each holder of a certificate representing Restricted Stock
by acceptance thereof agrees to comply in all respects with the provisions of
this Section 3.2(b). Prior to any proposed transfer of any Restricted Stock
other than pursuant to a registration under the Securities Act, the holder
thereof shall give written notice to CU of such holder's intention to effect
such transfer. Each such notice shall describe the manner and circumstances of
the proposed transfer
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of the Restricted Stock to be transferred and shall be accompanied by
an unqualified written opinion of counsel reasonably satisfactory to CU to
the effect that such proposed transfer may be effected without registration
under the Securities Act. Subject to Section 3.11 hereof, upon delivery to
CU of such notice and such opinion of counsel, the holder of such Restricted
Stock shall be entitled to transfer such Restricted Stock in accordance with
the terms of such notice delivered by the holder to CU. Each certificate
evidencing Restricted Stock transferred as above provided shall bear the
appropriate restrictive legend set forth in paragraph (a) above, except that
such certificate shall not bear such restrictive legend if the opinion of
counsel referred to above shall be to the further effect that such legend is
not required in order to establish compliance with any provisions of the
Securities Act.
Section 3.3 NO TRANSFERS PRIOR TO ACQUISITION EVENT. Notwithstanding
anything to the contrary set forth in this Agreement or the Restricted Stock,
neither Home nor any Affiliate of Home shall sell, transfer or otherwise dispose
of all or any portion of the Warrants owned by it, other than to an Affiliate of
Home, except after the occurrence of an Acquisition Event; provided, however,
that following an Acquisition Event, if CU or Home shall give notice of its
election to exercise its rights under Section 2.1, then such right of Home and
its Affiliates to sell, transfer or otherwise dispose of the Restricted Stock
shall no longer be exercised unless CU shall have defaulted in its obligation to
repurchase such Restricted Stock on the date specified in any notice.
Section 3.4 LIMITATIONS ON TRANSFEREES AND MANNER OF TRANSFER.
(a) In the event that Home and its Affiliates become entitled
pursuant to the provisions of Section 3.3 to sell, transfer or otherwise dispose
of Restricted Stock, such Restricted Stock may be sold or transferred (subject
to Section 3.11 hereof) only (i) to a third party (or a third party and its
Affiliates) in a transaction which complies with the provisions of paragraph (b)
of this Section or (ii) to one or more underwriters or dealers in connection
with a broad public distribution complying with the provisions of paragraph (c)
of this Section of the shares of Common Stock issuable pursuant to the exercise
of the transferred Warrants (such shares being hereinafter referred to as the
"Underlying Shares"). The provisions of this Section shall only apply to sales,
transfers or dispositions by Home and its Affiliates, and shall not apply to
sales, transfers or dispositions by transferees of Home or its Affiliates
(except that any sale or disposition by dealers or underwriters shall be
conducted in accordance with the applicable provisions of this Section and
further except that all resales shall be made in accordance with the Securities
Act).
(b) Home and its Affiliates shall be entitled, subject to the
other applicable provisions of this Article III (including Section 3.11) and
Section 2.1, to sell or transfer Restricted Stock in one or more transactions
exempt from the registration requirements of Section 5 of the Securities Act;
provided, however, that the aggregate number of shares of Restricted Stock sold
or transferred to any single purchaser and persons known to Home to be
Affiliates of or persons acting in concert with such purchaser in any such
transaction shall be limited to that amount of Restricted Stock which, when
taken together with the Restricted Stock theretofore sold or transferred to such
purchaser and such Affiliates and persons, would not, upon the exercise in full
of the Warrants so
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transferred, permit the acquisition of more than 2% of the then outstanding
shares of Common Stock, determined as of the date of such sale or transfer.
For purposes of the immediately preceding sentence, it shall be assumed that
all Warrants, if any, that already have been sold or transferred by Home and
its Affiliates are still outstanding and have not been exercised in whole or
in part to purchase shares of Common Stock.
(c) Warrants owned by Home and its Affiliates, unless sold to CU
or an Affiliate of CU or in compliance with paragraph (b) of this Section, may
only be sold or transferred to one or more underwriters or dealers in accordance
with the provisions of this paragraph. Home and its Affiliates may, subject to
the terms and conditions set forth in this paragraph (c), sell or transfer
Warrants in whole or in part to one or more underwriters or dealers who agree in
writing with Home, prior to the effective time of any such sale or transfer, to
exercise such Warrants and offer and sell the Underlying Shares either (i) to
the public in a public offering registered under the Securities Act (or any
successor federal securities laws) pursuant to a distribution in which no single
purchaser and its Affiliates will, to the knowledge of such underwriters or
dealers, acquire Underlying Shares representing more than 2% of the then
outstanding shares of Common Stock or (ii) in other transactions complying with
the requirements of paragraph (b) above. Notwithstanding any other provision of
this Agreement to the contrary, the exercise of any Warrants transferred to
underwriters or dealers in accordance with this Section and the acquisition by
such underwriters or dealers of shares of Common Stock pursuant to such exercise
may be made simultaneously on the date of the closing of the sale or transfer by
Home or its Affiliates of the relevant Warrants to such underwriters or dealers,
provided CU is given written notice of the date of such closing at least five
Business Days prior thereto. At any such closing, against payment of the
exercise price for shares of Common Stock to be acquired pursuant to the
exercise of Warrants, CU will deliver or cause to be delivered certificates
representing the Underlying Shares to such underwriters or dealers, in such
names and denominations as it or they shall designate not fewer than two
Business Days prior to such closing.
Section 3.5 "DEMAND" REGISTRATION. From and after such date as Home
and its Affiliates become entitled pursuant to Section 3.4 to sell or transfer
any Restricted Stock, CU shall, if requested by Home, as expeditiously as
possible, use its best efforts to effect the registration of the Restricted
Stock (which CU has been requested to register on a form in general use under
the Securities Act (or any successor federal securities law) selected by CU, in
order to permit the sale or other disposition of such Restricted Stock in
accordance with the intended method of sale or other disposition set forth in
the request (subject to the provisions of Section 3.4(c)). The right to require
registration of the Restricted Stock under this Section 3.5 may only be
exercised once unless Home is advised in writing by its investment banking firm
(a copy of which advice shall be supplied to CU) that, in the opinion of such
firm, an additional or two additional registrations are appropriate to maximize
the benefits to Home of the proposed distribution of Restricted Stock, in which
event Home may exercise once or twice more, as applicable, its rights under this
Section 3.5. Upon the issuance of a stop order or injunction, CU may withdraw
any such registration statement and abandon the proposed offering which Home
shall have demanded, in which case Home's right shall be reinstated.
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Section 3.6 "PIGGYBACK" REGISTRATION. From and after such date as
Home and its Affiliates become entitled pursuant to Section 3.4 to sell or
transfer any Restricted Stock, if at any time CU proposes to register any of its
securities under the Securities Act (or any successor federal securities law),
whether or not for sale for its own account (except with respect to registration
statements filed with respect to the issuance of securities under employee
benefit plans), it will give written notice to Home of its intention to do so.
Upon the written request of Home, given within 15 calendar days after receipt of
CU's notice, CU will use its best efforts to cause to be included in the shares
to be covered by the registration statement proposed to be filed by CU, in
accordance with the request of Home, the Restricted Stock to be sold by dealers
or underwriters in accordance with the provisions of Section 3.4; provided,
however, that CU need not include such Restricted Stock in such registration
statement if CU is advised in writing by its investment banking firm (a copy of
which advise shall be supplied to Home) that the inclusion of such securities
shall, in the opinion of such firm, materially interfere with the orderly sale
and distribution of the CU securities being sold by it. CU may, in its sole
discretion and without the consent of Home, withdraw any such registration
statement and abandon the proposed offering in which Home shall have requested
to participate pursuant to this Section.
Section 3.7 REGISTRATION PROCEDURES AND EXPENSES.
(a) If and whenever CU is required by the provisions of this
Article III to use its best efforts to effect the registration of any of the
Restricted Stock under the Securities Act (or any successor federal securities
law), Home and its Affiliates (including the underwriters in the case of a
registration of Underlying Shares) (individually referred to as a "selling
holder" or "holder" and collectively referred to as "selling holders" or
"holders") will furnish in writing such information as is reasonably requested
by CU for inclusion in the registration statement relating to such offering and
such other information and documentation as CU shall reasonably request, and CU
will, as expeditiously as possible:
(i) prepare and file with the SEC or any other federal
agency at the time administering the Securities Act (or a successor federal
securities law) a registration statement with respect to such securities and use
its best efforts to cause such registration statement to become and remain
effective for such period as may be necessary to permit the successful marketing
of such securities, but not exceeding 90 days;
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act;
(iii) furnish to each selling holder of Restricted Stock
being registered such number of copies of a prospectus and preliminary
prospectus in conformity with the requirements of the Securities Act (or any
successor federal securities law), and such other
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documents as such seller may reasonably request in order to facilitate the
public sale or other disposition of the Restricted Stock being registered
owned by such seller;
(iv) furnish, at the request of any holder or holders of
securities being registered pursuant to this Article III, on the date that such
securities are delivered to the underwriters for sale pursuant to such
registration or if such securities are not being sold through underwriters, on
the date the registration statement with respect to such securities becomes
effective (A) an opinion dated such date of independent counsel representing CU
for the purposes of such registration, addressed to the underwriters, if any,
and to the holder or holders making such request, stating that such registration
statement has become effective under the Securities Act (or such successor law)
and that (a) to the best of the knowledge of such counsel, no stop order
suspending the effectiveness thereof has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated under the Securities
Act (or such successor federal securities law); (b) the registration statement,
the related prospectus and each amendment or supplement thereto comply as to
form in all material respects with the requirements of the Securities Act (or
such successor law) and the applicable rules and regulations of the SEC
thereunder, except that such counsel need express no opinion as to financial
information or information provided by selling holders contained therein;
(c) such counsel (subject to such customary limitation on the scope of their
investigation as shall be set forth in such opinion) has no reason to believe
that either the registration statement or the prospectus, or any amendment or
supplement thereto, contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading except that such counsel need express no
opinion as to financial information or information provided by selling holders
contained therein; (d) the descriptions in the registration statement and in the
prospectus, or any amendment or supplement thereto, of all legal and
governmental matters and all contracts and other legal documents or instruments
are accurate and fairly present the information required to be shown; and
(e) such counsel does not know of any legal or governmental proceedings, pending
or contemplated, required to be described in the registration statement or
prospectus, or any amendment or supplement thereto, or to be filed as exhibits
to the registration statement which are not described and filed as required; and
(B) a letter dated such date, from the independent certified public accountants
of CU, addressed to the underwriters, if any, and to the holder or holders by or
on behalf of whom a request is made, stating that they are independent certified
public accountants within the meaning of the Securities Act (or such successor
law) and that in the opinion of such accountants the financial statements and
other financial data of CU included in the registration statement or the
prospectus, or any amendment or supplement thereto, comply as to form in all
material respects with the applicable accounting requirements of the Securities
Act (or such successor law). Such letter from the independent certified public
accountants shall additionally cover such other financial matters (including
information as to the period ending not more than five business days prior to
the date of such letter) with respect to the registration in respect of which
such letter is being given as the holder of Restricted Stock being registered
may reasonably request;
(v) use its best efforts to register or qualify the
Restricted Stock covered by such registration statement under such other
securities or blue sky laws of such
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jurisdictions as each such selling holder of such Restricted Stock shall
reasonably request and do any and all other acts and things which may be
necessary or reasonably desirable to enable such seller to consummate the
public sale or other disposition in such jurisdictions as may be requested by
such seller; provided, however, that CU shall have no obligation to qualify
to do business in any jurisdiction or to file a general consent to service of
process in any jurisdiction;
(vi) notify each selling holder of Restricted Stock covered
by such registration statement, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act (or any successor Federal
securities law), of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing;
(vii) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering the
period of at least twelve months, but not more than eighteen months, beginning
with the first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act;
(viii) provide a transfer agent and registrar for all
Restricted Stock covered by such registration statement not later than the
effective date of such registration statement;
(ix) use its best efforts to list all Common Stock covered
by such registration statement on each securities exchange, if any, on which any
of the Common Stock is then listed (unless such Common Stock is already so
listed) if such listing is then permitted under the rules of such exchange or
with the NASDAQ, National Market System; and
(x) undertake to take such further actions as may be
reasonably requested by the underwriters.
(b) If any registration statement pursuant to Section 3.5 or 3.6
shall have been declared effective and, in the judgment of CU, (A) any event
shall occur or state of facts exist (other than as described in clause (B))
which requires a notice to the selling holders of Restricted Stock pursuant to
clause (vi) of paragraph (a) of this Section 3.7 or (B) the offering at the time
of Restricted Stock pursuant to such registration statement would adversely
affect, or would be improper in view of, a public offering, financing,
reorganization, recapitalization, merger, consolidation, acquisition, or other
similar transaction, or negotiations, discussions or pending proposals with
respect thereto, immediately upon receipt of notice to such effect from CU, Home
shall cease to offer or sell any Restricted Stock registered thereunder and
cease to deliver or use the prospectus in use thereunder. In the case of any
matter described in clause (A), CU shall, as promptly as practicable, furnish to
each selling holder a reasonable number of copies of a supplement to or an
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amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchaser of such securities, such prospectus shall not include
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
in the light of the circumstances then existing. In the case of any matter
described in clause (B), CU shall promptly notify Home at such times as, in CU's
judgment, such offering may be recommended (which shall be no later than 90 days
following such suspension); provided that Home may, in its sole discretion,
discontinue such offering with respect to the Restricted Stock covered thereby,
in which event Home shall be entitled to "demand" registration rights hereunder
to the full extent as if such offering had not been requested.
All expenses incurred by CU in complying with Sections 3.5 and 3.6
hereof, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for CU and blue sky fees
and expenses are herein called "Registration Expenses," except for all
underwriting discounts and selling commissions applicable to the sales, all fees
and disbursements of counsel for any selling holder or holders (including
counsel designated by any seller for a "due diligence" investigation of CU) and
the expense of any special audits incident to or required by such registration,
all of which are herein called "Selling Expenses." CU shall pay all
Registration Expenses and the selling holder or holders of Restricted Stock
being registered shall pay all Selling Expenses.
Section 3.8 INDEMNIFICATION. In the event of a registration of any of
the Restricted Stock under the Securities Act (or any successor Federal
securities law) pursuant to this Article III, CU will indemnify and hold
harmless each underwriter of such Restricted Stock, Home and its Affiliates as
the transferors of the Restricted Stock or any portion thereof to underwriters,
and each other person, if any, who controls such seller, assignor or underwriter
within the meaning of Section 15 of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such seller,
underwriter, assignor or controlling person may become subject under the
Securities Act (or such successor law) or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such Restricted Stock
shall have been registered under the Securities Act (or such successor law), any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; and will reimburse such
seller, transferor and underwriter and each such controlling person for any
legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that CU will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, said preliminary prospectus or said
prospectus or said amendment or supplement in reliance upon and in conformity
with written information furnished to CU through an instrument executed by such
seller, transferor or underwriter specifically for use in the preparation
thereof; and provided further that if any losses, claims, damages or liabilities
arise out of or are based upon an untrue statement, alleged untrue statement,
omission or alleged omission contained in any
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preliminary prospectus which did not appear in the final prospectus, CU shall
not have any such liability with respect thereto to such seller, transferor
or underwriter or any person who controls such seller, transferor or
underwriter within the meaning of Section 15 of the Securities Act if such
seller, transferor or underwriter or any person on their behalf delivered a
copy of the preliminary prospectus to the person alleging such losses,
claims, damages or liabilities and failed to deliver a copy of the final
prospectus, as amended or supplemented if it has been amended or
supplemented, to such person at or prior to the written confirmation of the
sale to such person.
In the event of any registration of any Restricted Stock under the
Securities Act (or a successor Federal securities law) pursuant to this
Article III, each seller of such Restricted Stock (other than any underwriter or
dealer purchasing Underlying Shares), and Home and its Affiliates, as
transferors of Restricted Stock, severally and not jointly, will indemnify and
hold harmless CU, each person, if any who controls CU within the meaning of
Section 15 of the Securities Act, each officer of CU who signs the registration
statement and each director of CU against any and all such losses, claims,
damages, or liabilities arising out of or based upon any untrue statement or
alleged untrue statement in or omission or alleged omission from any such
registration statement, prospectus, amendment or supplement, if the untrue
statement or omission or alleged untrue statement or omission in respect of
which such loss, claim, damage or liability is asserted was made in reliance
upon and in conformity with information furnished in writing to CU by or on
behalf of such seller or transferor specifically for use in connection with the
preparation of such registration statement, preliminary prospectus, prospectus,
amendment or supplement; provided, however, that, if any losses, claims, damages
or liabilities arise out of or are based upon an untrue statement, alleged
untrue statement, omission or alleged omission contained in any preliminary
prospectus which did not appear in the final prospectus, such seller or
transferor shall not have any such liability with respect thereto to CU, any
person who controls CU within the meaning of Section 15 of the Securities Act,
any officer of CU who signed the registration statement of any director of CU if
CU or any person on their behalf delivered a copy of the preliminary prospectus
to the person alleging such losses, claims, damages or liabilities and failed to
deliver a copy of the final prospectus, as amended or supplemented if it has
been amended or supplemented, to such person at or prior to the written
confirmation of the sale to such person; and provided further that the liability
of any such seller or transferor so to indemnify shall be limited to an amount
equal to the amount received by such seller upon the sale of such Restricted
Stock pursuant to such registration statement, or by such transferor from the
seller, as the case may be.
Payments in respect of indemnifications required by this Section 3.8
shall be made by periodic payments during the course of the investigation or
defense, as and when bills are received or expenses incurred. Any party which
proposes to assert the right to be indemnified under this Section 3.8 will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim is to be made against
an indemnifying party under this Section 3.8, notify each such indemnifying
party of the commencement of such action, suit or proceeding, enclosing a copy
of all papers served, but the omission so to notify such indemnifying party of
any such action, suit or proceeding shall not relieve it from any liability
which it may have to any indemnified party otherwise than under this
Section 3.8. In case any such action, suit or
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proceeding shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in, and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified
party, and after notice from such indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party for any legal or other
expenses, other than reasonable costs of investigation, subsequently incurred
by such indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its own counsel in any such
action, but the fees and expenses of such counsel shall be at the expense of
such indemnified party, when and as incurred, unless (i) the employment of
counsel by such indemnified party has been authorized in writing by the
indemnifying party, (ii) the indemnified party shall have reasonably
concluded that there may be a conflict of interest between the indemnifying
party and the indemnified party in the conduct of the defense of such action
(in which case the indemnifying party shall not have the right to direct the
defense of such action on behalf of the indemnified party) or (iii) the
indemnifying party shall not in fact have employed counsel to assume the
defense of such action. An indemnifying party shall not be liable for
employed counsel to assume the defense of such action. An indemnifying party
shall not be liable for any settlement of any action or claim effected
without its consent. In no event shall an indemnifying party be required to
pay for more than one counsel for an indemnified party, exclusive of local
counsel.
Section 3.9 OBLIGATIONS OF CU WITH RESPECT TO UNDERWRITTEN OFFERING.
In the event that Restricted Stock shall be sold pursuant to a registration
statement in an underwritten offering pursuant to Section 3.5, CU agrees to
enter into an underwriting agreement containing customary representations and
warranties with respect to the business and operations of an issuer of the
securities being registered and customary covenants and agreements to be
performed by such issuer, including, without limiting the generality of the
foregoing, customary provisions with respect to indemnification by CU of the
underwriters of such offering. CU shall have the right to approve the managing
underwriters for such offering (which in no event shall include an affiliate of
Home); provided, however, that such approval shall not be unreasonably withheld.
Section 3.10 RULE 144 REQUIREMENTS. CU shall undertake to make
publicly available and available to the holders of Restricted Stock, pursuant to
Rule 144 of the SEC under the Securities Act, such information as shall be
necessary, and to take such further action as any such holder may reasonably
request, to enable the holders of Restricted Stock to make sales of Restricted
Stock pursuant to the Rule. CU shall furnish to any holder of Restricted Stock
upon request (after the preceding sentences shall have become applicable), a
written statement executed by CU as to the steps it has taken to comply with the
current public information requirements of Rule 144.
Section 3.11 RIGHTS OF FIRST REFUSAL.
(a) In the event Home or its Affiliates intend, at any time
after the occurrence of an Acquisition Event to sell, transfer or dispose of any
Restricted Stock (other than to an Affiliate of Home in a transaction not
intended to circumvent the transfer restrictions contained
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in this Agreement) other than (i) pursuant to a sale or transfer of Warrants
to one or more underwriters or dealers in accordance with Section 3.4(c) (in
which case Section 3.11(b) shall govern) or (ii) at any time after CU has
failed for any reason to repurchase such Restricted Stock pursuant to Article
II hereof on the closing date scheduled for such repurchase, then:
(i) Home shall notify CU in writing of its or its
Affiliate's intention to sell, transfer or dispose of such Restricted Stock
specifying the number of shares or amount of Warrants, as the case may be,
proposed to be disposed of, the identity or identities of the prospective
purchaser or purchasers thereof, the proposed purchase price therefor and the
material terms of any agreement relating thereto (the "Sale Notice"); and
(ii) CU shall have the right, by written notice of its
exercise of its right of first refusal given to Home within 15 calendar days
after CU's receipt of such notice of intention from Home, to purchase (or to
cause a Person designated by CU to purchase) all, but not less than all of, the
Restricted Stock specified in such notice of intention for cash at the gross
price set forth therein (including broker's commissions and other transaction
costs of Home or its Affiliate to be paid or absorbed by the prospective
purchaser) if the terms set forth in such notice of intention provide for a cash
sale. If the purchase price specified in such notice of intention include any
property other than cash, the purchase price at which CU shall be entitled to
purchase shall be (x) the amount of cash included in the purchase price
specified in such notice of intention plus (y) property, to the extent feasible,
substantially similar to the property described in such notice of intention and
in any case of equivalent value to such property (as agreed to by CU and Home,
or as determined by a nationally recognized investment banking firm selected by
Home and CU).
If CU shall have exercised its right of first refusal under this
paragraph (a) (including the designation of another purchaser as referred to in
the next subparagraph), the closing of the purchase of the Restricted Stock as
to which such right CU shall have been exercised shall take place as promptly as
practicable, but in no event more than 10 Business Days after CU gives notice of
such exercise, and if such closing does not occur within such 10 days, such
right of first refusal provided for herein (including any assignment thereof)
shall be null and void and of no further force and effect with respect to such
Restricted Stock and this Section 3.11 shall no longer apply to any sale or
disposition or proposed sale or disposition of such Restricted Stock; provided
that if prior notification to or approval of the Federal Reserve Board or any
other regulatory authority is required in connection with such purchase, CU
shall promptly file the required notice or application for approval and shall
expeditiously process the same and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which, as the case
may be, (i) any required notification period has expired or been terminated, or
(ii) such approval has been obtained and, in either event, any requisite waiting
period shall have passed.
If CU elects not to exercise, or fails to exercise or cause to be
exercised, its right of first refusal provided in this paragraph (a) within the
time specified for such exercise or if the Federal Reserve Board or any other
regulatory authority disapproves of CU's proposed purchase, Home and its
Affiliates shall be free thereafter for a period of 90 days to consummate the
sale, transfer or other
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disposition with any purchaser or purchasers of the Restricted Stock who
shall have been specified in the sale notice at the price (or at any price in
excess of such price) and on substantially the terms specified therein.
The right of first refusal provided for in this paragraph (a) may only
be exercised with respect to the initial sale, transfer or other disposition of
the Restricted Stock by Home or an Affiliate (whether in blocks or as a whole)
to a person that is not an Affiliate of Home and not to subsequent sales,
transfers or other dispositions by purchasers of Restricted Stock.
(b) If Home or its Affiliates at any time propose to transfer
any Warrants to any underwriters or dealers pursuant to the provisions of
Section 3.4, other than at any time after CU has failed for any reason to
repurchase such Warrants pursuant to Article II hereof on the closing date
scheduled for such repurchase, then Home shall first notify CU in writing of
such intention, specifying the Warrants which it proposes to sell or transfer
and the name or names of the proposed dealers or of the proposed managing
underwriters in the underwriting syndicate to which the sale or transfer is
proposed to be made. CU shall have the right, exercisable by written notice
given to Home 15 calendar days after CU's receipt of notice from Home pursuant
to the immediately preceding sentence, to repurchase, or to cause a third party
designated by CU to purchase, all, but not fewer than all, the Warrants proposed
to be sold or transferred on the terms and conditions hereinafter set forth.
Any notice given by CU of exercise of its repurchase rights under this
paragraph (b) shall specify a place in Los Angeles and a Business Day not
earlier than 10 days and not later than 15 days after the date of such notice
for the closing of the repurchase of the Warrants being repurchased. The
purchase price payable to CU or its designee for the repurchase of Warrants
pursuant to this paragraph (b) shall be a cash price equal to the product of
(x) the number of Underlying Shares covered by the relevant Warrants (calculated
as of the date of the closing of the repurchase) and (y) the Share Price on such
date. At the closing of a sale of Warrants pursuant to the foregoing
provisions, CU or its designee will make payment to Home of the aggregate price
for the Warrants to be repurchased in one of the manners set forth in
Section 2.1(c). At such closing, Home shall deliver to CU or its designee the
certificates representing the Warrants to be repurchased and CU shall deliver to
Home replacement certificates representing the Warrants (if any) which are not
to be repurchased but were covered by the certificate or certificates
surrendered by Home. Any election by CU pursuant to this paragraph to exercise
its repurchase rights in respect of Warrants shall be irrevocable. In the event
CU fails timely to exercise its repurchase rights in respect of Warrants within
the period specified above during which it must do so or notifies Home in
writing prior to the expiration of such period that it does not intend to
exercise such rights or its designee fails to repurchase Warrants on the date
set for the closing of such a purchase, Home and its Affiliates shall be free
thereafter to consummate the sale and transfer of the Warrants specified in this
notice to CU under this paragraph to any underwriters or dealers who agree to
exercise the Warrants and sell the Underlying Shares in accordance with the
provisions of Section 3.4(c), and this Section 3.11 shall no longer apply to
such sale or transfer of such Warrants.
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(c) Home shall have the right to withdraw any notice given by it
pursuant to this Section 3.11 at any time before CU shall have given notice of
its intention to exercise its right of first refusal hereunder (including by
designation of another purchaser).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CU
CU represents and warrants to Home that:
Section 4.1 AUTHORIZATION OF AGREEMENT; NO CONFLICTS.
(a) The execution and delivery of this Agreement by CU and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of CU. This Agreement has been
duly executed and delivered by CU and constitutes a valid and binding obligation
of CU, enforceable in accordance with its terms.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with, or
result in any violation of or default or loss of a material benefit under any
provision of the articles of incorporation, articles or association or bylaws of
CU or CU Bank or, except for the necessity of obtaining Requisite Regulatory
Approvals, any material mortgage, indenture, lease agreement or other material
instrument or any permit, concession, grant, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to CU or
CU Bank or their respective properties, other than any such conflict, violation,
default or loss which will not have a material adverse effect on CU or CU Bank.
No material consent, approval, order or authorization of, or registration,
declaration or filing with, any governmental authority is required in connection
with the execution and delivery of this Agreement by CU and CU Bank or the
consummation by CU of the transactions contemplated hereby except for any
approvals required to be obtained pursuant to the BHC Act or the Policy
Statement of the Board of Governors of the Federal Reserve System on Nonvoting
Equity Investments by Bank Holding Companies, 12 C.F.R. Section 225.143 (the
"FRB Guidelines"), or any other applicable laws, for the execution and delivery
of this Agreement and the issuance of the Warrants by CU.
Section 4.2 AUTHORIZED STOCK CU has taken all necessary corporate and
other action to authorize and reserve and, subject to obtaining the governmental
and other approvals and consents referred to herein, to permit it to issue, and,
at all times from the date hereof until the obligation to deliver Common Stock
upon the exercise of the Warrants terminates, will have reserved for issuance,
upon exercise of the Warrants, shares of Common Stock necessary for Home to
exercise the Warrants, and CU will take all necessary corporate action to
authorize and reserve for issuance all additional shares of Common Stock or
other securities which may be issued pursuant to this Agreement. The shares of
Common Stock to be issued upon due exercise of the Warrants, including all
additional shares of Common Stock or other securities which may be issuable
pursuant to this
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Agreement, upon issuance pursuant hereto, shall be duly and validly issued,
fully paid and nonassessable, and shall be delivered free and clear of all
liens, claims, charges and encumbrances of any kind or nature whatsoever,
including any preemptive rights of any stockholder of CU.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF HOME
Home represents and warrants to CU that:
Section 5.1 DUE EXECUTION OF AGREEMENT; NO CONFLICTS.
(a) This Agreement has been duly executed and delivered by Home
and constitutes a valid and binding obligation of Home, enforceable in
accordance with its terms.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with, or
result in any violation of or default or loss of a material benefit under, any
provision of the certificate of incorporation or By-laws of Home or, except for
the necessity of obtaining Requisite Regulatory Approvals, any material
mortgage, indenture, lease, agreement or other material instrument, or any
permit, concession, grant, franchise, license, judgment, order decree, statute,
law, ordinance, rule or regulation applicable to Home or its respective
properties, other than any such conflict, violation, default or loss which (i)
will not have a material adverse effect on Home and its Subsidiaries taken as a
whole. No material consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required in
connection with the execution and delivery of this Agreement by Home or the
consummation by Home of the transactions contemplated hereby, except for (a)
filings required in order to obtain Requisite Regulatory Approvals, and (b) any
approvals required to be obtained pursuant to the BHC Act, or the FRB Guidelines
or any other applicable law for the execution and delivery of this Agreement by
CU, Home and the issuance of the Warrants.
ARTICLE VI
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set forth
below (in their singular and plural forms as applicable) shall have the meanings
set forth below.
"Affiliate" or "affiliate" shall mean, with respect to any
corporation, any person that, directly or indirectly, controls or is controlled
by or is under common control with such corporation.
"BHC Act" means the Bank Holding Company Act of 1956, as amended.
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"Business Day" shall mean any day, other than a Saturday, Sunday or
legal holiday in the State of California, on which banks are open for
substantially all their banking business in Los Angeles.
"Change in Bank Control Act" means the Change in Bank Control Act of
1978, as amended.
"Covered Shares" shall mean on any date, with respect to any Warrants,
the maximum number of shares of Common Stock that would be purchasable upon the
exercise on such date of such Warrants, assuming that such Warrants may be
exercised on such date to purchase the maximum number of shares of Common Stock
purchasable pursuant to the terms thereof (including the limitations contained
in the second paragraph of the certificate evidencing each such Warrant) without
regard to any provision therein (other than such limitations) or in this
Agreement or in any law limiting the right of any holder of such Warrants to
acquire shares otherwise purchasable thereunder.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"Governmental Entity" shall mean any court, administrative agency or
commission or other governmental authority or instrumentality.
"Market Value" shall mean, on any date, the average of the closing
sale prices of a share of Common Stock on the principal securities exchange on
which the Common Stock is traded, or, if the Common Stock is not at the time
listed on any national securities exchange, as reported by the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"), on the
10 trading days immediately preceding such date, (or such fewer number of
trading days immediately preceding such date for which shares of Common Stock
have been listed for trading on such exchange or quoted on NASDAQ); PROVIDED,
HOWEVER, that if Home seeks a determination of the fair market value of a share
of Common Stock pursuant to the provisions of Section 2.2, Market Value shall,
if required pursuant to the terms of such Section, mean the fair market value of
a share of Common Stock on such date determined pursuant to such Section.
"Person" or "person" shall mean an individual, corporation,
partnership, joint venture, trust or unincorporated organization, or a
government or any agency or political subdivision thereof.
"Regulatory Authority" shall mean any United States federal or state
government or governmental authority the approval of which is legally required
for consummation of the Merger.
"Requisite Regulatory Approvals" shall mean all material permits,
approvals and consents required to be obtained, and all waiting periods required
to expire, prior to the consummation of the issuance of the Covered Shares under
applicable federal laws of the United States or applicable laws of any state
having jurisdiction over Home or CU.
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"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Share Price" shall mean, with respect to any Warrants, the amount by
which, on the date of the Acquisition Event triggering the exercisability of the
Warrants (i) the Warrant Price on such date is less than (ii) the greatest of:
(i) the Market Value of a share of Common Stock on such
date; and
(ii) the highest price paid on or prior to such date for a
share of Common Stock (including in any merger or consolidation) by a purchaser
or group of purchasers acting in concert of 50% or more of the outstanding
shares of Common Stock, or, in the case of a purchaser of 50% or more of the
consolidated assets of CU (as shown on the books of CU), the Market Value of a
share of Common Stock on the date of consummation of such asset acquisition.
"Subsidiary" shall mean, with respect to any corporation (the
"parent"), any other corporation, association or other business entity of which
more than 50% of the shares of the Voting Stock are owned or controlled,
directly or indirectly, by the parent or by one or more Subsidiaries of the
parent, or by the parent and one or more of its Subsidiaries.
"Voting Stock" shall mean the stock entitling the holders thereof to
vote in the election of the directors or trustees of the corporation,
association, or other business entity in question, except that it shall not
include any stock so entitling the holders thereof to vote only upon the
happening of a contingency, whether or not such contingency has occurred.
"Warrant Call Price" shall mean, when used with respect to any
Warrant, the product of (i) the number of Covered Shares on such date and
(ii) the Share Price on such date; provided that the Warrant Call Price with
respect to any Warrant shall in no event exceed (x) the quotient obtained by
dividing $5,000,000 by the number of Covered Shares subject to all the
outstanding Warrants multiplied by (y) the number of Covered Shares subject to
such Warrant.
ARTICLE VII
TERMINATION
Section 7.1 TERMINATION. Subject to Section 7.2, this Agreement may
be terminated in the following circumstances:
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(a) at the effective time of the Merger, as set forth in the
Merger Agreement;
(b) at the termination of the Merger Agreement prior to the
occurrence of an Acquisition Event; or
(c) two years after the occurrence of an Acquisition Event.
Section 7.2 EFFECT OF TERMINATION. In the event of termination of
this Agreement pursuant to Section 7.1(c), the rights of the parties hereto
shall forthwith become void; provided that, if the Agreement shall terminate
pursuant to Section 7.1(c) and any party has filed an application to purchase
securities with any regulatory authority, the Agreement shall not terminate as
provided in Section 7.1(c), but shall remain in full force and effect until the
day which is 30 Business Days (plus any applicable waiting periods) after the
receipt or denial of regulatory approval or consent, at which time the Agreement
shall then terminate.
Section 7.3 INDEMNIFICATION FOR BREACH. Each party to this
Agreement agrees to indemnify and hold harmless the other party against any
loss, claim, damage or liability arising out of or based upon a Default of this
Agreement by such defaulting party in accordance with the procedures set forth
in the last paragraph of Section 3.8 of this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or mailed
by registered or certified mail (return receipt requested) to the parties at the
following addresses (or any such other address for a party as shall be specified
by like notice):
(a) If to CU at:
16030 Ventura Boulevard
Encino, CA 91436
Attn: Stephen G. Carpenter
Fax: (818) 907-5024
with a copy to:
Anita Wolman, Esq.
16030 Ventura Boulevard
Encino, CA 91436
Fax: (818) 907-5024
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(b) If to Home at:
2633 Cherry Avenue
Signal Hill, CA 90806
Attn: James Staes
Phone: (310) 988-9600
Fax: (310) 426-4526
with a copy to:
Manatt, Phelps & Phillips
11355 West Olympic Boulevard
Los Angeles, California 90064
Attn: Barbara S. Polsky, Esq.
Fax: (310) 312-4224
Section 8.2 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
Section 8.3 AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken by their respective Boards of Directors or the duly
authorized committees thereof. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto. The
parties hereto agree to make such amendments as may be necessary to respond to
the request of any Regulatory Authority with respect to this Agreement.
Section 8.4 WAIVER. Any term or provision of this Agreement may be
waived in writing at any time by the party which is, or whose shareholders are,
entitled to the benefits thereof.
Section 8.5 MISCELLANEOUS. This Agreement (including the documents
and instruments referred to herein) (a) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof; (b) except as
contemplated in this Agreement, is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder; and (c) except as
contemplated in this Agreement, shall not be assigned by operation of law or
otherwise. CU and Home agree that, except as required by law, it shall not
issue any press release with respect to the transactions contemplated by this
Agreement without consulting with each other party hereto.
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Section 8.6 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
IN WITNESS WHEREOF, CU and Home have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first above written.
CU BANCORP
By:
HOME INTERSTATE BANCORP
By:
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EXHIBIT A
WARRANT
No.
January 10, 1996 1,492,390 Shares
CU BANCORP
This is to certify that, for value received and subject to the terms
and conditions provided for in a Warrant Purchase Agreement dated as of January
10, 1996 (the "Agreement") by and between Home Interstate Bancorp, a California
corporation ("Home"), and CU Bancorp, a California corporation ("CU"), pursuant
to which Home and its assigns are entitled to purchase from CU, on the terms and
conditions set forth therein, 1,492,390 fully paid and nonassessable shares of
common stock of CU ("Common Stock"), subject to adjustment as provided in the
Agreement. Terms not otherwise defined herein shall have the meanings ascribed
to them in the Agreement.
This Warrant may be exercised by the holder (except any holder which
shall not be permitted by the Bank Holding Company Act of 1956, as amended ("BHC
Act"), or other applicable law to own, or shall not have obtained all regulatory
approvals required by such Act or other applicable law as a precondition to its
ownership of, the shares of Common Stock covered hereby) as to the whole or any
part of the shares of Common Stock covered hereby at any time when such exercise
shall be permitted under the terms of this Warrant, by surrender of this Warrant
at the principal office of CU or at the office of any transfer agent for the
Warrant and upon payment to CU of the Warrant Price for shares so purchased by
wire transfer to a bank account designated by CU. Thereupon, this Warrant shall
be deemed to have been exercised and the person exercising the same to have
become a holder of record of shares of Common Stock (or of the other securities
or property to which it is entitled upon such exercise) purchased hereunder for
all purposes, and certificates for shares so purchased shall be delivered to the
purchaser. If this Warrant shall be exercised in respect of a part of the
shares of Common Stock covered hereby, the holder shall be entitled to receive a
new Warrant covering the number of shares in respect of which this Warrant shall
not have been exercised, but otherwise identical hereto.
This Warrant is exchangeable, upon the surrender hereof by the holder
hereof at such office or agency of CU, for new Warrants of this tenor
representing in the aggregate the right to
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subscribe for and purchase the number of shares which may be subscribed for
and purchased hereunder, each of such new Warrants to represent the right to
subscribe for and purchase not less than 1,000 shares of Common Stock (except
to the extent necessary to round out the balance of the number of shares
purchasable hereunder).
CU covenants and agrees that all shares which may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance, be fully
paid and non-assessable and free from all taxes, liens and charges with respect
to the issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue). CU further covenants and agrees that during
the period within which the rights represented by this Warrant may be exercised,
CU will at all times have authorized, and reserved, a sufficient number of
shares of Common Stock to provide for the exercise of the rights represented by
this Warrant, and will at its expense expeditiously upon each such reservation
of shares use its best efforts to procure the listing thereof (subject to
issuance or notice of issuance) on all stock exchanges on which the shares of
Common Stock are then listed, or if CU Shares are not then listed on a stock
exchange on NASDAQ National Market System.
The rights of the holder of this Warrant shall be subject to the
following further terms and conditions:
Section 1.1 CU shall at all times reserve and keep available, free
from preemptive rights, out of its authorized and unissued Common Stock or
shares of Common Stock held in treasury, for the purpose of effecting the
exercise of this Warrant, the full number of shares of Common Stock then
issuable upon the exercise of this and all other outstanding Warrant, computed
on the assumption that the adjustments required by Section 1.11 hereof have
become effective, in the event such is not then the case.
Section 1.2 CU will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Common Stock upon exercise of this
Warrant. CU shall not, however, be required to pay any tax which may be payable
in respect of any transfer involved in the issue and delivery of shares of
Common Stock in a name other than that of the holder of the Warrant or Warrants
to be exercised, and no such issue or delivery shall be made unless and until
the person requesting such issue has paid to CU the amount of any such tax, or
has established, to the satisfaction of CU, that such tax has been paid.
Section 1.3 This Warrant shall not entitle the holder of any rights of
a shareholder of CU, either at law or in equity, or to any notice of meetings of
shareholders or of any other proceedings of CU.
Section 1.4 Subject to Section 1.5 and the terms and conditions set
forth in the Agreement, this Warrant and all rights hereunder are transferable
(in whole or in part), on the books of CU by the registered holder thereof in
person or by duly authorized attorney, upon surrender of this Warrant, properly
endorsed, to CU (or if CU shall have notified the registered holder hereof of
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the appointment of an independent transfer agent for Warrants, then to such
transfer agent). As used herein the term "this Warrant" shall mean and include
any Warrant or Warrants hereafter issued in consequence of transfers of this
Warrant in whole or in part.
Section 1.5 THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THIS WARRANT MAY NOT BE SOLD OR
TRANSFERRED EXCEPT PURSUANT TO (i) A REGISTRATION STATEMENT WITH RESPECT TO THIS
WARRANT WHICH IS EFFECTIVE UNDER THE SECURITIES ACT, OR (ii) AN OPINION OF
COUNSEL THAT AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT IS
AVAILABLE. THE TRANSFERABILITY OF THIS WARRANT IS FURTHER SUBJECT TO THE
PROVISIONS OF A WARRANT PURCHASE AGREEMENT DATED AS OF JANUARY 10, 1996, A COPY
OF WHICH IS AVAILABLE FOR INSPECTION AT THE OFFICE OF THE SECRETARY OF CU
BANCORP.
Section 1.6 The holder of this Warrant, by the acceptance hereof,
agrees that prior to the exercise of any Warrants, at a time when said Warrants
have not been registered under the Securities Act or any similar Federal
statute, it will, if it has not requested or is then not entitled to such
registration pursuant to the provisions of Article III of the Agreement, deliver
to CU a written representation that it is acquiring the shares of Common Stock
issuable upon the exercise of such Warrants for its own account for investment,
and not with a view to, or for sale in connection with, any distribution
thereof, and not with any present intention of distributing or selling the same.
Section 1.7 (a) This Warrant shall terminate and be of no further
force or effect as provided in Article VII of the Agreement.
(b) Notwithstanding any other provision contained herein,
this Warrant and the rights conferred hereby shall terminate, and the full
consideration paid by Home for this Warrant shall be immediately due and payable
to Home, if CU or Home receives written notice from the Federal Reserve Board to
the effect that the execution and delivery of the Agreement or the issuance of
the Warrants is not consistent with Section 3 of the BHC Act.
Section 1.8 This Warrant shall be governed by and construed in
accordance with the laws of the State of California.
Section 1.9 This Warrant incorporates by reference all of the terms
and conditions of the Agreement.
CU BANCORP
By:
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EXHIBIT D
WARRANT PURCHASE AGREEMENT
This WARRANT PURCHASE AGREEMENT (the "Agreement"), dated as of January
10, 1996, between CU Bancorp, a California corporation ("CU"), and Home
Interstate Bancorp, a California corporation ("Home") is made with reference to
the following:
RECITALS
A. CU, California United Bank, National Association, a wholly owned
subsidiary of CU ("CU Bank"), Home and Home Bank, a wholly owned subsidiary of
Home ("Home Bank"), have entered into an Agreement and Plan of Reorganization
(the "Merger Agreement") whereby Home and Home Bank would be merged with and
into CU and CU Bank, respectively (collectively, the "Merger").
B. As partial consideration to CU for entering into the Merger
Agreement, Home has agreed to issue to CU a warrant entitling the holder thereof
to purchase up to 19.9% (or 1,082,224 shares) of the outstanding common stock of
Home ("Common Stock"), assuming the exercise of all Warrants (as hereafter
defined), and all other options, warrants or other securities convertible into
Common Stock, subject to such restrictions and conditions as may be imposed by
bank regulatory authorities having jurisdiction over CU and Home, respectively.
C. Concurrent with the execution of this Agreement, CU and Home
shall enter into a separate warrant agreement, with substantially identical
terms and conditions as are set forth in this Agreement, pursuant to which CU
shall issue to Home a warrant entitling the holder thereof, upon the occurrence
of certain events as set forth in such agreement, to purchase up to 19.9% (on a
fully diluted basis) of the outstanding common stock of CU.
D. Terms used herein and not otherwise defined shall have the
meanings ascribed to them in Article VI hereof.
In consideration of these premises and of the representations,
covenants and agreements hereinafter set forth, Home and CU hereby agree as
follows:
ARTICLE I
ISSUANCE AND SALE OF WARRANT
Section 1.1 ISSUANCE AND SALE OF THE WARRANT. Subject to the terms
and conditions of this Agreement, and in reliance upon the representations and
warranties hereinafter set forth, and in consideration for the execution and
delivery of the Merger Agreement, Home hereby issues to CU one or more warrants
(such warrants, together with any warrants issued pursuant to Section 1.4, the
"Warrants") entitling the holder thereof to purchase in the aggregate 1,082,224
duly authorized and
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newly issued shares of Common Stock, subject to adjustment as provided below.
The Warrants being issued at the time of the execution of this Agreement
will be evidenced by a single certificate in the form of Exhibit A hereto.
All Warrants issued pursuant to Section 1.4 will be evidenced by one or, at
CU's request, more certificates in the form of Exhibit A hereto, dated the
date of their issuance, exercisable at the adjusted exercise price at the
time in effect for the Warrants issued pursuant to this Section 1.1.
Section 1.2 WARRANT PRICE. The initial exercise price at which shares
of Common Stock may be acquired pursuant to exercise of the Warrants shall be
$12.050 per share (the "Warrant Price"), subject to adjustment as provided in
Section 1.4.
Section 1.3 EXERCISE OF WARRANTS.
(a) The Warrants may be exercised in whole or in part only after the
occurrence of an Acquisition Event.
(b) As used herein, an "Acquisition Event" means any of the following
events:
(i) any person (other than CU or an Affiliate of CU) shall have
commenced (as such term is defined in Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), or shall have
filed a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to, a tender offer or
exchange offer to purchase any shares of Common Stock such that, upon
consummation of such offer, such person would own or control 10% or
more of the then outstanding Common Stock;
(ii) Home or Home Bank, without having received CU's prior
written consent or except as permitted by the Merger Agreement, shall
have authorized, recommended, proposed or publicly announced an
intention to authorize, recommend or propose, or entered into, an
agreement with any person (other than CU or any Affiliate of CU to
(A) effect a merger, consolidation or similar transaction involving
Home or Home Bank, (B) sell, lease or otherwise dispose of assets of
Home or Home Bank representing 10% or more of the consolidated assets
of Home or Home Bank, or (C) issue, sell or otherwise dispose of
(including by way of merger, consolidation, share exchange or any
similar transaction) securities representing 10% or more of the voting
power of Home or Home Bank (any of the foregoing an "Acquisition
Transaction");
(iii) any person (other than Home or Home Bank or CU or CU
Bank in a fiduciary capacity) shall have acquired beneficial ownership
(as such term is defined in Rule 13d-3 under the Exchange Act) or the
right to acquire beneficial ownership of, or any "group" (as such term
is defined in the Exchange Act) shall have been
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formed which beneficially owns or has the right to acquire
beneficial ownership of, 10% or more of the then outstanding
Common Stock; or
(iv) the holders of Common Stock shall not have approved the
Merger Agreement at the meeting of such stockholders held for the
purpose of voting on the Merger Agreement, such meeting shall not have
been held or shall have been canceled prior to termination of the
Merger Agreement or Home's Board of Directors shall have withdrawn or
modified in a manner adverse to CU the recommendation of Home's Board
of Directors with respect to the Merger Agreement, in each case after
any person (other than CU) shall have (A) publicly announced a
proposal, or publicly disclosed an intention to make a proposal, to
engage in an Acquisition Transaction or (B) filed an application (or
given a notice), whether in draft or final form, under the BHC Act or
the Change in Bank Control Act for approval to engage in an
Acquisition Transaction.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(c) In the event CU is entitled to and wishes to exercise the
Warrants, it shall send to Home a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of shares it
will purchase pursuant to such exercise and (ii) a place and date not earlier
than three Business Days nor later than 60 Business Days from the Notice Date
for the closing of such purchase (the "Closing Date"); provided that if prior
notification to or approval of the Federal Reserve Board or any other regulatory
agency is required in connection with such purchase, CU shall promptly file the
required notice or application for approval, shall promptly notify Home of such
filing, and shall expeditiously process the same and the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which any required notification periods have expired or been terminated or such
approvals have been obtained and any requisite waiting period or periods shall
have passed.
(d) At the closing referred to in subsection (c), CU shall pay to
Home the aggregate purchase price for the shares of Common Stock purchased
pursuant to the exercise of the Warrants in immediately available funds by wire
transfer to a bank account designated by Home, provided that failure or refusal
of Home to designate such a bank account shall not preclude CU from exercising
the Warrants.
(e) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (d), Home shall deliver to CU a
certificate or certificates representing the number of shares of Common stock
purchased by CU.
(f) Upon the giving by CU to Home of the written notice of exercise
of the Warrants provided for under subsection (c) and the tender of the
applicable purchase price in
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immediately available funds, CU shall be deemed to be the holder of record of
the shares of Common Stock issuable upon such exercise, notwithstanding that
the stock transfer books of Home shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered
to CU. Home shall pay all expenses, and any and all federal, state and local
taxes or other charges that may be payable in connection with the
preparation, issue and delivery of stock certificates hereunder in the name
of CU.
Section 1.4 ADDITIONAL WARRANTS; ADJUSTMENTS TO WARRANT PRICE AND
NUMBER OF SHARES. The number of shares to which the Warrants may be exercised
and the Warrant Price shall be subject to adjustment as provided below:
(a) ADDITIONAL WARRANTS. If Home shall, on one or more
occasions after the date hereof, issue additional shares of Common Stock, and
if, as a result of any such issuance the shares of Common Stock issued or
issuable upon the exercise of Warrants issued pursuant to Section 1.1 hereof
shall represent less than 19.9% of the outstanding Common Stock, assuming the
exercise of all Warrants and all other options, warrants or other securities
convertible into Common Stock, Home shall issue to CU, promptly upon CU's
demand, without further consideration, Warrants to purchase a number of
authorized but unissued shares of Common Stock which, when added to the shares
issued or issuable upon the exercise of such previously issued Warrants, would
represent 19.9% as the case may be of the outstanding Common Stock.
(b) ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If Home at
any time or from time to time after the date of this Agreement effects a
subdivision of the Common Stock, the Warrant Price then in effect immediately
before that subdivision shall be proportionately decreased, and conversely, if
Home at any time or from time to time after the date of this Agreement combines
the outstanding shares of Common Stock, the Warrant Price then in effect
immediately before the combination shall be proportionately increased. Any
adjustment under this subsection (b) shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(c) ADJUSTMENT FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. In the
event Home at any time or from time to time after the date of this Agreement
makes, or fixes a record date for the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in additional
shares of Common Stock, then and in each such event the Warrant Price then in
effect shall be decreased as of the time of such issuance or, in the event such
a record date is fixed, as of the close of business on such record date, by
multiplying the Warrant Price then in effect by a fraction (i) the numerator of
which is the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of business on such
record date, and (ii) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date plus the number of
shares of Common Stock issuable in payment of such dividend or distribution;
PROVIDED, however, that if such record date is fixed and such dividend is not
fully paid or if such distribution is not fully made on the date fixed therefor,
the Warrant Price shall be
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recomputed accordingly as of the close of business on such record date and
thereafter the Warrant Price shall be adjusted pursuant to this subsection
(c) as of the time of actual payment of such dividends or distributions.
(d) ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. In the
event Home at any time or from time to time after the date of this Agreement
makes, or fixes a record date for the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in securities of
Home other than shares of Common Stock, then in each such event provision shall
be made so that the holders of Warrants shall receive upon exercise thereof, in
addition to the number of shares of Common Stock receivable thereupon, the
amount of securities of Home which they would have received had their Warrants
been converted into Common Stock on the date of such event and had they
thereafter, during the period from the date of such event to and including the
date of exercise of the Warrants, retained such securities receivable by them as
aforesaid during such period, subject to all other adjustments called for during
such period under this Section 1.4.
(e) ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION.
If the Common Stock issuable upon the exercise of the Warrants is changed into
the same or a different number of shares of any class or classes of stock,
whether by recapitalization, reclassification or otherwise (other than a
subdivision or combination of shares or stock dividend or a reorganization,
merger, consolidation or sale of assets provided for elsewhere in this Section
1.4), then and in any such event each holder of Warrants shall have the right
thereafter to receive upon exercise of the Warrants the kind and amount of stock
and other securities and property receivable upon such reorganization,
reclassification or other change by holders of the number of shares of Common
Stock into which such Warrants might have been exercised immediately prior to
such reorganization, reclassification or change, all subject to further
adjustment as provided in this Section 1.4.
(f) REORGANIZATION, MERGERS, CONSOLIDATIONS AND SALES OF ASSETS.
If at any time or from time to time there is a capital reorganization of the
Common Stock (other than a recapitalization, subdivision, combination,
reclassification or exchange of shares provided for elsewhere in this Section
1.4), or a merger or consolidation of Home with or into another corporation, or
the sale of all or substantially all of Home's properties and assets to any
other person, then, as a part of such reorganization, merger, consolidation or
sale, provision shall be made so that the holders of the Warrants shall
thereafter be entitled to receive upon exercise of the Warrants the number of
shares of stock or other securities or property of Home, or of the successor
corporation resulting from such merger or consolidation or sale, to which a
holder of Common Stock deliverable upon exercise of the Warrants would have been
entitled in such capital reorganization, merger, consolidation or sale. In any
such case, appropriate adjustment shall be made in the application of the
provisions of this Section 1.4 and the other terms and conditions with respect
to the rights of the holders of the Warrants after the reorganization, merger,
consolidation or sale to the end that the provisions of this Agreement,
including this Section 1.4 (including adjustment of the Warrant Price then in
effect and number of shares purchasable upon exercise of the Warrants) shall be
applicable after that event and be as nearly equivalent to the provisions hereof
as may be practicable.
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(g) SALE OF SHARES BELOW WARRANT PRICE.
(i) If at any time or from time to time after the date of
this Agreement, Home issues or sells, or is deemed by the express provisions of
this subsection (g) to have issued or sold, Additional Shares of Common Stock
(as hereinafter defined), other than as a dividend or other distribution on any
class of stock as provided in subsection (c) above and other than upon a
subdivision or combination of shares of Common Stock as provided in subsection
(b) above, for an Effective Price (as hereinafter defined) less than the Warrant
Price (or, if an adjusted Warrant Price shall be in effect by reason of a
previous adjustment, then less than such adjusted Warrant Price) then and in
each such case the then existing Warrant Price shall be reduced, as of the
opening of business on the date of such issuance or sale, to a price determined
by multiplying that Warrant Price by a fraction (i) the numerator of which shall
be (A) the number of shares of Common Stock Deemed Outstanding at the close of
business on the day next preceding the date of such issue or sale plus (B) the
number of shares of Common Stock which the aggregate consideration received (or
by express provision hereof deemed to have been received) by Home for the total
number of Additional Shares of Common Stock so issued would purchase at such
Warrant Price, and (ii) the denominator of which shall be the number of shares
of Common Stock Deemed Outstanding at the close of business on the date of such
issuance after giving effect to such issuance of Additional Shares of Common
Stock. For purposes of this paragraph (i), "Common Stock Deemed Outstanding" at
any given time shall mean the sum of (1) the number of shares of Common Stock
actually outstanding at that time, (2) the number of Additional Shares of Common
Stock then deemed to have been issued under paragraphs (iii) or (iv) of this
subsection (g) and (3) the number of shares of Common Stock then issuable upon
exercise of stock options to the extent not already deemed to have been issued
under paragraphs (iii) or (iv) of this subsection (g).
(ii) For the purpose of making any adjustment required under
this subsection (g), the consideration received by Home for any issuance or sale
of securities shall (i) to the extent it consists of cash be computed at the net
amount of cash received by Home after deduction of any expenses payable by Home
and any underwriting or similar commissions, compensation or concessions paid or
allowed by Home in connection with such issue or sale, (ii) to the extent it
consists of property other than cash, be computed at the fair value of that
property as determined in good faith by the Board and (iii) if Additional Shares
of Common Stock, Convertible Securities (as hereinafter defined) or rights or
options to purchase either Additional Shares of Common Stock or Convertible
Securities are issued or sold together with other stock or securities or other
assets of Home for a consideration which covers both, be computed as the portion
of the consideration so received that may be reasonably determined in good faith
by the Board to be allocable to such Additional Shares of Common Stock,
Convertible Securities or rights or options.
(iii) For the purpose of the adjustment required under
this subsection (g), if at any time or from time to time after the date of this
Agreement Home issues or sells any rights or options for the purchase of, or
stock or other securities convertible into, Additional Shares of Common Stock
(such convertible stock or securities being hereinafter referred to as
"Convertible Securities"), then in each case Home shall be deemed to have issued
at the time of the
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issuance of such rights or options or Convertible Securities the maximum
number of Additional Shares of Common Stock issuable upon exercise or
conversion thereof and to have received as consideration for the issuance of
such shares an amount equal to the total amount of the consideration, if any,
received by Home for the issuance of such rights or options or Convertible
Securities plus, in the case of such options or rights, the amounts of
consideration, if any, payable to Home upon the exercise of such options or
rights and, in the case of Convertible Securities, the amounts of
consideration, if any, payable to Home upon conversion (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities). No further adjustment of the Warrant Price, adjusted upon the
issuance of such rights, options or Convertible Securities, shall be made as
a result of the actual issuance of Additional Shares of Common Stock on the
exercise of any such rights or options or the conversion of any such
Convertible Securities. If any such rights or options or the conversion
privilege represented by any such Convertible Securities shall expire or be
canceled without having been exercised, the Warrant Price adjusted upon the
issuance of such options, rights or Convertible Securities shall be
readjusted to the Warrant Price which would have been in effect had an
adjustment been made on the basis that the only Additional Shares of Common
Stock so issued were the Additional Shares of Common Stock, if any, actually
issued or sold on the exercise of such rights or options or rights of
conversion of such Convertible Securities, and such Additional Shares of
Common Stock, if any, were issued or sold for the consideration actually
received by Home upon such exercise, plus the consideration, if any, actually
received by Home for the granting of all such rights or options, whether or
not exercised, plus the consideration received for issuing or selling the
Convertible Securities actually converted plus the consideration, if any,
actually received by Home (other than by cancellation of liabilities or
obligations evidenced by such Convertible Securities) on the conversion of
such Convertible Securities.
(iv) For the purpose of the adjustment required under this
subsection (g), if at any time or from time to time after the date of this
Agreement Home issues or sells any rights or options for the purchase of
Convertible Securities, then in each such case Home shall be deemed to have
issued at the time of the issuance of such rights or options the maximum number
of Additional Shares of Common Stock issuable upon conversion of the total
amount of Convertible Securities covered by such rights or options and to have
received as consideration for the issuance of such Additional Shares of Common
Stock an amount equal to the amount of consideration, if any, received by Home
for the issuance of such rights or options, plus the minimum amounts of
consideration, if any, payable to Home upon the exercise of such rights or
options and plus the minimum amount of consideration, if any, payable to Home
(other than by cancellation of liabilities or obligations evidenced by such
Convertible Securities) upon the conversion of such Convertible Securities. No
further adjustment of the Warrant Price, adjusted upon the issuance of such
rights or options, shall be made as a result of the actual issuance of the
Convertible Securities upon the exercise of such rights or options or upon the
actual issuance of Additional Shares of Common Stock upon the conversion of such
Convertible Securities. The provisions of paragraph (iii) above for the
readjustment of the Warrant Price upon the expiration of rights or options or
the rights of conversion of Convertible Securities shall apply in like manner to
the rights, options and Convertible Securities referred to in this paragraph
(iv).
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(v) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued by Home after the date of this Agreement whether
or not subsequently reacquired or retired by Home, other than (i) shares of
Common Stock issued upon exercise of the Warrants and (ii) shares issued by way
of dividend or other distribution on shares of Common Stock excluded from the
definition of Additional Shares of Common Stock by the foregoing clause or
shares of Common Stock resulting from any subdivision or combination of shares
of Common Stock so excluded, or shares issued by way of dividend or other
distribution on, or resulting from any subdivision or combination of, shares of
Common stock excluded from the definition of "Additional Shares of Common Stock"
by the foregoing provision. The "Effective Price" of Additional Shares of
Common Stock shall mean the quotient determined by dividing the total number of
Additional Shares of Common Stock issued or sold, or deemed to have been issued
or sold by Home under this subsection (g), into the aggregate consideration
received or deemed to have been received by Home for such issue under this
subsection (i).
ARTICLE II
REPURCHASE OF WARRANTS AND LIMITATIONS ON SALE
Section 2.1 REPURCHASE OF WARRANTS.
(a) Prior to the occurrence of an Acquisition Event, Home shall
have no right to repurchase the Warrants and CU shall have no right to require
Home to repurchase the Warrants.
(b) At any time after the occurrence of an Acquisition Event,
Home shall have the right to purchase (or to cause a person designated by Home
to purchase), and CU shall have the right to require that Home repurchase (or,
if Home shall so elect, cause a person designated by Home to purchase), (i) all
(but not fewer than all) the Warrants at the time beneficially owned by CU and
its Affiliates at the Warrant Call Price in effect for such Warrants on the date
of closing (as provided below) and (ii) all (but not fewer than all) of the
shares of Common Stock purchased by CU and its Affiliates pursuant to this
Agreement with respect to which CU has beneficial ownership at a price equal to
the aggregate Market Value for such shares as of the date of closing (as
provided below). Any purchase pursuant hereto shall take place on a Business
Day specified in a notice given by Home to CU or by CU to Home, as the case may
be (but in no event prior to the 30th day following the date of any such notice
to CU or later than the 30th day following the date of any such notice to Home).
(c) The closing of any repurchase of Warrants pursuant to this
Section 2.1 shall take place at 10:00 a.m. Los Angeles Time, on the date set
forth in the applicable notice given by Home or CU, as the case may be, at the
office of CU at the address set forth in Section 8.1. The amount payable to CU
and its Affiliates upon any repurchase of Warrants shall be paid in lawful money
of the United States by a federal funds check or a wire transfer of immediately
available funds to an account designated by CU. Upon receipt of such payment,
CU shall deliver or cause to be
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delivered to Home the certificates representing all the Warrants being
repurchased free and clear of any liens, security interests, charges or
encumbrances.
Section 2.2 CERTAIN DETERMINATIONS OF MARKET VALUE. The calculation
of the Market Value, as required herein, shall be calculated in accordance with
this section 2.2 In the event that Market Value is to be determined pursuant to
the terms hereof and there is not an established trading market for shares of
Common Stock, or more than 50% of the outstanding shares of Common Stock are
held beneficially or of record by persons, each of whom owns (individually or
together with members of any group of which such persons are members) 5% or more
of the outstanding shares of Common Stock, then CU may elect to have an
investment banking firm mutually agreeable to Home and CU determine (i) whether,
in the opinion of such investment banking firm, as a result of the absence of an
established trading market or the concentration of stock holdings, Market Value
(determined in accordance with the provisions of the definition of Market Value
in Article VI) does not accurately reflect the fair market value of a block of
1,000 shares of Common Stock on the date as of which Market Value is to be
determined, and (ii) if such investment banking firm determines that Market
Value (as so determined) does not accurately reflect such fair market value,
such investment banking firm shall make determination of the fair market value
of a share of Common Stock on the date as of which Market Value is to be
determined, based on whatever factors it deems relevant, as soon as possible and
shall promptly give written notice to CU and Home of its determination. The
fees of such investment banking firm in connection with such determination shall
be paid by CU. Such determination shall be final and binding on the parties
hereto and the fair market value so determined shall, if higher than the Market
Value that would otherwise apply, be the Market Value of a share of Common
Stock. In the event such determination is not transmitted to CU and Home prior
to the scheduled closing date with respect to any repurchase of Warrants or
Common Stock, the scheduled closing of such transaction shall not be postponed,
and Home shall make such payments on the closing date as are required based on
the Market Value of a share of Common Stock determined as if CU had not made an
election under this Section 2.4. Within three Business Days after such
investment banking firm's determination is made and conveyed to CU and Home in
writing, Home shall make a payment to CU, or CU shall make a payment to Home, as
the case may be, equal to the difference between the amount paid on the closing
date and the amount that would have been so payable had such amount been
determined on the basis of such investment banking firm's determination of the
Market Value of a share of Common Stock.
Section 2.3 LIMIT ON PROCEEDS. CU agrees, as long as Home shall not
have defaulted in its obligations to repurchase Warrants pursuant to Section
2.1, to pay over to Home any amount by which the profits received by CU and its
Affiliates upon the sale or transfer of Warrants (net of all selling expenses,
underwriting discounts, and commissions and other expenses incurred by CU in
connection with such exercise and sale) shall exceed $5,000,000.
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ARTICLE III
RESTRICTIONS ON TRANSFERABILITY OF STOCK;
COMPLIANCE WITH SECURITIES ACT OF 1933
Section 3.1 RESTRICTIONS ON TRANSFERABILITY. The Warrants acquired by
CU or any Affiliate of CU pursuant to this Agreement and the Common Stock
issuable upon exercise of such Warrants and any shares of capital stock received
or issued in respect thereof, including, without limitation, securities issued
upon any stock split, stock dividend, recapitalization, merger, consolidation or
similar event (such Warrants and all such shares of Common Stock and securities
being collectively called the "Restricted Stock") shall not be hypothecated, nor
shall any claim or liability exist, nor shall any agreement, written or oral, be
entered into by CU or any Affiliate of CU which would cause any claim or
liability to exist with respect to the Restricted Stock, and the Restricted
Stock shall not be transferred except upon the conditions, to the extent
applicable, specified in this Article III. CU will cause any proposed
transferee of Restricted Stock held by CU or any other Affiliate of CU to agree
to take ownership of such Restricted Stock subject to the provisions, to the
extent applicable, of this Article III; provided, however, that the provisions
of this Article shall cease to apply to any Restricted Stock which shall have
been sold in a registered public offering in accordance with the provisions of
this Article III. CU represents that it is purchasing the Restricted Stock for
its own account and not with a view to or for sale in connection with any
distribution of such Restricted Stock.
Section 3.2 RESTRICTIVE LEGEND; NOTICE OF PROPOSED TRANSFERS.
(a) Each certificate representing Restricted Stock shall (unless
otherwise permitted by the provisions of paragraph (b) of this Section) be
stamped or otherwise imprinted with a legend in substantially the following
form:
THESE SHARES/WARRANTS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. THESE SHARES/WARRANTS MAY NOT BE SOLD OR TRANSFERRED
EXCEPT PURSUANT TO (i) A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES
WHICH IS EFFECTIVE UNDER SAID ACT OR (ii) AN OPINION OF COUNSEL THAT AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT IS AVAILABLE. THE
TRANSFERABILITY OF THESE SHARES/ WARRANTS IS FURTHER SUBJECT TO THE PROVISIONS
OF A WARRANT PURCHASE AGREEMENT DATED AS OF JANUARY 10, 1996, A COPY OF WHICH IS
AVAILABLE FOR INSPECTION AT THE OFFICE OF THE SECRETARY OF HOME INTERSTATE
BANCORP.
(b) Each holder of a certificate representing Restricted Stock
by acceptance thereof agrees to comply in all respects with the provisions of
this Section 3.2(b). Prior to any proposed transfer of any Restricted Stock
other than pursuant to a registration under the Securities Act, the holder
thereof shall give written notice to Home of such holder's intention to effect
such transfer. Each such notice shall describe the manner and circumstances of
the proposed transfer of the Restricted Stock to be transferred and shall be
accompanied by an unqualified written opinion
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of counsel reasonably satisfactory to Home to the effect that such proposed
transfer may be effected without registration under the Securities Act.
Subject to Section 3.11 hereof, upon delivery to Home of such notice and such
opinion of counsel, the holder of such Restricted Stock shall be entitled to
transfer such Restricted Stock in accordance with the terms of such notice
delivered by the holder to Home. Each certificate evidencing Restricted
Stock transferred as above provided shall bear the appropriate restrictive
legend set forth in paragraph (a) above, except that such certificate shall
not bear such restrictive legend if the opinion of counsel referred to above
shall be to the further effect that such legend is not required in order to
establish compliance with any provisions of the Securities Act.
Section 3.3 NO TRANSFERS PRIOR TO ACQUISITION EVENT. Notwithstanding
anything to the contrary set forth in this Agreement or the Restricted Stock,
neither CU nor any Affiliate of CU shall sell, transfer or otherwise dispose of
all or any portion of the Warrants owned by it, other than to an Affiliate of
CU, except after the occurrence of an Acquisition Event; provided, however, that
following an Acquisition Event, if Home or CU shall give notice of its election
to exercise its rights under Section 2.1, then such right of CU and its
Affiliates to sell, transfer or otherwise dispose of the Restricted Stock shall
no longer be exercised unless Home shall have defaulted in its obligation to
repurchase such Restricted Stock on the date specified in any notice.
Section 3.4 LIMITATIONS ON TRANSFEREES AND MANNER OF TRANSFER.
(a) In the event that CU and its Affiliates become entitled
pursuant to the provisions of Section 3.3 to sell, transfer or otherwise dispose
of Restricted Stock, such Restricted Stock may be sold or transferred (subject
to Section 3.11 hereof) only (i) to a third party (or a third party and its
Affiliates) in a transaction which complies with the provisions of paragraph (b)
of this Section or (ii) to one or more underwriters or dealers in connection
with a broad public distribution complying with the provisions of paragraph (c)
of this Section of the shares of Common Stock issuable pursuant to the exercise
of the transferred Warrants (such shares being hereinafter referred to as the
"Underlying Shares"). The provisions of this Section shall only apply to sales,
transfers or dispositions by CU and its Affiliates, and shall not apply to
sales, transfers or dispositions by transferees of CU or its Affiliates (except
that any sale or disposition by dealers or underwriters shall be conducted in
accordance with the applicable provisions of this Section and further except
that all resales shall be made in accordance with the Securities Act).
(b) CU and its Affiliates shall be entitled, subject to the
other applicable provisions of this Article III (including Section 3.11) and
Section 2.1, to sell or transfer Restricted Stock in one or more transactions
exempt from the registration requirements of Section 5 of the Securities Act;
provided, however, that the aggregate number of shares of Restricted Stock sold
or transferred to any single purchaser and persons known to CU to be Affiliates
of or persons acting in concert with such purchaser in any such transaction
shall be limited to that amount of Restricted Stock which, when taken together
with the Restricted Stock theretofore sold or transferred to such purchaser and
such Affiliates and persons, would not, upon the exercise in full of the
Warrants so transferred, permit the acquisition of more than 2% of the then
outstanding shares of Common Stock,
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determined as of the date of such sale or transfer. For purposes of the
immediately preceding sentence, it shall be assumed that all Warrants, if
any, that already have been sold or transferred by CU and its Affiliates are
still outstanding and have not been exercised in whole or in part to purchase
shares of Common Stock.
(c) Warrants owned by CU and its Affiliates, unless sold to Home
or an Affiliate of Home or in compliance with paragraph (b) of this Section, may
only be sold or transferred to one or more underwriters or dealers in accordance
with the provisions of this paragraph. CU and its Affiliates may, subject to
the terms and conditions set forth in this paragraph (c), sell or transfer
Warrants in whole or in part to one or more underwriters or dealers who agree in
writing with CU, prior to the effective time of any such sale or transfer, to
exercise such Warrants and offer and sell the Underlying Shares either (i) to
the public in a public offering registered under the Securities Act (or any
successor federal securities laws) pursuant to a distribution in which no single
purchaser and its Affiliates will, to the knowledge of such underwriters or
dealers, acquire Underlying Shares representing more than 2% of the then
outstanding shares of Common Stock or (ii) in other transactions complying with
the requirements of paragraph (b) above. Notwithstanding any other provision of
this Agreement to the contrary, the exercise of any Warrants transferred to
underwriters or dealers in accordance with this Section and the acquisition by
such underwriters or dealers of shares of Common Stock pursuant to such exercise
may be made simultaneously on the date of the closing of the sale or transfer by
CU or its Affiliates of the relevant Warrants to such underwriters or dealers,
provided Home is given written notice of the date of such closing at least five
Business Days prior thereto. At any such closing, against payment of the
exercise price for shares of Common Stock to be acquired pursuant to the
exercise of Warrants, Home will deliver or cause to be delivered certificates
representing the Underlying Shares to such underwriters or dealers, in such
names and denominations as it or they shall designate not fewer than two
Business Days prior to such closing.
Section 3.5 "DEMAND" REGISTRATION. From and after such date as CU and
its Affiliates become entitled pursuant to Section 3.4 to sell or transfer any
Restricted Stock, Home shall, if requested by CU, as expeditiously as possible,
use its best efforts to effect the registration of the Restricted Stock (which
Home has been requested to register on a form in general use under the
Securities Act (or any successor federal securities law) selected by Home, in
order to permit the sale or other disposition of such Restricted Stock in
accordance with the intended method of sale or other disposition set forth in
the request (subject to the provisions of Section 3.4(c)). The right to require
registration of the Restricted Stock under this Section 3.5 may only be
exercised once unless CU is advised in writing by its investment banking firm (a
copy of which advice shall be supplied to Home) that, in the opinion of such
firm, an additional or two additional registrations are appropriate to maximize
the benefits to CU of the proposed distribution of Restricted Stock, in which
event CU may exercise once or twice more, as applicable, its rights under this
Section 3.5. Upon the issuance of a stop order or injunction, Home may withdraw
any such registration statement and abandon the proposed offering which CU shall
have demanded, in which case CU's right shall be reinstated.
Section 3.6 "PIGGYBACK" REGISTRATION. From and after such date as CU
and its Affiliates become entitled pursuant to Section 3.4 to sell or transfer
any Restricted Stock, if at any
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time Home proposes to register any of its securities under the Securities Act
(or any successor federal securities law), whether or not for sale for its
own account (except with respect to registration statements filed with
respect to the issuance of securities under employee benefit plans), it will
give written notice to CU of its intention to do so. Upon the written request
of CU, given within 15 calendar days after receipt of Home's notice, Home
will use its best efforts to cause to be included in the shares to be covered
by the registration statement proposed to be filed by Home, in accordance
with the request of CU, the Restricted Stock to be sold by dealers or
underwriters in accordance with the provisions of Section 3.4; provided,
however, that Home need not include such Restricted Stock in such
registration statement if Home is advised in writing by its investment
banking firm (a copy of which advise shall be supplied to CU) that the
inclusion of such securities shall, in the opinion of such firm, materially
interfere with the orderly sale and distribution of the Home securities being
sold by it. Home may, in its sole discretion and without the consent of CU,
withdraw any such registration statement and abandon the proposed offering in
which CU shall have requested to participate pursuant to this Section.
Section 3.7 REGISTRATION PROCEDURES AND EXPENSES.
(a) If and whenever Home is required by the provisions of this
Article III to use its best efforts to effect the registration of any of the
Restricted Stock under the Securities Act (or any successor federal securities
law), CU and its Affiliates (including the underwriters in the case of a
registration of Underlying Shares) (individually referred to as a "selling
holder" or "holder" and collectively referred to as "selling holders" or
"holders") will furnish in writing such information as is reasonably requested
by Home for inclusion in the registration statement relating to such offering
and such other information and documentation as Home shall reasonably request,
and Home will, as expeditiously as possible:
(i) prepare and file with the SEC or any other federal
agency at the time administering the Securities Act (or a successor federal
securities law) a registration statement with respect to such securities and use
its best efforts to cause such registration statement to become and remain
effective for such period as may be necessary to permit the successful marketing
of such securities, but not exceeding 90 days;
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act;
(iii) furnish to each selling holder of Restricted Stock
being registered such number of copies of a prospectus and preliminary
prospectus in conformity with the requirements of the Securities Act (or any
successor federal securities law), and such other documents as such seller may
reasonably request in order to facilitate the public sale or other disposition
of the Restricted Stock being registered owned by such seller;
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(iv) furnish, at the request of any holder or holders of
securities being registered pursuant to this Article III, on the date that such
securities are delivered to the underwriters for sale pursuant to such
registration or if such securities are not being sold through underwriters, on
the date the registration statement with respect to such securities becomes
effective (A) an opinion dated such date of independent counsel representing
Home for the purposes of such registration, addressed to the underwriters, if
any, and to the holder or holders making such request, stating that such
registration statement has become effective under the Securities Act (or such
successor law) and that (a) to the best of the knowledge of such counsel, no
stop order suspending the effectiveness thereof has been issued and no
proceedings for that purpose have been instituted or are pending or contemplated
under the Securities Act (or such successor federal securities law); (b) the
registration statement, the related prospectus and each amendment or supplement
thereto comply as to form in all material respects with the requirements of the
Securities Act (or such successor law) and the applicable rules and regulations
of the SEC thereunder, except that such counsel need express no opinion as to
financial information or information provided by selling holders contained
therein; (c) such counsel (subject to such customary limitation on the scope of
their investigation as shall be set forth in such opinion) has no reason to
believe that either the registration statement or the prospectus, or any
amendment or supplement thereto, contains any untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading except that such counsel
need express no opinion as to financial information or information provided by
selling holders contained therein; (d) the descriptions in the registration
statement and in the prospectus, or any amendment or supplement thereto, of all
legal and governmental matters and all contracts and other legal documents or
instruments are accurate and fairly present the information required to be
shown; and (e) such counsel does not know of any legal or governmental
proceedings, pending or contemplated, required to be described in the
registration statement or prospectus, or any amendment or supplement thereto, or
to be filed as exhibits to the registration statement which are not described
and filed as required; and (B) a letter dated such date, from the independent
certified public accountants of Home, addressed to the underwriters, if any, and
to the holder or holders by or on behalf of whom a request is made, stating that
they are independent certified public accountants within the meaning of the
Securities Act (or such successor law) and that in the opinion of such
accountants the financial statements and other financial data of Home included
in the registration statement or the prospectus, or any amendment or supplement
thereto, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act (or such successor law). Such
letter from the independent certified public accountants shall additionally
cover such other financial matters (including information as to the period
ending not more than five business days prior to the date of such letter) with
respect to the registration in respect of which such letter is being given as
the holder of Restricted Stock being registered may reasonably request;
(v) use its best efforts to register or qualify the
Restricted Stock covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as each such selling holder of
such Restricted Stock shall reasonably request and do any and all other acts and
things which may be necessary or reasonably desirable to enable such seller to
consummate the public sale or other disposition in such jurisdictions as may be
requested by such
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seller; provided, however, that Home shall have no obligation to qualify to
do business in any jurisdiction or to file a general consent to service of
process in any jurisdiction;
(vi) notify each selling holder of Restricted Stock covered
by such registration statement, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act (or any successor Federal
securities law), of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing;
(vii) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering the
period of at least twelve months, but not more than eighteen months, beginning
with the first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act;
(viii) provide a transfer agent and registrar for all
Restricted Stock covered by such registration statement not later than the
effective date of such registration statement;
(ix) use its best efforts to list all Common Stock covered
by such registration statement on each securities exchange, if any, on which any
of the Common Stock is then listed (unless such Common Stock is already so
listed) if such listing is then permitted under the rules of such exchange or
with the NASDAQ, National Market System; and
(x) undertake to take such further actions as may be
reasonably requested by the underwriters.
(b) If any registration statement pursuant to Section 3.5 or 3.6
shall have been declared effective and, in the judgment of Home, (A) any event
shall occur or state of facts exist (other than as described in clause (B))
which requires a notice to the selling holders of Restricted Stock pursuant to
clause (vi) of paragraph (a) of this Section 3.7 or (B) the offering at the time
of Restricted Stock pursuant to such registration statement would adversely
affect, or would be improper in view of, a public offering, financing,
reorganization, recapitalization, merger, consolidation, acquisition, or other
similar transaction, or negotiations, discussions or pending proposals with
respect thereto, immediately upon receipt of notice to such effect from Home, CU
shall cease to offer or sell any Restricted Stock registered thereunder and
cease to deliver or use the prospectus in use thereunder. In the case of any
matter described in clause (A), Home shall, as promptly as practicable, furnish
to each selling holder a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchaser of such securities, such prospectus shall not include
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements
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therein not misleading in the light of the circumstances then existing. In
the case of any matter described in clause (B), Home shall promptly notify CU
at such times as, in Home's judgment, such offering may be recommended (which
shall be no later than 90 days following such suspension); provided that CU
may, in its sole discretion, discontinue such offering with respect to the
Restricted Stock covered thereby, in which event CU shall be entitled to
"demand" registration rights hereunder to the full extent as if such offering
had not been requested.
All expenses incurred by Home in complying with Sections 3.5 and 3.6
hereof, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for Home and blue sky fees
and expenses are herein called "Registration Expenses," except for all
underwriting discounts and selling commissions applicable to the sales, all fees
and disbursements of counsel for any selling holder or holders (including
counsel designated by any seller for a "due diligence" investigation of Home)
and the expense of any special audits incident to or required by such
registration, all of which are herein called "Selling Expenses." Home shall pay
all Registration Expenses and the selling holder or holders of Restricted Stock
being registered shall pay all Selling Expenses.
Section 3.8 INDEMNIFICATION. In the event of a registration of any of
the Restricted Stock under the Securities Act (or any successor Federal
securities law) pursuant to this Article III, Home will indemnify and hold
harmless each underwriter of such Restricted Stock, CU and its Affiliates as the
transferors of the Restricted Stock or any portion thereof to underwriters, and
each other person, if any, who controls such seller, assignor or underwriter
within the meaning of Section 15 of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such seller,
underwriter, assignor or controlling person may become subject under the
Securities Act (or such successor law) or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such Restricted Stock
shall have been registered under the Securities Act (or such successor law), any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; and will reimburse such
seller, transferor and underwriter and each such controlling person for any
legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that Home will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, said preliminary prospectus or said
prospectus or said amendment or supplement in reliance upon and in conformity
with written information furnished to Home through an instrument executed by
such seller, transferor or underwriter specifically for use in the preparation
thereof; and provided further that if any losses, claims, damages or liabilities
arise out of or are based upon an untrue statement, alleged untrue statement,
omission or alleged omission contained in any preliminary prospectus which did
not appear in the final prospectus, Home shall not have any such liability with
respect thereto to such seller, transferor or underwriter or any person who
controls such
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seller, transferor or underwriter within the meaning of Section 15 of the
Securities Act if such seller, transferor or underwriter or any person on
their behalf delivered a copy of the preliminary prospectus to the person
alleging such losses, claims, damages or liabilities and failed to deliver a
copy of the final prospectus, as amended or supplemented if it has been
amended or supplemented, to such person at or prior to the written
confirmation of the sale to such person.
In the event of any registration of any Restricted Stock under the
Securities Act (or a successor Federal securities law) pursuant to this
Article III, each seller of such Restricted Stock (other than any underwriter or
dealer purchasing Underlying Shares), and CU and its Affiliates, as transferors
of Restricted Stock, severally and not jointly, will indemnify and hold harmless
Home, each person, if any who controls Home within the meaning of Section 15 of
the Securities Act, each officer of Home who signs the registration statement
and each director of Home against any and all such losses, claims, damages, or
liabilities arising out of or based upon any untrue statement or alleged untrue
statement in or omission or alleged omission from any such registration
statement, prospectus, amendment or supplement, if the untrue statement or
omission or alleged untrue statement or omission in respect of which such loss,
claim, damage or liability is asserted was made in reliance upon and in
conformity with information furnished in writing to Home by or on behalf of such
seller or transferor specifically for use in connection with the preparation of
such registration statement, preliminary prospectus, prospectus, amendment or
supplement; provided, however, that, if any losses, claims, damages or
liabilities arise out of or are based upon an untrue statement, alleged untrue
statement, omission or alleged omission contained in any preliminary prospectus
which did not appear in the final prospectus, such seller or transferor shall
not have any such liability with respect thereto to Home, any person who
controls Home within the meaning of Section 15 of the Securities Act, any
officer of Home who signed the registration statement of any director of Home if
Home or any person on their behalf delivered a copy of the preliminary
prospectus to the person alleging such losses, claims, damages or liabilities
and failed to deliver a copy of the final prospectus, as amended or supplemented
if it has been amended or supplemented, to such person at or prior to the
written confirmation of the sale to such person; and provided further that the
liability of any such seller or transferor so to indemnify shall be limited to
an amount equal to the amount received by such seller upon the sale of such
Restricted Stock pursuant to such registration statement, or by such transferor
from the seller, as the case may be.
Payments in respect of indemnifications required by this Section 3.8
shall be made by periodic payments during the course of the investigation or
defense, as and when bills are received or expenses incurred. Any party which
proposes to assert the right to be indemnified under this Section 3.8 will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim is to be made against
an indemnifying party under this Section 3.8, notify each such indemnifying
party of the commencement of such action, suit or proceeding, enclosing a copy
of all papers served, but the omission so to notify such indemnifying party of
any such action, suit or proceeding shall not relieve it from any liability
which it may have to any indemnified party otherwise than under this
Section 3.8. In case any such action, suit or proceeding shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and, to the
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extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party, and after notice from such
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses, other than reasonable
costs of investigation, subsequently incurred by such indemnified party in
connection with the defense thereof. The indemnified party shall have the
right to employ its own counsel in any such action, but the fees and expenses
of such counsel shall be at the expense of such indemnified party, when and
as incurred, unless (i) the employment of counsel by such indemnified party
has been authorized in writing by the indemnifying party, (ii) the
indemnified party shall have reasonably concluded that there may be a
conflict of interest between the indemnifying party and the indemnified party
in the conduct of the defense of such action (in which case the indemnifying
party shall not have the right to direct the defense of such action on behalf
of the indemnified party) or (iii) the indemnifying party shall not in fact
have employed counsel to assume the defense of such action. An indemnifying
party shall not be liable for employed counsel to assume the defense of such
action. An indemnifying party shall not be liable for any settlement of any
action or claim effected without its consent. In no event shall an
indemnifying party be required to pay for more than one counsel for an
indemnified party, exclusive of local counsel.
Section 3.9 OBLIGATIONS OF HOME WITH RESPECT TO UNDERWRITTEN OFFERING.
In the event that Restricted Stock shall be sold pursuant to a registration
statement in an underwritten offering pursuant to Section 3.5, Home agrees to
enter into an underwriting agreement containing customary representations and
warranties with respect to the business and operations of an issuer of the
securities being registered and customary covenants and agreements to be
performed by such issuer, including, without limiting the generality of the
foregoing, customary provisions with respect to indemnification by Home of the
underwriters of such offering. Home shall have the right to approve the
managing underwriters for such offering (which in no event shall include an
affiliate of CU); provided, however, that such approval shall not be
unreasonably withheld.
Section 3.10 RULE 144 REQUIREMENTS. Home shall undertake to make
publicly available and available to the holders of Restricted Stock, pursuant to
Rule 144 of the SEC under the Securities Act, such information as shall be
necessary, and to take such further action as any such holder may reasonably
request, to enable the holders of Restricted Stock to make sales of Restricted
Stock pursuant to the Rule. Home shall furnish to any holder of Restricted
Stock upon request (after the preceding sentences shall have become applicable),
a written statement executed by Home as to the steps it has taken to comply with
the current public information requirements of Rule 144.
Section 3.11 RIGHTS OF FIRST REFUSAL.
(a) In the event CU or its Affiliates intend, at any time after
the occurrence of an Acquisition Event to sell, transfer or dispose of any
Restricted Stock (other than to an Affiliate of CU in a transaction not intended
to circumvent the transfer restrictions contained in this Agreement) other than
(i) pursuant to a sale or transfer of Warrants to one or more underwriters or
dealers in accordance with Section 3.4(c) (in which case Section 3.11(b) shall
govern) or (ii) at any
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time after Home has failed for any reason to repurchase such Restricted Stock
pursuant to Article II hereof on the closing date scheduled for such
repurchase, then:
(i) CU shall notify Home in writing of its or its
Affiliate's intention to sell, transfer or dispose of such Restricted Stock
specifying the number of shares or amount of Warrants, as the case may be,
proposed to be disposed of, the identity or identities of the prospective
purchaser or purchasers thereof, the proposed purchase price therefor and the
material terms of any agreement relating thereto (the "Sale Notice"); and
(ii) Home shall have the right, by written notice of its
exercise of its right of first refusal given to CU within 15 calendar days after
Home's receipt of such notice of intention from CU, to purchase (or to cause a
Person designated by Home to purchase) all, but not less than all of, the
Restricted Stock specified in such notice of intention for cash at the gross
price set forth therein (including broker's commissions and other transaction
costs of CU or its Affiliate to be paid or absorbed by the prospective
purchaser) if the terms set forth in such notice of intention provide for a cash
sale. If the purchase price specified in such notice of intention include any
property other than cash, the purchase price at which Home shall be entitled to
purchase shall be (x) the amount of cash included in the purchase price
specified in such notice of intention plus (y) property, to the extent feasible,
substantially similar to the property described in such notice of intention and
in any case of equivalent value to such property (as agreed to by Home and CU,
or as determined by a nationally recognized investment banking firm selected by
CU and Home).
If Home shall have exercised its right of first refusal under this
paragraph (a) (including the designation of another purchaser as referred to in
the next subparagraph), the closing of the purchase of the Restricted Stock as
to which such right Home shall have been exercised shall take place as promptly
as practicable, but in no event more than 10 Business Days after Home gives
notice of such exercise, and if such closing does not occur within such 10 days,
such right of first refusal provided for herein (including any assignment
thereof) shall be null and void and of no further force and effect with respect
to such Restricted Stock and this Section 3.11 shall no longer apply to any sale
or disposition or proposed sale or disposition of such Restricted Stock;
provided that if prior notification to or approval of the Federal Reserve Board
or any other regulatory authority is required in connection with such purchase,
Home shall promptly file the required notice or application for approval and
shall expeditiously process the same and the period of time that otherwise would
run pursuant to this sentence shall run instead from the date on which, as the
case may be, (i) any required notification period has expired or been
terminated, or (ii) such approval has been obtained and, in either event, any
requisite waiting period shall have passed.
If Home elects not to exercise, or fails to exercise or cause to be
exercised, its right of first refusal provided in this paragraph (a) within the
time specified for such exercise or if the Federal Reserve Board or any other
regulatory authority disapproves of Home's proposed purchase, CU and its
Affiliates shall be free thereafter for a period of 90 days to consummate the
sale, transfer or other disposition with any purchaser or purchasers of the
Restricted Stock who shall have been
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specified in the sale notice at the price (or at any price in excess of such
price) and on substantially the terms specified therein.
The right of first refusal provided for in this paragraph (a) may only
be exercised with respect to the initial sale, transfer or other disposition of
the Restricted Stock by CU or an Affiliate (whether in blocks or as a whole) to
a person that is not an Affiliate of CU and not to subsequent sales, transfers
or other dispositions by purchasers of Restricted Stock.
(b) If CU or its Affiliates at any time propose to transfer any
Warrants to any underwriters or dealers pursuant to the provisions of
Section 3.4, other than at any time after Home has failed for any reason to
repurchase such Warrants pursuant to Article II hereof on the closing date
scheduled for such repurchase, then CU shall first notify Home in writing of
such intention, specifying the Warrants which it proposes to sell or transfer
and the name or names of the proposed dealers or of the proposed managing
underwriters in the underwriting syndicate to which the sale or transfer is
proposed to be made. Home shall have the right, exercisable by written notice
given to CU 15 calendar days after Home's receipt of notice from CU pursuant to
the immediately preceding sentence, to repurchase, or to cause a third party
designated by Home to purchase, all, but not fewer than all, the Warrants
proposed to be sold or transferred on the terms and conditions hereinafter set
forth. Any notice given by Home of exercise of its repurchase rights under this
paragraph (b) shall specify a place in Los Angeles and a Business Day not
earlier than 10 days and not later than 15 days after the date of such notice
for the closing of the repurchase of the Warrants being repurchased. The
purchase price payable to Home or its designee for the repurchase of Warrants
pursuant to this paragraph (b) shall be a cash price equal to the product of
(x) the number of Underlying Shares covered by the relevant Warrants (calculated
as of the date of the closing of the repurchase) and (y) the Share Price on such
date. At the closing of a sale of Warrants pursuant to the foregoing
provisions, Home or its designee will make payment to CU of the aggregate price
for the Warrants to be repurchased in one of the manners set forth in
Section 2.1(c). At such closing, CU shall deliver to Home or its designee the
certificates representing the Warrants to be repurchased and Home shall deliver
to CU replacement certificates representing the Warrants (if any) which are not
to be repurchased but were covered by the certificate or certificates
surrendered by CU. Any election by Home pursuant to this paragraph to exercise
its repurchase rights in respect of Warrants shall be irrevocable. In the event
Home fails timely to exercise its repurchase rights in respect of Warrants
within the period specified above during which it must do so or notifies CU in
writing prior to the expiration of such period that it does not intend to
exercise such rights or its designee fails to repurchase Warrants on the date
set for the closing of such a purchase, CU and its Affiliates shall be free
thereafter to consummate the sale and transfer of the Warrants specified in this
notice to Home under this paragraph to any underwriters or dealers who agree to
exercise the Warrants and sell the Underlying Shares in accordance with the
provisions of Section 3.4(c), and this Section 3.11 shall no longer apply to
such sale or transfer of such Warrants.
(c) CU shall have the right to withdraw any notice given by it
pursuant to this Section 3.11 at any time before Home shall have given notice of
its intention to exercise its right of first refusal hereunder (including by
designation of another purchaser).
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HOME
Home represents and warrants to CU that:
Section 4.1 AUTHORIZATION OF AGREEMENT; NO CONFLICTS.
(a) The execution and delivery of this Agreement by Home and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Home. This Agreement has been
duly executed and delivered by Home and constitutes a valid and binding
obligation of Home, enforceable in accordance with its terms.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with, or
result in any violation of or default or loss of a material benefit under any
provision of the articles of incorporation, articles or association or bylaws of
Home or Home Bank or, except for the necessity of obtaining Requisite Regulatory
Approvals, any material mortgage, indenture, lease agreement or other material
instrument or any permit, concession, grant, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Home or
Home Bank or their respective properties, other than any such conflict,
violation, default or loss which will not have a material adverse effect on Home
or Home Bank. No material consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental authority is required
in connection with the execution and delivery of this Agreement by Home and Home
Bank or the consummation by Home of the transactions contemplated hereby except
for any approvals required to be obtained pursuant to the BHC Act or the Policy
Statement of the Board of Governors of the Federal Reserve System on Nonvoting
Equity Investments by Bank Holding Companies, 12 C.F.R. Section 225.143 (the
"FRB Guidelines"), or any other applicable laws, for the execution and delivery
of this Agreement and the issuance of the Warrants by Home.
Section 4.2 AUTHORIZED STOCK Home has taken all necessary corporate
and other action to authorize and reserve and, subject to obtaining the
governmental and other approvals and consents referred to herein, to permit it
to issue, and, at all times from the date hereof until the obligation to deliver
Common Stock upon the exercise of the Warrants terminates, will have reserved
for issuance, upon exercise of the Warrants, shares of Common Stock necessary
for CU to exercise the Warrants, and Home will take all necessary corporate
action to authorize and reserve for issuance all additional shares of Common
Stock or other securities which may be issued pursuant to this Agreement. The
shares of Common Stock to be issued upon due exercise of the Warrants, including
all additional shares of Common Stock or other securities which may be issuable
pursuant to this Agreement, upon issuance pursuant hereto, shall be duly and
validly issued, fully paid and nonassessable, and shall be delivered free and
clear of all liens, claims, charges and encumbrances of any kind or nature
whatsoever, including any preemptive rights of any stockholder of Home.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CU
CU represents and warrants to Home that:
Section 5.1 DUE EXECUTION OF AGREEMENT; NO CONFLICTS.
(a) This Agreement has been duly executed and delivered by CU
and constitutes a valid and binding obligation of CU, enforceable in accordance
with its terms.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with, or
result in any violation of or default or loss of a material benefit under, any
provision of the certificate of incorporation or By-laws of CU or, except for
the necessity of obtaining Requisite Regulatory Approvals, any material
mortgage, indenture, lease, agreement or other material instrument, or any
permit, concession, grant, franchise, license, judgment, order decree, statute,
law, ordinance, rule or regulation applicable to CU or its respective
properties, other than any such conflict, violation, default or loss which (i)
will not have a material adverse effect on CU and its Subsidiaries taken as a
whole. No material consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required in
connection with the execution and delivery of this Agreement by CU or the
consummation by CU of the transactions contemplated hereby, except for (a)
filings required in order to obtain Requisite Regulatory Approvals, and (b) any
approvals required to be obtained pursuant to the BHC Act, or the FRB Guidelines
or any other applicable law for the execution and delivery of this Agreement by
Home, CU and the issuance of the Warrants.
ARTICLE VI
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set forth
below (in their singular and plural forms as applicable) shall have the meanings
set forth below.
"Affiliate" or "affiliate" shall mean, with respect to any
corporation, any person that, directly or indirectly, controls or is controlled
by or is under common control with such corporation.
"BHC Act" means the Bank Holding Company Act of 1956, as amended.
"Business Day" shall mean any day, other than a Saturday, Sunday or
legal holiday in the State of California, on which banks are open for
substantially all their banking business in Los Angeles.
D-22
"Change in Bank Control Act" means the Change in Bank Control Act of
1978, as amended.
"Covered Shares" shall mean on any date, with respect to any Warrants,
the maximum number of shares of Common Stock that would be purchasable upon the
exercise on such date of such Warrants, assuming that such Warrants may be
exercised on such date to purchase the maximum number of shares of Common Stock
purchasable pursuant to the terms thereof (including the limitations contained
in the second paragraph of the certificate evidencing each such Warrant) without
regard to any provision therein (other than such limitations) or in this
Agreement or in any law limiting the right of any holder of such Warrants to
acquire shares otherwise purchasable thereunder.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"Governmental Entity" shall mean any court, administrative agency or
commission or other governmental authority or instrumentality.
"Market Value" shall mean, on any date, the average of the closing
sale prices of a share of Common Stock on the principal securities exchange on
which the Common Stock is traded, or, if the Common Stock is not at the time
listed on any national securities exchange, as reported by the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"), on the
10 trading days immediately preceding such date, (or such fewer number of
trading days immediately preceding such date for which shares of Common Stock
have been listed for trading on such exchange or quoted on NASDAQ); PROVIDED,
HOWEVER, that if CU seeks a determination of the fair market value of a share of
Common Stock pursuant to the provisions of Section 2.2, Market Value shall, if
required pursuant to the terms of such Section, mean the fair market value of a
share of Common Stock on such date determined pursuant to such Section.
"Person" or "person" shall mean an individual, corporation,
partnership, joint venture, trust or unincorporated organization, or a
government or any agency or political subdivision thereof.
"Regulatory Authority" shall mean any United States federal or state
government or governmental authority the approval of which is legally required
for consummation of the Merger.
"Requisite Regulatory Approvals" shall mean all material permits,
approvals and consents required to be obtained, and all waiting periods required
to expire, prior to the consummation of the issuance of the Covered Shares under
applicable federal laws of the United States or applicable laws of any state
having jurisdiction over CU or Home.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
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"Share Price" shall mean, with respect to any Warrants, the amount by
which, on the date of the Acquisition Event triggering the exercisability of the
Warrants(i) the Warrant Price on such date is less than (ii) the greatest of:
(i) the Market Value of a share of Common Stock on such
date; and
(ii) the highest price paid on or prior to such date for a
share of Common Stock (including in any merger or consolidation) by a purchaser
or group of purchasers acting in concert of 50% or more of the outstanding
shares of Common Stock, or, in the case of a purchaser of 50% or more of the
consolidated assets of Home (as shown on the books of Home), the Market Value of
a share of Common Stock on the date of consummation of such asset acquisition.
"Subsidiary" shall mean, with respect to any corporation (the
"parent"), any other corporation, association or other business entity of which
more than 50% of the shares of the Voting Stock are owned or controlled,
directly or indirectly, by the parent or by one or more Subsidiaries of the
parent, or by the parent and one or more of its Subsidiaries.
"Voting Stock" shall mean the stock entitling the holders thereof to
vote in the election of the directors or trustees of the corporation,
association, or other business entity in question, except that it shall not
include any stock so entitling the holders thereof to vote only upon the
happening of a contingency, whether or not such contingency has occurred.
"Warrant Call Price" shall mean, when used with respect to any
Warrant, the product of (i) the number of Covered Shares on such date and
(ii) the Share Price on such date; provided that the Warrant Call Price with
respect to any Warrant shall in no event exceed (x) the quotient obtained by
dividing $5,000,000 by the number of Covered Shares subject to all the
outstanding Warrants multiplied by (y) the number of Covered Shares subject to
such Warrant.
ARTICLE VII
TERMINATION
Section 7.1 TERMINATION. Subject to Section 7.2, this Agreement may
be terminated in the following circumstances:
(a) at the effective time of the Merger, as set forth in the
Merger Agreement;
(b) at the termination of the Merger Agreement prior to the
occurrence of an Acquisition Event; or
(c) two years after the occurrence of an Acquisition Event.
D-24
Section 7.2 EFFECT OF TERMINATION. In the event of termination of
this Agreement pursuant to Section 7.1(c), the rights of the parties hereto
shall forthwith become void; provided that, if the Agreement shall terminate
pursuant to Section 7.1(c) and any party has filed an application to purchase
securities with any regulatory authority, the Agreement shall not terminate as
provided in Section 7.1(c), but shall remain in full force and effect until the
day which is 30 Business Days (plus any applicable waiting periods) after the
receipt or denial of regulatory approval or consent, at which time the Agreement
shall then terminate.
Section 7.3 INDEMNIFICATION FOR BREACH. Each party to this Agreement
agrees to indemnify and hold harmless the other party against any loss, claim,
damage or liability arising out of or based upon a Default of this Agreement by
such defaulting party in accordance with the procedures set forth in the last
paragraph of Section 3.8 of this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or mailed
by registered or certified mail (return receipt requested) to the parties at the
following addresses (or any such other address for a party as shall be specified
by like notice):
(a) If to CU at:
16030 Ventura Boulevard
Encino, CA 91436
Attn: Stephen G. Carpenter
Fax: (818) 907-5024
with a copy to:
Anita Wolman, Esq.
16030 Ventura Boulevard
Encino, CA 91436
Fax: (818) 907-5024
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(b) If to Home at:
2633 Cherry Avenue
Signal Hill, CA 90806
Attn: James Staes
Phone: (310) 988-9600
Fax: (310) 426-4526
with a copy to:
Manatt, Phelps & Phillips
11355 West Olympic Boulevard
Los Angeles, California 90064
Attn: Barbara S. Polsky, Esq.
Fax: (310) 312-4224
Section 8.2 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood
that all parties need not sign the same counterpart.
Section 8.3 AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken by their respective Boards of Directors or the duly
authorized committees thereof. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto. The
parties hereto agree to make such amendments as may be necessary to respond to
the request of any Regulatory Authority with respect to this Agreement.
Section 8.4 WAIVER. Any term or provision of this Agreement may be
waived in writing at any time by the party which is, or whose shareholders are,
entitled to the benefits thereof.
Section 8.5 MISCELLANEOUS. This Agreement (including the documents
and instruments referred to herein) (a) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof; (b) except as
contemplated in this Agreement, is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder; and (c) except as
contemplated in this Agreement, shall not be assigned by operation of law or
otherwise. Home and CU agree that, except as required by law, it shall not
issue any press release with respect to the transactions contemplated by this
Agreement without consulting with each other party hereto.
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Section 8.6 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
IN WITNESS WHEREOF, Home and CU have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first above written.
CU BANCORP
By:---------------------
HOME INTERSTATE BANCORP
By:---------------------
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EXHIBIT A
WARRANT
No. 1
January 10, 1996 1,082,224 Shares
HOME INTERSTATE BANCORP
This is to certify that, for value received and subject to the terms
and conditions provided for in a Warrant Purchase Agreement dated as of January
10, 1996 (the "Agreement") by and between Home Interstate Bancorp, a California
corporation ("Home"), and CU Bancorp, a California corporation ("CU"), pursuant
to which CU and its assigns are entitled to purchase from Home, on the terms and
conditions set forth therein, 1,082,224 fully paid and nonassessable shares of
common stock of Home ("Common Stock"), subject to adjustment as provided in the
Agreement. Terms not otherwise defined herein shall have the meanings ascribed
to them in the Agreement.
This Warrant may be exercised by the holder (except any holder which
shall not be permitted by the Bank Holding Company Act of 1956, as amended ("BHC
Act"), or other applicable law to own, or shall not have obtained all regulatory
approvals required by such Act or other applicable law as a precondition to its
ownership of, the shares of Common Stock covered hereby) as to the whole or any
part of the shares of Common Stock covered hereby at any time when such exercise
shall be permitted under the terms of this Warrant, by surrender of this Warrant
at the principal office of Home or at the office of any transfer agent for the
Warrant and upon payment to Home of the Warrant Price for shares so purchased by
wire transfer to a bank account designated by Home. Thereupon, this Warrant
shall be deemed to have been exercised and the person exercising the same to
have become a holder of record of shares of Common Stock (or of the other
securities or property to which it is entitled upon such exercise) purchased
hereunder for all purposes, and certificates for shares so purchased shall be
delivered to the purchaser. If this Warrant shall be exercised in respect of a
part of the shares of Common Stock covered hereby, the holder shall be entitled
to receive a new Warrant covering the number of shares in respect of which this
Warrant shall not have been exercised, but otherwise identical hereto.
This Warrant is exchangeable, upon the surrender hereof by the holder
hereof at such office or agency of Home, for new Warrants of this tenor
representing in the aggregate the right to
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subscribe for and purchase the number of shares which may be subscribed for
and purchased hereunder, each of such new Warrants to represent the right to
subscribe for and purchase not less than 1,000 shares of Common Stock (except
to the extent necessary to round out the balance of the number of shares
purchasable hereunder).
Home covenants and agrees that all shares which may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance, be fully
paid and non-assessable and free from all taxes, liens and charges with respect
to the issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue). Home further covenants and agrees that
during the period within which the rights represented by this Warrant may be
exercised, Home will at all times have authorized, and reserved, a sufficient
number of shares of Common Stock to provide for the exercise of the rights
represented by this Warrant, and will at its expense expeditiously upon each
such reservation of shares use its best efforts to procure the listing thereof
(subject to issuance or notice of issuance) on all stock exchanges on which the
shares of Common Stock are then listed, or if Home Shares are not then listed on
a stock exchange on NASDAQ National Market System.
The rights of the holder of this Warrant shall be subject to the
following further terms and conditions:
Section 1.1 Home shall at all times reserve and keep available, free
from preemptive rights, out of its authorized and unissued Common Stock or
shares of Common Stock held in treasury, for the purpose of effecting the
exercise of this Warrant, the full number of shares of Common Stock then
issuable upon the exercise of this and all other outstanding Warrant, computed
on the assumption that the adjustments required by Section 1.11 hereof have
become effective, in the event such is not then the case.
Section 1.2 Home will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Common Stock upon exercise of this
Warrant. Home shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issue and delivery of shares
of Common Stock in a name other than that of the holder of the Warrant or
Warrants to be exercised, and no such issue or delivery shall be made unless and
until the person requesting such issue has paid to Home the amount of any such
tax, or has established, to the satisfaction of Home, that such tax has been
paid.
Section 1.3 This Warrant shall not entitle the holder of any rights of
a shareholder of Home, either at law or in equity, or to any notice of meetings
of shareholders or of any other proceedings of Home.
Section 1.4 Subject to Section 1.5 and the terms and conditions set
forth in the Agreement, this Warrant and all rights hereunder are transferable
(in whole or in part), on the books of Home by the registered holder thereof in
person or by duly authorized attorney, upon surrender of this Warrant, properly
endorsed, to Home (or if Home shall have notified the registered holder
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hereof of the appointment of an independent transfer agent for Warrants, then
to such transfer agent). As used herein the term "this Warrant" shall mean
and include any Warrant or Warrants hereafter issued in consequence of
transfers of this Warrant in whole or in part.
Section 1.5 THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THIS WARRANT MAY NOT BE SOLD OR
TRANSFERRED EXCEPT PURSUANT TO (i) A REGISTRATION STATEMENT WITH RESPECT TO THIS
WARRANT WHICH IS EFFECTIVE UNDER THE SECURITIES ACT, OR (ii) AN OPINION OF
COUNSEL THAT AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT IS
AVAILABLE. THE TRANSFERABILITY OF THIS WARRANT IS FURTHER SUBJECT TO THE
PROVISIONS OF A WARRANT PURCHASE AGREEMENT DATED AS OF JANUARY 10, 1996, A COPY
OF WHICH IS AVAILABLE FOR INSPECTION AT THE OFFICE OF THE SECRETARY OF HOME
INTERSTATE BANCORP.
Section 1.6 The holder of this Warrant, by the acceptance hereof,
agrees that prior to the exercise of any Warrants, at a time when said Warrants
have not been registered under the Securities Act or any similar Federal
statute, it will, if it has not requested or is then not entitled to such
registration pursuant to the provisions of Article III of the Agreement, deliver
to Home a written representation that it is acquiring the shares of Common Stock
issuable upon the exercise of such Warrants for its own account for investment,
and not with a view to, or for sale in connection with, any distribution
thereof, and not with any present intention of distributing or selling the same.
Section 1.7 (a) This Warrant shall terminate and be of no further
force or effect as provided in Article VII of the Agreement.
(b) Notwithstanding any other provision contained herein,
this Warrant and the rights conferred hereby shall terminate, and the full
consideration paid by CU for this Warrant shall be immediately due and payable
to CU, if Home or CU receives written notice from the Federal Reserve Board to
the effect that the execution and delivery of the Agreement or the issuance of
the Warrants is not consistent with Section 3 of the BHC Act.
Section 1.8 This Warrant shall be governed by and construed in
accordance with the laws of the State of California.
Section 1.9 This Warrant incorporates by reference all of the terms
and conditions of the Agreement.
HOME INTERSTATE BANCORP
By:-------------------------
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EXHIBIT E
FORM OF OPINION OF CU'S COUNSEL
The opinion of counsel required by section 10.1 of the Agreement and
Plan of Reorganization (the "Agreement") shall be dated as of the Closing Date,
shall be in form and substance reasonably satisfactory to CU and CU Bank, and
shall contain opinions substantially in the form set forth below. (All
capitalized terms not otherwise defined herein have the meaning specified in
the Agreement).
1. CU Bank is a national banking association duly incorporated,
validly existing and in good standing under the laws of the State of California
and is authorized by the OCC to conduct a general banking business. The
deposits of the Bank are insured by the FDIC in the manner and to the fullest
extent permitted by law.
2. CU is a California corporation duly incorporated, validly
existing and in good standing under the laws of the state of California. CU is
registered as a bank holding company under the Bank Holding Company Act of
1956, as amended.
3. Each of CU and CU Bank have all necessary corporate power and
authority to own or lease its properties and assets, and to carry on its
business as now conducted. Neither the scope of the business of CU and CU Bank
nor the location of any of their respective properties requires that any of them
be licensed to do business in any jurisdiction other than the State of
California, where the failure to be so licensed would, individually or in the
aggregate, have a materially adverse effect on the financial condition, results
of operation, business, affairs, properties (collectively, the "Business
Condition") of CU on a consolidated basis.
4. The authorized capital of CU and CU Bank is as set forth in
Sections 5.2(a) and 5.2(b), respectively, of the Agreement. All of the
outstanding shares of CU Bank Stock and CU Stock are duly authorized, validly
issued, fully paid and nonassessable (except, in the case of the CU Bank Stock,
as provided for in 12 U.S.C. Section 55). To our knowledge, except for the CU
Options and the warrant referred to in section 5.2 of the Agreement and the Home
Warrant, there are no outstanding options, warrants or other rights in or with
respect to the unissued shares of CU Stock or CU Bank Stock or any other
securities convertible into CU Stock or CU Bank Stock and neither CU or CU Bank
is obligated to issue any additional shares of CU Stock or CU Bank Stock or any
additional options, warrants or other rights in or with respect to the unissued
shares of such stock or securities convertible into such stock.
5. The execution and delivery by each of CU and CU Bank of the
Agreement, the execution and delivery by CU of the Agreement of Merger, the
execution and delivery by CU Bank of the Bank Merger Agreement and the
consummation of the transactions contemplated thereby, have been duly and
validly authorized by all necessary action on the part of CU and CU
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Bank, as applicable. Each of the Agreement, the Agreement of Merger and the
Bank Merger Agreement, as applicable, constitutes a valid and binding
obligation of CU and CU Bank, enforceable in accordance with their terms,
except as the enforceability thereof may be limited by (i) bankruptcy,
insolvency, moratorium or other similar laws affecting the rights of
creditors generally; (ii) general equitable principles;or (iii) Section
8(b)(6)(D) of the Federal Deposit Insurance Act, 12 U.S.C. Section
1818(b)(6)(D).
6. Neither the execution and delivery by CU of the Agreement or the
Agreement of Merger, or by CU Bank of the Agreement or the Bank Merger
Agreement, nor the consummation of the transactions contemplated thereby, nor
compliance by CU or CU Bank with any of the provisions thereof, will (i)
conflict with or result in the breach of, or default under any provision of the
articles of incorporation or bylaws of CU or CU Bank, (ii) to our knowledge,
constitute a breach of or result in a default (or give rise to any rights of
termination, cancellation or acceleration, or any right to acquire any
securities or assets) under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, franchise, license, permit, agreement or other
instrument or obligation to which either CU or CU Bank is a party, or by which
either CU or CU Bank or any of their respective properties or assets is bound,
except where such breach or default would not have a material adverse effect on
the Business Condition of CU on a consolidated basis; or (iii) violate any law,
order, writ, injunction, decree, statute, rule or regulation applicable to
either CU or CU Bank or any of their respective properties or assets, except
where such violation would not have a material adverse effect on the Business
Condition of CU on a consolidated basis.
7. No consent or approval of, notice to or filing with, any
governmental authority having jurisdiction over any aspect of the business or
assets of either CU or CU Bank is required in connection with the execution and
delivery of the Agreement, the Agreement of Merger and the Bank Merger Agreement
and the consummation of the transactions contemplated thereby, except such
notices and approvals as may be required under federal and state securities
laws, by the FRB and the OCC.
8. Except as to those matters set forth on SCHEDULE 5.10 of the
Agreement, to our knowledge, (i) there is no private or governmental suit,
claim, action or proceeding pending, nor private or governmental suit, claim,
action or proceeding threatened against either CU or CU Bank or against any of
their respective directors, officers or employees relating to the performance of
their duties in such capacities or against or affecting any properties of either
CU or CU Bank; and (ii) there are no judgments, decrees, stipulations or orders
against either CU or CU Bank enjoining either of them or any of their respective
directors, officers or employees in respect of, or the effect of which is to
prohibit, any business practice or the acquisition of any property or the
conduct of business of either CU or CU Bank in any area.
9. The Proxy Statement for use at the shareholders' meeting required
pursuant to Section 7.7 of the Agreement, as of the date of mailing and the date
of the shareholders'
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meeting, complied as to form in all material respects with the requirements
of the Exchange Act and all applicable rules and regulations thereunder.
Counsel shall further state that although counsel has necessarily
assumed the correctness and completeness of the statements made by CU or CU Bank
in the Proxy Statement and takes no responsibility therefor, such counsel has,
in the course of the preparation of the Proxy Statement, had conferences with
representatives of CU and CU Bank with respect thereto, and that its examination
of the Proxy Statement and its discussions in the above-mentioned conferences
did not disclose to it any information which has caused such counsel to believe
that the Proxy Statement at the time of mailing and at the time of the meeting
of CU's shareholders contained any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein not
misleading (except that such counsel need express no belief or opinion as to
financial statements, including any notes thereto, or other financial or
statistical data or as to any information supplied by CU).
In rendering its opinion, such counsel may rely, to the extent that
such counsel deems reliance necessary or appropriate, as to matters of fact,
upon certificates of government officials and of any officer or officers of CU
or CU Bank or CU's registrar and transfer agent. The opinion need refer only
to matters of California and federal law, and such counsel may expressly
exclude any opinions as to choice of law matters, antitrust matters and
(except as set forth in paragraph 9) securities law matters and may add other
qualifications and explanations of the basis of its opinion as may be
reasonably acceptable to CU.
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EXHIBIT F
CU SHAREHOLDER'S AGREEMENT
This SHAREHOLDER'S AGREEMENT (this "Agreement"), dated as of January
10, 1996, is entered into by and among Home Bank, a California banking
corporation ("Home Bank"), Home Interstate Bancorp, a California corporation
("Home"), and ___________________________ (the "Shareholder").
R E C I T A L S
A. Home, Home Bank, CU Bancorp, a California corporation ("CU"), and
California United Bank, National Association, a national banking association,
entered into that certain Agreement and Plan of Reorganization dated as of
January 10, 1996 (the "Reorganization Agreement").
B. The Shareholder is a beneficial shareholder of shares of common stock,
no par value, of CU (the "CU Stock").
C. The Shareholder is a director of CU.
D. As an inducement to Home and Home Bank to enter into the
Reorganization Agreement, and in order to ensure pooling-of-interests accounting
treatment for the Merger contemplated by the Reorganization Agreement, the
Shareholder desires to enter into this Agreement.
E. Unless otherwise provided in this Agreement, capitalized terms shall
have the meanings ascribed to such terms in the Reorganization Agreement.
NOW, THEREFORE, in consideration of the premises and of the respective
representations, warranties and covenants, agreements and conditions contained
herein and in the Reorganization Agreement, and intending to be legally bound
hereby, Home, Home Bank and Shareholder agree as follows:
ARTICLE I
SHAREHOLDER'S AGREEMENT
1.1 AGREEMENT TO VOTE. Shareholder shall vote or cause to be voted at any
meeting of shareholders of CU to approve the principal terms of the
Reorganization Agreement, the Merger and the transactions contemplated thereby
(the "Shareholders' Meeting"), all of the shares of CU Stock as to which
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Shareholder has sole or shared voting power (the "Shares") as of the record date
established to determine shareholders who have the right to vote at any such
Shareholders' Meeting (the "Record Date").
1.2 LEGEND. The Shareholder agrees to stamp, print or type on the face of
his certificates of CU Stock evidencing the Shares the following legend:
"THE VOTING, SALE, ASSIGNMENT, TRANSFER, PLEDGE,
HYPOTHECATION OR OTHER ENCUMBRANCE OR DISPOSITION OF THE
SHARES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO A
SHAREHOLDER'S AGREEMENT DATED AS OF THE 10TH DAY OF JANUARY,
1996 BY AND AMONG HOME INTERSTATE BANCORP, HOME BANK AND
(THE RECORD OWNER HEREOF), COPIES OF WHICH ARE ON FILE AT
THE OFFICES OF HOME BANK"
1.3 RESTRICTIONS ON DISPOSITIONS. The Shareholder agrees that, from and
after the date of this Agreement and during the term of this Agreement, the
Shareholder will not take any action that will alter or affect in any way the
right to vote the Shares, except (i) with the prior written consent of Home or
(ii) to change such right from that of a shared right of the Shareholder to vote
the Shares to a sole right of the Shareholder to vote the Shares.
1.4 SHAREHOLDER APPROVAL. The Shareholder, in his capacity as a director,
shall (i) recommend shareholder approval of the Reorganization Agreement, the
Agreement of Merger and the transactions contemplated thereby at the
Shareholders' Meeting and (ii) advise the CU shareholders to reject any
subsequent proposal or offer received by CU relating to any Alternative
Transaction or purchase, sale, acquisition, merger or other form of business
combination involving CU or any of its assets, equity securities or debt
securities and to proceed with the transactions contemplated by the
Reorganization Agreement; PROVIDED, HOWEVER, that the Shareholder shall not be
obligated to take any action specified in clause (ii) if the Board of Directors
of CU is advised in writing by outside legal counsel (Loeb and Loeb, or such
other counsel that is reasonably acceptable to Home and Home Bank) that, in the
exercise of his fiduciary duties, a director of CU should not take such action.
1.5 RESTRICTIONS ON DISPOSITION OF CU STOCK AFTER THE MERGER.
Notwithstanding any other provisions of this Agreement to the contrary, none of
the shares of CU Stock held by the undersigned at the Effective Time of the
Merger will be sold, transferred or otherwise disposed of and the undersigned
will not in any other way reduce the undersigned's risk of ownership or
investment in any of the shares of CU Stock so held by the undersigned until
financial results covering a period of at least thirty (30) days of combined
operations of CU and Home following the Effective Time of the Merger have been
published by CU (provided that the undersigned may make bona fide gifts or
distributions without consideration so long as the recipients thereof agree not
to sell, transfer or otherwise dispose of the CU Stock except as provided
herein).
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
The Shareholder represents and warrants to Home and Home Bank that the
statements set forth below are true and correct as of the date of this
Agreement, except those that are specifically as of a different date:
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2.1 OWNERSHIP AND RELATED MATTERS.
(a) Schedule 2.1(a) hereto correctly sets forth the number of Shares
beneficially owned by Shareholder and the nature of Shareholder's voting power
with respect thereto. Within five Business Days after the Record Date, the
Shareholder shall amend said Schedule 2.1(a) to correctly reflect the number of
Shares and the nature of Shareholder's voting power with respect thereto as of
the Record Date.
(b) There are no proxies, voting trusts or other agreements or
understandings to or by which the Shareholder or the Shareholder's spouse is a
party or bound or that expressly requires that any of the Shares be voted in any
specific manner other than as provided in this Agreement.
2.2 AUTHORIZATION AND BINDING AGREEMENT. The Shareholder has the legal
right, power, capacity and authority to execute, deliver and perform this
Agreement, and this Agreement is the valid and binding obligation of the
Shareholder enforceable in accordance with its terms, except as the enforcement
thereof may be limited by general principles of equity.
2.3 NON-CONTRAVENTION. The execution, delivery and performance of this
Agreement by the Shareholder will not (a) conflict with or result in the breach
of, or default or actual or potential loss of any benefit under, any provision
of any agreement, instrument or obligation to which the Shareholder or the
Shareholder's spouse is a party or by which any of Shareholder's properties or
the Shareholder's spouse's properties are bound, or give any other party to any
such agreement, instrument or obligation a right to terminate or modify any term
thereof; (b) require the consent or approval of any third party; (c) result in
the creation or imposition of any lien, mortgage or encumbrance on any of the
Shares or any other assets of the Shareholder or the Shareholder's spouse; or
(d) violate any law, rule or regulation to which the Shareholder or the
Shareholder's spouse is subject.
ARTICLE III
GENERAL
3.1 AMENDMENTS. To the fullest extent permitted by law, this Agreement
and any schedule or exhibit attached hereto may be amended by agreement in
writing of the parties hereto at any time.
3.2 INTEGRATION. This Agreement constitutes the entire agreement between
the parties pertaining to the subject matter hereof and (except for other
documents to be executed pursuant to the Reorganization Agreement) supersedes
all prior agreements and understandings of the parties in connection therewith.
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3.3 SPECIFIC PERFORMANCE. The Shareholder, Home and Home Bank each
expressly acknowledge that, in view of the uniqueness of the obligations of the
Shareholder contemplated hereby, Home and Home Bank would not have an adequate
remedy at law for money damages in the event that this Agreement has not been
performed by the Shareholder in accordance with its terms, and therefore the
Shareholder, Home and Home Bank agree that Home and Home Bank shall be entitled
to specific enforcement of the terms hereof in addition to any other remedy to
which it may be entitled at law or in equity.
3.4 TERMINATION. This Agreement shall terminate automatically without
further action at the earlier of the Effective Time of the Merger or the
termination of the Reorganization Agreement in accordance with its terms. Upon
such termination of this Agreement, the respective obligations of the parties
hereto shall immediately become void and have no further force and effect.
3.5 NO ASSIGNMENT. Neither this Agreement nor any rights, duties or
obligations hereunder shall be assignable by Home, Home Bank or the Shareholder,
in whole or in part. Any attempted assignment in violation of this prohibition
shall be null and void. Subject to the foregoing, all of the terms and
provisions hereof shall be binding upon, and inure to the benefit of, the
successors of the parties hereto.
3.6 HEADINGS. The descriptive headings of the several Articles and
Sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
3.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
party hereto and delivered to each party hereto.
3.8 NOTICES. Any notice or communication required or permitted hereunder,
shall be deemed to have been given if in writing and (a) delivered in person,
(b) delivered by confirmed facsimile transmission (c) sent by overnight carrier,
postage prepaid with return receipt requested or (d) mailed by certified or
registered mail, postage prepaid with return receipt requested, addressed as
follows:
If to Home and Home Bank, addressed to:
Home Interstate Bancorp
2633 Cherry Avenue
Signal Hill, California 90806
Attention: James Staes
Telecopier Number: (310) 426-4526
With a copy addressed to:
Manatt, Phelps & Phillips
11355 West Olympic Blvd.
Los Angeles, CA 90064
Attention: Barbara S. Polsky, Esq.
Telecopier No: (310) 312-4224
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If to Shareholder, addressed to:
____________________________
____________________________
____________________________
____________________________
With a copy addressed to:
Anita Wolman, Esq.
CU Bancorp
16030 Ventura Boulevard
Encino, California 91436-4224
Telecopier No: (818) 907-5024
or at such other address and to the attention of such other person as a party
may notice to the others in accordance with this Section 3.8. Any such notice
or communication shall be deemed received on the date delivered personally or
delivered by confirmed facsimile transmission, on the first Business Day after
it was sent by overnight carrier, postage prepaid with return receipt requested
or on the third Business Day after it was sent by certified or registered mail,
postage prepaid with return receipt requested.
3.9 GOVERNING LAW. This Agreement and the legal relations between the
parties shall be governed by and construed in accordance with the laws of the
State of California applicable to contracts between California parties made and
performed in such State.
3.10 SEVERABILITY AND THE LIKE If any provision of this Agreement shall be
held by a court of competent jurisdiction to be unreasonable as to duration,
activity or subject, it shall be deemed to extend only over the maximum
duration, range of activities or subjects as to which such provision shall be
valid and enforceable under applicable law. If any provisions shall, for any
reason, be held by a court of competent jurisdiction to be invalid, illegal or
unenforceable, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision had never been contained
herein.
3.11 WAIVER OF BREACH. Any failure or delay by Home and Home Bank in
enforcing any provision of his Agreement shall not operate as a waiver thereof.
The waiver by Home and Home Bank of a breach of any provision of this Agreement
shall not operate as a waiver thereof. The waiver by Home and Home Bank of a
breach of any provision of this Agreement by the Shareholder shall not operate
or be construed as a waiver of any subsequent breach or violation thereof. All
waivers shall be in writing and signed by the party to be bound.
IN WITNESS WHEREOF, the parties to this Agreement have caused and duly
executed this Agreement as of the day and year first above written.
HOME INTERSTATE BANCORP
By:____________________________________
Title:_________________________________
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HOME BANK
By:____________________________________
Title:_________________________________
SHAREHOLDER
_______________________________________
(Shareholder's Name)
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SPOUSAL CONSENT
I am the spouse of __________________, the Shareholder in the above
Agreement. I understand that I may consult independent legal counsel as to the
effect of this Agreement and the consequences of my execution of this Agreement
and, to the extent I felt it necessary, I have discussed it with legal counsel.
I hereby confirm this Agreement and agree that it shall bind my interest in the
Shares, if any.
_______________________________________
(Shareholder's Spouse's Name)
F-7
EXHIBIT G
FORM OF OPINION OF HOME'S COUNSEL
The opinion of counsel required by section 11.1 of the Agreement and
Plan of Reorganization (the "Agreement") shall be dated as of the Closing Date,
shall be in form and substance reasonably satisfactory to CU and CU Bank, and
shall contain opinions substantially in the form set forth below. (All
capitalized terms not otherwise defined herein have the meaning specified in the
Agreement).
1. Home Bank is a California state-chartered bank duly incorporated,
validly existing and in good standing under the laws of the State of California
and is authorized by the Superintendent of Banks of the State of California to
conduct a general banking business. The deposits of the Bank are insured by the
FDIC in the manner and to the fullest extent permitted by law.
2. Home is a California corporation duly incorporated, validly
existing and in good standing under the laws of the state of California. Home
is registered as a bank holding company under the Bank Holding Company Act of
1956, as amended.
3. Each of Home and Home Bank have all necessary corporate power and
authority to own or lease its properties and assets, and to carry on its
business as now conducted. Neither the scope of the business of Home, Home Bank
nor the location of any of their respective properties requires that any of them
be licensed to do business in any jurisdiction other than the State of
California, where the failure to be so licensed would, individually or in the
aggregate, have a materially adverse effect on the financial condition, results
of operation, business, affairs, properties (collectively, the "Business
Condition") of Home on a consolidated basis.
4. The authorized capital of Home and Home Bank is as set forth in
Sections 4.2(a) and 4.2(b), respectively, of the Agreement. All of the
outstanding shares of Home Bank Stock and Home Stock are duly authorized,
validly issued, fully paid and nonassessable (except, in the case of the Home
Bank Stock, as provided for in Section 662 of the California Financial Code).
To our knowledge, except for the Home Options referred to in section 4.2 of the
Agreement and the CU Warrant, there are no outstanding options, warrants or
other rights in or with respect to the unissued shares of Home Stock or Home
Bank Stock or any other securities convertible into Home Stock or Home Bank
Stock and neither Home or Home Bank is obligated to issue any additional shares
of Home Stock or Home Bank Stock or any additional options, warrants or other
rights in or with respect to the unissued shares of such stock or securities
convertible into such stock.
5. The execution and delivery by each of Home and Home Bank of the
Agreement, the execution and delivery by Home of the Agreement of Merger, the
execution and
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delivery by Home Bank of the Bank Merger Agreement and the consummation of
the transactions contemplated thereby, have been duly and validly authorized
by all necessary action on the part of Home and Home Bank, as applicable.
Each of the Agreement, the Agreement of Merger and the Bank Merger Agreement,
as applicable, constitutes a valid and binding obligation of Home and Home
Bank, enforceable in accordance with their terms, except as the
enforceability thereof may be limited by (i) bankruptcy, insolvency,
moratorium or other similar laws affecting the rights of creditors generally;
(ii) general equitable principles or; (iii) Section 8(b)(6)(D) of the Federal
Deposit Insurance Act, 12 U.S.C. Section 1818(b)(6)(D).
6. Neither the execution and delivery by Home of the Agreement or the
Agreement of Merger, or by Home Bank of the Agreement or the Bank Merger
Agreement, nor the consummation of the transactions contemplated thereby, nor
compliance by Home or Home Bank with any of the provisions thereof, will (i)
conflict with or result in the breach of, or default under any provision of the
articles of incorporation or bylaws of Home or Home Bank, (ii) to our knowledge,
constitute a breach of or result in a default (or give rise to any rights of
termination, cancellation or acceleration, or any right to acquire any
securities or assets) under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, franchise, license, permit, agreement or other
instrument or obligation to which either Home or Home Bank is a party, or by
which either Home or Home Bank or any of their respective properties or assets
is bound, except where such breach or default would not have a material adverse
effect on the Business Condition of Home on a consolidated basis; or (iii)
violate any law, order, writ, injunction, decree, statute, rule or regulation
applicable to either Home or Home Bank or any of their respective properties or
assets, except where such violation would not have a material adverse effect on
the Business Condition of Home on a consolidated basis.
7. No consent or approval of, notice to or filing with, any
governmental authority having jurisdiction over any aspect of the business or
assets of either Home or Home Bank is required in connection with the execution
and delivery of the Agreement, the Agreement of Merger and the Bank Merger
Agreement and the consummation of the transactions contemplated thereby, except
such notices and approvals as may be required under federal and state securities
laws, by the FRB and the OCC.
8. Except as to those matters set forth on Schedule 4.10 of the
Agreement, to our knowledge, (i) there is no private or governmental suit,
claim, action or proceeding pending, nor private or governmental suit, claim,
action or proceeding threatened against either Home or Home Bank or against any
of their respective directors, officers or employees relating to the performance
of their duties in such capacities or against or affecting any properties of
either Home or Home Bank; and (ii) there are no judgments, decrees, stipulations
or orders against either Home or Home Bank enjoining either of them or any of
their respective directors, officers or employees in respect of, or the effect
of which is to prohibit, any business practice or the acquisition of any
property or the conduct of business of either Home or Home Bank in any area.
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9. The Proxy Statement for use at the shareholders' meeting required
pursuant to Section 6.7 of the Agreement, as of the date of mailing and the date
of the shareholders' meeting, complied as to form in all material respects with
the requirements of the Exchange Act and all applicable rules and regulations
thereunder.
Counsel shall further state that although counsel has necessarily
assumed the correctness and completeness of the statements made by Home or Home
Bank in the Proxy Statement and takes no responsibility therefor, such counsel
has, in the course of the preparation of the Proxy Statement, had conferences
with representatives of Home and Home Bank with respect thereto, and that its
examination of the Proxy Statement and its discussions in the above-mentioned
conferences did not disclose to it any information which has caused such counsel
to believe that the Proxy Statement at the time of mailing and at the time of
the meeting of Home's shareholders contained any untrue statement of a material
fact or omitted to state a material fact necessary to make the statements
therein not misleading (except that such counsel need express no belief or
opinion as to financial statements, including any notes thereto, or other
financial or statistical data or as to any information supplied by Home).
In rendering its opinion, such counsel may rely, to the extent that
such counsel deems reliance necessary or appropriate, as to matters of fact,
upon certificates of government officials and of any officer or officers of Home
or Home Bank or Home's registrar and transfer agent. The opinion need refer
only to matters of California and federal law, and such counsel may expressly
exclude any opinions as to choice of law matters, antitrust matters and (except
as set forth in paragraph 9) securities law matters and may add other
qualifications and explanations of the basis of its opinion as may be reasonably
acceptable to CU.
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EXHIBIT H
HOME SHAREHOLDER'S AGREEMENT
This SHAREHOLDER'S AGREEMENT (this "Agreement"), dated as of January
10, 1996, is entered into by and among California United Bank, National
Association, a national banking association ("CU Bank"), CU Bancorp, a
California corporation ("CU"), and ___________________________ (the
"Shareholder").
R E C I T A L S
A. CU Bank, CU, Home Interstate Bancorp, a California corporation
("Home"), and Home Bank, a California banking corporation ("Home Bank"), entered
into that certain Agreement and Plan of Reorganization dated as of January 10,
1996 (the "Reorganization Agreement").
B. The Shareholder is a beneficial shareholder of shares of common stock,
no par value, of Home (the "Home Stock").
C. The Shareholder is a director of Home.
D. As an inducement to CU Bank and CU to enter into the Reorganization
Agreement, and in order to ensure pooling-of-interests accounting treatment for
the Merger contemplated by the Reorganization Agreement, the Shareholder desires
to enter into this Agreement.
E. Unless otherwise provided in this Agreement, capitalized terms shall
have the meanings ascribed to such terms in the Reorganization Agreement.
NOW, THEREFORE, in consideration of the premises and of the respective
representations, warranties and covenants, agreements and conditions contained
herein and in the Reorganization Agreement, and intending to be legally bound
hereby, CU Bank, CU and Shareholder agree as follows:
ARTICLE I
SHAREHOLDER'S AGREEMENT
1.1 AGREEMENT TO VOTE. Shareholder shall vote or cause to be voted at any
meeting of shareholders of Home to approve the principal terms of the
Reorganization Agreement, the Merger and the transactions contemplated thereby
(the "Shareholders' Meeting"), all of the shares
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of Home Stock as to which Shareholder has sole or shared voting power (the
"Shares") as of the record date established to determine shareholders who have
the right to vote at any such Shareholders' Meeting (the "Record Date").
1.2 LEGEND. The Shareholder agrees to stamp, print or type on the face of
his certificates of Home Stock evidencing the Shares the following legend:
"THE VOTING, SALE, ASSIGNMENT, TRANSFER, PLEDGE,
HYPOTHECATION OR OTHER ENCUMBRANCE OR DISPOSITION OF THE
SHARES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO A
SHAREHOLDER'S AGREEMENT DATED AS OF THE 10TH DAY OF JANUARY,
1996 BY AND BETWEEN CU BANCORP, CALIFORNIA UNITED BANK, N.A.
AND (THE RECORD OWNER HEREOF), COPIES OF WHICH ARE ON FILE
AT THE OFFICES OF CU BANCORP."
1.3 RESTRICTIONS ON DISPOSITIONS. The Shareholder agrees that, from and
after the date of this Agreement and during the term of this Agreement, the
Shareholder will not take any action that will alter or affect in any way the
right to vote the Shares, except (i) with the prior written consent of CU or
(ii) to change such right from that of a shared right of the Shareholder to vote
the Shares to a sole right of the Shareholder to vote the Shares.
1.4 SHAREHOLDER APPROVAL. The Shareholder shall, in his capacity as a
director, (i) recommend shareholder approval of the Reorganization Agreement,
the Agreement of Merger and the transactions contemplated thereby at the Home
Shareholders' Meeting and (ii) advise the Home shareholders to reject any
subsequent proposal or offer received by Home relating to any Alternative
Transaction or purchase, sale, acquisition, merger or other form of business
combination involving Home or any of its assets, equity securities or debt
securities and to proceed with the transactions contemplated by the
Reorganization Agreement; PROVIDED, HOWEVER, that the Shareholder shall not be
obligated to take any action specified in clause (ii) if the Board of Directors
of Home is advised in writing by outside legal counsel (Manatt, Phelps &
Phillips, or such other counsel that is reasonably acceptable to CU and CU Bank)
that, in the exercise of his fiduciary duties, a director of Home should not
take such action.
1.5 RESTRICTIONS ON DISPOSITION OF CU STOCK RECEIVED PURSUANT TO THE
MERGER. Notwithstanding any other provisions of this Agreement to the
contrary, none of the shares of CU Stock to be received by the undersigned
pursuant to the Merger will be sold, transferred or otherwise disposed of and
the undersigned will not in any other way reduce the undersigned's risk of
ownership or investment in any of the shares of CU Stock so received by the
undersigned until financial results covering a period of at least thirty (30)
days of combined operations of CU and Home following the Effective Time of the
Merger have been published by CU (provided that the undersigned may make
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bona fide gifts or distributions without consideration so long as the
recipients thereof agree not to sell, transfer or otherwise dispose of the CU
Stock except as provided herein).
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
The Shareholder represents and warrants to CU and CU Bank that the
statements set forth below are true and correct as of the date of this
Agreement, except those that are specifically as of a different date:
2.1 OWNERSHIP AND RELATED MATTERS.
(a) Schedule 2.1(a) hereto correctly sets forth the number of Shares
beneficially owned by Shareholder and the nature of Shareholder's voting power
with respect thereto. Within five Business Days after the Record Date, the
Shareholder shall amend said Schedule 2.1(a) to correctly reflect the number of
Shares and the nature of Shareholder's voting power with respect thereto as of
the Record Date.
(b) There are no proxies, voting trusts or other agreements or
understandings to or by which the Shareholder or the Shareholder's spouse is a
party or bound or that expressly requires that any of the Shares be voted in any
specific manner other than as provided in this Agreement.
2.2 AUTHORIZATION AND BINDING AGREEMENT. The Shareholder has the legal
right, power, capacity and authority to execute, deliver and perform this
Agreement, and this Agreement is the valid and binding obligation of the
Shareholder enforceable in accordance with its terms, except as the enforcement
thereof may be limited by general principles of equity.
2.3 NON-CONTRAVENTION. The execution, delivery and performance of this
Agreement by the Shareholder will not (a) conflict with or result in the breach
of, or default or actual or potential loss of any benefit under, any provision
of any agreement, instrument or obligation to which the Shareholder or the
Shareholder's spouse is a party or by which any of Shareholder's properties or
the Shareholder's spouse's properties are bound, or give any other party to any
such agreement, instrument or obligation a right to terminate or modify any term
thereof; (b) require the consent or approval of any third party; (c) result in
the creation or imposition of any lien, mortgage or encumbrance on any of the
Shares or any other assets of the Shareholder or the Shareholder's spouse; or
(d) violate any law, rule or regulation to which the Shareholder or the
Shareholder's spouse is subject.
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ARTICLE III
GENERAL
3.1 AMENDMENTS. To the fullest extent permitted by law, this Agreement
and any schedule or exhibit attached hereto may be amended by agreement in
writing of the parties hereto at any time.
3.2 INTEGRATION. This Agreement constitutes the entire agreement between
the parties pertaining to the subject matter hereof and (except for other
documents to be executed pursuant to the Reorganization Agreement) supersedes
all prior agreements and understandings of the parties in connection therewith.
3.3 SPECIFIC PERFORMANCE. The Shareholder, CU and CU Bank each expressly
acknowledge that, in view of the uniqueness of the obligations of the
Shareholder contemplated hereby, CU and CU Bank would not have an adequate
remedy at law for money damages in the event that this Agreement has not been
performed by the Shareholder in accordance with its terms, and therefore the
Shareholder, CU and CU Bank agree that CU and CU Bank shall be entitled to
specific enforcement of the terms hereof in addition to any other remedy to
which it may be entitled at law or in equity.
3.4 TERMINATION. This Agreement shall terminate automatically without
further action at the earlier of the Effective Time of the Merger or the
termination of the Reorganization Agreement in accordance with its terms. Upon
such termination of this Agreement, the respective obligations of the parties
hereto shall immediately become void and have no further force and effect.
3.5 NO ASSIGNMENT. Neither this Agreement nor any rights, duties or
obligations hereunder shall be assignable by CU, CU Bank or the Shareholder, in
whole or in part. Any attempted assignment in violation of this prohibition
shall be null and void. Subject to the foregoing, all of the terms and
provisions hereof shall be binding upon, and inure to the benefit of, the
successors of the parties hereto.
3.6 HEADINGS. The descriptive headings of the several Articles and
Sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
3.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
party hereto and delivered to each party hereto.
3.8 NOTICES. Any notice or communication required or permitted hereunder,
shall be deemed to have been given if in writing and (a) delivered in person,
(b) delivered by confirmed facsimile transmission (c) sent by overnight carrier,
postage prepaid with return receipt requested or (d) mailed by certified or
registered mail, postage prepaid with return receipt requested, addressed as
follows:
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If to CU and CU Bank, addressed to:
CU Bancorp
16030 Ventura Boulevard
Encino, California 91436-4487
Attention: Stephen G. Carpenter
With a copy addressed to:
Anita Wolman, Esq.
CU Bancorp
16030 Ventura Boulevard
Encino, California 91436-4487
Telecopier No: (818) 907-5024
If to Shareholder, addressed to:
____________________________
____________________________
____________________________
____________________________
With a copy addressed to:
Manatt, Phelps & Phillips
11355 West Olympic Blvd.
Los Angeles, CA 90064
Attention: Barbara S. Polsky, Esq.
Telecopier No: (310) 312-4224
or at such other address and to the attention of such other person as a party
may notice to the others in accordance with this Section 3.8. Any such notice
or communication shall be deemed received on the date delivered personally or
delivered by confirmed facsimile transmission, on the first Business Day after
it was sent by overnight carrier, postage prepaid with return receipt requested
or on the third Business Day after it was sent by certified or registered mail,
postage prepaid with return receipt requested.
3.9 GOVERNING LAW. This Agreement and the legal relations between the
parties shall be governed by and construed in accordance with the laws of the
State of California applicable to contracts between California parties made and
performed in such State.
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3.10 SEVERABILITY AND THE LIKE If any provision of this Agreement shall be
held by a court of competent jurisdiction to be unreasonable as to duration,
activity or subject, it shall be deemed to extend only over the maximum
duration, range of activities or subjects as to which such provision shall be
valid and enforceable under applicable law. If any provisions shall, for any
reason, be held by a court of competent jurisdiction to be invalid, illegal or
unenforceable, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision had never been contained
herein.
3.11 WAIVER OF BREACH. Any failure or delay by CU and CU Bank in enforcing
any provision of his Agreement shall not operate as a waiver thereof. The waiver
by CU and CU Bank of a breach of any provision of this Agreement shall not
operate as a waiver thereof. The waiver by CU and CU Bank of a breach of any
provision of this Agreement by the Shareholder shall not operate or be construed
as a waiver of any subsequent breach or violation thereof. All waivers shall be
in writing and signed by the party to be bound.
IN WITNESS WHEREOF, the parties to this Agreement have caused and duly
executed this Agreement as of the day and year first above written.
CU BANCORP
By:____________________________________
Title:_________________________________
CALIFORNIA UNITED BANK,
NATIONAL ASSOCIATION
By:____________________________________
Title:_________________________________
SHAREHOLDER
_______________________________________
(Shareholder's Name)
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SPOUSAL CONSENT
I am the spouse of __________________, the Shareholder in the above
Agreement. I understand that I may consult independent legal counsel as to the
effect of this Agreement and the consequences of my execution of this Agreement
and, to the extent I felt it necessary, I have discussed it with legal counsel.
I hereby confirm this Agreement and agree that it shall bind my interest in the
Shares, if any.
_______________________________________
(Shareholder's Spouse's Name)
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EXHIBIT I
CU Bancorp
16030 Ventura Boulevard
Encino, California 91436-4487
Attention: Stephen G. Carpenter
Ladies and Gentlemen:
Reference is made to the Agreement and Plan of Reorganization, dated
as of January 10, 1996 (the "Agreement"), by and among CU Bancorp, a California
corporation ("CU"), California United Bank, National Association, a national
banking association ("CU Bank"), Home Interstate Bancorp, a California
corporation ("Home"), and Home Bank, a California banking corporation ("Home
Bank"), which Agreement provides, among other things, for the merger (the
"Merger") of CU with and into Home in a transaction in which shares of common
stock of Home ("Home Stock") will be automatically canceled and shall be
converted into 1.409 shares of common stock of CU ("CU Stock"), as more fully
provided for in the Agreement.
The undersigned has been informed that the Merger constitutes a
transaction covered by Rule 145 under the Securities Act of 1933, as amended,
(the "Securities Act"); that the undersigned may be deemed to be an "affiliate"
of Home within the meaning of Rule 145; and that, accordingly, the shares of CU
Stock which the undersigned may acquire in connection with the Merger may only
be disposed of in conformity with the provisions hereof.
The capitalized terms used and not defined herein shall have the
meaning set forth in the Agreement.
1. The undersigned, after inquiry of any agent with discretionary
power to transfer the undersigned's shares of Home Stock, represents, warrants
and agrees as follows:
(a) The undersigned has full power to execute this Affiliate's
Agreement and to make the representations, warranties and agreements herein, and
to perform his or its obligations hereunder.
(b) The undersigned is currently the owner of that number of
shares of Home Stock set forth in Schedule 1 hereto (the "Home Shares") and has
held the Home Shares at all times since January 1, 1995 unless otherwise set
forth in Schedule 1.
(c) The undersigned shall not purchase, sell, transfer or
otherwise dispose of, or reduce the undersigned's risk of ownership or
investment in any of the Home Shares prior to the Merger. The undersigned agrees
to the placement of a restrictive legend on his or her certificates representing
Home Shares which legend shall set forth these restrictions. Such legend
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shall be placed on the certificates concurrently with the execution of this
Agreement or as soon thereafter as practicable.
(d) The undersigned will not sell, transfer or dispose of any
shares of CU Stock which the undersigned may acquire in connection with the
Merger or any securities which may be paid as a dividend or otherwise
distributed thereon or with respect thereto or issued or delivered in exchange
or substitution therefor (all such shares and other securities herein sometimes
collectively referred to as "Restricted Securities"), or any option, right or
other interest with respect to any Restricted Securities, unless such sale,
transfer or disposition is effected (i) pursuant to an exemption from the
registration requirements of the Securities Act as provided in Section 3 hereof
or (ii) pursuant to an effective registration statement under, and in compliance
with, the Securities Act (provided that the undersigned may make bona fide gifts
or distributions without consideration so long as the recipients thereof agree
not to sell, transfer or otherwise dispose of the CU Stock except as provided
herein.)
(e) The undersigned has no present plan or intent to engage in a
sale, exchange, transfer, redemption or reduction in any way of the
undersigned's risk of ownership by short sale or otherwise, or other
disposition, directly or indirectly (such actions being collectively referred to
as a "Sale") of CU Stock to be received by the undersigned pursuant to the
Merger.
(f) The undersigned has not engaged in a Sale of any shares of
Home Stock at any time since January 1, 1995 unless otherwise set forth in
Schedule 1.
(g) The undersigned has no present plan or intent to (i) engage
in a Sale of the Home Shares (other than in exchange for CU Stock pursuant to
the Merger), or (ii) exercise dissenters' rights in connection with the Merger.
(h) The representations contained herein shall be true and
correct at all times from the date hereof through the Effective Time.
(i) The undersigned has consulted such legal and financial
counsel as the undersigned deems appropriate in connection with the execution of
this Affiliate's Agreement.
2. CU agrees to use its best efforts to file all reports and data
with the Securities and Exchange Commission necessary to permit the undersigned
to sell Restricted Securities pursuant to and otherwise in conformity with Rule
145(d) under the Securities Act.
3. CU acknowledges that the provision of Section 1(d) of this
Affiliate's Agreement will be satisfied as to any sale by the undersigned of
Restricted Securities pursuant to Rule 145(d) under the Securities Act, as
evidenced by a broker's letter stating that the requirements of Rule 145 have
been met; provided, however, that if counsel for CU reasonably believes that the
provisions of Rule 145 have not been complied with, or if requested by CU in
connection with a proposed disposition, the undersigned shall furnish to CU a
copy of a "no
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action" letter or other communication from the staff of the SEC or an opinion
of counsel in form and substance satisfactory to CU and its counsel, to the
effect that the applicable provisions of paragraphs (c), (e), (f) and (g) of
Rule 144 under the Securities Act have been complied with or that the
disposition may be otherwise effected in the manner requested in compliance
with the Securities Act. It is agreed and understood that the undersigned
may rely upon CU's representation, warranty and agreement in Section 2 above
in complying with this Section 3.
4. The undersigned also understands that stop transfer instructions
will be given to CU's transfer agent with respect to the Restricted Securities
and that there will be placed on the certificates evidencing the Restricted
Securities, or any substitutions therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), APPLIES AND MAY ONLY BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN ACCORDANCE WITH THE
TERMS OF AN AGREEMENT BETWEEN THE REGISTERED HOLDER HEREOF AND CU
BANCORP, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICES OF CU BANCORP."
CU agrees that such stop transfer instructions and legend will be
promptly removed if the provisions of Section 3 are complied with.
5. This Affiliate's Agreement shall be binding upon and enforceable
against administrators, executors, representatives, heirs, legatees and devisees
of the undersigned and any pledgee holding the Restricted Securities as
collateral.
6. In the event any of the parties to this Agreement brings an
action or suit against any other party by reason of any breach of any covenant,
agreement, representation, warranty or other provision hereof, or any breach of
any duty or obligation created hereunder by such other party, the prevailing
party, as determined by the court or other body having jurisdiction, shall be
entitled to have and recover of and from the losing party, as determined by the
court or other body having jurisdiction, all reasonable costs and expenses
incurred or sustained by such prevailing party in connection with such suit or
action, including, without limitation, legal fees and court costs (whether or
not taxable as such).
7. THE PARTIES HERETO WAIVE TRIAL BY JURY IN ANY MATTER ARISING OUT
OF THIS AGREEMENT OR RELATED TO THIS AGREEMENT OR IN CONNECTION WITH ANY
TRANSACTION OR MATTER CONTEMPLATED BY THIS AGREEMENT.
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IN WITNESS WHEREOF, the undersigned has executed the foregoing
Affiliate's Agreement as of the date first above written.
Very truly yours,
Agreed to and Accepted:
CU BANCORP
By:____________________________________
Title:_________________________________
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ANNEX 1
Roger K. Freeman, M.D.
Bill Neal
Ruth A. Martin
George W. Post