EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
among
HANMI FINANCIAL CORPORATION,
HANMI BANK
and
PACIFIC UNION BANK
Dated as of December 22, 2003
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TABLE OF CONTENTS
ARTICLE I THE MERGER........................................................ 1
1.1. The Merger................................................ 1
1.2. Effective Time............................................ 1
1.3. Effects of the Merger..................................... 2
1.4. Closing of the Merger..................................... 2
1.5. Articles of Incorporation................................. 2
1.6. Bylaws.................................................... 2
1.7. Board of Directors and Officers........................... 2
ARTICLE II CONSIDERATION; EXCHANGE PROCEDURES............................... 2
2.1. Effect on Company Common Stock............................ 2
2.2. No Fractional Shares...................................... 4
2.3. Shares of Dissenting Holders.............................. 5
2.4. Options................................................... 5
2.5. Buyer to Make Merger Consideration Available.............. 6
2.6. Exchange of Shares........................................ 6
2.7. Shares of Buyer Sub....................................... 8
ARTICLE III DISCLOSURE SCHEDULES; STANDARDS FOR
REPRESENTATIONS AND WARRANTIES.............................................. 8
3.1. Disclosure Schedule....................................... 8
3.2. Standards................................................. 8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................... 9
4.1. Corporate Organization.................................... 9
4.2. Capitalization............................................ 10
4.3. Authority; No Violation................................... 10
4.4. Consents and Approvals.................................... 11
4.5. Regulatory Reports........................................ 12
4.6. Financial Statements...................................... 13
4.7. Broker's Fees; Expenses................................... 14
4.8. Absence of Certain Changes or Events...................... 14
4.9. Legal Proceedings......................................... 14
4.10. Taxes..................................................... 15
4.11. Employee Benefit Plans.................................... 16
4.12. Company Disclosure Controls and Procedures................ 18
4.13. Company Information....................................... 18
4.14. Compliance with Applicable Law............................ 19
4.15. Certain Contracts......................................... 19
4.16. Environmental Matters..................................... 20
4.17. Derivative Transactions................................... 21
4.18. Opinion................................................... 22
4.19. Approvals................................................. 22
4.20. Loan Portfolio............................................ 22
4.21. Property.................................................. 23
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4.22. Patents, Trademarks, Etc.................................. 23
4.23. Insurance................................................. 24
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER........................... 24
5.1. Corporate Organization.................................... 24
5.2. Capitalization............................................ 24
5.3. Authority; No Violation................................... 25
5.4. Consents and Approvals.................................... 26
5.5. Broker's Fees............................................. 26
5.6. Buyer Information......................................... 27
5.7. Access to Funds........................................... 27
5.8. Approvals................................................. 27
5.9. Legal Proceedings......................................... 27
5.10. Compliance with Applicable Law............................ 28
5.11. Regulatory Reports........................................ 29
5.12. Financial Statements...................................... 29
5.13. Absence of Certain Changes or Events...................... 30
5.14. Opinion................................................... 30
5.15. Buyer Disclosure Controls and Procedures.................. 30
ARTICLE VI COVENANTS RELATING TO CONDUCT OF BUSINESS........................ 31
6.1. Covenants of the Company.................................. 31
6.2. Covenants of Buyer........................................ 34
ARTICLE VII ADDITIONAL AGREEMENTS........................................... 36
7.1. Regulatory Matters........................................ 36
7.2. No Solicitation by the Company or Buyer................... 37
7.3. Access to Information..................................... 39
7.4. Notification of Certain Matters........................... 40
7.5. Employee Benefit Plans; Existing Agreements............... 40
7.6. Indemnification........................................... 41
7.7. Reasonable Best Efforts; Additional Agreements............ 43
7.8. Current Information....................................... 43
7.9. Dividends................................................. 43
7.10. Stockholder Approvals..................................... 43
7.11. Subsequent Interim and Annual Financial Statements........ 44
7.12. Reorganization; Certain Modifications..................... 44
7.13. Exemption From Liability Under Section 16(b).............. 45
7.14. Stock Exchange Listing.................................... 45
7.15. Financing................................................. 45
7.16. Termination of Certain Company Plans...................... 46
7.17. Termination of Parent Tax Agreement....................... 46
7.18. Board Seat................................................ 46
7.19. Consent Order............................................. 46
ARTICLE VIII CONDITIONS PRECEDENT........................................... 46
8.1. Conditions to Each Party's Obligation To Effect the Merger 46
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8.2. Conditions to Obligations of Buyer and Buyer Sub.......... 47
8.3. Conditions to Obligations of the Company.................. 48
ARTICLE IX TERMINATION AND AMENDMENT........................................ 49
9.1. Termination............................................... 49
9.2. Effect of Termination..................................... 51
9.3. Amendment................................................. 52
9.4. Extension; Waiver......................................... 53
ARTICLE X GENERAL PROVISIONS................................................ 53
10.1. Nonsurvival of Representations, Warranties and Agreements. 53
10.2. Expenses.................................................. 53
10.3. Notices................................................... 53
10.4. Interpretation............................................ 54
10.5. Counterparts.............................................. 54
10.6. Entire Agreement.......................................... 55
10.7. Governing Law............................................. 55
10.8. Enforcement of Agreement.................................. 55
10.9. Severability.............................................. 55
10.10. Publicity................................................. 55
10.11. Assignment; No Third Party Beneficiaries.................. 55
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INDEX OF DEFINED TERMS
TERM PAGE
2000 Plan............................................................... 11
Acquisition Proposal.................................................... 40
Aggregate Cash Price.................................................... 4
Agreement............................................................... 1
Agreement of Merger..................................................... 2
Bank Merger Act Application............................................. 12
Benefit Agreements...................................................... 43
Business Day............................................................ 2
Buyer................................................................... 1
Buyer Closing Share Price............................................... 5
Buyer Common Stock...................................................... 3
Buyer Disclosure Schedule............................................... 9
Buyer Plan.............................................................. 43
Buyer Recommendation.................................................... 47
Buyer Reports........................................................... 31
Buyer Savings Plan...................................................... 43
Buyer Stockholders Meeting.............................................. 47
Buyer Sub............................................................... 1
Buyer Sub Common Stock.................................................. 8
California Certificate.................................................. 2
California Secretary.................................................... 2
Cash Component.......................................................... 5
Cash Reduction Amount................................................... 5
CDFI.................................................................... 12
Certificates............................................................ 6
CFC..................................................................... 1
CGCL.................................................................... 1
Change in Buyer Recommendation.......................................... 47
Change in the Company Recommendation.................................... 47
Closing................................................................. 2
Closing Date............................................................ 2
Closing Price........................................................... 5
Code.................................................................... 1
Commissioner............................................................ 2
Company................................................................. 1
Company Advisor......................................................... 15
Company Common Stock.................................................... 3
Company Contract........................................................ 22
Company Disclosure Schedule............................................. 9
Company Employees....................................................... 18
Company Insiders........................................................ 48
Company Option.......................................................... 6
Company Plans........................................................... 18
Company Recommendation.................................................. 46
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Company Reports......................................................... 13
Company Savings Plan.................................................... 44
Company Stockholders Meeting............................................ 46
Confidentiality Agreement............................................... 42
Constituent Corporations................................................ 1
Controlled Corporation.................................................. 16
Controlled Group........................................................ 18
Derivative Transaction.................................................. 24
Dissenting Shareholders................................................. 5
Dissenting Shares....................................................... 5
Distributing Corporation................................................ 16
Effective Time.......................................................... 2
Environmental Laws...................................................... 22
ERISA................................................................... 17
Exchange Act............................................................ 13
Exchange Agent.......................................................... 6
Exchange Fund........................................................... 7
Exchange Ratio.......................................................... 3
FDIC.................................................................... 10
Financing............................................................... 29
Financing Commitment Letters............................................ 29
Foreign Benefit Plan.................................................... 19
GAAP.................................................................... 14
Governmental Entity..................................................... 13
Hazardous Materials..................................................... 23
Indemnified Parties..................................................... 44
Injunction.............................................................. 50
Insurance Amount........................................................ 45
Joint Proxy Statement/Prospectus....................................... 13
Lien.................................................................... 12
Loan Property........................................................... 23
Loans................................................................... 24
Material Adverse Effect................................................. 9
Merger.................................................................. 1
Merger Consideration.................................................... 6
Multiemployer Plan...................................................... 19
Other Real Estate Owned................................................. 25
Outstanding Company Shares.............................................. 3
Parent.................................................................. 18
Participation Facility.................................................. 23
PBGC.................................................................... 19
Plan Termination Date................................................... 49
Purchase Price.......................................................... 3
Regulatory Agencies..................................................... 13
Reorganization.......................................................... 52
Reportable Event........................................................ 18
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Required Buyer Vote..................................................... 47
Required Company Vote................................................... 46
Requisite Regulatory Approvals.......................................... 50
S&C..................................................................... 57
S-4..................................................................... 13
SBA..................................................................... 25
SEC..................................................................... 13
Section 16 Information.................................................. 48
Securities Act.......................................................... 13
Share Component......................................................... 3
Skadden................................................................. 57
SRO..................................................................... 13
State Banking Approvals................................................. 12
State Regulator......................................................... 13
Stockholders Meetings................................................... 47
Subsidiary.............................................................. 10
Superior Proposal....................................................... 40
Surviving Company....................................................... 1
Tax Return.............................................................. 17
Taxes................................................................... 17
Terminated Company Plans................................................ 49
Termination Fee......................................................... 55
Transaction Value....................................................... 4
Trust................................................................... 12
Trustee................................................................. 12
VAS Agreement........................................................... 12
Voting Debt............................................................. 11
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 22, 2003
(this "Agreement"), by and among Hanmi Financial Corporation, a Delaware
corporation ("Buyer"), Hanmi Bank, a California banking corporation and a direct
wholly owned subsidiary of Buyer ("Buyer Sub"), and Pacific Union Bank, a
California banking corporation (the "Company").
WHEREAS, the Boards of Directors of Buyer, Buyer Sub and the
Company have determined that it is in the best interests of their respective
companies and their stockholders to consummate the business combination
transaction provided for herein in which the Company will, subject to the terms
and conditions set forth herein, merge with and into Buyer Sub, with Buyer Sub
being the surviving entity (the "Merger");
WHEREAS, it is the intention of the parties to this Agreement
that the Merger be treated as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code") and this
Agreement shall constitute a plan of reorganization within the meaning of
Treasury Regulation Section 1.368-2(g); and
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. Subject to the terms and conditions of
this Agreement, in accordance with the California General Corporation Law (the
"CGCL") and the California Financial Code (the "CFC"), at the Effective Time (as
defined in Section 1.2 hereof), the Company shall merge with and into Buyer Sub.
Buyer Sub shall be the surviving corporation (hereinafter sometimes referred to
as the "Surviving Company") in the Merger, and shall continue its corporate
existence under the laws of the State of California. The name of the Surviving
Company shall be Hanmi Bank. Upon consummation of the Merger, the separate
corporate existence of the Company shall terminate.
1.2. Effective Time. Subject to the provisions of this
Agreement, an agreement of merger complying with Section 1101 of the CGCL (the
"Agreement of Merger") and an officers' certificate complying with Section 1103
of the CGCL (the "California Certificate"), substantially in the form attached
as Exhibit A hereto, shall be duly prepared, executed and filed first, with the
California Commissioner of Financial
Institutions (the "Commissioner") for approval, and second, with the Secretary
of State of the State of California (the "California Secretary") on the Closing
Date by the Company and Buyer Sub. After the Agreement of Merger has been filed
with the California Secretary, Buyer Sub shall immediately file with the
Commissioner a copy of the Agreement of Merger certified by the California
Secretary. The term "Effective Time" shall mean the time when the Merger becomes
effective pursuant to Section 4887 of the CFC.
1.3. Effects of the Merger. At and after the Effective
Time, the Merger shall have the effects set forth in this Agreement, the CFC and
the CGCL.
1.4. Closing of the Merger. Subject to the terms and
conditions of this Agreement, the closing of the Merger (the "Closing") will
take place at 10:00 a.m. Pacific time on the date that is the second Business
Day after the satisfaction or waiver (subject to applicable law) of the
conditions set forth in Article VIII hereof, other than conditions which by
their terms are to be satisfied at Closing, or such other date or time as the
parties may mutually agree (the "Closing Date"). The Closing shall be held at
the offices of Simpson Thacher & Bartlett LLP, 1999 Avenue of the Stars, Suite
2900, Los Angeles, California, unless another place is agreed upon by the
parties. For purposes of this Agreement, a "Business Day" shall mean any day
that is not a Saturday, a Sunday or other day on which banking organizations in
the City of Los Angeles, California are required or authorized by law to be
closed.
1.5. Articles of Incorporation. At the Effective Time, the
Articles of Incorporation of Buyer Sub, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the Surviving Company.
1.6. Bylaws. At the Effective Time, the bylaws of Buyer
Sub, as in effect immediately prior to the Effective Time, shall be the Bylaws
of the Surviving Company.
1.7. Board of Directors and Officers. The directors and
corporate officers of Buyer Sub immediately prior to the Effective Time shall
continue to be the directors and corporate officers of the Surviving Company,
each to hold office in accordance with the Articles of Incorporation and Bylaws
of the Surviving Company, until their respective successors are duly elected or
appointed (as the case may be) and qualified.
ARTICLE II
CONSIDERATION; EXCHANGE PROCEDURES
2.1. Effect on Company Common Stock. At the Effective
Time, by virtue of the Merger and without any action on the part of the holder
of any shares of the capital stock of the Company:
(a) Each share of the common stock, par value
$6.00 per share, of the Company (the "Company Common Stock") owned by Buyer or
Buyer Sub immediately prior to the Effective Time (other than shares in trust
accounts, managed
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accounts and the like for the benefit of customers or shares held in
satisfaction of a debt previously contracted) shall be cancelled and retired and
no shares of common stock, par value $0.001 per share, of Buyer (the "Buyer
Common Stock"), or other consideration shall be delivered in exchange therefor.
(b) Subject to Sections 2.1(c) and 2.2, each
share of Company Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares to be cancelled pursuant to Sections 2.1(a)
and Dissenting Shares) shall be converted into and become the right to receive
that number of shares of Buyer Common Stock equal to the Exchange Ratio. For
purposes of this Agreement:
(i) "Exchange Ratio" shall mean the
quotient, rounded to the nearest one ten thousandth, of (A) the
Purchase Price divided by (B) the Buyer Closing Share Price;
(ii) "Outstanding Company Shares" shall
mean that number of shares of Company Common Stock issued and
outstanding as of the close of business on the date of this Agreement,
as certified in writing by the Company's transfer agent, a copy of
which certification shall be promptly delivered to Buyer;
(iii) "Purchase Price" shall mean the
quotient, rounded to the nearest one ten thousandth, of (A) the
Transaction Value divided by (B) the Outstanding Company Shares;
(iv) Subject to clause (v) of this
Section 2.1(b), "Share Component" shall mean:
(A) if the Buyer Closing Share
Price is less than $19.00, the product of (x) 6,120,093
multiplied by (y) a fraction, the numerator of which is 19 and
the denominator of which is the Buyer Closing Share Price, but
not more than 6,644,672;
(B) if the Buyer Closing Share
Price is greater than $18.99 but less than $25.01, 6,120,093;
and
(C) if the Buyer Closing Share
Price is greater than $25.00, the product of (x) 6,120,093
multiplied by (y) a fraction, the numerator of which is 25 and
the denominator of which is the Buyer Closing Share Price, but
not less than 5,773,672;
(v) "Transaction Value" shall mean the
sum of (A) the Cash Component (determined without giving effect to any
reduction pursuant to Section 2.1(d)) and (B) the product of (x) the
Share Component determined as provided in clause (iv) above without
giving
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effect to Section 2.1(d) multiplied by (y) the Buyer Closing Share
Price; provided, however, that if the first sentence of Section 2.1(d)
is applicable such that there is a Cash Reduction Amount, then for
purposes of this clause (v), the Cash Component shall be reduced by the
Cash Reduction Amount and the Share Component shall be increased by an
amount equal to the quotient obtained by dividing the Cash Reduction
Amount by the greater of the Closing Price and $19.00, and
(vi) The calculations required by this
Section 2.1(b) shall be prepared by Buyer and subject to review by the
Company and the Trustee.
(c) The Exchange Ratio shall be subject to
appropriate adjustments in the event that, subsequent to the date of this
Agreement but prior to the Effective Time, the outstanding shares of Buyer
Common Stock shall have been increased, decreased, changed into or exchanged for
a different number or kind of shares or securities through any reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split, or other like changes in Buyer's capitalization.
(d) In the event that the sum of (i) the Cash
Component, (ii) 130% of the product of (A) the Purchase Price and (B) the number
of Dissenting Shares, if any, and (iii) the amount of cash estimated to be
payable with respect to fractional shares resulting from the Merger (the
"Aggregate Cash Price") shall exceed 58% of the Adjusted Transaction Value, then
the Cash Component shall be reduced such that the Aggregate Cash Price shall not
exceed 58% of the Adjusted Transaction Value (or such lesser amount as may be
necessary to enable Buyer's and the Company's respective tax counsel to render
the opinions referred to in Sections 8.2(e) and 8.3(e)) after giving effect to
the proviso in Section 2.1(b)(v). The amount, if any, by which the Cash
Component is reduced pursuant to the preceding sentence is referred to herein as
the "Cash Reduction Amount." Adjusted Transaction Value shall mean the
Transaction Value calculated (prior to giving effect to the first sentence of
this Section 2.1(d) or the proviso in Section 2.1(b)(v)) using the average of
the high and low price of one share of Buyer Common Stock on the NASDAQ market
on the Closing Date (the "Closing Price"), rather than the Buyer Closing Share
Price. The "Cash Component" shall mean $164,562,490.
2.2. No Fractional Shares. Notwithstanding any other
provision of this Agreement, neither certificates nor scrip for fractional
shares of Buyer Common Stock shall be issued in the Merger. Each holder of
Company Common Stock who otherwise would have been entitled to a fraction of a
share of Buyer Common Stock shall receive in lieu thereof cash (without
interest) in an amount determined by multiplying the fractional share interest
to which such holder would otherwise be entitled (after taking into account all
shares of Company Common Stock owned by such holder at the Effective Time) by
the Buyer Closing Share Price. The "Buyer Closing Share Price" shall mean the
average of the daily volume weighted average sale price of one share of Buyer
Common Stock for the five trading days immediately preceding the Closing Date on
the Nasdaq National
4
Market. No such holder shall be entitled to dividends, voting rights or any
other rights in respect of any fractional share.
2.3. Shares of Dissenting Holders. Notwithstanding
anything else in this Agreement to the contrary but only to the extent required
by the CGCL, shares of Company Common Stock that are issued and outstanding
immediately before the Effective Time and that are held by holders of Company
Common Stock who have voted against the Merger and who comply with all
provisions of the CGCL concerning the right of holders of Company Common Stock
to dissent from the Merger and require appraisal of their shares of Company
Common Stock (the "Dissenting Shareholders," with the shares of Company Common
Stock held by such Dissenting Shareholders being referred to as the "Dissenting
Shares") shall not be converted into the right to receive the Merger
Consideration but shall only be entitled to such rights as are granted to them
pursuant to Sections 1300 - 1312 of the CGCL; provided, however, that any
Dissenting Shares which, at any time after the Effective Time, lose their status
as Dissenting Shares under the CGCL shall forfeit the right to appraisal and all
such Dissenting Shares shall then be deemed to have been converted into the
right to receive, as of the Effective Time, the Merger Consideration without
interest. Prior to the Effective Time, the Company shall give Buyer prompt
notice of any such demands for appraisal, withdrawals of demands for appraisal
and any other related instruments received by the Company and the opportunity to
direct all negotiations and proceedings with respect to demands for appraisal.
The Company shall not, except with the prior written consent of Buyer,
voluntarily make any payment with respect to, or settle or offer to settle, any
such demand for payment, or waive any failure to timely deliver a written demand
for appraisal or the taking of any other action by such Dissenting Shareholder
as may be necessary to perfect appraisal rights under the CGCL.
2.4. Options. (a) At the Effective Time, each option
granted by the Company to purchase shares of Company Common Stock (each, a
"Company Option") which is outstanding and unexercised immediately prior
thereto, whether vested or unvested, shall cease to represent a right to acquire
shares of Company Common Stock and shall be assumed together with the Company
2000 Stock Option Plan and shall be converted into an option to acquire, on the
same terms and conditions as were applicable to the original Company Option
(including full vesting and exercisability as a result of and following the
Merger), that number of shares of Buyer Common Stock determined by multiplying
the number of shares of Company Common Stock subject to such Company Option by
the Exchange Ratio, rounded, if necessary, to the nearest whole share of Company
Common Stock, at a price per share (rounded to the nearest one-hundredth of a
cent) equal to the per share exercise price specified in such Company Option
divided by the Exchange Ratio; provided, however, that in the case of any
Company Option to which Section 421 of the Code applies by reason of its
qualification under Section 422 of the Code, the option price, the number of
shares subject to such option and the terms and conditions of exercise of such
option shall be determined in a manner consistent with the requirements of
Section 424(a) of the Code. Prior to the Effective Time, Buyer shall reserve for
issuance the number of shares of Buyer Common Stock necessary to satisfy Buyer's
obligations under this Section 2.4. Immediately prior to the Effective Time,
Buyer shall issue to each holder of an outstanding Company Option a document
5
evidencing the conversion and assumption of the Company Option by Buyer pursuant
to this Section 2.4.
(b) Within fifteen (15) Business Days after the
Effective Time, Buyer shall file with the SEC a registration statement on Form
S-8 (or any successor or other appropriate forms), with respect to the shares of
Buyer Common Stock subject to the options referred to in paragraph (a) of this
Section 2.4 and shall use its reasonable best efforts to maintain the current
status of the prospectus or prospectuses contained therein, as well as comply
with state securities or "blue sky" laws, for so long as such options remain
outstanding.
2.5. Buyer to Make Merger Consideration Available. Buyer
shall appoint an agent, who shall be reasonably acceptable to the Company (the
"Exchange Agent"), for the purpose of exchanging certificates that immediately
prior to the Effective Time evidenced shares of Company Common Stock (the
"Certificates") for the amount or kind of consideration to be received by
holders of Company Common Stock under this Agreement (the "Merger
Consideration"). At or promptly after the Effective Time, Buyer shall deposit,
or shall cause to be deposited, with the Exchange Agent, for the benefit of the
holders of Certificates, for exchange in accordance with this Article II,
certificates representing the shares of Buyer Common Stock and an estimated
amount of cash sufficient to pay any cash that may be payable in lieu of any
fractional shares (such cash and certificates for shares of Buyer Common Stock,
together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund").
2.6. Exchange of Shares. (a) As soon as reasonably
practicable after the Effective Time, and in no event more than five Business
Days thereafter, the Exchange Agent shall mail to each holder of record of a
Certificate a form of letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent) and instructions
for use in effecting the surrender of the Certificates in exchange for
certificates representing the shares of Buyer Common Stock and cash in lieu of
fractional shares of Buyer Common Stock, if any, into which the shares of
Company Common Stock represented by such Certificate or Certificates shall have
been converted pursuant to this Agreement. Upon proper surrender of a
Certificate for exchange and cancellation to the Exchange Agent, together with a
properly completed letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of shares of Buyer Common Stock (if any) to which such
former holder of Company Common Stock shall have become entitled pursuant to the
provisions of this Article II and a check representing the amount of cash (if
any) payable in lieu of fractional shares of Buyer Common Stock which such
former holder has the right to receive in respect of the Certificate surrendered
pursuant to the provisions of this Article II, and the Certificate so
surrendered shall forthwith be cancelled. No interest will be paid or accrued on
the cash payable in lieu of fractional shares.
(b) No dividends or other distributions with
respect to Buyer Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate until the holder thereof
shall surrender such Certificate in
6
accordance with this Article II. After the surrender of a Certificate in
accordance with this Article II, the record holder thereof shall be entitled to
receive any such dividends or other distributions, without any interest thereon,
with a record date after the Effective Time and which theretofore had become
payable with respect to whole shares of Buyer Common Stock represented by such
Certificate.
(c) If any certificate representing shares of
Buyer Common Stock is to be issued in the name of a person other than the
registered holder of the Certificate surrendered in exchange therefor, it shall
be a condition of the issuance thereof that the Certificate so surrendered shall
be properly endorsed (or accompanied by an appropriate instrument of transfer)
and otherwise in proper form for transfer, and that the person requesting such
exchange shall pay to the Exchange Agent in advance any applicable stock
transfer or other Taxes or shall establish to the reasonable satisfaction of the
Exchange Agent that such Taxes have been paid or are not payable.
(d) At and after the Effective Time, there shall
be no transfers on the stock transfer books of the Company of the shares of
Company Common Stock that were issued and outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates representing such
shares are presented for transfer to the Buyer, the Surviving Company or the
Exchange Agent, they shall be cancelled and exchanged for the Merger
Consideration as provided in this Article II.
(e) Any portion of the Exchange Fund that
remains unclaimed by the stockholders of the Company for twelve months after the
Effective Time shall be paid, at the request of Buyer, to Buyer. Any
stockholders of the Company who have not theretofore complied with this Article
II shall thereafter look only to Buyer for payment of the Merger Consideration
and unpaid dividends and distributions on the Buyer Common Stock deliverable in
respect of each share of Company Common Stock held by such stockholder at the
Effective Time as determined pursuant to this Agreement, in each case, without
any interest thereon. Notwithstanding anything to the contrary contained herein,
none of Buyer, the Company, the Exchange Agent or any other person shall be
liable to any former holder of shares of Company Common Stock for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(f) In the event any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by Buyer, the posting by such person of a bond in such amount as Buyer
may determine is reasonably necessary as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration deliverable in respect thereof pursuant to this Agreement.
(g) Buyer or the Exchange Agent will be entitled
to deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of Company Common Stock such amounts as Buyer or the
Exchange Agent are required to deduct and withhold with respect to the making of
such payment under the
7
Code, or any applicable provision of any other U.S. federal, state, local or
non-U.S. tax law. To the extent that such amounts are properly withheld by Buyer
or the Exchange Agent, such withheld amounts will be treated for all purposes of
this Agreement as having been paid to the holder of Company Common Stock in
respect of whom such deduction and withholding were made by Buyer or the
Exchange Agent.
2.7. Shares of Buyer Sub. Each share of common stock of
Buyer Sub ("Buyer Sub Common Stock"), issued and outstanding immediately prior
to the Effective Time shall be unaffected by the Merger and shall remain issued
and outstanding.
ARTICLE III
DISCLOSURE SCHEDULES; STANDARDS FOR REPRESENTATIONS AND WARRANTIES
3.1. Disclosure Schedule. Prior to the execution and
delivery of this Agreement, the Company has delivered to Buyer, and Buyer has
delivered to the Company, a schedule (in the case of the Company, the "Company
Disclosure Schedule," and in the case of Buyer, the "Buyer Disclosure Schedule")
setting forth, among other things, items the disclosure of which is necessary or
appropriate either in response to an express disclosure requirement contained in
a provision hereof or as an exception to one or more of such party's
representations or warranties contained in Article IV, in the case of the
Company, or Article V, in the case of Buyer, or to one or more of such party's
covenants contained in Article VI; provided, however, that notwithstanding
anything in this Agreement to the contrary (a) no such item is required to be
set forth in the Disclosure Schedule as an exception to a representation or
warranty if its absence would not result in the related representation or
warranty being deemed untrue or incorrect under the standard established by
Section 3.2, and (b) the mere inclusion of an item in a Disclosure Schedule as
an exception to a representation or warranty shall not be deemed an admission by
a party that such item represents a material exception or material fact, event
or circumstance or that such item has had or is reasonably likely to have a
Material Adverse Effect (as defined herein) with respect to either the Company
or Buyer, respectively.
3.2. Standards. (a) No representation or warranty of
either the Company or Buyer contained in Article IV or Article V, respectively
(other than the representations and warranties in Section 4.1(a), 4.1 (c),
4.2(a) and (c), 4.3(a), 4.3(b)(i), 4.7, 4.8(a), the first sentence of 5.1, 5.2,
5.3(a), 5.3(b)(i), 5.5, 5.7 and 5.13(a) respectively, which shall be true and
correct in all material respects), shall be deemed untrue or incorrect, and
neither the Company nor Buyer shall be deemed to have breached a representation
or warranty, as a consequence of the existence or absence of any fact,
circumstance or event unless such fact, circumstance or event, individually or
taken together with all other facts, circumstances or events inconsistent with
any representation or warranty contained in Article IV or Article V, as the case
may be, has had or is reasonably likely to have a Material Adverse Effect (as
defined below) on the party making such representation or warranty.
8
(b) As used in this Agreement, the term
"Material Adverse Effect" means with respect to Buyer or the Company, as the
case may be, any effect which individually or in the aggregate with all other
effects (i) is materially adverse to the business, results of operations or
financial condition of such party and its subsidiaries (if any) taken as a
whole, other than any such effect attributable to or resulting from (A) any
change in banking or similar laws, rules, regulations or policies of general
applicability or interpretations thereof by courts or governmental authorities,
(B) any change in GAAP or regulatory accounting principles, in each case which
affects banks, thrifts or their holding companies generally, (C) events,
conditions or trends in economic, business or financial conditions generally or
affecting banks, thrifts or their holding companies specifically (including
changes in the prevailing level of interest rates), except to the extent Buyer
or the Company, as the case may be, is materially and disproportionately
affected thereby, or (D) any action or omission of such party taken with the
prior written consent of the other party, (E) any expenses incurred by the
referenced party in connection with this Agreement or the transactions
contemplated hereby, to the extent such expenses do not exceed the good faith
estimates thereof set forth in the Company Disclosure Schedule or the Buyer
Disclosure Schedule, as applicable, or (F) any change in the stock price or
trading volume of such party, or (ii) materially impairs the ability of such
party to consummate the transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Schedule, the
Company hereby represents and warrants to Buyer as follows:
4.1. Corporate Organization. (a) The Company is a banking
corporation duly organized, validly existing and in good standing under the laws
of the State of California. The deposit accounts of the Company are insured by
the Federal Deposit Insurance Corporation (the "FDIC") through the Bank
Insurance Fund to the fullest extent permitted by law, and all premiums and
assessments required to be paid in connection therewith have been paid when due.
The Articles of Incorporation and By-laws of the Company, copies of which have
previously been made available to Buyer, are true, complete and correct copies
of such documents as in effect as of the date of this Agreement.
(b) The Company (i) has all requisite corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and (ii) is duly licensed or
qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary.
(c) As of the date hereof, the Company does not
have any Subsidiaries. As of the Closing, the Company will have no Subsidiaries
other than any entity which becomes a Subsidiary as a result of foreclosures,
settlements in lieu of foreclosures or troubled loan or debt restructurings in
the ordinary course of the
9
Company's business consistent with past practice. For purposes of this
Agreement, the term "Subsidiary" means, with respect to any party, any
corporation or other entity of which a majority of the capital stock or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are at the
time, directly or indirectly, owned by such party.
(d) The minute books of the Company contain
true, complete and accurate records of all meetings and other corporate actions
held or taken since January 1, 2000 of its stockholders and Board of Directors
(including committees of its Boards of Directors).
4.2. Capitalization. (a) The authorized capital stock of
the Company consists of 30,000,000 shares of Company Common Stock. As of the
date of this Agreement, there are (i) 10,685,876 shares of Company Common Stock
issued and outstanding as of December 19, 2003 and (ii) no shares of Company
Common Stock reserved for issuance upon exercise of outstanding stock options or
otherwise, except for 641,846 shares of Company Common Stock reserved for
issuance pursuant to the Company's 2000 Stock Option Plan (the "2000 Plan") and
described in Section 4.2 of the Company Disclosure Schedule. All of the issued
and outstanding shares of Company Common Stock have been duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof. Except for the
stock options referred to in the next sentence, the Company does not have and is
not bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or issuance
of any shares of Company Common Stock or any other equity security of the
Company or any securities representing the right to purchase or otherwise
receive any shares of Company Common Stock or any other equity security of the
Company (including any rights plan or agreement). The names of the optionees,
the date of each issued and outstanding option to purchase Company Common Stock
granted, the number of shares subject to each such option, the expiration date
of each such option, and the price at which each such option may be exercised
under the 2000 Plan are set forth in Section 4.2 of the Company Disclosure
Schedule.
(b) Except as disclosed in Section 4.2(b) of the
Company Disclosure Schedule, the Company does not beneficially own or control,
directly or indirectly, any shares of stock or other equity interest in any
corporation, firm, partnership, joint venture or other entity, excluding any
investments acquired in the normal course of its banking business after the date
of this Agreement in respect of debts previously contracted in good faith.
(c) No bonds, debentures, notes or other
indebtedness having the right to vote on any matters on which the Company's
stockholders may vote ("Voting Debt") have been issued by the Company and are
outstanding.
4.3. Authority; No Violation. (a) The Company has full
corporate power and authority to execute and deliver this Agreement and the
Agreement of Merger and to consummate the transactions contemplated hereby and
thereby. The execution and
10
delivery of this Agreement and the Agreement of Merger and the consummation of
the transactions contemplated hereby and thereby have been duly and validly
approved by the Board of Directors of the Company. Concurrently with the
execution and delivery of this Agreement, the Trustee has delivered to the
Company on behalf of the Trust a Voting and Sale Agreement (the "VAS Agreement")
to vote in favor of this Agreement and the transactions contemplated hereby at
the Company Stockholder Meeting (as defined in Section 7.10(a) hereof), and no
other corporate or stockholder proceedings on the part of the Company are
necessary to approve this Agreement and the Agreement of Merger and to
consummate the transactions contemplated hereby and thereby other than the
Required Company Vote (as defined in Section 7.10(a) hereof). This Agreement has
been duly and validly executed and delivered by the Company, and (assuming due
authorization, execution and delivery by Buyer and Buyer Sub) constitutes and
the Agreement of Merger, upon due execution and delivery by the parties hereto,
will constitute a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as enforcement may be
limited by general principles of equity whether applied in a court of law or a
court of equity and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally. For purposes of this Agreement, the
"Trust" shall mean the trust established pursuant to the Trust Agreement, dated
as of October 31, 2003 by and between Korea Exchange Bank, as grantor, and L.
Dale Crandall, as trustee (the "Trustee").
(b) Neither the execution and delivery of this
Agreement by the Company, nor the consummation by the Company of the
transactions contemplated hereby, nor compliance by the Company with any of the
terms or provisions hereof, will (i) violate any provision of the Articles of
Incorporation or By-Laws of the Company, or (ii) assuming receipt of the
Required Company Vote and that the consents and approvals referred to in Section
4.4 hereof are duly obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to the
Company, or any of its properties or assets, or (y) violate, conflict with,
result in a breach of any provision of or the loss of any benefit under,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance (a "Lien") upon any of the properties or assets of the Company
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, contract, agreement or other
instrument or obligation to which the Company is a party, or by which it or any
of its properties or assets may be bound or affected.
4.4. Consents and Approvals. Except for (a) the filing of
an application with the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") under the Bank Merger Act and the approval of such
application (the "Bank Merger Act Application"), (b) the filing and approval of
applications and notices, as applicable, with the California Department of
Financial Institutions (the "CDFI") (the "State Banking Approvals"), (c) the
filing of the Agreement of Merger and the California Certificate with the
Commissioner, (d) the filing of the Agreement of Merger and the California
Certificate approved by the Commissioner with the California Secretary (e) the
11
filing of a copy of the Agreement of Merger certified by the California
Secretary with the Commissioner, (f) notification from the Federal Reserve Board
pursuant to 12 C.F.R. 225.12(d)(2) that an application under Section 3 of the
Bank Holding Company Act of 1956, as amended, is not required in connection with
the consummation of the Merger and the purchase of shares of Company Common
Stock pursuant to the VAS Agreement, (g) the filing with the Securities and
Exchange Commission (the "SEC") and the FDIC of a joint proxy statement in
definitive form relating to the respective meetings of the stockholders of the
Company and Buyer referred to in Section 7.10 (the "Joint Proxy
Statement/Prospectus") and the filing and declaration of effectiveness of the
registration statement on Form S-4 covering all of the shares of Buyer Common
Stock to be issued in the Merger in which the Joint Proxy Statement/Prospectus
will be included as a prospectus (the "S-4") and any filings or approvals under
applicable state securities laws, and (h) such filings, authorizations or
approvals as may be set forth in Section 4.4 of the Company Disclosure Schedule,
no consents or approvals of or filings or registrations with any court,
administrative agency or commission or other governmental authority or
instrumentality (each, a "Governmental Entity") or with any third party are
necessary in connection with the execution and delivery by the Company of this
Agreement or the consummation by the Company of the Merger and the other
transactions contemplated hereby.
4.5. Regulatory Reports. (a) The Company has timely filed
all reports, registrations and statements, together with any amendments required
to be made with respect thereto, that it was required to file since December 31,
2000, with (i) the FDIC, (ii) the CDFI and any other applicable state banking
commission or any other state regulatory authority (each, a "State Regulator")
and (iii) any other self-regulatory organization ("SRO") (collectively, the
"Regulatory Agencies"), and has paid all fees and assessments due and payable in
connection therewith. Except for normal examinations conducted by a Regulatory
Agency in the regular course of the business of the Company, no Regulatory
Agency has initiated any proceeding, or, to the knowledge of the Company,
threatened an investigation into the business or operations of the Company since
December 31, 2000. There is no unresolved violation, criticism, or exception by
any Regulatory Agency with respect to any report or statement relating to any
examinations of the Company.
(b) The Company has previously made available to
Buyer a true, correct and complete copy of each (a) final registration
statement, prospectus, report, schedule and definitive proxy statement filed
since December 31, 2000 by the Company with the FDIC pursuant to the Securities
Act of 1933, as amended (the "Securities Act") or the Securities Exchange Act of
1934, as amended (the "Exchange Act") (collectively, the "Company Reports") and
(b) communication mailed by the Company to its stockholders since December 31,
2000. The Company has timely filed all Company Reports and other documents
required to be filed by it under the Securities Act and the Exchange Act, and,
as of their respective dates, all of the Company Reports complied in all
material respects with the requirements of the Securities Act and the Exchange
Act, as the case may be, and the rules and regulations of the FDIC thereunder
applicable to such Company Reports and other documents. As of their respective
dates of filing with the FDIC (or, if amended or superseded by a subsequent
filing prior to the
12
date hereof, as of the date of such subsequent filing), no such Company Report
(when filed and at their respective effective times, if applicable) or
communication (when mailed) contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in which
they were made, not misleading, and there are no outstanding comments from or
unresolved issues raised by the FDIC with respect to any of the Company Reports.
No executive officer of the Company has failed in any respect to make the
certifications required of him or her under Section 302 or 906 of the
Sarbanes-Oxley Act of 2002 and no enforcement action has been initiated against
the Company by the FDIC or any State Regulator relating to disclosures contained
in any Company Reports.
4.6. Financial Statements. (a) The Company has previously
made available to Buyer copies of (a) the balance sheets of the Company as of
December 31 for the fiscal years 2001 and 2002, and the related statements of
operations, changes in stockholders' equity and comprehensive income and cash
flows for the fiscal years 2000 through 2002, inclusive, as reported in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2002
filed with the FDIC under the Exchange Act, in each case accompanied by the
audit report of the Company's independent public accountants, and (b) the
unaudited balance sheets of the Company as of September 30, 2002 and September
30, 2003 and the related unaudited statements of operations and cash flows for
the three-month and nine-month periods then ended as reported in the Company's
Quarterly Report on Form 10-Q for the period ended September 30, 2003 filed with
the FDIC under the Exchange Act. The financial statements referred to in this
Section 4.6 (including the related notes, where applicable) fairly present, and
the financial statements to be filed by the Company with the FDIC after the date
of this Agreement will fairly present (subject, in the case of the unaudited
statements, to recurring audit adjustments normal in nature and amount, none of
which are expected to be material to the Company), the results of the operations
and financial position of the Company for the respective fiscal periods or as of
the respective dates therein set forth; each of such statements (including the
related notes, where applicable) complies, and the financial statements to be
filed by the Company with the FDIC after the date of this Agreement will comply,
with applicable accounting requirements and with the published rules and
regulations of the FDIC with respect thereto; and each of such statements
(including the related notes, where applicable) has been, and the financial
statements to be filed by the Company with the FDIC after the date of this
Agreement will be, prepared in accordance with generally accepted accounting
principles ("GAAP") consistently applied during and throughout the periods
involved, except as indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-Q. The books and records of the Company have
been, and are being, maintained in accordance with GAAP and any other applicable
legal and accounting requirements and reflect only actual transactions.
(b) Except for (i) those liabilities that are
fully reflected or reserved for in the consolidated financial statements of the
Company included in its Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 2003, as filed with the FDIC, or (ii) liabilities incurred
since September 30, 2003 in the ordinary course
13
of business consistent with past practice, the Company has not incurred any
material liability of any nature whatsoever (whether absolute, accrued or
contingent or otherwise and whether due or to become due), other than pursuant
to or as contemplated by this Agreement.
4.7. Broker's Fees; Expenses. Neither the Company nor any
of its officers or directors has employed any broker or finder or incurred any
liability for any broker's fees, commissions or finder's fees in connection with
any of the transactions contemplated by this Agreement, except that the Company,
through a special committee of the Board of Directors of the Company, has
engaged, and will pay a fee or commission to, Friedman, Billings, Ramsey & Co.,
Inc. ("Company Advisor") in accordance with the terms of a letter agreement
between Company Advisor and the Company, a true, complete and correct copy of
which has been previously delivered by the Company to Buyer, and pursuant to
Section 10.2 hereof, the Company has agreed to pay the fees and expenses of
Merrill Lynch & Co., financial advisor to the Trustee, in accordance with the
letter agreement, dated as of October 31, 2003, by and among the Trustee,
Merrill Lynch & Co. and Korea Exchange Bank.
4.8. Absence of Certain Changes or Events. (a) Except as
disclosed in any Company Report filed prior to the date of this Agreement, since
December 31, 2002, there has been no change or development or combination of
changes or developments which, individually or in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect on the Company.
(b) Except as disclosed in any Company Report
filed prior to the date of this Agreement, since September 30, 2003, the Company
has carried on its business only in the ordinary and usual course consistent
with its past practices and has not taken any action that would have been
prohibited by Section 6.1 (other than Section 6.1(g)) if taken after the date of
this Agreement.
(c) Since December 31, 2002, the Company has not
(i) increased the wages, salaries, compensation, pension, or other fringe
benefits or perquisites payable to any officer, employee or director from the
amount thereof in effect as of December 31, 2002 (which amounts have been
previously disclosed to Buyer), granted any severance or termination pay,
entered into any contract to make or grant any severance or termination pay, or
paid any bonus (except for salary increases and bonus payments made in the
ordinary course of business consistent with past practice), (ii) suffered any
strike, work stoppage, slow-down, or other labor disturbance, (iii) been a party
to a collective bargaining agreement, contract or other agreement or
understanding with a labor union or organization, (iv) had any union organizing
activities or (v) made any agreement or commitment (contingent or otherwise) to
do any of the foregoing.
4.9. Legal Proceedings. (a) The Company is not a party to
any, and there are no pending or, to the Company's knowledge, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or governmental
or regulatory investigations of any nature against the Company or challenging
the validity or propriety of the transactions contemplated by this Agreement.
14
(b) There is no injunction, order, judgment,
decree, or regulatory restriction imposed upon the Company or the assets of the
Company.
4.10. Taxes. (a) The Company has (i) duly and timely filed
(including applicable extensions granted without penalty) all material Tax
Returns (as defined below) required to be filed at or prior to the Effective
Time, and such Tax Returns are true, correct and complete in all material
respects, and (ii) paid in full or made adequate provision in the financial
statements of the Company (in accordance with GAAP) for all material Taxes (as
defined below) whether or not shown as due on such Tax Returns. No material
deficiencies for any Taxes have been proposed or assessed in writing with
respect to the Company.
(b) (i) There are no material Liens for Taxes
upon the assets of the Company except for statutory liens for current Taxes not
yet due, (ii) the Company has not requested any extension of time within which
to file any Tax Returns in respect of any fiscal year which have not since been
filed and no request for waivers of the time to assess any Taxes are pending or
outstanding and (iii) the Company is not a party to any agreement providing for
the allocation, indemnification or sharing of Taxes other than the agreement
referenced in Section 7.17 hereto.
(c) Except as set forth in Section 4.10(c) of
the Company Disclosure Schedule, the Company (A) is not and has never been a
member of an affiliated group filing a consolidated tax return or (B) has any
liability for Taxes of any person arising from the application of Treasury
Regulation section 1.1502-6 or any analogous provision of state, local or
foreign law, or as a transferee or successor, by contract, or otherwise.
(d) No closing agreement pursuant to section
7121 of the Code (or any similar provision of state, local or foreign law) has
been entered into by or with respect to the Company.
(e) The Company has not been either a
"distributing corporation" or a "controlled corporation" in a distribution
occurring during the last five years in which the parties to such distribution
treated the distribution as one to which Section 355 of the Code is applicable.
(f) All material Taxes required to be withheld,
collected or deposited by or with respect the Company have been timely withheld,
collected or deposited, as the case may be, and to the extent required, have
been paid to the relevant taxing authority.
(g) The Company is not aware of any fact or
circumstance that could reasonably be expected to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code.
(h) There is no outstanding audit, assessment,
dispute or claim concerning any material Tax liability of the Company either
within the Company's knowledge or claimed, pending or raised by an authority in
writing.
15
(i) The Company will not be required to include
amounts in income, or exclude items of deduction, in a taxable period beginning
after the Closing Date as a result of (i) a change in method of accounting
occurring prior to the Closing Date, (ii) an installment sale or open
transaction arising in a taxable period (or portion thereof) ending on or before
the Closing Date, (iii) a prepaid amount received, or paid, prior to the Closing
Date or (iv) deferred gains arising prior to the Closing Date.
(j) For the purposes of this Agreement, "Taxes"
shall mean all taxes, charges, fees, levies, penalties or other assessments
imposed by any United States federal, state, local or foreign taxing authority,
including, but not limited to income, excise, property, sales, transfer,
franchise, payroll, withholding, social security or other taxes, including any
interest, penalties or additions attributable thereto. For purposes of this
Agreement, "Tax Return" shall mean any return, report, information return or
other document (including any related or supporting information) required to be
filed with any taxing authority with respect to Taxes, including all information
returns relating to Taxes of third parties, any claims for refunds of Taxes and
any amendments or supplements to any of the foregoing.
4.11. Employee Benefit Plans. (a) Section 4.11(a) of the
Company Disclosure Schedule contains a true and complete list of each "employee
benefit plan" (within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), including, without
limitation, multiemployer plans within the meaning of Section 3(37) of ERISA),
and all stock purchase, stock option, severance, employment, change-in-control,
fringe benefit, collective bargaining, bonus, incentive, deferred compensation,
employee loan and all other employee benefit plans, agreements, programs,
policies or other arrangements, whether or not subject to ERISA (including any
funding mechanism therefor now in effect or required in the future as a result
of the transaction contemplated by this Agreement or otherwise), whether formal
or informal, oral or written, under which (i) any current or former employee,
director or consultant of the Company (the "Company Employees") has any present
or future right to benefits and which are contributed to, sponsored by or
maintained by the Company's parent company (the "Parent"), the Company or any of
its Subsidiaries or (ii) the Company or its Subsidiaries has had or has any
present or future liability. All such plans, agreements, programs, policies and
arrangements shall be collectively referred to as the "Company Plans".
(b) With respect to each Company Plan under
which any Company Employee has any present or future rights to benefits, the
Company has provided to Buyer a current, accurate and complete copy (or, to the
extent no such copy exists, an accurate description) thereof and, to the extent
applicable: (i) any related trust agreement or other funding instrument; (ii)
the most recent determination letter, if applicable; (iii) any summary plan
description and other written communications (or a description of any oral
communications) by the Parent or the Company to the Company Employees concerning
the extent of the benefits provided under a Company Plan; (iv) a summary of any
proposed amendments or changes anticipated to be made to the Company Plans at
any time within the twelve months immediately following the date
16
hereof and (v) for the three most recent years (A) the Form 5500 and attached
schedules, and (B) audited financial statements.
(c) (i) Each Company Plan has been established
and administered in accordance with its terms, and in compliance with the
applicable provisions of ERISA, the Code and other applicable laws, rules and
regulations; (ii) each Company Plan which is intended to be qualified within the
meaning of Section 401(a) of the Code is so qualified and has received a
favorable determination letter or a sponsor opinion letter as to its
qualification, and nothing has occurred, whether by action or failure to act,
that could reasonably be expected to cause the loss of such qualification; (iii)
no event has occurred and no condition exists that would subject the Company, by
reason of its affiliation with any member of their "Controlled Group" (defined
as any organization which is a member of a controlled group of organizations
within the meaning of Sections 414(b), (c), (m) or (o) of the Code), to any tax,
fine, lien, penalty or other liability imposed by ERISA, the Code or other
applicable laws, rules and regulations; (iv) no "reportable event" (as such term
is defined in Section 4043 of the Code) that could reasonably be expected to
result in liability, no "prohibited transaction" (as such term is defined in
Section 406 of ERISA and Section 4975 of the Code) or "accumulated funding
deficiency" (as such term is defined in Section 302 of ERISA and Section 412 of
the Code (whether or not waived)) has occurred with respect to any Company Plan;
(v) no Company Plan is a split-dollar life insurance program or otherwise
provides for loans to executive officers (within the meaning of The
Sarbanes-Oxley Act of 2002); and (vi) no Company Plan other than the 401(k) plan
provides for any loans to Company Employees. The Company has not incurred any
current or projected liability in respect of post-employment or post-retirement
health, medical or life insurance benefits for current, former or retired
employees of Company, except as required to avoid an excise tax under Section
4980B of the Code or otherwise except as may be required pursuant to any other
applicable law.
(d) No Company Plan is a "multiemployer plan"
(as defined in Section 4001(a)(3) of ERISA) and none of the Company, nor any
member of its Controlled Group has at any time sponsored or contributed to, or
has or had any liability or obligation in respect of, any multiemployer plan.
(e) With respect to any Company Plan, (i) no
actions, suits or claims (other than routine claims for benefits in the ordinary
course) are pending or, to the knowledge of the Company, threatened, (ii) to the
knowledge of the Company, no facts or circumstances exist that could give rise
to any such actions, suits or claims, (iii) no written or oral communication has
been received from the Pension Benefit Guaranty Corporation (the "PBGC") in
respect of any Company Plan subject to Title IV of ERISA concerning the funded
status of any such plan or any transfer of assets and liabilities from any such
plan in connection with the transactions contemplated herein, and (iv) to the
knowledge of the Company, no administrative investigation, audit or other
administrative proceeding by the Department of Labor, the PBGC, the Internal
Revenue Service or other governmental agencies are pending, threatened or in
progress (including, without limitation, any routine requests for information
from the PBGC).
17
(f) Except as set forth in Section 4.11(f) of
the Company Disclosure Schedule, no Company Plan exists that, as a result of the
execution of this Agreement or the transactions contemplated by this Agreement
(whether alone or in connection with any subsequent event(s)), could result in
(i) the payment to any Company Employee of any money or other property, (ii) the
provision of any benefits or other rights of any Company Employee or (iii) the
increase, acceleration or provision of any payments, benefits or other rights to
any Company Employee. The Company's ability to deduct the payments, rights or
benefits set forth in Schedule 4.11(f) is not limited by Section 280G of the
Code.
(g) Except as set forth in Section 4.11(g) of
the Company Disclosure Schedule, no Company Plan is maintained outside the
jurisdiction of the United States, or covers any Company Employee residing or
working outside the United States (any such Company Plan set forth in Schedule
4.11(g) shall be referred to herein as a "Foreign Benefit Plan"). With respect
to any Foreign Benefit Plans, (i) all Foreign Benefit Plans have been
established, maintained and administered in compliance with their terms and all
applicable statutes, laws, ordinances, rules, orders, decrees, judgments, writs,
and regulations of any controlling governmental authority or instrumentality;
(ii) all Foreign Benefit Plans that are required to be funded are fully funded,
and with respect to all other Foreign Benefit Plans, adequate reserves therefore
have been established on the accounting statements of the Company; and (iii) no
material liability or obligation of the Company exists with respect to such
Foreign Benefit Plans that has not been disclosed on Schedule 4.11(g).
4.12. Company Disclosure Controls and Procedures. None of
the Company's records, systems, controls, data or information are recorded,
stored, maintained, operated or otherwise wholly or partly dependent on or held
by any means (including any electronic, mechanical or photographic process,
whether computerized or not) which (including all means of access thereto and
therefrom) are not under the exclusive ownership and direct control of the
Company or its accountants. The Company has devised and maintained a system of
internal accounting controls sufficient to provide reasonable assurances
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP.
4.13. Company Information. The information relating to the
Company that is provided to Buyer by the Company or its representatives for
inclusion in the Joint Proxy Statement/Prospectus, the S-4, any filing pursuant
to Rule 165 or Rule 425 under the Securities Act or Rule 14a-12 under the
Exchange Act, or any other document filed with any other Governmental Entity in
connection herewith will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances in which they are made, not misleading. The Joint Proxy
Statement/Prospectus and any filing pursuant to Rule 14a-12 under the Exchange
Act will comply with the provisions of the Securities Act and the Exchange Act
and the rules and regulations thereunder except that no representation or
warranty is made by the Company with respect to statements made or incorporated
by reference therein based on information supplied by Buyer specifically for
inclusion or incorporation by reference in the Joint Proxy Statement/Prospectus.
18
4.14. Compliance with Applicable Law. The Company:
(a) is in compliance, in the conduct of its
business, with all applicable federal, state, local and foreign statutes, laws,
regulations, ordinances, permits, licenses, franchises, certificates of
authority, rules, judgments, orders or decrees applicable thereto or to the
employees conducting such businesses, including the Sarbanes-Oxley Act of 2002,
the Equal Credit Opportunity Act, the Fair Housing Act, the Community
Reinvestment Act, the Home Mortgage Disclosure Act, the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, all other applicable fair
lending and fair housing laws or other laws relating to discrimination
(including, without limitation, anti-redlining, equal credit opportunity and
fair credit reporting), truth-in-lending, real estate settlement procedures,
adjustable rate mortgages disclosures or consumer credit (including, without
limitation, the federal Consumer Credit Protection Act, the federal Truth-in
Lending Act and Regulation Z thereunder, the federal Real Estate Settlement
Procedures Act of 1974 and Regulation X thereunder, and the federal Equal Credit
Opportunity Act and Regulation B thereunder) or with respect to the Flood
Disaster Protection Act and the Bank Secrecy Act, and, as of the date hereof,
the Company has a Community Reinvestment Act rating of "outstanding";
(b) has all permits, licenses, franchises,
certificates, orders, and approvals of, and has made all filings, applications,
and registrations with, Governmental Entities that are required in order to
permit the Company to carry on its business as currently conducted;
(c) except as set forth in Section 4.14(c) of
the Company Disclosure Schedule, has, since December 31, 2001, received no
notification or communication from any Governmental Entity (A) asserting that
the Company is not in compliance with any statutes, regulations or ordinances,
(B) threatening to revoke any permit, license, franchise, certificate of
authority or other governmental authorization, or (C) threatening or
contemplating revocation or limitation of, or which would have the effect of
revoking or limiting, FDIC deposit insurance; and
(d) except as set forth in Section 4.14(d) of
the Company Disclosure Schedule, is not a party to or subject to any order,
decree, capital or other directive, agreement, memorandum of understanding or
similar arrangement with, or a commitment letter, supervisory letter or similar
submission to, and has not adopted any board resolutions at the request of any
Governmental Entity charged with the supervision or regulation of depository
institutions or engaged in the insurance of deposits (including the FDIC) or the
supervision or regulation of the Company and the Company has not been advised by
any such Governmental Entity that such Governmental Entity is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of understanding,
commitment letter, supervisory letter or similar submission or any such board
resolutions.
4.15. Certain Contracts. (a) Except as set forth in Section
4.15(a) of the Company Disclosure Schedule, the Company is not a party to or
bound by any contract,
19
arrangement, commitment or understanding (whether written or oral) (i) with
respect to the employment of any directors, officers, employees or consultants,
(ii) which, upon the consummation of the transactions contemplated by this
Agreement, will (either alone or upon the occurrence of any additional acts or
events) result in (x) any payment or benefits (whether of severance pay or
otherwise) becoming due, or any increase in the amount of or acceleration or
vesting of any rights to any payment or benefits, from Buyer, the Company, the
Surviving Company or any of their respective Subsidiaries to any director,
officer, employee or consultant thereof or (y) the invalidity, unenforceability
or discontinuation of any such contract, arrangement, commitment or
understanding, whether in whole or in part, (iii) which is a material contract
(as defined in Item 601(b)(10) of Regulation S-K of the SEC) to be performed in
whole or part after the date of this Agreement that has not been filed or
incorporated by reference in the Company Reports filed prior to the date of this
Agreement, (iv) which is not terminable without cause on 60 days or less notice
or involves the payment of more than $100,000 per annum, (v) which limits the
freedom of the Company or any of its affiliates to compete in any line of
business, in any geographic area or with any person, or which requires referrals
of business or requires the Company or any of its affiliates to offer products
or services of any other person on a priority or exclusive basis, or (vi) with
Korea Exchange Bank or any of its other affiliates or any directors or officers
thereof (other than any such contract, arrangement, commitment or understanding
that will be terminated at or prior to the Closing without any cost or liability
to the Company). Each contract, arrangement, commitment or understanding of the
type described in this Section 4.15(a), whether or not set forth in Section
4.15(a) of the Company Disclosure Schedule, is referred to herein as a "Company
Contract." The Company has made available to Buyer (x) all Company Contracts and
(y) all other contracts (including all lease, rental or occupancy agreements or
other contracts affecting or relating to the ownership or use of any real or
personal property; all agreements for the purchase or sale of Loans (as
hereinafter defined) on a wholesale or bulk basis and all consulting agreements
with outside consultants) which involved payments by the Company in fiscal year
2003 of more than $100,000 or which could reasonably be expected to involve
payments during fiscal year 2004 of more than $100,000, other than any such
contract that is terminable at will on 60 days or less notice without payment of
a penalty in excess of $100,000 and other than any contract entered into on or
after the date hereof that is permitted under the provisions of Section 6.1.
(b) (i) Each Company Contract is a valid and
binding obligation of the Company and in full force and effect, and to the
knowledge of the Company, is valid and binding on the other parties thereto,
(ii) the Company, and to the knowledge of the Company, each of the other parties
thereto, has performed all obligations required to be performed by it under each
Company Contract, (iii) no event or condition exists which constitutes, or after
notice or lapse of time or both would constitute, a default on the part of the
Company under any Company Contract, and (iv) no other party to such Company
Contract is, to the knowledge of the Company, in default in any respect
thereunder.
4.16. Environmental Matters. (a) Each of the Company and,
to the knowledge of the Company, each of the Participation Facilities and the
Loan Properties (each as defined below) are and have been in compliance with all
applicable federal, state
20
and local laws including common law, regulations and ordinances and with all
applicable decrees, orders and contractual obligations relating to pollution or
the discharge of or exposure to Hazardous Materials (as defined below) in the
environment or workplace.
(b) There is no legal, administrative, arbitral
or other proceeding, claim, action or cause of action, private environmental
investigation or remediation activity or governmental investigation of any
nature seeking to impose, or that is reasonably expected to result in the
imposition, on the Company any liability or obligation arising under common law
standards relating to environmental protection, human health or safety, or under
any local, state or federal environmental statute, regulation or ordinance,
including the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended (collectively, the "Environmental Laws"), pending or, to
the knowledge of the Company, threatened. The Company is not subject to any
agreement, order, judgment, decree, letter or memorandum by or with any court,
governmental authority or regulatory agency imposing any liability or obligation
pursuant to or under any Environmental Law.
(c) To the knowledge of the Company, during the
period of (i) the Company's ownership or operation of any of its current or
former properties, (ii) the Company's participation in the management of any
Participation Facility or (iii) the Company's interest in a Loan Property, there
has been no release of Hazardous Materials in, on, under or affecting any such
property. To the knowledge of the Company, prior to the period of (x) the
Company's ownership or operation of any of its current or former properties, (y)
the Company's participation in the management of any Participation Facility, or
(z) the Company's interest in a Loan Property, there was no release or
threatened release of Hazardous Materials in, on, under or affecting any such
property, Participation Facility or Loan Property.
The following definitions apply for purposes of this Section
4.16: (i) "Hazardous Materials" means any chemicals, pollutants, contaminants,
wastes, toxic substances, petroleum or other regulated substances or materials;
(ii) "Loan Property" means any property in which the Company holds a security
interest, and, where required by the context, said term means the owner or
operator of such property; and (iii) "Participation Facility" means any facility
in which the Company participates in the management and, where required by the
context, said term means the owner or operator of such property.
4.17. Derivative Transactions. (a) All Derivative
Transactions (as defined below) entered into by the Company or for the account
of any of its customers were entered into in accordance with applicable laws,
rules, regulations and regulatory policies of any Governmental Entity, and in
accordance with the investment, securities, commodities, risk management and
other policies, practices and procedures employed by the Company, and were
entered into with counterparties believed at the time to be financially
responsible and able to understand (either alone or in consultation with their
advisers) and to bear the risks of such Derivative Transactions. The Company
and, to the knowledge of the Company, each of the applicable counterparties,
have duly performed all of its obligations under the Derivative Transactions to
the extent that such obligations
21
to perform have accrued, and, to the knowledge of the Company, there are no
breaches, violations or defaults or allegations or assertions of such by any
party thereunder.
(b) No Derivative Transaction, were it to be a
Loan held by the Company, would be classified as "Other Loans Specially
Mentioned," "Special Mention," "Substandard," "Doubtful," "Loss," "Classified,"
"Criticized," "Credit Risk Assets," "Concerned Loans" or words of similar
import. The financial position of the Company under or with respect to each such
Derivative Transaction has been reflected in the books and records of the
Company in accordance with GAAP consistently applied.
(c) For purposes of this Agreement, the term
"Derivative Transaction" means any swap transaction, option, warrant, forward
purchase or sale transaction, futures transaction, cap transaction, floor
transaction or collar transaction relating to one or more currencies,
commodities, bonds, equity securities, loans, interest rates, catastrophe
events, weather-related events, credit-related events or conditions or any
indexes, or any other similar transaction (including any option with respect to
any of these transactions) or combination of any of these transactions,
including collateralized mortgage obligations or other similar instruments or
any debt or equity instruments evidencing or embedding any such types of
transactions, and any related credit support, collateral or other similar
arrangements related to such transactions.
4.18. Opinion. Prior to the execution of this Agreement,
the Company has received an opinion from the Company Advisor to the effect that,
as of the date thereof and based upon and subject to the matters set forth
therein, the Merger Consideration to be received by the stockholders of the
Company (other than the Trustee on behalf of the Trust) is fair to such
stockholders from a financial point of view. Such opinion has not been amended
or rescinded as of the date of this Agreement.
4.19. Approvals. As of the date of this Agreement, the
Company knows of no reason why all regulatory approvals applicable to it from
any Governmental Entity required for the consummation of the transactions
contemplated by this Agreement should not be obtained on a timely basis.
4.20. Loan Portfolio. (a) The Company is not a party to any
written or oral (i) loan, loan agreement, note, borrowing arrangement or other
extension of credit (including, without limitation, leases, credit enhancements,
commitments, guarantees and interest-bearing assets) (collectively, "Loans"),
other than any Loan the unpaid principal balance of which does not exceed
$250,000, under the terms of which the obligor was, as of September 30, 2003,
over 90 days delinquent in payment of principal or interest or in default of any
other provision, or (ii) as of the date hereof, Loan with any director,
executive officer or five percent or greater stockholder of the Company, or to
the knowledge of the Company, any person, corporation or enterprise controlling,
controlled by or under common control with any of the foregoing. Section 4.20(a)
of the Company Disclosure Schedule sets forth (x) all of the Loans in original
principal amount in excess of $750,000 of the Company that as of September 30,
2003 were classified by any bank examiner (whether regulatory or internal) as
"Other Loans Specially Mentioned," "Special Mention," "Substandard," "Doubtful,"
"Loss," "Classified," "Criticized,"
22
"Credit Risk Assets," "Concerned Loans," "Watch List" or words of similar
import, together with the principal amount of and accrued and unpaid interest on
each such Loan and the identity of the borrower thereunder, (y) by category of
Loan (i.e., commercial, consumer, etc.), all of the other Loans of the Company
that as of September 30, 2003 were classified as such, together with the
aggregate principal amount of and accrued and unpaid interest on such Loans by
category and (z) each asset of the Company that as of September 30, 2003 was
classified as "Other Real Estate Owned" and the book value thereof.
(b) Each Loan in original principal amount in
excess of $250,000 (i) is evidenced by notes, agreements or other evidences of
indebtedness that are true, genuine and what they purport to be, (ii) to the
extent secured, has been secured by valid Liens which have been perfected and
(iii) is the legal, valid and binding obligation of the obligor named therein,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(c) The Company is duly licensed as a lender by
the Small Business Administration ("SBA") and is eligible to participate in the
SBA's Preferred Lenders Program. The Company is not now nor has it ever been
subject to any fine, suspension or other administrative agreement or sanction
by, or any reduction in its lending authority by, the SBA. All of the Loans
originated or purchased by the Company which are guaranteed by the SBA meet all
of the SBA's requirements for guarantee under the applicable SBA program.
4.21. Property. The Company has good and marketable title
free and clear of all Liens to all of the properties and assets, real and
personal, tangible or intangible, which are reflected on the consolidated
statement of financial condition of the Company as of September 30, 2003 or
acquired after such date, except (a) liens for Taxes not yet due and payable,
(b) pledges to secure deposits and other liens incurred in the ordinary course
of business, or (c) mechanics', materialmen's, workmen's, repairmen's,
warehousemen's, carrier's and other similar liens arising in the ordinary course
of business. All real property and fixtures material to the business, operations
or financial condition of the Company are in good condition and repair, subject
to ordinary wear and tear. All leases pursuant to which the Company, as lessee,
leases real or personal property are valid and enforceable in accordance with
their respective terms and neither the Company nor, to the knowledge of the
Company, any other party thereto is in default thereunder nor is there any event
which with notice or lapse of time or both would constitute such a default. The
Company has good, valid and marketable title to all material tangible personal
property owned by it, free and clear of all Liens other than mechanics',
materialmen's, workmen's, repairmen's, warehousemen's, carrier's and other
similar liens arising in the ordinary course of business.
4.22. Patents, Trademarks, Etc. The Company owns or
possesses, or is licensed or otherwise has the right to use, all proprietary
rights, including all trademarks, trade names, service marks and copyrights,
that are material to the conduct of its existing business. The Company is not
bound by or a party to any licenses or agreements of any
23
kind with respect to any trademarks, service marks or trade names which it
claims to own. The Company has not received any communications alleging that it
has violated any of the patents, trademarks, service marks, trade names,
copyrights or trade secrets or other proprietary rights of any other person or
entity.
4.23. Insurance. The Company is insured with reputable
insurers against such risks and in such amounts as the management of the Company
reasonably has determined to be prudent and consistent with industry practice.
The Company is in material compliance with its insurance policies and is not in
default under any of the material terms thereof. Each such policy is outstanding
and in full force and effect and, except as set forth in Section 4.23 of the
Company Disclosure Schedule and except for policies insuring against potential
liabilities of officers, directors and employees of the Company, the Company is
the sole beneficiary of such policies. All premiums and other payments due under
any such policy have been paid, and all claims thereunder have been filed in due
and timely fashion.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Except as set forth in the Buyer Disclosure Schedule, Buyer
hereby represents and warrants to the Company as follows:
5.1. Corporate Organization. (a) Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Buyer Sub is a banking corporation duly organized, validly
existing and in good standing under the laws of the State of California. The
deposit accounts of Buyer Sub are insured by the FDIC through the Bank Insurance
Fund to the fullest extent permitted by law, and all premiums and assessments
required to be paid in connection therewith have been paid when due. Each of
Buyer and Buyer Sub (i) has all requisite corporate power and authority to own
or lease all of its properties and assets and to carry on its business as it is
now being conducted, and (ii) is duly licensed or qualified to do business in
each jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary. Buyer is duly registered as a bank
holding company under the Bank Holding Company Act of 1956, as amended. The
Certificate of Incorporation and By-Laws of Buyer, and the Articles of
Incorporation and By-Laws of Buyer Sub, copies of which have previously been
made available to the Company, are true, complete and correct copies of such
documents as in effect as of the date of this Agreement. Buyer has no
Subsidiaries other than Buyer Sub.
(b) The minute books of Buyer and Buyer Sub
contain true, complete and accurate records of all meetings and other corporate
actions held or taken since January 1, 2000 of their respective stockholders and
Board of Directors (including committees of their respective Boards of
Directors).
5.2. Capitalization. (a) The authorized capital stock of
Buyer consists of 50,000,000 shares of Buyer Common Stock and 10,000,000 shares
of preferred stock.
24
As of the date of this Agreement, there are (i) 14,163,410 shares of Buyer
Common Stock issued and outstanding and no shares of Buyer preferred stock
outstanding as of December 19, 2003, (ii) no shares of Buyer Common Stock
reserved for issuance upon exercise of outstanding stock options or otherwise,
except for 1,654,291 shares of Buyer Common Stock reserved for issuance pursuant
to Buyer's 2000 Stock Option Plan and described in Section 5.2 of the Buyer
Disclosure Schedule and (iii) no shares of Buyer Common Stock held by Buyer as
treasury stock. All of the issued and outstanding shares of Buyer Common Stock
have been, and the shares of Buyer Common Stock to be issued pursuant to the
Merger will be at the Effective Time, duly authorized, validly issued, fully
paid and nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. Except for the stock options referred to in
this Section 5.2(a) or as otherwise specified by Section 5.2 of the Buyer
Disclosure Schedule or otherwise contemplated by this Agreement (including
Section 5.7 hereof), as of the date of this Agreement, Buyer does not have and
is not bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or issuance
of any shares of Buyer Common Stock or any other equity security of Buyer or any
securities representing the right to purchase or otherwise receive any shares of
Buyer Common Stock or any other equity security of Buyer (including any rights
plan or agreement).
(b) The authorized capital stock of Buyer Sub
consists of 10,000,000 shares of Buyer Sub Common Stock, of which 7,414,400
shares are outstanding on the date hereof. All of the issued and outstanding
shares of Buyer Sub are owned by Buyer. All of the issued and outstanding shares
of Buyer Sub have been duly authorized, validly issued, fully paid and
nonassessable. As of the date of this Agreement, Buyer Sub does not have and is
not bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or issuance
of any shares of Buyer Sub Common Stock or any other equity security of Buyer
Sub or any securities representing the right to purchase or otherwise receive
any shares of Buyer Sub Common Stock or any other equity security of Buyer Sub
(including any rights plan or agreement).
(c) No Voting Debt has been issued by Buyer or
Buyer Sub and is outstanding.
5.3. Authority; No Violation. (a) Each of Buyer and Buyer
Sub has full corporate power and authority to execute and deliver this Agreement
and the Agreement of Merger and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and the
Agreement of Merger and the consummation of the transactions contemplated hereby
and thereby have been (i) duly and validly approved by the Board of Directors of
Buyer, and (ii) duly and validly approved by the Board of Directors of Buyer Sub
and by Buyer in its capacity as the sole shareholder of Buyer Sub, and no other
corporate or stockholder proceedings on the part of Buyer or Buyer Sub are
necessary to approve this Agreement and the Agreement of Merger and to
consummate the transactions contemplated hereby and thereby other than the
Required Buyer Vote. This Agreement has been duly and validly executed and
delivered by Buyer and Buyer Sub and (assuming due authorization, execution and
25
delivery by the Company) constitutes and the Agreement of Merger, upon due
execution and delivery by the parties hereto, will constitute a valid and
binding obligation of Buyer and Buyer Sub, enforceable against Buyer and Buyer
Sub in accordance with its terms, except as enforcement may be limited by
general principles of equity whether applied in a court of law or a court of
equity and by bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally.
(b) Neither the execution and delivery of this
Agreement by Buyer and Buyer Sub nor the consummation by Buyer and Buyer Sub of
the transactions contemplated hereby, nor compliance by Buyer and Buyer Sub with
any of the terms or provisions hereof, will (i) violate any provision of the
Certificate of Incorporation or By-Laws of Buyer, or the Articles of
Incorporation or By-Laws of Buyer Sub or (ii) assuming that the Required Buyer
Vote and the consents and approvals referred to in Section 5.4 are duly
obtained, (x) violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to Buyer or Buyer Sub or any of
their respective properties or assets, or (y) violate, conflict with, result in
a breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of Buyer or Buyer Sub under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, deed of trust, license, lease, contract,
agreement or other instrument or obligation to which Buyer or Buyer Sub is a
party, or by which they or any of their respective properties or assets may be
bound or affected.
5.4. Consents and Approvals. Except for (a) the filing of
the Bank Merger Act Application and approval of such application, (b) the State
Banking Approvals, (c) the filing of the Agreement of Merger and the California
Certificate with the Commissioner, (d) the filing of the Agreement of Merger and
California Certificate approved by the Commissioner with the California
Secretary, (e) the filing of a copy of the Agreement of Merger certified by the
California Secretary with the Commissioner, (f) notification from the Federal
Reserve Board pursuant to 12 C.F.R. 225.12(d)(2) that an application under
Section 3 of the Bank Holding Company Act of 1956, as amended, is not required
in connection with the consummation of the Merger and the purchase of shares of
Company Common Stock pursuant to the VAS Agreement, (g) authorization for
listing of the shares of Buyer Common Stock to be issued in the Merger on the
Nasdaq National Market System, (h) the filing with the SEC and the FDIC of the
Joint Proxy Statement/Prospectus and the filing and declaration of effectiveness
of the S-4 and any filings or approvals under applicable state securities laws,
and (i) such filings, authorizations or approvals as may be set forth in Section
5.4 of the Buyer Disclosure Schedule, no consents or approvals of or filings or
registrations with any Governmental Entity or with any third party are necessary
in connection with the execution and delivery by Buyer or Buyer Sub of this
Agreement or the consummation by Buyer and Buyer Sub of the Merger and the other
transactions contemplated hereby.
5.5. Broker's Fees. Neither Buyer nor Buyer Sub, nor any
of their respective officers or directors, has employed any broker or finder or
incurred any
26
liability for any broker's fees, commissions or finder's fees in connection with
any of the transactions contemplated by this Agreement, except that Buyer has
engaged, and will pay a fee or commission to Credit Suisse First Boston LLC.
5.6. Buyer Information. The information relating to Buyer
and Buyer Sub to be contained in the Joint Proxy Statement/Prospectus, the S-4,
any filing pursuant to Rule 165 or Rule 425 under the Securities Act or Rule
14a-12 under the Exchange Act, or any other document filed with any other
Governmental Entity in connection herewith will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances in which they are made, not
misleading. The Joint Proxy Statement/Prospectus, the S-4 and any filing
pursuant to Rule 165 or Rule 425 under the Securities Act or Rule 14a-12 under
the Exchange Act will comply with the provisions of the Securities Act and the
Exchange Act and the rules and regulations thereunder except that no
representation or warranty is made by Buyer with respect to statements made or
incorporated by reference therein based on information supplied by the Company
specifically for inclusion or incorporation by reference in the Joint Proxy
Statement/Prospectus.
5.7. Access to Funds. Section 5.7 of the Buyer Disclosure
Schedule contains an accurate and complete description of the financing (the
"Financing") contemplated as of the date hereof to be used by Buyer to complete
the transactions contemplated by the VAS Agreement and the amounts of debt and
equity financing as to which Buyer has entered into binding written commitments
with respect to the Financing as of the date of this Agreement, including the
names of the parties to such commitments. Buyer has previously provided to the
Company copies of the commitment letters (the "Financing Commitment Letters")
between Buyer and certain investors related to the debt and equity financing
that Buyer intends to use to consummate the transactions contemplated by the VAS
Agreement. As of the date of this Agreement, the Financing Commitment Letters
are in full force and effect, and Buyer has no reason to believe that any of the
conditions to financing specified in the Financing Commitment Letters that are
within the control of Buyer will not be satisfied in accordance with the terms
of the Financing Commitment Letters. As of the date of this Agreement, the
representations and warranties made by Buyer in the Financing Commitment Letters
were true and correct when made.
5.8. Approvals. As of the date of this Agreement, Buyer
knows of no reason applicable to it why all regulatory approvals from any
Governmental Entity required for the consummation of the transactions
contemplated hereby (including, without limitation, the Merger) should not be
obtained on a timely basis.
5.9. Legal Proceedings. (a) Neither Buyer nor Buyer Sub is
a party to any, and there are no pending or, to Buyer's knowledge, threatened,
legal, administrative, or arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against Buyer or Buyer
Sub that, individually or in the aggregate, would (i) delay or prevent Buyer or
Buyer Sub from performing its obligations hereunder or (ii) adversely affect the
ability of Buyer or Buyer Sub to consummate the transactions contemplated
hereby.
27
(b) There is no injunction, order, judgment,
decree, or regulatory restriction imposed upon Buyer or Buyer Sub, or the assets
of Buyer or Buyer Sub.
5.10. Compliance with Applicable Law. Each of Buyer and
Buyer Sub:
(a) is in compliance, in the conduct of its
business, with all applicable federal, state, local and foreign statutes, laws,
regulations, ordinances, permits, licenses, franchises, certificates of
authority, rules, judgments, orders or decrees applicable thereto or to the
employees conducting such businesses, including the Sarbanes-Oxley Act of 2002,
the Equal Credit Opportunity Act, the Fair Housing Act, the Community
Reinvestment Act, the Home Mortgage Disclosure Act, the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, all other applicable fair
lending and fair housing laws or other laws relating to discrimination
(including, without limitation, anti-redlining, equal credit opportunity and
fair credit reporting), truth-in-lending, real estate settlement procedures,
adjustable rate mortgages disclosures or consumer credit (including, without
limitation, the federal Consumer Credit Protection Act, the federal Truth-in
Lending Act and Regulation Z thereunder, the federal Real Estate Settlement
Procedures Act of 1974 and Regulation X thereunder, and the federal Equal Credit
Opportunity Act and Regulation B thereunder) or with respect to the Flood
Disaster Protection Act and the Bank Secrecy Act, and, as of the date hereof,
the Company has a Community Reinvestment Act rating of "satisfactory" or better;
(b) has all permits, licenses, franchises,
certificates, orders, and approvals of, and has made all filings, applications,
and registrations with, Governmental Entities that are required in order to
permit Buyer and Buyer Sub to carry on its business as currently conducted;
(c) has, since December 31, 2000, received no
notification or communication from any Governmental Entity (A) asserting that
Buyer or Buyer Sub is not in compliance with any statutes, regulations or
ordinances, (B) threatening to revoke any permit, license, franchise,
certificate of authority or other governmental authorization, or (C) threatening
or contemplating revocation or limitation of, or which would have the effect of
revoking or limiting, FDIC deposit insurance; and
(d) is not a party to or subject to any order,
decree, capital or other directive, agreement, memorandum of understanding or
similar arrangement with, or a commitment letter, supervisory letter or similar
submission to, and has not adopted any board resolutions at the request of, any
Governmental Entity charged with the supervision or regulation of depository
institutions or their holding companies or engaged in the insurance of deposits
(including the Federal Reserve) or the supervision or regulation of Buyer or
Buyer Sub and neither Buyer nor Buyer Sub has been advised by any such
Governmental Entity that such Governmental Entity is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding, commitment letter,
supervisory letter or similar submission or any such board resolution.
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5.11. Regulatory Reports. (a) Buyer and Buyer Sub have
timely filed all reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were required to
file since December 31, 2000 with the Regulatory Agencies (which term shall
include, for purposes of this Section 5.11, the Federal Reserve Board), and have
paid all fees and assessments due and payable in connection therewith. Except
for normal examinations conducted by a Regulatory Agency in the regular course
of the business of Buyer and Buyer Sub, no Regulatory Agency has initiated any
proceeding, or to the knowledge of Buyer, threatened an investigation into the
business or operations of Buyer or Buyer Sub since December 31, 2000. There is
no unresolved violation, criticism, or exception by any Regulatory Agency with
respect to any report or statement relating to any examinations of Buyer or
Buyer Sub.
(b) A true, correct and complete copy of each
final registration statement, prospectus, report, schedule and definitive proxy
statement filed since December 31, 2000 by Buyer with the SEC pursuant to the
Securities Act or the Exchange Act (collectively, the "Buyer Reports") is
publicly available via EDGAR. Buyer has timely filed all Buyer Reports and other
documents required to be filed by it under the Securities Act and the Exchange
Act, and, as of their respective dates, all Buyer Reports complied with the
requirements of the Securities Act and the Exchange Act, as the case may be, and
the rules and regulations of the SEC thereunder applicable to such Buyer
Reports. As of their respective dates of filing with the SEC (or, if amended or
superseded by a subsequent filing prior to the date hereof, as of the date of
such subsequent filing), no such Buyer Report (when filed and at their
respective effective time, if applicable) contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading, and there are no
outstanding comments from or unresolved issues raised by the SEC with respect to
any of the Buyer Reports. No executive officer of Buyer has failed in any
respect to make the certifications required of him or her under Section 302 or
906 of the Sarbanes-Oxley Act of 2002 and no enforcement action has been
initiated against Buyer by the SEC or any State Regulator relating to
disclosures contained in any Buyer Reports.
5.12. Financial Statements. (a) Buyer has previously made
available to the Company copies of (a) the consolidated balance sheets of Buyer
as of December 31 for the fiscal years 2001 and 2002, and the related
consolidated statements of operations, changes in stockholders' equity and
comprehensive income and cash flows for the fiscal years 2000 through 2002,
inclusive, as reported in Buyer's Annual Report on Form 10-K for the fiscal year
ended December 31, 2002 filed with the SEC under the Exchange Act, in each case
accompanied by the audit report of Buyer's independent public accountant, and
(b) the consolidated unaudited balance sheets of Buyer as of September 30, 2002
and September 30, 2003 and the related unaudited statements of operations and
cash flows for the three-month and nine-month periods then ended as reported in
Buyer's Quarterly Report on Form 10-Q for the period ended September 30, 2003
filed with the SEC under the Exchange Act. The financial statements referred to
in this Section 5.12 (including the related notes, where applicable) fairly
present, and the financial statements to be filed by
29
Buyer with the SEC after the date of this Agreement will fairly present
(subject, in the case of the unaudited statements, to recurring audit
adjustments normal in nature and amount, none of which are expected to be
material to Buyer), the consolidated results of the operations and financial
position of Buyer for the respective fiscal periods or as of the respective
dates therein set forth; each of such statements (including the related notes,
where applicable) complies, and the financial statements to be filed by Buyer
with the SEC after the date of this Agreement will comply, with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto; and each of such statements (including the related notes,
where applicable) has been, and the financial statements to be filed by Buyer
with the SEC after the date of this Agreement will be, prepared in accordance
with GAAP consistently applied during and throughout the periods involved,
except as indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-Q. The books and records of Buyer and Buyer
Sub have been, and are being, maintained in accordance with GAAP and any other
applicable legal and accounting requirements and reflect only actual
transactions.
(b) Except for (i) those liabilities that are
fully reflected or reserved for in the consolidated financial statements of
Buyer included in its Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 2003, as filed with the SEC or (ii) liabilities incurred since
September 30, 2003 in the ordinary course of business consistent with past
practice, neither Buyer nor Buyer Sub has incurred any material liability of any
nature whatsoever (whether absolute, accrued or contingent or otherwise and
whether due or to become due), other than pursuant to or as contemplated by this
Agreement (including Section 5.7 hereof) and except as is not reasonably likely
to have a Material Adverse Effect on Buyer.
5.13. Absence of Certain Changes or Events. (a) Except
as disclosed in any Buyer Report filed prior to the date of this Agreement,
since December 31, 2002, there has been no change or development or combination
of changes or developments which, individually or in the aggregate, has had or
is reasonably likely to have a Material Adverse Effect on Buyer.
(b) Except as disclosed in any Buyer Report
filed prior to the date of this Agreement, since September 30, 2003, Buyer and
Buyer Sub have carried on their business only in the ordinary and usual course
consistent with past practices and have not taken any action that would have
been prohibited by Section 6.2 if taken after the date of this Agreement.
5.14. Opinion. Prior to the execution of this Agreement,
Buyer has received an opinion from the Buyer Advisor to the effect that, as of
the date thereof and based upon and subject to the matters set forth therein,
the Merger Consideration to be paid to the stockholders of the Company is fair
to Buyer from a financial point of view. Such opinion has been confirmed in
writing and has not been amended or rescinded as of the date of this Agreement.
5.15. Buyer Disclosure Controls and Procedures. None of
Buyer's records, systems, controls, data or information are recorded, stored,
maintained, operated
30
or otherwise wholly or partly dependent on or held by any means (including any
electronic, mechanical or photographic process, whether computerized or not)
which (including all means of access thereto and therefrom) are not under the
exclusive ownership and direct control of Buyer or its accountants. Buyer has
devised and maintained a system of internal accounting controls sufficient to
provide reasonable assurances regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with GAAP.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1. Covenants of the Company. During the period from the
date of this Agreement and continuing until the Effective Time, except as
expressly contemplated or permitted by this Agreement or with the prior written
consent of Buyer, the Company shall carry on its business in the ordinary course
consistent with past practice and, to the extent consistent therewith, the
Company will use its reasonable best efforts to (x) preserve its business
organization and its rights, authorizations, franchises and other authorizations
issued by Governmental Entities intact, (y) keep available to itself and Buyer
the present services of the current officers and employees of the Company, and
(z) preserve for itself and Buyer the goodwill of the customers of the Company
and others with whom business relationships exist. Without limiting the
generality of the foregoing, and except as set forth in Section 6.1 of the
Company Disclosure Schedule or as otherwise contemplated by this Agreement or
with the prior written consent of Buyer, which shall not be unreasonably
withheld or delayed, during the period from the date of this Agreement to the
Effective Time, the Company shall not:
(a) other than normal quarterly cash dividends
not in excess of $0.05 per share of Company Common Stock, declare or pay any
dividends on, or make other distributions in respect of, any of its capital
stock; provided, however, that no dividends shall be paid by the Company on
Company Common Stock if (i) the Company shall be required to borrow funds to do
so or (ii) such dividend shall cause the Company to cease to qualify as a "well
capitalized" institution under applicable FDIC rules;
(b) (i) split, combine or reclassify any shares
of its capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock; (ii) directly or indirectly repurchase, redeem or otherwise
acquire (except for the acquisition of shares in trust accounts, managed
accounts and the like for the benefit of customers or shares held in
satisfaction of a debt previously contracted) any shares of the capital stock of
the Company, or any securities convertible into or exercisable for any shares of
the capital stock of the Company, or grant any person any right to acquire any
shares of the capital stock of the Company; or (iii) issue, deliver, sell,
pledge or otherwise encumber or subject to any Lien or authorize or propose the
issuance, delivery, sale, pledge or encumbrance of or the imposition of any Lien
on, any shares of its capital stock or any securities convertible into or
exercisable for, or any rights, warrants or options to acquire, any such shares,
or enter into any agreement with respect to any of the foregoing, except, in the
case of clause (iii), for the issuance of Company Common Stock upon the exercise
31
or fulfillment of rights or options issued or existing pursuant to employee
benefit plans, programs or arrangements, all to the extent outstanding and in
existence on the date of this Agreement and disclosed pursuant to Section
4.2(a), and in accordance with their present terms;
(c) amend its articles of incorporation, by-laws
or other similar governing documents, or enter into a plan of consolidation,
merger, share exchange, reorganization or similar business combination with or
involving any other person, or a letter of intent or agreement in principle with
respect thereto, other than in accordance with Section 9.1(i) of this Agreement;
(d) make any capital expenditures other than
those which (i) are made in the ordinary course of business or are necessary to
maintain existing assets in good repair and (ii) in any event are in an amount
of no more than $150,000 in the aggregate;
(e) enter into any new line of business, offer
any new product or change its lending, investment, risk and asset-liability
management and other material banking or operating policies or procedures,
except as required by law or by policies imposed by a Governmental Entity;
(f) acquire or agree to acquire, by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or
division thereof or otherwise acquire any assets (other than investment
securities acquired in the ordinary course of business consistent with past
practice and with Section 6.1(q)), other than in connection with foreclosures,
settlements in lieu of foreclosure or troubled loan or debt restructurings in
the ordinary course of business consistent with past practices;
(g) except for Loans or commitments for Loans
that have previously been approved by the Company prior to the date of this
Agreement, (i) make or acquire any Loan or issue a commitment for any Loan
except for Loans and commitments that are made in the ordinary course of
business consistent with past practice and with a principal balance of
$7,000,000 or less, (ii) take any action that would result in any discretionary
releases of collateral or guarantees or otherwise restructure any Loan or
commitment for any Loan with a principal balance in excess of $3,000,000, (iii)
incur any indebtedness for borrowed money, other than deposit liabilities, FHLB
advances and reverse repurchase agreements, in each case, entered into in the
ordinary course of business consistent with past practice and with a final
maturity of one year or less, or (iv) guarantee or agree to guarantee, or
endorse or assume responsibility for, the obligations of any person (other than
the endorsement of checks and other negotiable instruments in the normal process
of collection and the issuance of standby letters of credit and trade letters of
credit);
32
(h) take any action or fail to take any action
that is intended or may reasonably be expected to result in any of the
conditions to the Merger set forth in Article VIII not being satisfied;
(i) change its methods of accounting in effect
at December 31, 2002 except as required by changes in GAAP or regulatory
accounting principles as concurred to by the Company's independent auditors;
(j) (i) increase the compensation or benefits of
any present or former director, officer or employee of the Company (except, in
the case of non-executive officers and other employees, for increases in salary
or wages in the ordinary course of business consistent with past practice or for
additional payments pursuant to the Company's Retention Plan identified in
Section 4.11(a) of the Company Disclosure Schedule not to exceed $800,000 in the
aggregate), (ii) grant any severance or termination pay to any present or former
director, officer or employee of the Company other than pursuant to the
Company's Severance Plan identified in Section 4.11(a) of the Company Disclosure
Schedule not to exceed $2,100,000 in the aggregate, (iii) establish, adopt,
enter into, amend or terminate any Company Plan or any plan, agreement, program,
policy, trust, fund or other arrangement that would be a Company Plan if it were
in existence as of the date of this Agreement, except as required by applicable
law or as required to maintain qualification pursuant to the Code, or (iv) grant
any equity or equity-based awards;
(k) sell, license, lease, encumber, assign or
otherwise dispose of, or agree to sell, license, lease, encumber, assign or
otherwise dispose of, or abandon or fail to maintain any of its assets,
properties or other rights or agreements except (i) sales of Loans and, subject
to Section 6.1(q), investment securities in the ordinary course of business
consistent with past practice, (ii) as expressly required by the terms of any
contracts or agreements in force at the date or renewals thereof of this
Agreement and set out in Section 6.1 of the Company Disclosure Schedule, or
(iii) pledges of assets to secure public deposits accepted in the ordinary
course of business consistent with past practice;
(l) file any application to establish, relocate,
sell, acquire or terminate, or establish, relocate, sell, acquire or terminate,
the operations of any branch, loan production, servicing or other banking office
or facility of the Company;
(m) enter into, create, renew, amend or
terminate, fail to perform any material obligations under, waive or release any
material rights under or give notice of a proposed renewal, amendment, waiver,
release or termination of, any contract, agreement or lease to which the Company
is a party or by which the Company or its properties is bound that calls for
aggregate annual payments of $100,000 or more; or make any material change in
any of such contracts, agreements or leases, other than the renewal in the
ordinary course of business of any lease the term of which expires prior to the
Closing Date without material changes to the terms thereof;
33
(n) except pursuant to agreements or
arrangements in effect on the date hereof and previously provided to Buyer, pay,
loan or advance any amount to, or sell, transfer or lease any properties or
assets (real, personal or mixed, tangible or intangible) to, or enter into any
agreement or arrangement with, any of its officers or directors or any of their
immediate family members or any affiliates or associates (as such terms are
defined under the Exchange Act) of any of its officers or directors;
(o) other than in the ordinary course of
business consistent with past practice or as required by applicable law, (i)
make any material Tax election or change any method of accounting, (ii) enter
into any settlement or compromise of any material Tax liability, (iii) file any
amended Tax Return with respect to any material Tax, (iv) change any annual Tax
accounting period, (v) enter into any closing agreement relating to any material
Tax or (vi) surrender any right to claim a material Tax refund;
(p) pay, discharge, settle, compromise or
satisfy any claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), including taking any action to settle or
compromise any litigation, in each case, involving monetary damages in excess of
$200,000, other than the payment, discharge, settlement, compromise or
satisfaction in accordance with their terms of liabilities reflected or reserved
against in, or contemplated by, the most recent consolidated financial
statements (or the notes thereto) of the Company Reports filed prior to the date
hereof, or agree or consent to the issuance of any injunction, decree, order or
judgment restricting or otherwise affecting its business or operations;
(q) materially change its investment securities
portfolio policy (including by changing the average maturity by more than twelve
months from that in effect at September 30, 2003), or the manner in which the
portfolio is classified or reported;
(r) enter into any securitizations of any Loans
or create any special purpose funding or variable interest entity;
(s) authorize, commit or agree to do any of the
foregoing actions; or
(t) take any action or enter into any agreement
that could reasonably be expected to jeopardize or materially delay receipt of
any Requisite Regulatory Approvals (as defined in Section 8.1(b)) or the
consummation of the Merger.
6.2. Covenants of Buyer. During the period from the date
of this Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement or with the prior written consent of
the Company, Buyer shall, and shall cause Buyer Sub to, carry on their
respective businesses in the ordinary course consistent with past practice and,
to the extent consistent therewith, Buyer shall, and shall cause Buyer Sub to,
use its reasonable best efforts to (w) preserve its business organization and
its rights, authorizations, franchises and other authorizations issued by
Governmental Entities intact, (x) keep available to itself the present services
of the
34
current officers and employees of Buyer and Buyer Sub, and (y) preserve for
itself the goodwill of the customers of Buyer and Buyer Sub and others with whom
business relationships exist. Without limiting the generality of the foregoing,
and except as set forth in Section 6.2 of the Buyer Disclosure Schedule or as
otherwise contemplated by this Agreement (including Section 5.7 hereof) or with
the prior written consent of the Company (which shall not be unreasonably
withheld or delayed), during the period from the date of this Agreement to the
Effective Time, Buyer shall not and shall not permit Buyer Sub to:
(a) other than normal quarterly cash dividends
not in excess of $0.10 per share of Buyer Common Stock, declare or pay any
dividends on, or make other distributions in respect of, any shares of Buyer
Common Stock; provided, however, that no dividends shall be paid by Buyer on
Buyer Common Stock if (i) Buyer shall be required to borrow funds to do so, or
(ii) such dividend shall cause Buyer to cease to qualify as a "well capitalized"
institution under applicable Federal Reserve Board rules;
(b) (i) split, combine or reclassify any shares
of its capital stock; (ii) directly or indirectly repurchase, redeem or
otherwise acquire (except for the acquisition of shares in trust accounts,
managed accounts and the like for the benefit of customers or shares held in
satisfaction of a debt previously contracted) any shares of the capital stock of
Buyer, or any securities convertible into or exercisable for any shares of the
capital stock of Buyer;
(c) amend its articles of incorporation, by-laws
or other similar governing documents, except as required by applicable law or
regulation;
(d) acquire or agree to acquire, by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or
division thereof, which is reasonably likely to, individually or in the
aggregate, have a Material Adverse Effect on Buyer, other than in connection
with foreclosures, settlements in lieu of foreclosure or troubled loan or debt
restructurings in the ordinary course of business consistent with past
practices;
(e) take any action or fail to take any action
that is intended or may reasonably be expected to result in any of the
conditions to the Merger set forth in Article VIII or in any of the Financing
Commitment Letters or other written commitments with respect to the Financing
not being satisfied;
(f) take any action or enter into any agreement
that could reasonably be expected to jeopardize or materially delay receipt of
any Requisite Regulatory Approvals or the consummation of the Merger;
(g) change its methods of accounting in effect
at December 31, 2002 except as required by changes in GAAP or regulatory
accounting principles as concurred to by Buyer's independent auditors; or
35
(h) authorize, commit or agree to do any of the
foregoing actions.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1. Regulatory Matters. (a) The Company and Buyer shall
promptly prepare and file with the SEC and the FDIC the Joint Proxy
Statement/Prospectus, and Buyer shall promptly prepare and file with the SEC the
S-4. Each of Buyer and the Company shall use reasonable best efforts to have the
S-4 declared effective under the Securities Act as promptly as practicable after
such filing, and thereafter to mail the Joint Proxy Statement/Prospectus to
their respective stockholders.
(b) Subject to subsection (e) below, the parties
hereto shall cooperate with each other and use their reasonable best efforts to
promptly prepare and file all necessary documentation, to effect all
applications, notices, petitions and filings and to obtain as promptly as
practicable all permits, consents, approvals and authorizations of all third
parties or Governmental Entities that are necessary or advisable to consummate
the transactions contemplated by this Agreement. The Company and Buyer shall
have the right to review in advance, and to the extent practicable each will
consult the other on, in each case subject to applicable laws relating to the
exchange of information, all the information relating to the Company or Buyer,
as the case may be, and, in the case of Buyer, Buyer Sub, that appears in any
filing made with, or written materials submitted to, any third party or any
Governmental Entity in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties hereto shall
act reasonably and as promptly as practicable. The parties hereto agree that
they will consult with each other with respect to the obtaining of all permits,
consents, approvals and authorizations of all third parties or Governmental
Entities necessary or advisable to consummate the transactions contemplated by
this Agreement and each party will keep the other apprised of the status of
matters relating to consummation of the transactions contemplated hereby.
(c) Buyer and the Company shall, upon request,
furnish each other with all information concerning themselves, their
Subsidiaries, directors, officers and stockholders and such other matters as may
be reasonably necessary or advisable in connection with the Joint Proxy
Statement/Prospectus and the S-4 or any other statement, filing, notice or
application made by or on behalf of Buyer, the Company or any of their
respective Subsidiaries to any Governmental Entity in connection with the Merger
and the other transactions contemplated by this Agreement.
(d) Buyer and the Company shall cooperate to
keep each other reasonably apprised of material written communications received
by Buyer or Buyer Sub, on the one hand, or the Company, on the other hand, or
any of their respective Subsidiaries from, or delivered by any of the foregoing
to, any Governmental Entity in respect of the transactions contemplated by this
Agreement, in each case to the extent permitted by law.
36
(e) Buyer hereby agrees to use its reasonable
best efforts to file all state, federal and foreign regulatory applications and
notices required to consummate the Merger no later than the twentieth business
day following the date hereof.
7.2. No Solicitation by the Company or Buyer. (a) Each of
the Company and Buyer agree that it shall, and shall direct and use its
reasonable best efforts to cause its affiliates, directors, officers, employees,
agents and representatives (including without limitation any investment banker,
financial advisor, attorney, accountant or other representative retained by it)
to, immediately cease any discussions or negotiations with any other parties
that may be ongoing with respect to the possibility or consideration of any
Acquisition Proposal (as defined below), and will use its reasonable best
efforts to enforce any confidentiality or similar agreement relating to any
Acquisition Proposal, including by requesting the other party to promptly return
or destroy any confidential information previously furnished by such party
thereunder. From the date of this Agreement through the Effective Time, each of
the Company and Buyer shall not, nor shall it authorize or permit any of its
directors, officers or employees (and, in the case of Buyer, those of Buyer Sub)
or any investment banker, financial advisor, attorney, accountant or other
representative retained by it (or, in the case of Buyer, by Buyer Sub) to,
directly or indirectly through another person, (i) solicit, initiate or
encourage (including by way of furnishing information or assistance), or take
any other action designed to facilitate or that is likely to result in, any
inquiries or the making of any proposal or offer that constitutes, or is
reasonably likely to lead to, any Acquisition Proposal, (ii) provide any
confidential information or data to any person relating to any Acquisition
Proposal, (iii) participate in any discussions or negotiations regarding any
Acquisition Proposal, (iv) except in accordance with Section 9.1(i) in the case
of the Company, approve or recommend, propose to approve or recommend, or
execute or enter into, any letter of intent, agreement in principle, merger
agreement, asset purchase agreement or share exchange agreement, option
agreement or other similar agreement related to any Acquisition Proposal or
propose to do any of the foregoing, or (v) make or authorize any statement,
recommendation or solicitation in support of any Acquisition Proposal; provided,
however, that prior to the date of its Stockholders Meeting, if a party's Board
of Directors determines in good faith, after consulting with its outside legal
and financial advisors, that the failure to do so would breach, or would
reasonably be expected to result in a breach of, its Board's fiduciary duties
under applicable law, such party may, in response to a bona fide, written
Acquisition Proposal not solicited in violation of this Section 7.2(a) that its
Board of Directors believes in good faith constitutes a Superior Proposal (as
defined below), subject to providing 48 hour prior written notice of its
decision to take such action to the other party and identifying the person
making the proposal and all the material terms and conditions of such proposal
and compliance with Section 7.2(b), following delivery of such notice (1)
furnish information with respect to itself to any person making such a Superior
Proposal pursuant to a customary confidentiality agreement (as determined by
such party after consultation with its outside counsel) on terms no more
favorable to such person than the terms contained in any such agreement between
the Company and Buyer, and (2) participate in discussions or negotiations
regarding such a Superior Proposal. For purposes of this Agreement, the term
"Acquisition Proposal" means any inquiry, proposal or offer, filing of any
regulatory application or notice (whether in draft or final form) or disclosure
of an
37
intention to do any of the foregoing from any person relating to any (w) direct
or indirect acquisition or purchase of a business that constitutes a substantial
portion of the net revenues, net income or assets of the Company or Buyer, as
the case may be, (x) direct or indirect acquisition or purchase of any class of
equity securities representing 10% or more of the voting power of the Company or
Buyer, as the case may be, (y) tender offer or exchange offer that if
consummated would result in any person beneficially owning 10% or more of any
class of equity securities of the Company or Buyer, as the case may be, or (z)
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company or Buyer, as the case
may be, other than the transactions contemplated by this Agreement or, in the
case of Buyer, transactions permitted by Section 6.2 or contemplated by Section
5.7, including the transaction described therein and in the Financing Commitment
Letters. For purposes of this Agreement, the term "Superior Proposal" means any
bona fide written proposal made by a third party to acquire, directly or
indirectly, including pursuant to a tender offer, exchange offer, merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction, for consideration consisting of cash and/or securities,
more than 50% of the combined voting power of the shares of the Company Common
Stock or the Buyer Common Stock, as the case may be, then outstanding or all or
substantially all of the Company's or Buyer's, as the case may be, consolidated
assets, which after taking into account all legal, financial, regulatory and
other aspects of the proposal and the person making the proposal (including any
break-up fees, expense reimbursement provisions and conditions to consummation)
(i) is on terms which the Board of Directors of the Company or Buyer, as the
case may be, determines in its good faith judgment to be more favorable from a
financial point of view to its stockholders than the Merger and, in the case of
Buyer, the transactions contemplated by the VAS Agreement, (ii) that constitutes
a transaction that, in such Board of Directors' good faith judgment, is
reasonably likely to be consummated on the terms set forth, and (iii) for which
financing, to the extent required, is then committed or which, in the good faith
judgment of the Board of Directors of the Company or Buyer, as the case may be,
is reasonably likely to be obtained by such third party.
(b) In addition to the obligations of the
Company and Buyer, as the case may be, set forth in Section 7.2(a), each party
shall promptly (within 24 hours) advise the other orally and in writing of its
receipt of any Acquisition Proposal (or any inquiry which could lead to an
Acquisition Proposal) and keep the other informed, on a current basis, of the
continuing status thereof and shall contemporaneously provide to the other all
materials provided to or made available to any third party pursuant to this
Section 7.2 which were not previously provided to the other.
(c) The Company shall immediately advise the
Trustee orally and in writing of any Acquisition Proposal (or any inquiry which
could lead to an Acquisition Proposal) that it may receive and keep the Trustee
informed, on a current basis, of the continuing status thereof and shall consult
with the Trustee prior to taking or failing to take any action pursuant to this
Section 7.2. The provisions of this Section 7.2(c) are intended to be for the
benefit of, and shall be enforceable by, the Trust and the Trustee, and their
successors.
38
(d) Notwithstanding anything herein to the
contrary, each of the Company and Buyer and its respective Board of Directors
shall be permitted to comply with Rule 14d-9 and Rule 14e-2 promulgated under
the Exchange Act; provided, however, that compliance with such Rules will in no
way limit or modify the effect that any action pursuant to such Rules would
otherwise have under this Agreement.
(e) Nothing in this Section 7.2 shall be read so
as to restrict Buyer's pursuit and consummation of the Financing.
7.3. Access to Information. (a) The parties agrees that,
upon reasonable notice and subject to applicable laws relating to the exchange
of information, each shall afford to the officers, employees, accountants,
counsel and other representatives of the other, access, during normal business
hours during the period prior to the Effective Time, to all its properties,
books, contracts, commitments, records, officers, employees, accountants,
counsel and other representatives and, during such period, such party shall make
available to the other (i) a copy of each report, schedule, registration
statement and other document filed or received by it during such period pursuant
to the requirements of Federal securities laws or Federal or state banking,
consumer finance or protection laws (other than reports or documents which such
party is not permitted to disclose under applicable law) and (ii) all other
information concerning its business, properties and personnel as the other party
may reasonably request. Such party shall not be required to provide access to or
to disclose information where such access or disclosure would jeopardize any
attorney-client privilege or contravene any law, rule, regulation, order,
judgment, decree, fiduciary duty or binding agreement entered into prior to the
date of this Agreement. The parties hereto will make appropriate substitute
disclosure arrangements under circumstances in which the restrictions of the
preceding sentence apply.
(b) All information furnished to either party by
the other party pursuant to Section 7.3 shall be subject to, and such receiving
party shall hold all such information in confidence in accordance with, the
provisions of the Confidentiality Agreement (other than the provisions set forth
in the second full paragraph on page 4 thereof), dated as of November 7, 2003,
between the Company and Buyer (the "Confidentiality Agreement").
(c) No investigation by a party or its
Representatives shall affect the representations, warranties, covenants or
agreements of the other party set forth herein.
(d) The Company shall provide Buyer with
reasonable notice of and the opportunity to have an observer present at all
meetings of the Company's management loan committee.
(e) Notwithstanding anything contained in this
Agreement to the contrary, the Company and Buyer (and each of their respective
employees, representatives, or other agents) may disclose to any and all
persons, without limitation of any kind, the tax treatment and any facts that
may be relevant to the tax structure of the
39
transactions contemplated by this Agreement; provided, however, that neither the
Company nor Buyer (nor any of their respective employees, representatives or
other agents thereof) may disclose any other information that is not relevant to
understanding the tax treatment and tax structure of the transactions
contemplated by this Agreement, or any other information to the extent that such
disclosure could result in a violation of any federal or state securities law.
7.4. Notification of Certain Matters. Each of Buyer and
the Company will give prompt notice to the other (and subsequently keep the
other party informed on a current basis) upon its becoming aware of the
occurrence or existence of any fact, event or circumstance that (i) is
reasonably likely to result in any Material Adverse Effect with respect to it,
or (ii) would cause or constitute a material breach of any of its
representations, warranties, covenants or agreements contained herein; provided,
however, that the mere delivery of any notice pursuant to this Section 7.4 shall
not have any effect for the purpose of determining the satisfaction of the
conditions set forth in Article VIII of this Agreement or otherwise limit or
affect the remedies available to any such party hereunder.
7.5. Employee Benefit Plans; Existing Agreements. (a) The
Company Employees shall be eligible to participate in employee benefit plans of
Buyer or Buyer Sub in which similarly situated employees of Buyer or Buyer Sub
participate, to the same extent that similarly situated employees of Buyer or
Buyer Sub participate (it being understood that inclusion of Company Employees
in Buyer's employee benefit plans may occur at different times with respect to
different plans).
(b) With respect to each employee benefit plan,
program, policy or arrangement maintained by Buyer or Buyer Sub for the benefit
of current or former employees of Buyer or Buyer Sub (each such plan, program,
policy or arrangement, a "Buyer Plan") for which length of service is taken into
account for any purpose, service with the Company (or predecessor employers to
the extent the Company provides past service credit) shall be treated as service
with Buyer for purposes of determining eligibility to participate, vesting, and
entitlement to benefits, including for severance benefits and vacation
entitlement (but not for accrual of pension benefits); provided however, that
such service shall not be recognized to the extent that such recognition would
result in a duplication of benefits. Such service also shall apply for purposes
of satisfying any waiting periods, evidence of insurability requirements, or the
application of any preexisting condition limitations. Each Buyer Plan shall
waive pre-existing condition limitations to the same extent waived under the
applicable Company Plan. Company Employees shall be given credit for amounts
paid under a corresponding benefit plan during the same period for purposes of
applying deductibles, copayments and out-of-pocket maximums as though such
amounts had been paid in accordance with the terms and conditions of the Buyer
Plan.
(c) As of the Effective Time, Buyer shall assume
and honor and shall cause Buyer Sub to assume and to honor in accordance with
their terms all agreements listed in Section 7.5 of the Company Disclosure
Schedule (the "Benefit Agreements"). Buyer acknowledges and agrees that the
Merger will constitute a merger,
40
sale or a change in control of the Company for all purposes under such
agreements. The provisions of this Section 7.5(c) are intended to be for the
benefit of, and shall be enforceable by, each director, officer or employee that
is a party to any Benefit Agreement.
(d) Buyer agrees to have in effect on the
Closing Date a defined contribution plan that meets the requirements of Section
401(a) of the Code and which includes a qualified cash or deferred arrangement
within the meaning of Section 401(k) of the Code (such plan, the "Buyer Savings
Plan"). Each Company Employee who is eligible to defer compensation under the
Company 401(k) Savings Plan (the "Company Savings Plan") on the Closing Date
shall be eligible to participate in and defer compensation under Buyer Savings
Plan as soon as practicable following the Closing Date but in no event greater
than 30 days following the Closing Date. To the extent permitted by law, Buyer
shall permit the Company Employees who are participants in Buyer Savings Plan to
rollover their accounts balances in the Company Savings Plan into Buyer Savings
Plan as soon as practicable following the Closing Date.
7.6. Indemnification. (a) In the event of any threatened
or actual claim, action, suit, proceeding or investigation, whether civil,
criminal or administrative, including, without limitation, any such claim,
action, suit, proceeding or investigation in which any person who is now, or has
been at any time prior to the date of this Agreement, or who becomes prior to
the Effective Time, a director or officer of the Company (the "Indemnified
Parties") is, or is threatened to be, made a party based in whole or in part on,
or arising in whole or in part out of, or pertaining to (i) the fact that he is
or was a director or officer of the Company or any of its predecessors or
affiliates or (ii) this Agreement or any of the transactions contemplated
hereby, whether in any case asserted or arising before or after the Effective
Time, the parties hereto agree to cooperate and use their best efforts to defend
against and respond thereto. It is understood and agreed that after the
Effective Time, Buyer shall indemnify and hold harmless, as and to the fullest
extent provided in the Articles of Incorporation and By-Laws of the Company as
in effect on the date of this Agreement, each such Indemnified Party against any
losses, claims, damages, liabilities, costs, expenses (including reasonable
attorney's fees and expenses in advance of the final disposition of any claim,
suit, proceeding or investigation to each Indemnified Party to the fullest
extent permitted by law upon receipt of any undertaking required by applicable
law from such Indemnified Party to repay such advanced expenses if it is
determined by a final and nonappealable judgment of a court of competent
jurisdiction that such Indemnified Party was not entitled to indemnification
hereunder), judgments, fines and amounts paid in settlement in connection with
any such threatened or actual claim, action, suit, proceeding or investigation,
and in the event of any such threatened or actual claim, action, suit,
proceeding or investigation (whether asserted or arising before or after the
Effective Time), the Indemnified Parties may retain counsel reasonably
satisfactory to them after consultation with Buyer; provided, however, that (1)
Buyer shall have the right to assume the defense thereof and upon such
assumption Buyer shall not be liable to any Indemnified Party for any legal
expenses of other counsel or any other expenses subsequently incurred by any
Indemnified Party in connection with the defense thereof, except that if Buyer
elects not to assume such defense or counsel for the Indemnified Parties
reasonably advises that there are issues which raise conflicts of
41
interest between Buyer and the Indemnified Parties, the Indemnified Parties may
retain counsel reasonably satisfactory to them after consultation with Buyer,
and Buyer shall pay the reasonable fees and expenses of such counsel for the
Indemnified Parties, (2) Buyer shall in all cases be obligated pursuant to this
paragraph to pay for only one firm of counsel for all Indemnified Parties, (3)
Buyer shall not be liable for any settlement effected without its prior written
consent (which consent shall not be unreasonably withheld) and (4) Buyer shall
have no obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination shall
have become final and nonappealable, that indemnification of such Indemnified
Party in the manner contemplated hereby is prohibited by applicable law. Any
Indemnified Party wishing to claim Indemnification under this Section 7.6, upon
learning of any such claim, action, suit, proceeding or investigation, shall
notify promptly Buyer thereof, provided that the failure to so notify shall not
affect the obligations of Buyer under this Section 7.6 except to the extent such
failure to notify materially prejudices Buyer. Buyer's obligations under this
Section 7.6 shall continue in full force and effect without limit from the
Effective Time.
(b) Buyer shall use its reasonable best efforts
to cause the persons serving as officers and directors of the Company
immediately prior to the Effective Time to be covered for a period of six years
from the Effective Time by the directors' and officers' liability insurance
policy maintained by the Company (provided that Buyer may substitute therefor
policy or policies of at least the same coverage amounts and containing terms
and conditions which are in the aggregate not materially less advantageous to
such directors and officers of the Company than the terms and conditions of the
existing directors' and officers' liability insurance policy of the Company)
with respect to acts or omissions occurring prior to the Effective Time which
were committed by such officers and directors in their capacity as such;
provided, however, that in no event shall Buyer be required to expend on an
annual basis more than 200% of the annual premiums currently expended by the
Company for the insurance covering the officers and directors of the Company
(the "Insurance Amount"), and further provided that if Buyer is unable to
maintain or obtain the insurance called for by this Section 7.6(b) Buyer shall
use all reasonable best efforts to obtain as much comparable insurance as is
available for the Insurance Amount with respect to acts or omissions occurring
prior to the Effective Time which were committed by such officers and directors
in their capacity as such.
(c) In the event Buyer or any of its successors
or assigns (i) consolidates with or merges into any other person and shall not
be the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any person entity, then, and in each such case, to the extent
necessary, proper provision shall be made so that the successors and assigns of
Buyer assume the obligations set forth in this Section 7.6.
(d) The provisions of this Section 7.6 are
intended to be for the benefit of, and shall be enforceable by, each Indemnified
Party and his or her heirs and representatives.
42
7.7. Reasonable Best Efforts; Additional Agreements. (a)
Subject to the terms and conditions of this Agreement, each of Buyer, Buyer Sub
and the Company agrees to cooperate fully with each other and to use reasonable
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 to consummate and make
effective, at the time and in the manner contemplated by this Agreement, the
Merger, including using reasonable best efforts to lift or rescind any
injunction or restraining order or other order adversely affecting the ability
of the parties to consummate the Merger.
(b) In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement or to vest the Surviving Company with full title to all properties,
assets, rights, approvals, immunities and franchises of any of the parties to
the Merger, the proper officers and directors of each party to this Agreement
and their respective Subsidiaries shall take all such necessary action as may be
reasonably requested by Buyer.
7.8. Current Information. During the period from the date
of this Agreement to the Effective Time, the Company will cause one or more of
its designated representatives to confer on a regular and frequent basis with
representatives of Buyer and to report the general status of the ongoing
operations of the Company. The Company will promptly notify Buyer of any
material change in the normal course of business or in the operation of the
properties of the Company and of any governmental complaints, investigations or
hearings (or communications indicating that the same may be contemplated), or
the institution or the threat of significant litigation involving the Company,
and will keep Buyer fully informed of such events.
7.9. Dividends. Until the Effective Time, Buyer and the
Company shall coordinate the declaration and payment of any dividends in respect
of Buyer Common Stock and Company Common Stock and the record dates and the
payment dates relating thereto, it being the intention of Buyer and the Company
that holders of Company Common Stock shall not receive two dividends, or fail to
receive one dividend, for any single calendar quarter with respect to their
shares of Company Common Stock and/or any shares of Buyer Common Stock that any
such holder receives in exchange therefor pursuant to the Merger.
7.10. Stockholder Approvals. (a) The Company shall duly
take all lawful action to call, give notice of, convene and hold a meeting of
its stockholders as promptly as practicable following the date upon which the
Form S-4 becomes effective (the "Company Stockholders Meeting") for the purpose
of obtaining the affirmative vote of the holders of a majority of the
outstanding shares of the Company Common Stock to adopt this Agreement (the
"Required Company Vote") and, except as provided hereby, shall take all
reasonable action to solicit the adoption of this Agreement by such
stockholders. The Board of Directors of the Company shall recommend adoption of
this Agreement and the transactions contemplated hereby by the stockholders of
the Company (the "Company Recommendation"); provided, however, that, if the
Company receives a Superior Proposal, the Board of Directors of the Company may
(x) withdraw, modify, qualify in any manner adverse to Buyer, condition or
refuse to make such
43
recommendation or (y) take any other action or make any other public statement
in connection with the Company Stockholders Meeting inconsistent with such
recommendation (collectively, a "Change in the Company Recommendation") if the
Board of Directors of the Company determines, in good faith after consulting
with its outside financial and legal advisors, that the failure to take such
action would breach, or would reasonably be expected to result in a breach of,
its fiduciary obligations under applicable law. Notwithstanding anything to the
contrary herein, this Agreement shall (unless the Agreement shall have been
terminated in accordance with its terms) be submitted to the stockholders of the
Company at the Company Stockholders Meeting for the purpose of voting on the
adoption of this Agreement and nothing contained herein shall be deemed to
relieve the Company of such obligation.
(b) Buyer shall duly take all lawful action to
call, give notice of, convene and hold a meeting of its stockholders as promptly
as practicable following the date upon which the Form S-4 becomes effective (the
"Buyer Stockholders Meeting" and together with the Company Stockholders Meeting,
the "Stockholders Meetings") for the purpose of obtaining the affirmative vote
of the holders of a majority of the outstanding shares of Buyer Common Stock
voted in person or by proxy at the Buyer Stockholders Meeting to approve the
issuance of the shares of Buyer Common Stock pursuant to the Merger and the
Financings (the "Required Buyer Vote") and, except as provided hereby, shall
take all reasonable action to solicit such approval by its stockholders. The
Board of Directors of Buyer shall recommend such approval by the stockholders of
Buyer (the "Buyer Recommendation"); provided, however, that, if the Buyer
receives a Superior Proposal, the Board of Directors of Buyer may (x) withdraw,
modify, qualify in any manner adverse to the Company, condition or refuse to
make such recommendation or (y) take any other action or make any other public
statement in connection with the Buyer Stockholders Meeting inconsistent with
such recommendation (collectively, a "Change in Buyer Recommendation") if the
Board of Directors of Buyer determines, in good faith after consulting with its
outside financial and legal advisors, that the failure to take such action would
breach, or would reasonably be expected to result in a breach of its fiduciary
obligations under applicable law. Notwithstanding anything to the contrary
herein, this Agreement shall be submitted to the stockholders of Buyer at the
Buyer Stockholders Meeting for the purpose of voting or the adoption of this
Agreement and nothing contained herein shall be deemed to relieve Buyer of such
obligation.
7.11. Subsequent Interim and Annual Financial Statements.
As soon as reasonably practicable after they become available, but in no event
more than 30 days, after the end of each calendar month ending after the date of
this Agreement, the Company shall furnish to Buyer financial statements
(including balance sheet, statement of operations and stockholders' equity) of
the Company as of and for such month then ended. All information furnished by
the Company hereto pursuant to this Section 7.11 shall be held in confidence by
Buyer to the extent required by, and in accordance with, the provisions of the
Confidentiality Agreement.
7.12. Reorganization; Certain Modifications. Buyer and the
Company will (i) use all reasonable best efforts to cause the Merger to
constitute a reorganization
44
under Section 368(a) of the Code and (ii) not take any action or fail to take
any action required hereby that could reasonably be expected to prevent or
impede the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code. Buyer and the Company shall execute and deliver
officer's certificates containing appropriate representations at such time or
times as may be reasonably requested by counsel, including the effective date of
the Form S-4 and the Closing Date, for purposes of rendering opinions with
respect to the Tax treatment of the Merger.
7.13. Exemption From Liability Under Section 16(b).
Assuming that the Company delivers to Buyer the Section 16 Information (as
defined below) reasonably in advance of the Effective Time, the Board of
Directors of Buyer, or a committee of Non-Employee Directors thereof (as such
term is defined for purposes of Rule 16b-3(d) under the Exchange Act), shall
reasonably promptly thereafter and in any event prior to the Effective Time
adopt a resolution providing that the receipt by the Company Insiders (as
defined below) of Buyer Common Stock in exchange for shares of Company Common
Stock, and of options to purchase Buyer Common Stock upon conversion of Company
Options, in each case pursuant to the transactions contemplated hereby and to
the extent such securities are listed in the Section 16 Information provided by
the Company to Buyer prior to the Effective Time, are intended to be exempt from
liability pursuant to Section 16(b) under the Exchange Act such that any such
receipt shall be so exempt. "Section 16 Information" shall mean information
accurate in all respects regarding the Company Insiders, the number of shares of
Company Common Stock held by each such Company Insider and the number and
description of the Company Options held by each such Company Insider. "Company
Insiders" shall mean those officers and directors of Company who are subject to
the reporting requirements of Section 16(a) of the Exchange Act and who are
listed in the Section 16 Information.
7.14. Stock Exchange Listing. Buyer shall use its
reasonable best efforts to cause the shares of Buyer Common Stock to be issued
in the Merger to be approved for listing on the Nasdaq National Market, subject
to official notice of issuance, prior to the Effective Time.
7.15. Financing. Buyer hereby agrees to use its reasonable
best efforts to satisfy all conditions to the Financing set forth in the
Financing Commitment Letters and to consummate the transactions contemplated
thereby. Buyer will keep the Company and the Trustee reasonably informed of the
status of the Financing. The Company shall provide, and will cause its officers
and employees to provide, all necessary cooperation and information in
connection with the arrangement and obtaining of the Financing as may be
reasonably requested by Buyer, including, without limitation, facilitating
customary due diligence and arranging senior officers, as selected by Buyer, to
meet with prospective lenders and investors in customary presentations
(including "road show" presentations) or otherwise. Buyer shall not amend,
supplement, modify or terminate (whether unilaterally or by mutual consent) any
Financing Commitment Letters, or waive any rights thereunder, prior to the
termination of this Agreement, without the written consent of the Company and
the Trustee.
45
7.16. Termination of Certain Company Plans. (a) The Company
shall terminate, effective immediately preceding the Closing Date (the "Plan
Termination Date"), any and all 401(k) plans sponsored by the Company
(collectively, the "Terminated Company Plans") unless Buyer provides notice to
the Company that such Terminated Company Plans shall not be terminated. Buyer
shall receive from the Company evidence that the Terminated Company Plans have
been terminated pursuant to resolutions of the Company's Board of Directors (the
form and substance of such resolutions shall be subject to review and approval
of Buyer), effective as of the Plan Termination Date.
(b) The Company agrees to take, or cause to be
taken, all actions, and to do, or cause to be done, all things necessary to
consummate and make effective such conversion of Company Options as set forth in
Section 2.4(a).
7.17. Termination of Parent Tax Agreement. The Company
shall use its reasonable best efforts to enter into an agreement terminating the
California Franchise Tax Sharing Agreement dated February 28, 2000 between KEB
and the Company and providing for cooperation between KEB and the Company (or
its successor) with respect to periods covered by such agreement prior to the
Closing Date.
7.18. Board Seat. Promptly following the Effective Time,
consistent with applicable law and its bylaws, the number of directors on the
Board of Directors of Buyer shall be increased by one (unless a current vacancy
exists, in which case no new vacancy need be created), and a director designated
by the special committee of the Board of Directors of the Company and acceptable
to Buyer shall be appointed as a Class I director of Buyer.
7.19. Consent Order. The Company shall use its reasonable
best efforts to cause the Consent Order issued by the FDIC on April 14, 2002 to
have been terminated prior to the Closing with no further force or effect.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Stockholder Approvals. The Company shall
have obtained the Required Company Vote and Buyer shall have obtained the
Required Buyer Vote.
(b) Regulatory Approvals. All regulatory
approvals required to consummate the transactions contemplated hereby (including
the Merger) shall have been obtained and shall remain in full force and effect,
and all statutory waiting periods in respect thereof shall have expired (all
such approvals and the expiration of all such waiting periods being referred to
herein as the "Requisite Regulatory Approvals").
46
(c) No Injunctions or Restraints; Illegality. No
judgment, order, injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Merger shall be in effect. No statute, rule,
regulation, order or decree shall have been enacted, entered, promulgated or
enforced by any Governmental Entity that prohibits, restricts or makes illegal
the consummation of the Merger.
(d) Stock Exchange Listing. The shares of Buyer
Common Stock to be issued to the holders of Company Common Stock upon
consummation of the Merger shall have been authorized for listing on the Nasdaq
National Market, subject to official notice of issuance.
(e) S-4 Effectiveness. The S-4 shall have become
effective under the Securities Act, no stop order suspending the effectiveness
of the S-4 shall have been issued and no proceedings for that purpose shall have
been initiated or threatened by the SEC.
(f) Voting and Sale Agreement. Buyer shall have
purchased the Purchased Shares pursuant to the VAS Agreement, dated as of the
date hereof, by and between Buyer and the Trust. For purposes of this Section
8.1(f), "Purchased Shares" shall have the meaning set forth in the VAS
Agreement.
8.2. Conditions to Obligations of Buyer and Buyer Sub. The
obligation of Buyer and Buyer Sub to effect the Merger is also subject to the
satisfaction or waiver by Buyer at or prior to the Effective Time of the
following conditions:
(a) Representations and Warranties. The
representations and warranties of the Company set forth in this Agreement shall
be, giving effect to Section 3.2, true and correct as of the date of this
Agreement and as of the Effective Time as though made at and as of the Effective
Time (except that representations and warranties that by their terms speak
specifically as of the date of this Agreement or some other date shall be true
and correct as of such date); and Buyer shall have received a certificate, dated
the Closing Date, signed on behalf of the Company by the Chief Executive Officer
and the Chief Financial Officer of the Company to such effect.
(b) Performance of Obligations of the Company.
The Company shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the Closing
Date, and Buyer shall have received a certificate signed on behalf of the
Company by the Chief Executive Officer and the Chief Financial Officer of the
Company to such effect.
(c) Consents Under Agreements. All consents and
approvals of all persons (other than the Governmental Entities) required for
consummation of the Merger shall have been obtained and shall be in full force
and effect, unless the failure to obtain any such consent or approval is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on the Company or Buyer.
47
(d) No Pending Governmental Actions. No
proceeding initiated by any Governmental Entity seeking an Injunction shall be
pending.
(e) Tax Opinion. Buyer shall have received an
opinion of Simpson Thacher & Bartlett LLP, counsel to Buyer, dated the Closing
Date, in form and substance reasonably satisfactory to Buyer, substantially to
the effect that, on the basis of facts, representations, and assumptions set
forth in such opinion, the Merger will be treated as a "reorganization" within
the meaning of Section 368(a) of the Code. In rendering its opinion, Simpson
Thacher & Bartlett LLP may require and rely upon written representations and
covenants, including those contained in officer's certificates of the Company
and Buyer, in form and substance reasonably satisfactory to such counsel.
(f) Termination of Certain Company Plans. The
Company shall have terminated, effective the Plan Termination Date the
Terminated Company Plans unless Buyer provided notice to the Company that such
Terminated Company Plans shall not be terminated. Buyer shall receive from the
Company evidence that the Terminated Company Plans have been terminated pursuant
Section 7.17 herein.
(g) Financing. Buyer shall have received the
proceeds of the Financing on the terms set forth in Section 5.7 of the Buyer
Disclosure Schedule.
8.3. Conditions to Obligations of the Company. The
obligation of the Company to effect the Merger is also subject to the
satisfaction or waiver by the Company at or prior to the Effective Time of the
following conditions:
(a) Representations and Warranties. The
representations and warranties of Buyer set forth in this Agreement shall be,
giving effect to Section 3.2, true and correct as of the date of this Agreement
and as of the Effective Time as though made at and as of the Effective Time
(except that representations and warranties that by their terms speak
specifically as of the date of this Agreement or some other date shall be true
and correct as of such date); and the Company shall have received a certificate,
dated the Closing Date, signed on behalf of Buyer by the Chief Executive Officer
and the Chief Financial Officer of Buyer to such effect.
(b) Performance of Obligations of Buyer. Buyer
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and the
Company shall have received a certificate signed on behalf of Buyer by the Chief
Executive Officer and the Chief Financial Officer of Buyer to such effect.
(c) Consents Under Agreements. All consents and
approvals of all persons (other than the Governmental Entities) required for
consummation of the Merger shall have been obtained and shall be in full force
and effect, unless the failure to obtain any such consent or approval is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on the Company or Buyer.
48
(d) No Pending Governmental Actions. No
proceeding initiated by any Governmental Entity seeking an Injunction shall be
pending.
(e) Tax Opinion. The Company shall have received
an opinion of Manatt, Phelps & Phillips, LLP, counsel to the Company, dated the
Closing Date, in form and substance reasonably satisfactory to the Company,
substantially to the effect that, on the basis of facts, representations, and
assumptions set forth in such opinion, the Merger will be treated as a
"reorganization" within the meaning of Section 368(a) of the Code. In rendering
its opinion, Manatt, Phelps & Phillips, LLP may require and rely upon written
representations and covenants, including those contained in officer's
certificates of the Company and Buyer, in form and substance reasonably
satisfactory to such counsel.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1. Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of the
matters presented in connection with the Merger by the stockholders of the
Buyer:
(a) by mutual consent of the Company and Buyer
in a written instrument, if the Board of Directors of each so determines by a
vote of a majority of the members of its entire Board (provided that the Trustee
consents in writing to such termination);
(b) by either Buyer or the Company upon written
notice to the other party (i) 30 days after the date on which any request or
application for a Requisite Regulatory Approval shall have been denied or
withdrawn at the request or recommendation of the Governmental Entity which must
grant such Requisite Regulatory Approval, unless within the 30-day period
following such denial or withdrawal a petition for rehearing or an amended
application has been filed with the applicable Governmental Entity; provided,
however, that no party shall have the right to terminate this Agreement pursuant
to this Section 9.1(b) if such denial or request or recommendation for
withdrawal shall be due to the failure of the party seeking to terminate this
Agreement to perform or observe the covenants of such party set forth herein, or
(ii) if any Governmental Entity of competent jurisdiction shall have issued a
final nonappealable order enjoining or otherwise prohibiting the Merger;
(c) by either Buyer or the Company if the Merger
shall not have been consummated on or before September 30, 2004, unless the
failure of the Closing to occur by such date shall be due to the failure of the
party seeking to terminate this Agreement to perform or observe the covenants
and agreements of such party set forth herein;
(d) by either Buyer or the Company (provided
that the terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have been
a breach of any of the
49
representations or warranties set forth in this Agreement by the other party,
which breach is not cured within thirty days following written notice to the
party committing such breach, or which breach, by its nature, cannot be cured
prior to the Closing; provided, however, that neither party shall have the right
to terminate this Agreement pursuant to this Section 9.1(d) unless the breach of
representation or warranty, together with all other such breaches, would entitle
the party receiving such representation not to consummate the transactions
contemplated hereby under Section 8.2(a) (in the case of a breach of a
representation or warranty by the Company) or Section 8.3(a) (in the case of a
breach of a representation or warranty by Buyer);
(e) by either Buyer or the Company (provided
that the terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have been
a material breach of any of the covenants or agreements set forth in this
Agreement on the part of the other party, which breach shall not have been cured
within thirty days following receipt by the breaching party of written notice of
such breach from the other party hereto, or which breach, by its nature, cannot
be cured prior to the Closing;
(f) (i) by either Buyer or the Company if the
Required Buyer Vote shall not have been obtained at the Buyer Stockholders
Meeting or at any adjournment or postponement thereof;
(g) by either Buyer or the Company if the other
party shall have breached the terms of Section 7.2 hereof in any respect
materially adverse to the other party;
(h) (i) by Buyer if the Board of Directors of
the Company shall have failed to recommend adoption of this Agreement by the
stockholders of the Company or shall have effected a Change in the Company Board
Recommendation or shall have resolved to do so, whether or not permitted by this
Agreement, (ii) by the Company, if the Board of Directors of Buyer shall have
failed to recommend the issuance of Buyer Common Stock pursuant to the Merger
and the Financing by the stockholders of Buyer, or shall have effected a change
in the Buyer Board Recommendation, or shall have resolved to do so, whether or
not permitted by this Agreement, or (iii) the Company or Buyer, as the case may
be, if the other shall have materially breached its obligations under Section
7.10 by failing to call, give notice of, convene and hold its respective
Stockholders Meeting in accordance with Section 7.10; or
(i) by the Company, but only during such period
of time beginning on the date of distribution of the Joint Proxy
Statement/Prospectus to the stockholders of the Company and ending on the date
that the Company Stockholders Meeting is held (but in no event more than 45 days
after the date of distribution of the Joint Proxy Statement/Prospectus), in the
event that the Board of Directors of the Company determines in good faith, after
consultation with outside counsel, that in light of a Superior Proposal it is
necessary to terminate this Agreement in order to comply with its fiduciary
duties to the Company and to the Company's stockholders under applicable law;
provided, however, that the Board of Directors of the Company may terminate this
50
Agreement pursuant to this Section 9.1(i) solely in order to concurrently enter
into a definitive acquisition agreement or other similar agreement related to a
Superior Proposal; and provided further, however, that this Agreement may be
terminated pursuant to this Section 9.1(i) only after the fifth day following
Buyer's receipt of written notice from the Company advising Buyer that the Board
of Directors of the Company is prepared to accept a Superior Proposal, and only
if, during such five-day period, if Buyer so elects, the Company and its
advisors shall have negotiated in good faith with Buyer to make such adjustments
in the terms and conditions of this Agreement as would enable the Company to
proceed with the transactions contemplated herein on such adjusted terms.
9.2. Effect of Termination. (a) In the event of
termination of this Agreement by either Buyer or the Company as provided in
Section 9.1, this Agreement shall forthwith become void and have no effect and
none of Buyer, the Company, any of their respective Subsidiaries or any of the
officers or directors of any of them or the Trustee shall have any liability of
any nature whatsoever hereunder, or in connection with the transactions
contemplated hereby, except that (i) Sections 7.3(b), 9.2 and 10.2 shall survive
any termination of this Agreement and (ii) notwithstanding anything to the
contrary contained in this Agreement, no party shall be relieved or released
from any liabilities or damages arising out of its willful breach of any
provision of this Agreement.
(b) The Company and Buyer agree that the
agreement contained in Sections 9.2(c) and 9.2(d) below are an integral part of
the transactions contemplated by this Agreement and constitutes liquidated
damages and not a penalty.
(c) The Company shall pay Buyer, by wire
transfer of immediately available funds, the sum of twelve million dollars (the
"Termination Fee") if this Agreement is terminated as follows:
(i) by Buyer pursuant to Section 9.1(g)
or 9.1(h) or by the Company pursuant to Section 9.1(i), in which case
the Company shall pay the full amount of the Termination Fee on the
second Business Day following such termination; and
(ii) by (A) Buyer pursuant to Sections
9.1(d) or 9.1(e), or (B) by either Buyer or the Company pursuant to
Section 9.1(c) and at the time of such termination, no vote of the
stockholders of the Company contemplated by this Agreement at the
Company Stockholder Meeting shall have occurred, and in the case of
clauses (A) and (B) an Acquisition Proposal with respect to the Company
shall have been publicly announced or otherwise communicated or made
known to the senior management or Board of Directors of the Company and
the Trustee (or any person shall have publicly announced, communicated
or made known an intention, whether or not conditional, to make an
Acquisition Proposal with respect to the Company) at any time after the
date of this Agreement and on or prior to the date of termination of
this Agreement, then the Company shall pay (x) an amount equal to 1/3
of the Termination Fee on the second Business Day following such
termination, and (y) if
51
within 12 months after such termination the Company enters into a
definitive agreement with respect to, or consummates, an Acquisition
Proposal, then the Company shall pay the remainder of the Termination
Fee on the date of such execution or consummation.
(d) Buyer shall pay the Company, by wire
transfer of immediately available funds, the Termination Fee if this Agreement
is terminated as follows:
(i) by the Company pursuant to Section
9.1(g) or 9.1(h), in which case Buyer shall pay the full amount of the
Termination Fee on the second Business Day following such termination;
and
(ii) by (A) the Company pursuant to
Sections 9.1(d) or 9.1(e), (B) by either Buyer or the Company pursuant
to Section 9.1(f), due to a failure to receive the Required Buyer Vote
or (C) by either Buyer or the Company pursuant to Section 9.1(c) and at
the time of such termination, no vote of the stockholders of Buyer
contemplated by this Agreement at the Buyer Stockholders Meeting shall
have occurred, and in the case of clauses (A), (B) and (C) an
Acquisition Proposal with respect to Buyer shall have been publicly
announced or otherwise communicated or made known to the senior
management or Board of Directors of Buyer (or any person shall have
publicly announced, communicated or made known an intention, whether or
not conditional, to make an Acquisition Proposal with respect to Buyer)
at any time after the date of this Agreement and on or prior to the
date of the Buyer Stockholders Meeting, in the case of clause (B), or
the date of termination of this Agreement, in the case of clauses (A)
or (C), then Buyer shall pay (x) an amount equal to 1/3 of the
Termination Fee on the second Business Day following such termination,
and (y) if within 12 months after such termination Buyer or Buyer Sub
enters into a definitive agreement with respect to, or consummates, an
Acquisition Proposal, then Buyer shall pay the remainder of the
Termination Fee on the date of such execution or consummation.
9.3. Amendment. Subject to compliance with applicable law,
this Agreement may be amended by the parties hereto, by action taken or
authorized by their respective Boards of Directors, at any time before or after
approval of the matters presented in connection with the Merger by the
stockholders of the Company and Buyer; provided, however, that this Agreement
may be so amended by the parties hereto only with the prior written consent of
the Trustee; provided further, however, that after any approval of the
transactions contemplated by this Agreement by the Company's and Buyer's
stockholders, there may not be, without further approval of such stockholders,
any amendment of this Agreement which changes the amount or form of the
consideration to be delivered to the Company stockholders hereunder other than
as contemplated by this Agreement. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto. The
provisions of this
52
Section 9.3 are intended to be for the benefit of, and shall be enforceable by,
the Trust, the Trustee, and their successors.
9.4. Extension; Waiver. At any time prior to the Effective
Time, each of the parties hereto, by action taken or authorized by its Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other party hereto,
(b) waive any inaccuracies in the representations and warranties of the other
party contained herein or in any document delivered pursuant hereto and (c)
waive compliance by the other party with any of its agreements contained herein,
or waive compliance with any of the conditions to its obligations hereunder;
provided, however, that the Trustee shall consent in writing to any agreement on
the part of the Company to any such extension or waiver. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party, but such
extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
ARTICLE X
GENERAL PROVISIONS
10.1. Nonsurvival of Representations, Warranties and
Agreements. None of the representations, warranties, covenants and agreements in
this Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except for those covenants and agreements contained
herein and therein which by their terms apply in whole or in part after the
Effective Time.
10.2. Expenses. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expense; provided, however, that the Company
shall pay the fees and expenses of Merrill Lynch & Co., financial advisor to the
Trustee, and Skadden, Arps, Slate, Meagher & Flom LLP ("Skadden") and Sullivan &
Cromwell LLP ("S&C"), legal advisors to the Trustee, in connection with this
Agreement and the transactions contemplated hereby; provided further, however,
that nothing contained herein shall limit either party's rights to recover any
liabilities or damages arising out of the other party's willful breach of any
provision of this Agreement. The provisions of this Section 10.2 are intended to
be for the benefit of, and shall be enforceable by, Merrill Lynch & Co., Skadden
and S&C, and their successors.
10.3. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation), mailed by registered or certified mail (return
receipt requested) or delivered by an express courier (with confirmation) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Buyer, to:
53
Hanmi Financial Corporation
3660 Wilshire Blvd., Suite PH-A
Los Angeles, CA 90010
Attention: Chief Executive Officer
with a copy to:
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, NY 10017
Attention: Lee Meyerson, Esq.
(b) if to the Company, to:
Pacific Union Bank
3530 Wilshire Blvd., Suite 1800
Los Angeles, CA 90010
Attention: Lisa Kim Pai
With copies to:
Manatt, Phelps, & Phillips, LLP
11355 W. Olympic Blvd
Los Angeles, CA 90064
Attention: William Quicksilver, Esq. and
Gordon Bava, Esq.
and
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Attention: William S. Rubenstein, Esq.
10.4. Interpretation. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be to a
Section of or Exhibit or Schedule to this Agreement unless otherwise indicated.
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include," "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation." The phrases "the date of this Agreement," "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to December 22, 2003.
10.5. Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement and
shall become effective
54
when counterparts have been signed by each party hereto and delivered to the
other party, it being understood that all parties need not sign the same
counterpart.
10.6. Entire Agreement. This Agreement (including the
documents and the instruments referred to herein, including, without limitation,
the Confidentiality Agreement), constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof. Notwithstanding the
foregoing, any provision of the Confidentiality Agreement or any other document
or instrument referred to herein that conflicts with any provision of this
Agreement shall be superseded by the provisions hereof.
10.7. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of California, without
regard to any applicable conflicts of law.
10.8. Enforcement of Agreement. The parties hereto agree
that irreparable damage would occur in the event that the provisions contained
in Sections 6.1(h), 6.1(t), 6.2(e), 6.2(f), 7.2, 7.3(b) and 7.7 of this
Agreement were not performed in accordance with its specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of Sections 6.1(h), 6.1(t),
6.2(e), 6.2(f), 7.2, 7.3(b) and 7.7 of this Agreement and to enforce
specifically the terms and provisions thereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
10.9. Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
10.10. Publicity. Except as otherwise required by law or by
the rules of the Nasdaq Stock Market's National Market, so long as this
Agreement is in effect, neither Buyer nor the Company shall, nor shall Buyer
permit Buyer Sub to, issue or cause the publication of any press release or
other public announcement with respect to, or otherwise make any public
statement concerning, the transactions contemplated by this Agreement without
the consent of the other party, which consent shall not be unreasonably withheld
or delayed.
10.11. Assignment; No Third Party Beneficiaries. Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by either of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other party. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective permitted successors and
assigns. Except as otherwise expressly provided
55
herein, this Agreement (including the documents and instruments referred to
herein) is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder; provided, however, that the provisions of this
Agreement are intended to be for the benefit of, and shall be enforceable by,
the Trust, the Trustee, and their respective successors.
56
IN WITNESS WHEREOF, Buyer and the Company have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
date first above written.
HANMI FINANCIAL CORPORATION
By: /s/ Jae Whan Yoo
------------------------------------------
Name: Jae Whan Yoo
Title: President and Chief Executive Officer
HANMI BANK
By: /s/ Jae Whan Yoo
------------------------------------------
Name: Jae Whan Yoo
Title: President and Chief Executive Officer
PACIFIC UNION BANK
By: /s/ David Warner
------------------------------------------
Name: David Warner
Title: President and Chief Executive Officer
57