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EXHIBIT 2.(b)
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
HOME INTERSTATE BANCORP,
HOME BANK,
CU BANCORP AND
CALIFORNIA UNITED BANK, NATIONAL ASSOCIATION
January 10, 1996
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS................................................................................. 1
ARTICLE II THE MERGER AND RELATED MATTERS.............................................................. 7
2.1. The Merger.................................................................................. 7
2.2. Fractional Shares........................................................................... 8
2.3. Exchange Procedures......................................................................... 8
2.4. Dissenting Shares........................................................................... 9
2.5. Effect of Merger. ......................................................................... 9
2.6. Name of Surviving Company................................................................... 9
2.7. Articles of Incorporation and Bylaws of Surviving Company................................... 9
2.8. Directors and Officers of Surviving Company. ............................................... 9
2.9. Options..................................................................................... 10
2.10. Warrant ................................................................................... 10
ARTICLE III THE CLOSING................................................................................. 11
3.1. Closing Date. ............................................................................. 11
3.2. Execution of Merger Agreements.............................................................. 11
3.3. Documents to be Delivered................................................................... 11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF HOME AND HOME BANK........................................ 11
4.1. Incorporation, Standing and Power. ........................................................ 11
4.2. Capitalization.............................................................................. 12
4.3. Subsidiaries. ............................................................................. 12
4.4. Financial Statements. ..................................................................... 12
4.5. SEC/Regulatory Filings. ................................................................... 12
4.6. Authority of Home and Home Bank............................................................. 13
4.7. Insurance................................................................................... 13
4.8. Title to Assets. .......................................................................... 14
4.9. Real Estate. ............................................................................... 14
4.10. Litigation. ............................................................................... 14
4.11. Taxes....................................................................................... 14
4.12. Compliance with Laws and Regulations. ..................................................... 15
4.13. Performance of Obligations.................................................................. 15
4.14. Employees. ................................................................................ 16
4.15. Brokers and Finders. ...................................................................... 16
4.16. Material Contracts. ........................................................................ 16
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TABLE OF CONTENTS (CONT'D.)
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4.17. Absence of Material Change. .............................................................. 18
4.18. Licenses and Permits. ..................................................................... 18
4.19. No Material Liabilities; Environmental...................................................... 18
4.20. Employee Benefit Plans...................................................................... 18
4.21. Corporate Records. ........................................................................ 21
4.22. Offices and ATMs............................................................................ 21
4.23. Operating Losses............................................................................ 21
4.24. Loan Portfolio. .......................................................................... 21
4.25. Power of Attorney. ........................................................................ 22
4.26. Disclosure Documents and Applications. .................................................... 22
4.27. Accuracy and Currentness of Information Furnished. ........................................ 22
4.28. Loan Servicing Portfolio.................................................................... 22
4.29. Certain Interests........................................................................... 22
4.30. Investment Securities....................................................................... 22
ARTICLE V REPRESENTATIONS AND WARRANTIES OF CU AND CU BANK............................................ 23
5.1. Incorporation, Standing and Power........................................................... 23
5.2. Capitalization.............................................................................. 23
5.3. Subsidiaries. ............................................................................. 23
5.4. Financial Statements........................................................................ 24
5.5. SEC/Regulatory Filings...................................................................... 24
5.6. Authority of CU and CU Bank. .............................................................. 24
5.7. Insurance. ................................................................................ 25
5.8. Title to Assets............................................................................. 25
5.9. Real Estate................................................................................. 25
5.10. Litigation. ............................................................................... 25
5.11. Taxes....................................................................................... 26
5.12. Compliance with Laws and Regulations........................................................ 27
5.13. Performance of Obligations.................................................................. 27
5.14. Employees. ................................................................................ 27
5.15. Brokers and Finders......................................................................... 27
5.16. Material Contracts.......................................................................... 27
5.17. Absence of Material Change. .............................................................. 29
5.18. Licenses and Permits. ..................................................................... 29
5.19. No Material Liabilities; Environmental...................................................... 29
5.20. Employee Benefit Plans...................................................................... 30
5.21. Corporate Records........................................................................... 32
5.22. Offices and ATMs............................................................................ 32
5.23. Operating Losses. ......................................................................... 32
5.24. Loan Portfolio.............................................................................. 32
5.25. Power of Attorney........................................................................... 33
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TABLE OF CONTENTS (CONT'D.)
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5.26. Disclosure Documents and Applications....................................................... 33
5.27. Accuracy and Currentness of Information Furnished........................................... 33
5.28. Loan Servicing Portfolio.................................................................... 33
5.29. Certain Interests........................................................................... 33
5.30. Investment Securities. .................................................................... 34
ARTICLE VI COVENANTS OF HOME AND HOME BANK PENDING EFFECTIVE
TIME OF THE MERGERS......................................................................... 34
6.1. Limitation on Home's and Home Bank's Conduct Prior to Effective Time. ..................... 34
6.2. No Solicitation, etc........................................................................ 36
6.3. Affirmative Conduct of Home and Home Bank Prior to Effective Time........................... 36
6.4. Access to Information....................................................................... 38
6.5. Filings. .................................................................................. 38
6.6. Notices; Reports. ......................................................................... 38
6.7. Home Shareholders' Meeting. .............................................................. 39
6.8. Bank Merger. .............................................................................. 39
6.9. Filings; Applications....................................................................... 39
6.10. Certain Loans and Other Extensions of Credit. ............................................ 39
6.11. Termination of Home Stock Option Plan. ..................................................... 40
6.12. Environmental Audit. ...................................................................... 40
6.13. D&O Coverage. ............................................................................. 40
ARTICLE VII COVENANTS OF CU AND CU BANK PENDING EFFECTIVE TIME
OF THE MERGERS.............................................................................. 40
7.1. Limitation on CU's and CU Bank's Conduct Prior to Effective Time............................ 40
7.2. No Solicitation, etc........................................................................ 42
7.3. Affirmative Conduct of CU and CU Bank Prior to Effective Time............................... 43
7.4. Access to Information....................................................................... 45
7.5. Filings. .................................................................................. 45
7.6. Notices; Reports............................................................................ 45
7.7. CU Shareholders' Meeting.................................................................... 46
7.8. Bank Merger................................................................................. 46
7.9. Filings; Applications....................................................................... 46
7.10. Certain Loans and Other Extensions of Credit................................................ 46
7.11. CU Stock Option Plan........................................................................ 47
7.12. Dividends. ................................................................................ 47
7.13. Articles of Incorporation................................................................... 47
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TABLE OF CONTENTS (CONT'D.)
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ARTICLE VIII GENERAL COVENANTS........................................................................... 47
8.1. Best Efforts................................................................................ 47
8.2. Public Announcements........................................................................ 47
8.3. S-4 and the Proxy Statement................................................................. 47
8.4. Merger of Home Bank and CU Bank............................................................. 47
ARTICLE IX CONDITIONS PRECEDENT TO THE MERGERS......................................................... 48
9.1. Shareholder Approval........................................................................ 48
9.2. No Judgments or Orders...................................................................... 48
9.3. Regulatory Approvals........................................................................ 48
9.4. Tax Opinion................................................................................. 48
9.5. Pooling of Interests Accounting Treatment................................................... 48
9.6. S-4 and Proxy Statement..................................................................... 48
9.7. Dissenters.................................................................................. 48
ARTICLE X CONDITIONS PRECEDENT TO THE OBLIGATIONS OF HOME AND
HOME BANK .................................................................................. 49
10.1. Legal Opinion............................................................................... 49
10.2. Representations and Warranties; Performance of Covenants.................................... 49
10.3. Authorization of Mergers; Option Plan....................................................... 49
10.4. Absence of Certain Changes.................................................................. 49
10.5. Officers' Certificate....................................................................... 49
10.6. Fairness Opinion............................................................................ 50
10.7. Directors' Voting Agreements................................................................ 50
10.8. Home Warrant Agreement...................................................................... 50
10.9. Appointment of Directors.................................................................... 50
10.10. Validity of Transactions.................................................................... 50
10.11. Third Party Consents........................................................................ 50
10.12. NASDAQ Listing.............................................................................. 50
10.13. CU Board.................................................................................... 50
10.14. Non-Performing Loans. ..................................................................... 50
ARTICLE XI CONDITIONS PRECEDENT TO OBLIGATIONS OF CU AND CU BANK....................................... 50
11.1. Legal Opinion............................................................................... 51
11.2. Representations and Warranties; Performance of Covenants.................................... 51
11.3. Authorization of Mergers.................................................................... 51
11.4. Regulatory Approvals and Related Conditions................................................. 51
11.5. Third Party Consents........................................................................ 51
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TABLE OF CONTENTS (CONT'D.)
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11.6. Absence of Certain Changes.................................................................. 51
11.7. Officers' Certificate....................................................................... 51
11.8. Fairness Opinion............................................................................ 51
11.9. Validity of Transactions.................................................................... 52
11.10. Blue Sky Matters............................................................................ 52
11.11. Insurance Coverage.......................................................................... 52
11.12. Directors' Voting Agreements................................................................ 52
11.13. CU Warrant Agreement........................................................................ 52
11.14. Affiliate Agreements........................................................................ 52
11.15. Non-Performing Loans........................................................................ 52
11.16. Absence of Excess Remediation............................................................... 52
ARTICLE XII EMPLOYEE BENEFITS........................................................................... 52
12.1. Employee Benefits........................................................................... 52
ARTICLE XIII TERMINATION................................................................................. 53
13.1. Termination................................................................................. 53
13.2. Termination Date............................................................................ 53
13.3. Effect of Termination....................................................................... 54
ARTICLE XIV MISCELLANEOUS............................................................................... 54
14.1. Expenses.................................................................................... 54
14.2. Notices..................................................................................... 54
14.3. Successors and Assigns...................................................................... 55
14.4. Counterparts................................................................................ 55
14.5. Effect of Representations and Warranties.................................................... 55
14.6. Third Parties............................................................................... 55
14.7. Lists; Exhibits; Integration................................................................ 55
14.8. Knowledge................................................................................... 55
14.9. Governing Law............................................................................... 55
14.10. Schedules................................................................................... 55
14.11. Captions.................................................................................... 55
14.12. Severability................................................................................ 55
14.13. Waiver and Modification..................................................................... 56
14.14. Attorney's Fees............................................................................. 56
14.15. Jury Waiver................................................................................. 57
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TABLE OF CONTENTS (CONT'D.)
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EXHIBITS
Exhibit A Agreement of Merger
Exhibit B Bank Merger Agreement
Exhibit C CU Warrant Agreement
Exhibit D Home Warrant Agreement
Exhibit E CU Legal Opinion
Exhibit F CU Shareholders' Agreement
Exhibit G Manatt, Phelps & Phillips Legal Opinion
Exhibit H Home Shareholders' Agreement
Exhibit I Home Affiliate Letter
ANNEX I List of Home Directors Signing Affiliate Agreement
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AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is
made and entered into as of the 10th day of January, 1996, by and between Home
Interstate Bancorp, a California corporation ("Home"), and Home Bank, a
California chartered commercial bank ("Home Bank"), and CU Bancorp, a California
corporation ("CU"), and California United Bank, National Association, a national
banking association ("CU Bank").
R E C I T A L S
WHEREAS, Home and CU desire to effect a merger (the "Merger")
in accordance with the terms of this Agreement and the Agreement of Merger (as
defined herein).
WHEREAS, the respective Boards of Directors of Home and CU
believe that the proposed Merger, on the terms and conditions set forth herein,
is in the best interests of their respective corporations and shareholders.
WHEREAS, Home and CU intend to cause the Merger (the "Bank
Merger") of Home Bank and CU Bank at the Effective Time (as hereinafter defined)
or as soon thereafter as practicable.
WHEREAS, Home, Home Bank, CU Bancorp and CU Bank desire to
make certain representations, warranties, covenants and agreements in connection
with the transactions contemplated by this Agreement.
NOW, THEREFORE, on the basis of the foregoing recitals and in
consideration of the mutual representations, warranties, covenants and
agreements contained herein, the parties hereto do agree as follows:
ARTICLE I
DEFINITIONS
Except as otherwise expressly provided for in this Agreement, or unless
the context otherwise requires, as used throughout this Agreement the following
terms shall have the respective meanings specified below:
1.1. "Affiliate" of, or a person "Affiliated" with, a specific
person is a person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the person specified.
1.2. "Agreement of Merger" means the Agreement of Merger to be
entered into by and between Home and CU substantially in the form of Exhibit A
hereto, but subject to any changes that may be necessary to conform to any
requirements of any regulatory agency having authority over the Merger.
1.3. "Alternative Transaction" means any of the following involving
Home or Home Bank for purposes of Section 6.2 or CU or CU Bank for purposes of
Section 7.2: any merger, consolidation, share
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exchange or other business combination; a sale, lease, exchange, mortgage,
pledge, transfer or other disposition of assets of Home or Home Bank or CU or CU
Bank (as applicable) representing 10% or more of consolidated assets; a sale of
shares of capital stock (or securities convertible or exchangeable into or
otherwise evidencing, or any agreement or instrument evidencing, the right to
acquire capital stock), representing 10% or more of the voting power of Home or
Home Bank or CU or CU Bank (as applicable); a tender offer or exchange offer for
at least 10% of the outstanding shares of Home or CU (as applicable); a
solicitation of proxies in opposition to approval of the Merger by Home's
shareholders or CU's shareholders (as applicable); or a public announcement of a
proposal, plan, or intention to do any of the foregoing.
1.4. "Arthur Andersen" means Arthur Andersen, LLP.
1.5. "ATM" has the meaning set forth in Section 4.22.
1.6. "Average Price of CU Stock" means the average of the Closing
Price of CU Stock (as defined below) for the 10 consecutive trading days
immediately preceding the one trading day prior to the Effective Time (subject
to adjustment as provided below). The term "trading day" shall mean a day on
which trading generally takes place on the NASDAQ and on which trading in CU
Stock has not been halted or suspended. In the event CU pays, declares or
otherwise effects a stock split, reverse stock split, reclassification or stock
dividend or distribution with respect to the CU Stock between the date of this
Agreement and the Effective Time, appropriate adjustments will be made to the
Average Price of CU Stock.
1.7. "Bank Merger" means the merger of Home Bank with and into CU
Bank.
1.8. "Bank Merger Agreement" means the Agreement of Merger between
CU Bank and Home Bank, substantially in the form of Exhibit B hereto.
1.9. "BHC Act" means the Bank Holding Company Act of 1956, as
amended.
1.10. "Business Day" means any day other than Saturday, Sunday or a
day on which commercial banks in California are authorized or required to be
closed.
1.11. "California Secretary" means the Secretary of State of the
State of California.
1.12. "Closing" means the consummation of the Merger (as defined
herein) on the Closing Date (as defined herein) at the offices of Manatt, Phelps
& Phillips, 11355 West Olympic Boulevard, Los Angeles, California, or at such
other place as the parties may agree upon.
1.13. "Closing Date" means a Business Day to be designated by the
Parties.
1.14. "Closing Price of CU Stock" means the closing price of CU
Stock as reported on the NASDAQ and reprinted in the Western Edition of the Wall
Street Journal.
1.15. "Code" means the Internal Revenue Code of 1986, as amended.
1.16. "Conversion Ratio" has the meaning set forth in Section
2.1(c).
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1.17. "Corporate Bank Merger" means the proposed merger of Corporate
Bank, a California banking corporation, with and into CU Bank.
1.18. "Covered Loan" has the meaning set forth in Section 4.24.
1.19. "CU Bank Stock" means the common stock, $5.00 par value, of CU
Bank.
1.20. "CU Options" means options to purchase CU Stock pursuant to
the CU Stock Option Plan.
1.21. "CU Schedules" has the meaning set forth in Section 7.3(k).
1.22. "CU Scheduled Contracts" has the meaning set forth in Section
5.16.
1.23. "CU Shareholders' Meeting" means the meeting of CU's
shareholders referred to in Section 7.7 hereof.
1.24. "CU Stock" means the common stock, no par value, of CU.
1.25. "CU Stock Option Plan" means, collectively, the (i) the 1983
Employee Stock Option Plan, (ii) 1985 Employee Stock Option Plan, (iii) 1987
Special Stock Option Plan, (iv) 1993 Employee Stock Option Plan, (v) Non
Employee Director Stock Option Plan, and (vi) 1995 Restricted Stock Plan.
1.26. "CU Supplied Information" has the meaning set forth in Section
5.26.
1.27. "CU Warrant" means the warrant issued to CU pursuant to the CU
Warrant Agreement.
1.28. "CU Warrant Agreement" means the Warrant Agreement entered
into between CU and Home and attached hereto as Exhibit C, pursuant to which the
CU Warrant is issued.
1.29. "Dissenting Shares" means any shares of CU Stock or Home Stock
(as defined herein) that are (i) issued and outstanding immediately prior to the
Effective Time of the Merger and (ii) "dissenting shares" as that term is
defined in Section 1301 (b) of the California Corporations Code.
1.30. "Effective Time" means the date and time of the filing of the
Agreement of Merger with the California Secretary.
1.31. "Environmental Law" means any federal, state, provincial or
local statute, law, ordinance, rule, regulation, order, consent, decree,
judicial or administrative decision or directive of the United States or other
jurisdiction whether now existing or as hereinafter promulgated, issued or
enacted relating to: (A) pollution or protection of the environment, including
natural resources; (B) exposure of persons, including employees, to Hazardous
Substances or other products, materials or chemicals; (C) protection of the
public health or welfare from the effects of products, by-products, wastes,
emissions, discharges or releases of chemical or other substances from
industrial or commercial activities; or (D) regulation of the manufacture, use
or introduction into commerce of substances, including, without limitation,
their manufacture, formulation, packaging, labeling, distribution
transportation, handling, storage and disposal. For the purposes of this
definition the term "Environmental Law" shall include, without limiting the
foregoing, the following statutes, as amended from time to time: (1) the Clean
Air Act, as amended,
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42 U.S.C. Section 7401 et seq.; (2) the Federal Water Pollution Control Act, as
amended, 33 U.S.C. Section 1251 et seq.; (3) the Resource Conservation and
Recovery Act of 1976, as amended, 42 U.S.C. Section 6901 et seq., (4) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (including the Superfund Amendments and Reauthorization Act of 1986), 42
U.S.C. Section 2601 et seq; (5) the Toxic Substances Control Act, as amended, 15
U.S.C. Section 2601 et seq.; (6) The Occupational Safety and Health Act, as
amended, 29 U.S.C. Section 651; (7) the Emergency Planning and Community
Right-To-Know Act of 1986, 42 U.S.C. Section 1101 et seq.; (8) the Mine Safety
and Health Act of 1977, as amended, 30 U.S.C. Section 801 et seq.; (9) the Safe
Drinking Water Act, 42 U.S.C. Section 300f et seq.; and (10) all comparable
state and local laws, laws of other jurisdictions or orders and regulations
including, but not limited to, the Carpenter-Presley-Tanner Hazardous Substance
Account Act, Cal. Health & Safety Code Section 25300 et seq.
1.32. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
1.33. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
1.34. "Exchange Agent" means the financial institution appointed by
CU with the consent of Home, to effect the exchange contemplated by Article II
hereof.
1.35. "FDIC" means the Federal Deposit Insurance Corporation.
1.36. "FDIC Filings of Home" means all reports, registration
statements, proxy statements or other filings made by Home or Home Bank with the
FDIC during the time period from January 1, 1992 through the date of this
Agreement.
1.37. "Financial Statements of CU" means (i) the audited
consolidated financial statements and notes thereto of CU and the related
opinions thereon included in CU's Annual Reports on Form 10-K for the years
ended December 31, 1992, 1993 and 1994, (ii) the unaudited consolidated interim
financial statements and notes thereto of CU included in CU's Quarterly Report
on Form 10-Q for the quarters ended March 31, June 30 and September 30, 1995.
1.38. "Financial Statements of Home" means (i) the audited
consolidated financial statements and notes thereto of Home and the related
opinions thereon included in Home's Annual Reports on Form 10-K for the years
ended December 31, 1992, 1993 and 1994 and (ii) the unaudited consolidated
interim financial statements and notes thereto of Home included in Home's
Quarterly Reports on Form 1O-Q for the quarters ended March 31, June 30 and
September 30, 1995.
1.39. "FRB" means the Board of Governors of the Federal Reserve
System.
1.40. "FRB Filings of CU" means all reports, registration
statements, proxy statements or other filings made by CU or CU Bank with the FRB
during the time period from January 1, 1992 through the date of this Agreement.
1.41. "FRB Filings of Home" means all reports, registration
statements, proxy statements or other filings made by Home or Home Bank with the
FRB during the time period from January 1, 1992 through the date of this
Agreement.
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1.42. "Hazardous Substances" means (i) substances that are defined
or listed in, or otherwise classified pursuant to, or the use or disposal of
which are regulated by, any Environmental Law as "hazardous substances,"
"hazardous materials," "hazardous wastes," "toxic substances," or any other
formulation intended to define, list, or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, reproductive toxicity, or "EP toxicity;" (ii) oil, petroleum or
petroleum derived from substances and drilling fluids, produced waters, and
other wastes associated with the exploration, development, or production of
crude oil, natural gas, or geothermal resources; (iii) any flammable substances
or explosives, any radioactive materials, any hazardous wastes or substances,
any toxic wastes or substances or any other materials or pollutants which pose a
hazard to any property or to Persons on or about such property; and (iv)
asbestos in any form or electrical equipment which contains any oil or
dielectric fluid containing levels of polychlorinated biphenyls in excess of 50
parts per million.
1.43. "Home Bank Stock" means the common stock, $0.40 par value per
share, of Home Bank.
1.44. "Home Employee Plans" has the meaning set forth in Section
4.20.
1.45. "Home Options" means options to purchase Home Stock pursuant
to the Home Stock Option Plan.
1.46. "Home Real Property" has the meaning set forth in Section 4.9.
1.47. "Home Scheduled Contracts" has the meaning set forth in
Section 4.16.
1.48. "Home Schedules" has the meaning set forth in Section 6.3(k).
1.49. "Home Shareholders' Meeting" means the meeting of Home's
shareholders referred to in Section 6.7 hereof.
1.50. "Home Stock" means the common stock, no par value, of Home.
1.51. "Home Stock Option Plan" means the Home Interstate Bancorp
Stock Option Plan, which plan expired on March 12, 1995.
1.52. "Home Supplied Information" has the meaning set forth in
Section 4.26.
1.53. "Home Warrant" means the warrant issued to Home pursuant to
the Home Warrant Agreement.
1.54. "Home Warrant Agreement" means the Warrant Agreement entered
between Home and CU and attached hereto as Exhibit D, pursuant to which the Home
Warrant is issued.
1.55. "Immediate Family" means a person's spouse, parents, in-laws,
children and siblings.
1.56. "IRS" means the Internal Revenue Service.
1.57. "Montgomery" means Montgomery Securities.
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1.58. "NASDAQ" means the National Association of Securities Dealers
Automated Quotation System.
1.59. "New Stock Option Plan" means the CU Stock Option Plan to be
established in connection with the Merger.
1.60. "Non-Performing Loans" means loans or investments held by Home
Bank or CU Bank which are (i) more than ninety (90) days past due with respect
to any scheduled payment of principal or interest, (ii) classified as "loss,"
"doubtful," "substandard," "other assets especially mentioned" or "special
mention," or (iii) on non-accrual status in accordance with Home Bank's or CU
Bank's, as the case may be, loan review procedures.
1.61. "OCC" means the Office of the Comptroller of the Currency.
1.62. "OCC Filings of CU" means all reports, registration
statements, proxy statements or other filings made by CU or CU Bank with the OCC
during the time period from January 1, 1992 through the date of this Agreement.
1.63. "Operating Loss" has the meaning set forth in Section 4.23.
1.64. "Other Real Estate Owned" means any real property owned or
acquired by foreclosure or otherwise, in the ordinary course of collecting a
debt previously contracted for in good faith.
1.65. "Party" means either Home, Home Bank, CU or CU Bank and
"Parties" shall mean Home, Home Bank, CU and CU Bank.
1.66. "Person" means any individual, corporation, association,
partnership, joint venture, other entity, government or governmental department
or agency.
1.67. "Phase I Reports" has the meaning set forth in Sesction 6.12.
1.68. "Phase II Assessments" has the meaning set forth in Section
6.12.
1.69. "Proposed Retention Agreements" means the Retention Agreements
to be entered into between Home Bank and certain executive officers of Home
Bank, pursuant to which certain key employees of Home Bank shall receive certain
payments as a result of the transactions contemplated hereby.
1.70. "Proxy Statement" means the Joint Proxy Statement and
Prospectus that is used to solicit proxies for the Home Shareholders' Meeting
and CU Shareholders' Meeting and to offer and sell the shares of CU Stock to be
issued in connection with the Merger.
1.71. "Related Group of Persons" means Affiliates, members of an
Immediate Family or Persons the obligations of whom would be attributed to
another Person pursuant to the regulations promulgated by the SEC (as defined
herein).
1.72. "SEC" means the Securities and Exchange Commission.
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1.73. "SEC Filings of CU" means all reports, registration
statements, proxy statements or other filings made by CU with the SEC during the
time period from January 1, 1992 through the date of this Agreement.
1.74. "SEC Filings of Home" means all reports, registration
statements, proxy statements or other filings made by Home with the SEC during
the time period from January 1, 1992 through the date of this Agreement.
1.75. "Secured Loan" has the meaning set forth in Section 4.24.
1.76. "Securities Act" means the Securities Act of 1933, as amended.
1.77. "S-4" means the registration statement on Form S-4 to be filed
with the SEC relating to the registration under the Securities Act of the CU
Stock to be issued in connection with the Merger.
1.78. "Superintendent" means the Superintendent of Banks of the
State of California.
1.79. "Surviving Company" means the corporation surviving the
Merger.
1.80. "Transferred Employees" has the meaning set forth in Section
12.1.
1.81. "Understanding" means any contract, agreement, understanding,
commitment or offer, whether written or oral, which may become a binding
obligation if accepted by another Person.
ARTICLE II
THE MERGER AND RELATED MATTERS
2.1. The Merger. The Merger shall become effective upon the filing
of the Agreement of Merger with the California Secretary in accordance with the
provisions of the California Corporations Code. At the Effective Time, the
following transactions will be deemed to have occurred simultaneously:
(a) Home shall be merged with and into CU, and the
separate corporate existence of Home shall cease.
(b) Subject to Section 2.4(a), each share of CU Stock
issued and outstanding immediately prior to the Effective Time shall
remain an issued and outstanding share of common stock of the Surviving
Company and shall not be converted or otherwise affected by the Merger.
(c) Subject to Sections 2.2 and 2.4(b), each share of
Home Stock issued and outstanding immediately prior to the Effective
Time shall, on and after the Effective Time, be automatically canceled
and cease to be an issued and outstanding share of Home Stock and shall
be converted into 1.409 shares of CU Stock (the "Conversion Ratio").
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2.2. Fractional Shares. No fractional shares of CU Stock shall be
issued in the Merger. In lieu thereof, each holder of Home Stock who would
otherwise be entitled to receive a fractional share shall receive an amount in
cash equal to the product (calculated to the nearest thousandth) obtained by
multiplying (a) the Average Price of CU Stock times (b) the fraction of the
share of CU Stock to which such holder would otherwise be entitled. No such
holder shall be entitled to dividends or other rights in respect of any such
fraction.
2.3. Exchange Procedures.
(a) On or before the Effective Time, CU will deliver to
the Exchange Agent certificates representing a sufficient number of
shares of CU Stock issuable in the Merger and funds representing a
sufficient amount of cash payable in lieu of fractional shares in the
Merger.
(b) Upon surrender for cancellation to the Exchange Agent
of one or more certificates for shares of Home Stock ("Old
Certificates"), accompanied by a duly executed letter of transmittal in
proper form, the Exchange Agent shall, promptly after the Effective
Time, deliver to each holder of such surrendered Old Certificates new
certificates representing the appropriate number of shares of CU Stock
("New Certificates"), together with checks for payment of cash in lieu
of fractional interests to be issued in respect of the Old
Certificates.
(c) Until Old Certificates have been surrendered and
exchanged as herein provided, each outstanding Old Certificate shall
represent, on and after the Effective Time, the right to receive the
shares of CU Stock and/or the cash into which the number of shares of
Home Stock shown thereon have been converted, as provided herein. No
dividends or other distributions that are declared on CU Stock will be
paid to Persons otherwise entitled to receive the same until the Old
Certificates have been surrendered in exchange for New Certificates in
the manner herein provided, but upon such surrender, such dividends or
other distributions, from and after the Effective Time, will be paid to
such Persons in accordance with the terms of such CU Stock. In no event
shall the Persons entitled to receive such dividends or other
distributions be entitled to receive interest on such dividends or
other distributions.
(d) No transfer taxes shall be payable by any shareholder
in respect of the issuance of New Certificates, except that if any New
Certificate is to be issued in a name other than that in which the Old
Certificate surrendered shall have been registered, it shall be a
condition of such issuance that the Person requesting such issuance
shall properly endorse the certificate or certificates and shall pay to
CU any transfer taxes payable by reason thereof, or of any prior
transfer of such surrendered certificate, or establish to the
satisfaction of CU that such taxes have been paid or are not payable.
(e) Any CU Stock or cash delivered to the Exchange Agent
(together with any interest or profits earned thereon) and not issued
pursuant to this Section 2.3 at the end of six months from the
Effective Time shall be returned to CU.
(f) Notwithstanding anything to the contrary set forth in
Sections 2.3(c) and 2.3(d) hereof, if any holder of Home Stock shall be
unable to surrender his Old Certificates because such certificates have
been lost or destroyed, such holder may deliver in lieu thereof an
indemnity bond in form and substance reasonably satisfactory to CU.
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(g) The Exchange Agent shall not be entitled to vote or
exercise any rights of ownership with respect to the shares of CU Stock
held by it from time to time hereunder, except that it shall receive
and hold all dividends or other distributions paid or distributed with
respect to such shares of CU Stock for the account of the Persons
entitled thereto.
2.4. Dissenting Shares.
(a) Notwithstanding anything to the contrary contained in
this Agreement, Dissenting Shares of CU Stock which have not
effectively withdrawn or lost their rights under Section 1309 shall
remain issued and outstanding shares of common stock of Surviving
Company after the Effective Time, subject to the right to receive such
consideration as shall be determined pursuant to Chapter 13 of the
California Corporations Code.
(b) Notwithstanding anything to the contrary contained in
this Agreement, Dissenting Shares of Home Stock which have not
effectively withdrawn or lost their rights under Section 1309 shall not
be converted pursuant to Section 2.1 (c), but shall be entitled to
receive such consideration as shall be determined pursuant to Chapter
13 of the California Corporations Code.
2.5. Effect of Merger. By virtue the Merger and at the Effective
Time, all of the rights, privileges, powers and franchises and all property and
assets of every kind and description of Home and CU shall be vested in and be
held and enjoyed by the Surviving Company, without further act or deed, and all
the estates and interests of every kind of Home and CU, including all debts due
to either of them, shall be as effectively the property of the Surviving Company
as they were of Home and CU, and the title to any real estate vested by deed or
otherwise in either Home or CU shall not revert or be in any way impaired by
reason of the Merger; and all rights of creditors and liens upon any property of
Home and CU shall be preserved unimpaired and all debts, liabilities and duties
of Home and CU shall be debts, liabilities and duties of the Surviving Company
and may be enforced against it to the same extent as if such debts, liabilities
and duties had been incurred or contracted by it, and none of such debts,
liabilities or duties shall be expanded, increased, broadened or enlarged by
reason of the Merger.
2.6. Name of Surviving Company. The name of the Surviving Company
shall be mutually agreed upon by the Parties.
2.7. Articles of Incorporation and Bylaws of Surviving Company.
Subject to any changes in the Articles of Incorporation resulting from the
Parties' agreement as to the name of the Surviving Company as provided in
Section 2.6, the Articles of Incorporation and Bylaws of CU as in effect
immediately prior to the Effective Time shall continue to be the Articles of
Incorporation and Bylaws of the Surviving Company.
2.8. Directors and Officers of Surviving Company.
(a) At the Effective Time, the Board of Directors of the
Surviving Company will consist of the five directors designated by the
Board of Directors of Home and the five directors designated by the
Board of Directors of CU.
(b) At the Effective Time, Stephen Carpenter will become
the Chairman and Chief Executive Officer, James Staes will become Vice
Chairman and David Rainer will become President and Chief Operating
Officer of the Surviving Company.
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2.9. Options.
(a) Subject to Section 2.9(b), (c) and (d), each Home
Option issued and outstanding immediately prior to the Effective Time
shall, on and after the Effective Time, be assumed by and be deemed to
be options granted by the Surviving Company pursuant to the New Stock
Option Plan to purchase that number of shares of CU Stock equal to the
Conversion Ratio times the number of shares of Home Stock subject to
the option; provided, however, that no option shall be deemed granted
by the Surviving Company to acquire a fractional share of CU Stock.
(b) Assumption of such options shall be contingent upon
the Closing and upon the execution prior to the Closing by the
particular optionee, CU and Home of a new option agreement providing
for the assumption and conversion of the Home Options. Assumption by CU
of the Home Options will be pursuant to the terms of the New Stock
Option Plan providing for the assumption of such options, which plan
shall be contingent upon approval of the CU shareholders.
(c) To the extent that the assumption of a Home Option by
the Surviving Company would result in the issuance of an option to
purchase a fractional share of CU Stock, such fractional share option
shall be canceled, and the aggregate exercise price of the option to
purchase shares of CU Stock shall be reduced by the proportionate
amount of the aggregate exercise price attributable to the fractional
share.
(d) The assumption by the Surviving Company of Home
Options pursuant to the New Stock Option Plan shall be subject to the
following limitations:
(i) The excess of the aggregate fair market
value of the shares of CU Stock subject to an option
immediately after the assumption over the aggregate option
exercise price of such shares of CU Stock shall not be greater
than the excess of the aggregate fair market value of the
shares subject to the Home Option immediately before the
assumption over the aggregate option exercise price of such
shares of Home Stock.
(ii) For any option, on a share by share
comparison, the ratio of the option exercise price to the fair
market value of the CU Stock subject to the option immediately
after the assumption shall not be more favorable to the
optionee than the ratio of the Home Option exercise price to
the fair market value on the Home Stock subject to the option
immediately before the assumption.
(iii) The optionee shall not receive additional
benefits under the Surviving Company option which he did not
have under the Home Option.
(e) Each CU Option issued and outstanding immediately
prior to the Effective Time shall not be affected by the Merger.
2.10. Warrant. Concurrent with the execution of this Agreement, CU
and Home have executed each of the Home Warrant Agreement and the CU Warrant
Agreement, pursuant to which agreements CU has issued to Home the Home Warrant
and Home has issued to CU the CU Warrant, granting the holder of each such
warrant the right to purchase up to 19.9% of the issued and outstanding shares
of capital stock of
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the other party, on a fully diluted basis (as more specifically set forth in the
Home Warrant Agreement and CU Warrant Agreement), on the terms, and subject to
the conditions set forth in such agreements.
ARTICLE III
THE CLOSING
3.1. Closing Date. The Closing shall take place on the Closing
Date.
3.2. Execution of Merger Agreements. As soon as practicable after
execution of this Agreement, the Agreement of Merger shall be executed by Home
and CU. On the Closing Date, the Agreement of Merger, together with all
requisite certificates, shall be duly filed with the California Secretary as
required by applicable laws and regulations.
3.3. Documents to be Delivered. At the Closing, the parties hereto
shall deliver, or cause to be delivered, such documents or certificates as may
be necessary, in the reasonable opinion of counsel for any of the parties, to
effectuate the transactions contemplated by this Agreement. From and after the
Effective Time, each of the parties hereto hereby covenants and agrees, without
the necessity of any further consideration whatsoever, to execute, acknowledge
and deliver any and all other documents and instruments and take any and all
such other action as may be reasonably necessary or desirable to effectuate the
transactions set forth herein or contemplated hereby, and the officers and
directors of the parties hereto shall execute and deliver, or cause to be
executed and delivered, all such documents as may reasonably be required to
effectuate such transactions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HOME AND HOME BANK
Home and Home Bank represent and warrant to CU as follows:
4.1. Incorporation, Standing and Power. Home has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the State of California and is registered as a bank holding company
under the BHC Act. Home Bank has been duly incorporated and is validly existing
as a state chartered Bank under the laws of the State of California and is a
member of the Federal Reserve System, and its deposits are insured by the FDIC
in the manner and to the extent provided by law. Home and Home Bank have all
requisite corporate power and authority to own, lease and operate their
respective properties and assets and to carry on their respective businesses as
presently conducted. Neither the scope of the business of Home or Home Bank nor
the location of any of their respective properties requires that Home or Home
Bank be licensed to do business in any jurisdiction other than the State of
California where the failure to be so licensed would, individually or in the
aggregate, have a materially adverse effect on the financial condition, results
of operation or business of Home on a consolidated basis.
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4.2. Capitalization.
(a) As of the date of this Agreement, the authorized
capital stock of Home consists of 20,000,000 shares of Home Stock, of
which 4,187,954 shares are outstanding, and 3,000,000 shares of serial
preferred stock, none of which is outstanding. All of the outstanding
shares of Home Stock are duly authorized, validly issued, fully paid
and nonassessable. As of the date of this Agreement, except for Home
Options covering 168,134 shares of Home Stock granted pursuant to the
Home Stock Option Plan, and 1,082,224 shares covered by the CU Warrant,
there were no outstanding options, warrants or other rights in or with
respect to the unissued shares of Home Stock or Home serial preferred
stock nor any securities convertible into such stock, and Home is not
obligated to issue any additional shares of Home Stock or preferred
stock or any additional options, warrants or other rights in or with
respect to the unissued shares of such stock or any other securities
convertible into such stock. Schedule 4.2 sets forth the name of each
holder of a Home Option, the number of shares of Home Stock covered by
each such Home Option, the exercise price per share and the expiration
date of each such Home Option.
(b) As of the date of this Agreement, the authorized
capital stock of Home Bank consists of 4,000,000 shares of Home Bank
Stock, of which1,938,746 shares are outstanding and all of which are
owned of record by Home. All the outstanding shares of Home Bank Stock
are duly authorized, validly issued, fully paid and nonassessable
(except for assessments that may be made by order of the Superintendent
pursuant to the Section 662 of the California Finance Code). There are
no outstanding options, warrants or other rights in or with respect to
the unissued shares of Home Bank Stock or any other securities
convertible into such stock, and Home Bank is not obligated to issue
any additional shares of its common stock or any options, warrants or
other rights in or with respect to the unissued shares of its common
stock or any other securities convertible into such stock.
4.3. Subsidiaries. Except for Home Bank, a wholly owned subsidiary
of Home, Home does not own, directly or indirectly (except as pledgee pursuant
to loans or upon acquisition in satisfaction of debt previously contracted), the
outstanding stock or other voting interest in any corporation, partnership,
joint venture or other entity.
4.4. Financial Statements. Home has previously furnished to CU a
copy of the Financial Statements of Home. The Financial Statements of Home: (a)
present fairly the consolidated financial condition of Home as of the respective
dates indicated and its consolidated results of operations and changes in
financial position/cash flow, as applicable, for the respective periods then
ended, subject, in the case of the unaudited consolidated interim financial
statements, to normal recurring adjustments; (b) have been prepared in
accordance with generally accepted accounting principles consistently applied
(except as otherwise indicated therein); (c) set forth as of the respective
dates indicated adequate reserves for all foreseeable loan losses and other
contingencies; and (d) are based on the books and records of Home and Home Bank.
4.5. SEC/Regulatory Filings. Since January 1, 1990, Home and Home
Bank have filed all reports, registrations and statements that were required to
be filed with the (i) FDIC; (ii) the FRB; (iii) the SEC; and (iv) any other
applicable federal, state or local governmental or regulatory authority. Home
has previously furnished to CU a copy of the SEC Filings, FDIC Filings and FRB
Filings of Home. As of their respective dates, the SEC Filings, FDIC Filings and
FRB Filings of Home complied in all material respects
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with the requirements of their respective forms and did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.6. Authority of Home and Home Bank. The execution and delivery by
Home and Home Bank of this Agreement, by Home of the Agreement of Merger and by
Home Bank of the Bank Merger Agreement and, subject to the requisite approval of
the shareholders of Home and the sole shareholder of Home Bank, the consummation
of the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of Home and Home Bank,
and this Agreement is, and the Agreement of Merger and Bank Merger Agreement
will be upon execution by the respective parties thereto, a valid and binding
obligation of Home or Home Bank or both of them, as the case may be, enforceable
in accordance with their respective terms, except as the enforceability thereof
may be limited by bankruptcy, liquidation, receivership, conservatorship,
insolvency, moratorium or other similar laws affecting the rights of creditors
generally and by general equitable principles and by Section 8(b)(6)(D) of the
Federal Deposit Insurance Act, 12 U.S.C. Section 1818(b) (6) (D). Except as set
forth in Schedule 4.6, neither the (i) execution and delivery by Home and Home
Bank of this Agreement, by Home of the Agreement of Merger or by Home Bank of
the Bank Merger Agreement; (ii) the consummation of the Merger or Bank Merger or
the transactions contemplated herein or therein; nor (iii) compliance by Home
and Home Bank with any of the provisions hereof or thereof, will: (a) conflict
with or result in a breach of any provision of their respective Articles of
Incorporation, as amended, or Bylaws, as amended; (b) constitute a breach of or
result in a default (or give rise to any rights of termination, cancellation or
acceleration, or any right to acquire any securities or assets) under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
franchise, license, permit, agreement or other instrument or obligation to which
Home or Home Bank is a party, or by which Home or Home Bank or any of their
respective properties or assets is bound, if in any such circumstances, such
event could have consequences materially adverse to Home on a consolidated
basis; or (c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Home or Home Bank or any of their respective properties
or assets, if such violation could have consequences materially adverse to Home
on a consolidated basis. Except as set forth in the Home Schedules, no consent
of, approval of, notice to or filing with any governmental authority having
jurisdiction over any aspect of the business or assets of Home or Home Bank, and
no consent of, approval of or notice to any other Person, is required in
connection with the execution and delivery by Home and Home Bank of this
Agreement, by Home of the Agreement of Merger, by Home and Home Bank of the Bank
Merger Agreement, or the consummation by Home and Home Bank of the Merger or
Bank Merger or the transactions contemplated hereby or thereby, except (i) the
approval of this Agreement and the transactions contemplated hereby by the
shareholders of Home and the sole shareholder of Home Bank; (ii) such approvals
as may be required by the FRB and the OCC; (iii) the filing of the Agreement of
Merger with the California Secretary; (iv) the filing of the Bank Merger
Agreement with the OCC; and (v) the filing with and the approval by the SEC of
the S-4 and Proxy Statement.
4.7. Insurance. Home and Home Bank have policies of insurance and
bonds with respect to their respective assets and businesses against such
casualties and contingencies and in such amounts, types and forms as are
appropriate for their respective businesses, operations, properties and assets.
All such insurance policies and bonds are in full force and effect. To the
knowledge of Home and Home Bank and except as set forth on Schedule 4.7, no
insurer under any such policy or bond has canceled or indicated an intention to
cancel or not to renew any such policy or bond or generally disclaimed liability
thereunder. To the knowledge of Home and Home Bank and except as set forth on
Schedule 4.7, neither Home nor Home Bank is in default under any such policy or
bond and all material claims thereunder have been filed in a timely
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fashion. Set forth on Schedule 4.7 is a list of all policies of insurance
carried and owned by Home or Home Bank, showing the name of the insurance
company, the nature of the coverage, the policy limit, the annual premiums and
the expiration dates. Home has delivered to CU a copy of each such policy of
insurance.
4.8. Title to Assets. Home and Home Bank have good and marketable
title to all their respective material properties and assets, other than real
property, owned or stated to be owned by Home or Home Bank, free and clear of
all mortgages, liens, encumbrances, pledges or charges of any kind or nature
except: (a) as set forth in the Financial Statements of Home; (b) for liens or
encumbrances for current taxes not yet due; (c) for liens or encumbrances
incurred in the ordinary course of business; (d) for liens that are not
substantial in character, amount or extent or that do not materially detract
from the value, or interfere with present use, of the property subject thereto
or affected thereby, or otherwise materially impair the conduct of business of
Home on a consolidated basis; or (e) as set forth on Schedule 4.8.
4.9. Real Estate. Schedule 4.9 sets forth a list of real property,
including leaseholds, owned or leased by Home or Home Bank (the "Home Real
Property"). Home or Home Bank has good and marketable title to the Home Real
Property, and valid leasehold interests in the leaseholds, described on Schedule
4.9, free and clear of all mortgages, covenants, conditions, restrictions,
easements, liens, security interests, charges, claims, assessments and
encumbrances, except (a) for rights of lessors, co-lessees or sublessees in such
matters that are reflected in the lease; (b) for current taxes not yet due and
payable; (c) for liens and encumbrances of public record; (d) for such
imperfections of title, liens and encumbrances, if any, as do not materially
detract from the value of or materially interfere with the present use of such
property; and (e) as described on Schedule 4.9.
4.10. Litigation. Except as set forth in the SEC Filings of Home or
Schedule 4.10, there is no private or governmental suit, claim, action or
proceeding pending, nor to Home's or Home Bank's knowledge, threatened against
Home or Home Bank or against any of their respective directors, officers or
employees relating to the performance of their duties in such capacities or
against or affecting any properties of Home or Home Bank that has had or may
have a material adverse effect upon the business, financial condition or results
of operations of Home on a consolidated basis or the transactions contemplated
hereby or which may involve a payment by Home in excess of $50,000 of applicable
insurance coverage. Also, except as disclosed in the SEC Filings of Home or on
Schedule 4.10, there are no material judgments, decrees, stipulations or orders
against Home or Home Bank enjoining either of them or any of their respective
directors, officers or employees in respect of, or the effect of which is to
prohibit, any business practice or the acquisition of any property or the
conduct of business in any area. Home has previously provided to CU summary
reports of Home's and Home Bank's attorneys relating to all pending litigation
to which Home or Home Bank is a party and which names Home or Home Bank as a
defendant or cross- defendant and a true, correct and complete list of all
pending litigation in which Home or Home Bank is a named party.
4.11. Taxes.
(a) Home and/or Home Bank have filed all federal and
foreign income tax returns, all state and local franchise and income
tax, real and personal property tax, sales and use tax, premium tax,
excise tax and other tax returns of every character required to be
filed by it and have paid all taxes, together with any interest and
penalties owing in connection therewith, shown on such returns to be
due in respect of the periods covered by such returns, other than taxes
which are being contested in good faith and for which adequate reserves
have been established. Home and/or Home
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Bank have filed all required payroll tax returns, have fulfilled all
tax withholding obligations and have paid over to the appropriate
governmental authorities the proper amounts with respect to the
foregoing. The tax and audit positions taken by Home and/or Home Bank
in connection with the tax returns described in the preceding sentence
were reasonable and asserted in good faith. Adequate provision has been
made in the books and records of Home and/or Home Bank and, to the
extent required by generally accepted accounting procedures, reflected
in the Financial Statements of Home, for all tax liabilities, including
interest or penalties, whether or not due and payable and whether or
not disputed, with respect to any and all federal, foreign, state,
local and other taxes for the periods covered by such financial
statements and for all prior periods. Schedule 4.11 sets forth the date
or dates through which the IRS has examined the federal tax returns of
Home and/or Home Bank and the date or dates through which any foreign,
state, local or other taxing authority has examined any other tax
returns of Home and/or Home Bank. Schedule 4.11 also contains a
complete list of each year for which any federal, state, local or
foreign tax authority has obtained or has requested an extension of the
statute of limitations from Home and/or Home Bank and lists each tax
case of Home and/or Home Bank currently pending in audit, at the
administrative appeals level or in litigation. Schedule 4.11 further
lists the date and issuing authority of each statutory notice of
deficiency, notice of proposed assessment and revenue agent's report
issued to Home and/or Home Bank within the last twelve (12) months.
Except as set forth in Schedule 4.11, neither the IRS nor any foreign,
state, local or other taxing authority has, during the past three
years, examined or is in the process of examining any federal, foreign,
state, local or other tax returns of Home. To the knowledge of Home,
neither the IRS nor any foreign, state, local or other taxing authority
is now asserting or threatening to assert any deficiency or claim for
additional taxes (or interest thereon or penalties in connection
therewith) except as set forth on Schedule 4.11.
(b) Except as set forth on Schedule 4.11(b), neither Home
nor Home Bank is a party to any safe harbor lease within the meaning of
Section 168(f)(8) of the Code, as in effect prior to amendment by the
Tax Equity and Fiscal Responsibility Act of 1982. Neither Home nor Home
Bank is or has been a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
Neither Home nor Home Bank is a "consenting corporation" under Section
341(f) of the Code. Neither Home nor Home Bank has agreed, nor is it
required to make, any adjustment under Section 481(a) of the Code by
reason of a change in accounting method or otherwise.
4.12. Compliance with Laws and Regulations. To Home's and Home
Bank's knowledge, neither of them is in default under or in breach of any
provision of their respective Articles of Incorporation, as amended, or Bylaws,
as amended, or law, ordinance, rule or regulation promulgated by any
governmental agency having authority over either of them, where such default or
breach would have a material adverse effect on the business, financial condition
or results of operations of Home on a consolidated basis. No investigation or
review by any governmental entity or regulatory authority with respect to Home
or Home Bank is pending or, to the knowledge of Home or Home Bank, threatened,
nor has any such governmental entity or regulatory authority indicated to Home
or any Affiliate of Home any intention to conduct the same, other than those the
outcome of which would not have a material adverse affect on the business,
financial condition or results of operations of Home on a consolidated basis.
4.13. Performance of Obligations. Home and Home Bank have performed
in all material respects all of the obligations required to be performed by them
to date, and to the best of their knowledge, are not in default under or in
breach of any term or provision of any covenant, contract, lease, indenture or
any other
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covenant to which either of them is a party, is subject or is otherwise bound,
and no event has occurred that, with the giving of notice or the passage of time
or both, would constitute such default or breach, where such default or breach
would have a material adverse effect on the business, financial condition or
results of operations of Home on a consolidated basis. Except for loans and
leases made by Home Bank in the ordinary course of business, to Home's or Home
Bank's knowledge, no party with whom Home or Home Bank has an agreement that is
of material importance to the business of Home on a consolidated basis is in
default thereunder.
4.14. Employees. There are no controversies pending or threatened
between Home or Home Bank and any of their respective employees that are likely
to have a material adverse effect on the business, financial condition or
results of operation of Home on a consolidated basis. Neither Home nor Home Bank
is a party to any collective bargaining agreement with respect to any of their
respective employees or any labor organization to which their respective
employees or any of them belong. Except as previously disclosed in writing to
CU, there are no Understandings with respect to the employment of any officer or
employee of Home or Home Bank which are not terminable by Home or Home Bank
without liability on not more than thirty (30) days' notice. Except as disclosed
in the Home Financial Statements or as previously disclosed in writing to CU,
all material sums due for employee compensation have been paid or accrued and
all employer contributions for employee benefits, including deferred
compensation obligations, and any benefits under any Home Employee Plan have
been duly and adequately paid or provided for in accordance with plan documents.
Except for the Proposed Retention Agreements and as set forth on Schedule 4.14,
as of the date hereof, no director, officer or employee of Home or Home Bank is
entitled to receive any payment or any amount under any existing Home Employee
Plan, Understanding, severance plan or other benefit plan as a result of the
consummation of any transaction contemplated by this Agreement, the Agreement of
Merger or the Bank Merger.
4.15. Brokers and Finders. Except for any agreements among Home, CU
and Montgomery, and any fees payable thereunder, neither Home nor Home Bank is a
party to or obligated under any agreement with any broker or finder relating to
the transactions contemplated hereby, and neither the execution of this
Agreement nor the consummation of the transactions provided for herein or
therein will result in any liability to any broker or finder.
4.16. Material Contracts. Except as set forth on Schedule 4.16
hereto (all items listed or required to be listed on Schedule 4.16 being
referred to herein as "Home Scheduled Contracts"), neither Home nor Home Bank is
a party or otherwise subject to:
(a) any employment, deferred compensation, bonus or
consulting contract that requires payment by Home or Home Bank of
$50,000 or more per annum;
(b) any advertising, brokerage, licensing, dealership,
representative or agency relationship or contract not terminable by
Home on 30 days' or less notice and which requires payment by Home or
Home Bank of $10,000 or more per annum;
(c) any contract or agreement that restricts Home (or
would restrict any Affiliate of Home after the Effective Time) from
competing in any line of business with any Person or using or employing
the services of any Person;
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(d) any lease of real or personal property providing for
annual lease payments by or to Home or Home Bank in excess of $100,000
per annum other than (i) financing leases entered into in the ordinary
course of business in which Home or Home Bank is lessor and (ii) leases
of real property presently used by Home Bank as banking offices;
(e) any mortgage, pledge, conditional sales contract,
security agreement, option, or any other similar agreement with respect
to any interest of Home or Home Bank (other than as mortgagor or
pledgor in the ordinary course of their banking business or as
mortgagee, secured party or deed of trust beneficiary in the ordinary
course of their business) in personal property having a value of
$100,000 or more;
(f) any agreement to acquire equipment or any commitment
to make capital expenditures of $100,000 or more;
(g) other than agreements entered into in the ordinary
course of business, including sales of Other Real Estate Owned, any
agreement for the sale of any property or assets in which Home or Home
Bank has an ownership interest or for the grant of any preferential
right to purchase any such property or asset;
(h) any agreement for the borrowing of any money (other
than liabilities or interbank borrowings made in the ordinary course of
their banking business and reflected in the Financial Statements of
Home);
(i) any restrictive covenant contained in any deed to or
lease of real property owned or leased by Home or Home Bank (as lessee)
that materially restricts the use, transferability or value of such
property;
(j) any guarantee or indemnification which involves the
sum of $100,000 or more, other than letters of credit or loan
commitments issued in the normal course of business;
(k) any supply, maintenance or landscape contracts not
terminable by Home or Home Bank without penalty on 30 days' or less
notice and which provides for payments in excess of $25,000 per annum;
(l) any agreement which would be terminable other than by
Home or Home Bank as a result of the consummation of the transactions
contemplated by this Agreement;
(m) any contract of participation with any other bank in
any loan entered into by Home or Home Bank subsequent to December 31,
1994 in excess of $100,000 or any sales of assets of Home or Home Bank
with recourse of any kind to Home or Home Bank except the sale of
mortgage loans, servicing rights, repurchase or reverse repurchase
agreements, securities or other financial transactions in the ordinary
course of business;
(n) any other Understanding of any other kind not
terminable on 30 days' or less notice which involves future payments or
receipts or performances of services or delivery of items requiring
payment of $25,000 or more to or by Home or Home Bank other than
payments made
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under or pursuant to loan agreements, participation agreements and
other agreements for the extension of credit in the ordinary course of
their business; or
(o) any Understanding that is otherwise material to the
business, financial condition, results of operations or prospects of
Home or Home Bank.
Home has delivered to CU copies of all Home Scheduled Contracts, including all
amendments and supplements thereto.
4.17. Absence of Material Change. Since December 31, 1994, the
businesses of Home and Home Bank have been conducted, only in the ordinary
course, in the same manner as theretofore conducted and there has not occurred
any event that has had or may reasonably be expected to have a material adverse
effect on the business, financial condition or results of operation of Home on a
consolidated basis.
4.18. Licenses and Permits. Home and Home Bank have all material
licenses and permits that are necessary for the conduct of their respective
businesses, and such licenses are in full force and effect, except for any
failure to be in full force and effect that would not, individually or in the
aggregate, have a material adverse effect on the business, financial condition
or results of operations of Home on a consolidated basis. The properties and
operations of Home and Home Bank are and have been maintained and conducted, in
all material respects, in compliance with all applicable laws and regulations.
4.19. No Material Liabilities; Environmental.
(a) Schedule 4.19 sets forth all material liabilities of
Home and Home Bank, including liabilities for Hazardous Substances or
under any Environmental Law, contingent or otherwise, that are not
reflected or reserved against in the Home Financial Statements, except
for liabilities incurred or accrued since December 31, 1994 in the
ordinary course of business, none of which has had or could reasonably
be expected to have a material adverse effect on the business,
financial condition, results of operations or prospects of Home on a
consolidated basis. Except as set forth in Schedule 4.19, neither Home
nor Home Bank knows of any basis for the asserting against it of any
liability, obligation or claim that could reasonably be expected to
have a material adverse effect on the business, financial condition, or
results of operations of Home on a consolidated basis.
(b) Except as set forth on Schedule 4.19(b) or the Phase
I Reports or Phase II Assessments, to the actual knowledge of the
executive officers of Home and Home Bank, (i) there has not been any
generation, use, handling, transportation, treatment, storage, release,
or disposal of any Hazardous Substance in connection with the conduct
of business of Home or Home Bank that has resulted or is likely to
result in any liability under any Environmental Law in excess of
$1,000,000; (ii) there has never been a use of the Home Real Property
that has resulted, or is likely to result in any liability under any
Environmental Law in excess of $1,000,000; (iii) no underground storage
tanks or surface impoundments are on or in the Home Real Property; and
(iv) no Hazardous Substances are contained on, under or migrating from
or located on any of the Home Real Property.
4.20. Employee Benefit Plans.
(a) Schedule 4.20 sets forth and describes all employee
benefit plans and any collective bargaining agreements or labor
contracts in which Home or Home Bank participates, or by which
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they are bound, including, without limitation; (i) any profit sharing,
deferred compensation, bonus, stock option, stock purchase, pension,
retainer consulting, retirement, welfare or incentive plan or agreement
whether legally binding or not; (ii) any plan providing for "fringe
benefits" to its employees, including but not limited to vacation, sick
leave, medical, hospitalization, life insurance and other insurance
plans, and related benefits; (iii) any written employment agreement and
any other employment agreement not terminable at will; or (iv) any
other "employee benefit plan" (within the meaning of Section 3(3) of
ERISA) (collectively, the "Home Employee Plans"). Except as set forth
in Schedule 4.20, (i) there are no negotiations, demands or proposals
that are pending or threatened that concern matters now covered, or
that would be covered, by any employment agreements or employee benefit
plans other than amendments to plans qualified under Section 401 of the
Code that are required by the Tax Reform Act of 1986 and later
legislation; (ii) Home is in compliance with the material reporting and
disclosure requirements of Part 1 of Subtitle IB of ERISA and the
corresponding provisions of the Code to the extent applicable to all
such employee benefit plans; (iii) Home has performed all of its
obligations under all such employee benefit plans and employment
agreements required to be performed heretofore; and (iv) there are no
actions, suits or claims (other than routine claims for benefits)
pending or, to the best knowledge of Home and Home Bank, threatened
against any such employee benefit plans and employment agreements or
the assets of such plans, and to the best knowledge of Home, no facts
exist which could give rise to any actions, suits or claims (other than
routine claims for benefits) against such plans or the assets of such
plans.
(b) The "employee pension benefit plans" (within the
meaning of Section 3(2) of ERISA) described on Schedule 4.20 have been
duly authorized by the Board of Directors of Home. Except as set forth
in Schedule 4.20, each such plan and associated trust intended to be
qualified under Section 401(a) and to be exempt from tax under Section
501(a) of the Code, respectively, has either received a favorable
determination letter from the IRS, has applied for such a determination
letter or will apply for such a determination letter before the
expiration of the remedial amendment period set forth in Section 401(b)
of the Code, as the IRS may extend such period, and to the best
knowledge of Home and Home Bank, no event has occurred that will or
could give rise to disqualification of any such plan which is intended
to be qualified under Section 401(a) of the Code or loss of the
exemption from tax of any such trust which is intended to be exempt
from tax under Section 501(a) of the Code. No event has occurred that
will or could subject any such plans to tax under Section 511 of the
Code. None of such plans has engaged in a merger or consolidation with
any other plan or transferred assets or liabilities from any other
plan. No prohibited transaction (within the meaning of Section 409 or
502(i) of ERISA or Section 4975 of the Code) or party-in-interest
transaction (within the meaning of Section 406 of ERISA) has occurred
with respect to any of such plans which could subject Home or Home Bank
to an excise tax or penalty. To the best knowledge of Home and Home
Bank, no employee of Home or Home Bank has engaged in any transactions
which could subject Home or Home Bank to indemnify such person against
liability. All costs of plans have been provided for on the basis of
consistent methods in accordance with sound actuarial assumptions and
practices. No employee benefit plan has incurred any "accumulated
funding deficiency" (as defined in Section 302(2) of ERISA), whether or
not waived, taking into account contributions made within the period
described in Section 412(c)(10) of the Code; nor are there any unfunded
amounts under any employee benefit plan which is required to be funded
under Part 3 of Subtitle IB of ERISA and Section 412 of the Code); nor
has Home or Home Bank failed to make any contributions or pay any
amount due and owing as required by law or the terms of any employee
benefit plan or employment agreement. Subject to amendments that are
required by the
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Tax Reform Act of 1986 and later legislation, since the last valuation
date for each employee pension benefit plan, there has been no
amendment or change to such plan that would increase the amount of
benefits thereunder.
(c) Neither Home nor Home Bank sponsors or participates
in, or has sponsored or participated in, any employee benefit pension
plan to which Section 4021 of ERISA applies that would create a
liability under Title IV of ERISA.
(d) Neither Home nor Home Bank sponsors or participates
in, or has sponsored or participated in, any employee benefit pension
plan that is a "multi-employer plan" (within the meaning of Section
3(37) of ERISA) that would subject such Person to any liability with
respect to any such plan.
(e) All group health plans of Home or Home Bank
(including any plans of Affiliates of Home that must be taken into
account under Section 162(i) or (k) of the Code as in effect
immediately prior to the Technical and Miscellaneous Revenue Act of
1988 and Section 4980B of the Code) have been operated in compliance
with the group health plan continuation coverage requirements of
Section 4980B of the Code to the extent such requirements are
applicable.
(f) There have been no acts or omissions by Home or Home
Bank that have given rise to or may give rise to fines, penalties,
taxes, or related charges under Sections 502(c) or (i) or 4071 of ERISA
or Chapter 43 of the Code which could be imposed on Home or Home Bank.
(g) Except as described in Section 4.20(j), neither Home
or Home Bank maintains any employee benefit plan or employment
agreement pursuant to which any benefit plan or other payment will be
required to be made by Home or Home Bank or pursuant to which any other
benefit will accrue or vest in any director, officer or employee of
Home or Home Bank, in either case as a result of the consummation of
the transactions contemplated by the Agreement.
(h) No "reportable event," as defined in ERISA, has
occurred with respect to any of the employee benefit plans.
(i) All amendments required to bring each of the employee
benefit plans into conformity with all of the provisions of ERISA and
the Code and all other applicable laws, rules and regulations have been
made, or will be made before the expiration of the remedial amendment
period set forth under Section 401(b) of the Code, as such period may
be extended by the IRS.
(j) Schedule 4.20 sets forth the name of each director,
officer, employee, agent or representative of Home or Home Bank and
every other person entitled to receive any benefit or any payment of
any amount under any existing employment agreement, severance plan or
other benefit plan or Understanding as a result of the consummation of
any transaction contemplated in this Agreement, and with respect to
each such person, the nature of such benefit or the amount of such
payment, the event triggering the benefit or payment, and the date of,
and parties to, such employment agreement, severance or other benefit
plan or Understanding. Home has furnished CU with true and correct
copies of all documents with respect to the plans and agreements
referred to in Schedule 4.20 delivered as of the date of the Agreement,
including all amendments and supplements thereto, and all related
summary plan descriptions. For each of the employee pension
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benefit plans of Home and Home Bank referred to in Schedule 4.20
delivered as of the date of the Agreement, Home has furnished CU with
true and correct copies of (i) a copy of the Form 5500 which was filed
in each of the three most recent plan years, including without
limitation, all schedules thereto and all financial statements with
attached opinions of independent accountants to the extent required;
(ii) the most recent determination letter from the IRS; (iii) the
statement of assets and liabilities as of the most recent valuation
date; and (iv) the statement of changes in fund balance and in
financial position or the statement of changes in net assets available
for benefits under each of said plans for the most recently ended plan
year. The documents referred to in subdivisions (iii) and (iv) fairly
present the financial condition of each of said plans as of and at such
dates and the results of operations of each of said plans, all in
accordance with generally accepted accounting principles or on the cash
method of accounting applied on a consistent basis.
4.21. Corporate Records. The minute books of Home and Home Bank
accurately reflect all material actions taken to this date by the respective
shareholders, boards of directors and committees of Home and Home Bank and
contain true and complete copies of the Articles of Incorporation, Bylaws and
other charter documents, and all amendments thereto.
4.22. Offices and ATMs. Schedule 4.22 sets forth the headquarters of
Home and Home Bank (identified as such) and each of the offices and automated
teller machines ("ATMs") maintained and operated by Home Bank (including,
without limitation, representative and loan production offices and operations
centers) and the location thereof. Except as set forth on Schedule 4.22, neither
Home nor Home Bank maintains any other office or ATM nor conducts business at
any other location. Neither Home nor Home Bank has applied for or received
permission to open any additional branch or operate at any other location.
4.23. Operating Losses. Schedule 4.23 sets forth a list of any
Operating Loss (as herein defined) which has occurred at Home Bank during the
period after September 30, 1995. To the knowledge of Home or Home Bank, no
action has been taken or omitted to be taken by any employee of Home or Home
Bank that has resulted in the incurrence by Home Bank of an Operating Loss or
that might reasonably be expected to result in the incurrence of any individual
Operating Loss after September 30, 1995, which, net of any insurance proceeds
payable in respect thereof, would exceed $25,000. For purposes of this Agreement
"Operating Loss" means any loss resulting from cash shortages, lost or misposted
items, disputed clerical and accounting errors, forged checks, payment of checks
over stop payment orders, merchant credit card processing, counterfeit money,
wire transfers made in error, theft, robberies, defalcations, check kiting,
fraudulent use of credit cards or electronic teller machines or other similar
acts or occurrences.
4.24. Loan Portfolio. All loans or other extensions of credit, and
guaranties, security agreements or other agreements supporting any loans or
extensions of credit, and investments of Home or Home Bank are, in all material
respects, legal, enforceable and authorized under applicable federal and state
laws and regulations, except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting the rights of
creditors generally and by general equitable principles. Except as previously
disclosed in writing to CU, no loans or investments held by Home Bank are, as of
September 30, 1995 (i) more than ninety (90) days past due with respect to any
scheduled payment of principal or interest; (ii) classified as "loss,"
"doubtful," "substandard," "special mention," or "criticized" by any federal or
state banking regulators; or (iii) on a non-accrual status in accordance with
Home Bank's loan review procedures. None of such investments are subject to any
restrictions, contractual, statutory or other, that would materially impair the
ability of the entity holding such investment to dispose freely of any such
investment at any time, except restrictions on the public distribution or
transfer of any such investments under the Securities Act and
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the regulations thereunder or state securities laws and pledges or security
interests given in connection with government deposits. Except as previously
disclosed in writing to CU, Home Bank has no loans, leases or other extensions
of credit outstanding, or commitments to make any loans, leases or other
extensions of credit to any Affiliates of Home Bank which are not on
substantially the same terms (including interest rates, repayment terms and
collateral) as would be available for comparable transactions with persons of
similar creditworthiness who are not Affiliates of Home Bank. For each
outstanding loan or extension of credit or commitment to make a loan or
extension of credit where the original principal amount is in excess of $50,000
and which by its terms is either secured by collateral ("Secured Loan") or
supported by a guaranty or similar obligation ("Covered Loan"), in the case of
each Secured Loan, to the best knowledge of Home Bank, the security interest has
been perfected and, in the case of each Covered Loan, the guaranty or similar
obligation has been executed and delivered to Home Bank and is still in full
force and effect.
4.25. Power of Attorney. Neither Home nor Home Bank has granted any
Person a power of attorney or similar authorization that is presently in effect
or outstanding.
4.26. Disclosure Documents and Applications. None of the information
supplied or to be supplied by or on behalf of Home or Home Bank ("Home Supplied
Information") for inclusion in the documents to be filed with the SEC, FRB, the
FDIC, or any other governmental entity in connection with the transactions
contemplated in this Agreement will, at the respective times such documents are
filed or become effective, contain any untrue statement of a material fact, or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
4.27. Accuracy and Currentness of Information Furnished. The
representations and warranties made by Home or Home Bank hereby or in the
schedules hereto contain no statements of fact which are untrue or misleading,
or omit to state any material fact which is necessary under the circumstances to
prevent the statements contained herein or in such schedules from being
misleading.
4.28. Loan Servicing Portfolio. Except as set forth on Schedule
4.28, Home Bank services no loans owned in whole or in part by other parties.
4.29. Certain Interests. Schedule 4.29 sets forth a description of
each instance in which an executive officer or director of Home or Home Bank (a)
has any material interest in any property, real or personal, tangible or
intangible, used by or in connection with the business of Home or Home Bank; (b)
is indebted to Home or Home Bank except for normal business expense advances; or
(c) is a creditor (other than as a deposit holder of Home Bank) of Home or Home
Bank except for amounts due under normal salary and related benefits or
reimbursement of ordinary business expenses. Except as set forth in Schedule
4.29, all such arrangements are arm's length transactions pursuant to normal
commercial terms and conditions.
4.30. Investment Securities. Except as set forth on Schedule 4.30,
all investment securities held by Home or Home Bank are legal investments under
applicable law and regulations.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CU AND CU BANK
CU and CU Bank represent and warrant to Home and Home Bank as follows:
5.1. Incorporation, Standing and Power. CU has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the State of California and is registered as a bank holding company
under the BHC Act. CU Bank has been duly incorporated and is validly existing as
a national banking association under the laws of the United States, and is
authorized by the OCC to conduct a general banking business; CU Bank's deposits
are insured by the FDIC in the manner and to the extent provided by law. CU and
CU Bank have all requisite corporate power and authority to own, lease and
operate their respective properties and assets and to carry on their respective
businesses as presently conducted. Neither the scope of the business of CU or CU
Bank nor the location of any of their respective properties requires that CU or
CU Bank be licensed to do business in any jurisdiction other than the State of
California where the failure to be so licensed would, individually or in the
aggregate, have a materially adverse effect on the financial condition, results
of operation or business of CU on a consolidated basis.
5.2. Capitalization.
(a) As of the date of this Agreement, the authorized
capital stock of CU consists of 24,000,000 shares of CU Stock, of which
4,621,450 shares are outstanding, and 10,000,000 shares of serial
preferred stock, none of which are outstanding. All of the outstanding
shares of CU Stock are duly authorized, validly issued, fully paid and
nonassessable. As of the date of this Agreement, except for employee
stock options covering 729,240 shares of CU Stock granted pursuant to
the CU Stock Option Plan, outstanding warrants covering 7,500 shares of
CU Stock and 1,492,390 shares covered by the Home Warrant, there were
no outstanding options, warrants or other rights in or with respect to
the unissued shares of CU Stock or CU serial preferred stock nor any
securities convertible into such stock. Except with respect to the
approximately 648,871 shares of CU Stock to be issued in connection
with the Corporate Bank Merger, CU is not obligated to issue any
additional shares of CU Stock or preferred stock or any additional
options, warrants or other rights in or with respect to the unissued
shares of such stock or any other securities convertible into such
stock. Schedule 5.2 sets forth the name of each holder of a CU Option,
the number of shares of CU Stock covered by each such CU Option, the
exercise price per share and the expiration date of each CU Option.
(b) As of the date of this Agreement, the authorized
capital stock of CU Bank consists of 540,000 shares of CU Bank Stock,
of which 472,973 shares are outstanding and all of which are owned of
record by CU. All the outstanding shares of CU Bank Stock are duly
authorized, validly issued, fully paid and nonassessable (except as
provided for in 12 U.S.C. Section55). There are no outstanding options,
warrants or other rights in or with respect to the unissued shares of
CU Bank Stock or any other securities convertible into such stock, and
CU Bank is not obligated to issue any additional shares of its common
stock or any options, warrants or other rights in or with respect to
the unissued shares of its common stock or any other securities
convertible into such stock.
5.3. Subsidiaries. Except for CU Bank, a wholly owned subsidiary of
CU, CU does not own, directly or indirectly (except as pledgee pursuant to loans
or upon acquisition in satisfaction of debt
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previously contracted), the outstanding stock or other voting interest in any
corporation, partnership, joint venture or other entity.
5.4. Financial Statements. CU has previously furnished to Home a
copy of the Financial Statements of CU. The Financial Statements of CU: (a)
present fairly the consolidated financial condition of CU as of the respective
dates indicated and its consolidated results of operations and changes in
financial position/cash flow, as applicable, for the respective periods then
ended, subject, in the case of the unaudited consolidated interim financial
statements, to normal recurring adjustments; (b) have been prepared in
accordance with generally accepted accounting principles consistently applied
(except as otherwise indicated therein); (c) set forth as of the respective
dates indicated adequate reserves for all foreseeable loan losses and other
contingencies; and (d) are based on the books and records of CU and CU Bank.
5.5. SEC/Regulatory Filings. Since January 1, 1990, CU and CU Bank
have filed all reports, registrations, and statements that were required to be
filed with the (i) OCC; (ii) the FRB; (iii) the SEC; and (iv) any other
applicable federal, state or local or governmental or regulatory authority. CU
has previously furnished to Home a copy of the SEC Filings of CU, OCC Filings of
CU, and the FRB Filings of CU. As of their respective dates, the SEC Filings of
CU, the OCC Filings of CU and the FRB Filings of CU complied in all material
respects with the requirements of their respective forms and did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
5.6. Authority of CU and CU Bank. The execution and delivery by CU
and CU Bank of this Agreement, by CU of the Agreement of Merger and by CU Bank
of the Bank Merger Agreement and, subject to the requisite approval of the
shareholders of CU and the sole shareholder of CU Bank, the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of CU and CU Bank, and
this Agreement is, and the Agreement of Merger and Bank Merger Agreement will be
upon execution by the respective parties thereto, a valid and binding obligation
of CU or CU Bank or both of them, as the case may be, enforceable in accordance
with their respective terms, except as the enforceability thereof may be limited
by bankruptcy, liquidation, receivership, conservatorship, insolvency,
moratorium or other similar laws affecting the rights of creditors generally and
by general equitable principles and by Section 8(b)(6)(D) of the Federal Deposit
Insurance Act, 12 U.S.C. Section 1818(b) (6) (D). Except as set forth in
Schedule 5.6, neither the (i) execution and delivery by CU and CU Bank of this
Agreement, by CU of the Agreement of Merger or by CU Bank of the Bank Merger
Agreement; (ii) the consummation of the Merger or Bank Merger or the
transactions contemplated herein or therein; nor (iii) compliance by CU and CU
Bank with any of the provisions hereof or thereof, will: (a) conflict with or
result in a breach of any provision of their respective Articles of
Incorporation or Association, as amended, as the case may be, or Bylaws, as
amended; (b) constitute a breach of or result in a default (or give rise to any
rights of termination, cancellation or acceleration, or any right to acquire any
securities or assets) under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, franchise, license, permit, agreement or other
instrument or obligation to which CU or CU Bank is a party, or by which CU or CU
Bank or any of their respective properties or assets is bound, if in any such
circumstances, such event could have consequences materially adverse to CU on a
consolidated basis; or (c) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to CU or CU Bank or any of their respective
properties or assets, if such violation could have consequences materially
adverse to CU on a consolidated basis. Except as set forth in the CU Schedules,
no consent of, approval of, notice to or filing with any governmental authority
having jurisdiction over any aspect of the business or assets of CU or CU Bank,
and no consent of, approval of or notice to any other Person, is required in
connection with the
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execution and delivery by CU and CU Bank of this Agreement, by CU of the
Agreement of Merger, by CU Bank of the Bank Merger Agreement, or the
consummation by CU and CU Bank of the Merger or Bank Merger or the transactions
contemplated hereby or thereby, except (i) the approval of this Agreement and
the transactions contemplated hereby by the shareholders of CU and the sole
shareholder of CU Bank; (ii) such approvals as may be required by the FRB and
the OCC; (iii) the filing of the Agreement of Merger with the California
Secretary; (iv) the filing of the Bank Merger Agreement with the OCC; and (v)
the filing with and the approval by the SEC of the S-4 and the Proxy Statement.
5.7. Insurance. CU and CU Bank have policies of insurance and bonds
with respect to their respective assets and businesses against such casualties
and contingencies and in such amounts, types and forms as are appropriate for
their respective businesses, operations, properties and assets. All such
insurance policies and bonds are in full force and effect. To the knowledge of
CU and CU Bank and except as set forth on Schedule 5.7, no insurer under any
such policy or bond has canceled or indicated an intention to cancel or not to
renew any such policy or bond or generally disclaimed liability thereunder. To
the knowledge of CU and CU Bank and except as set forth on Schedule 5.7, neither
CU nor CU Bank is in default under any such policy or bond and all material
claims thereunder have been filed in a timely fashion. Set forth on Schedule 5.7
is a list of all policies of insurance carried and owned by CU or CU Bank,
showing the name of the insurance company, the nature of the coverage, the
policy limit, the annual premiums and the expiration dates. CU has delivered to
Home a copy of each such policy of insurance.
5.8. Title to Assets. CU and CU Bank have good and marketable title
to all their respective material properties and assets, other than real
property, owned or stated to be owned by CU or CU Bank, free and clear of all
mortgages, liens, encumbrances, pledges or charges of any kind or nature except:
(a) as set forth in the Financial Statements of CU; (b) for liens or
encumbrances for current taxes not yet due; (c) for liens or encumbrances
incurred in the ordinary course of business; (d) for liens that are not
substantial in character, amount or extent or that do not materially detract
from the value, or interfere with present use, of the property subject thereto
or affected thereby, or otherwise materially impair the conduct of business of
CU on a consolidated basis; or (e) as set forth on Schedule 5.8.
5.9. Real Estate. Schedule 5.9 sets forth a list of real property,
including leaseholds, owned or leased by CU or CU Bank (the "CU Real Property").
CU or CU Bank has good and marketable title to the CU Real Property, and valid
leasehold interests in the leaseholds, described on Schedule 5.9, free and clear
of all mortgages, covenants, conditions, restrictions, easements, liens,
security interests, charges, claims, assessments and encumbrances, except (a)
for rights of lessors, co-lessees or sublessees in such matters that are
reflected in the lease; (b) for current taxes not yet due and payable; (c) for
liens and encumbrances of public record; (d) for such imperfections of title,
liens and encumbrances, if any, as do not materially detract from the value of
or materially interfere with the present use of such property; and (e) as
described on Schedule 5.9.
5.10. Litigation. Except as set forth in the SEC Filings of CU or
Schedule 5.10, there is no private or governmental suit, claim, action or
proceeding pending, nor to CU's or CU Bank's knowledge, threatened against CU or
CU Bank or against any of their respective directors, officers or employees
relating to the performance of their duties in such capacities or against or
affecting any properties of CU or CU Bank that has had or may have a material
adverse effect upon the business, financial condition or results of operations
of CU on a consolidated basis or the transactions contemplated hereby or which
may involve a payment by CU in excess of $50,000 of applicable insurance
coverage. Also, except as disclosed in the SEC Filings of CU or on Schedule
5.10, there are no material judgments, decrees, stipulations or orders against
CU or CU
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Bank enjoining either of them or any of their respective directors, officers or
employees in respect of, or the effect of which is to prohibit, any business
practice or the acquisition of any property or the conduct of business in any
area. CU has previously provided to Home summary reports of CU's and CU Bank's
attorneys relating to all pending litigation to which CU or CU Bank is a party
and which names CU or CU Bank as a defendant or cross-defendant and a true,
correct and complete list of all pending litigation in which CU or CU Bank is a
named party.
5.11. Taxes.
(a) CU and/or CU Bank have filed all federal and foreign
income tax returns, all state and local franchise and income tax, real
and personal property tax, sales and use tax, premium tax, excise tax
and other tax returns of every character required to be filed by it and
have paid all taxes, together with any interest and penalties owing in
connection therewith, shown on such returns to be due in respect of the
periods covered by such returns, other than taxes which are being
contested in good faith and for which adequate reserves have been
established. CU and/or CU Bank have filed all required payroll tax
returns, have fulfilled all tax withholding obligations and have paid
over to the appropriate governmental authorities the proper amounts
with respect to the foregoing. The tax and audit positions taken by CU
and/or CU Bank in connection with the tax returns described in the
preceding sentence were reasonable and asserted in good faith. Adequate
provision has been made in the books and records of CU and/or CU Bank
and, to the extent required by generally accepted accounting
procedures, reflected in the Financial Statements of CU, for all tax
liabilities, including interest or penalties, whether or not due and
payable and whether or not disputed, with respect to any and all
federal, foreign, state, local and other taxes for the periods covered
by such financial statements and for all prior periods. Schedule 5.11
sets forth the date or dates through which the IRS has examined the
federal tax returns of CU and/or CU Bank and the date or dates through
which any foreign, state, local or other taxing authority has examined
any other tax returns of CU and/or CU Bank. Schedule 5.11 also contains
a complete list of each year for which any federal, state, local or
foreign tax authority has obtained or has requested an extension of the
statute of limitations from CU and/or CU Bank and lists each tax case
of CU and/or CU Bank currently pending in audit, at the administrative
appeals level or in litigation. Schedule 5.11 further lists the date
and issuing authority of each statutory notice of deficiency, notice of
proposed assessment and revenue agent's report issued to CU and/or CU
Bank within the last twelve (12) months. Except as set forth in
Schedule 5.11, neither the IRS nor any foreign, state, local or other
taxing authority has, during the past three years, examined or is in
the process of examining any federal, foreign, state, local or other
tax returns of CU. To the knowledge of CU, neither the IRS nor any
foreign, state, local or other taxing authority is now asserting or
threatening to assert any deficiency or claim for additional taxes (or
interest thereon or penalties in connection therewith) except as set
forth on Schedule 5.11.
(b) Neither CU nor CU Bank is a party to any safe harbor
lease within the meaning of Section 168(f)(8) of the Code, as in effect
prior to amendment by the Tax Equity and Fiscal Responsibility Act of
1982. Neither CU nor CU Bank is or has been a United States real
property holding corporation within the meaning of Section 897(c)(2) of
the Code during the applicable period specified in Section
897(c)(i)(A)(ii) of the Code. Neither CU nor CU Bank is a "consenting
corporation" under Section 341(f) of the Code. Neither CU nor CU Bank
has agreed, nor is it required to make, any adjustment under Section
481(a) of the Code by reason of a change in accounting method or
otherwise.
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5.12. Compliance with Laws and Regulations. To CU's and CU Bank's
knowledge, neither of them is in default under or in breach of any provision of
their respective Articles of Incorporation or Association, as amended, as the
case may be, or Bylaws, as amended, or law, ordinance, rule or regulation
promulgated by any governmental agency having authority over either of them,
where such default or breach would have a material adverse effect on the
business, financial condition or results of operations of CU on a consolidated
basis. No investigation or review by any governmental entity or regulatory
authority with respect to CU or CU Bank is pending or, to the knowledge of CU or
CU Bank, threatened, nor has any such governmental entity or regulatory
authority indicated to CU or any Affiliate of CU an intention to conduct the
same, other than those the outcome of which would not have a material adverse
affect on the business, financial condition or results of operation of CU on a
consolidated basis.
5.13. Performance of Obligations. CU and CU Bank have performed in
all material respects all of the obligations required to be performed by them to
date, and to the best of their knowledge, are not in default under or in breach
of any term or provision of any covenant, contract, lease, indenture or any
other covenant to which either of them is a party, is subject or is otherwise
bound, and no event has occurred that, with the giving of notice or the passage
of time or both, would constitute such default or breach, where such default or
breach would have a material adverse effect on the business, financial condition
or results of operations of CU on a consolidated basis. Except for loans and
leases made by CU Bank in the ordinary course of business, to CU's or CU Bank's
knowledge, no party with whom CU or CU Bank has an agreement that is of material
importance to the business of CU on a consolidated basis is in default
thereunder.
5.14. Employees. There are no controversies pending or threatened
between CU or CU Bank and any of their respective employees that are likely to
have a material adverse effect on the business, financial condition or results
of operation of CU on a consolidated basis. Neither CU nor CU Bank is a party to
any collective bargaining agreement with respect to any of their respective
employees or any labor organization to which their respective employees or any
of them belong. Except as previously disclosed in writing to Home, there are no
understandings with respect to the employment of any officer or employee of CU
or CU Bank which are not terminable by CU or CU Bank without liability on not
more than thirty (30) days notice. Except as disclosed in the CU Financial
Statements or as previously disclosed in writing to CU, all material sums due
for employee compensation have been paid or accrued and all employer
contributions for employee benefits, including deferred compensation
obligations, and any benefits under any CU Employee Plan have been duly and
adequately paid or provided for in accordance with plan documents. Except as set
forth on Schedule 5.14, as of the date hereof, no director, officer or employee
of CU or CU Bank is entitled to receive any payment or any amount under any
existing CU Employee Plan, Understanding, agreement, severance plan or other
benefit plan as a result of the consummation of any transaction contemplated by
this Agreement, the Agreement of Merger or the Bank Merger.
5.15. Brokers and Finders. Except for any agreements among CU, Home
and Montgomery, and any fees payable thereunder, neither CU nor CU Bank is a
party to or obligated under any agreement with any broker or finder relating to
the transactions contemplated hereby, and neither the execution of this
Agreement nor the consummation of the transactions provided for herein or
therein will result in any liability to any broker or finder.
5.16. Material Contracts. Except as set forth on Schedule 5.16
hereto (all items listed or required to be listed on Schedule 5.16 being
referred to herein as "CU Scheduled Contracts"), neither CU nor CU Bank is a
party or otherwise subject to:
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(a) any employment, deferred compensation, bonus or
consulting contract that requires payment by CU or CU Bank of $50,000
or more per annum;
(b) any advertising, brokerage, licensing, dealership,
representative or agency relationship or contract not terminable by CU
on 30 days' or less notice and which requires payment by CU or CU Bank
of $10,000 or more per annum;
(c) any contract or agreement that restricts CU (or would
restrict any Affiliate of CU after the Effective Time) from competing
in any line of business with any Person or using or employing the
services of any Person;
(d) any lease of real or personal property providing for
annual lease payments by or to CU or CU Bank in excess of $100,000 per
annum other than (i) financing leases entered into in the ordinary
course of business in which CU or CU Bank is lessor and (ii) leases of
real property presently used by CU Bank as banking offices;
(e) any mortgage, pledge, conditional sales contract,
security agreement, option, or any other similar agreement with respect
to any interest of CU or CU Bank (other than as mortgagor or pledgor in
the ordinary course of their banking business or as mortgagee, secured
party or deed of trust beneficiary in the ordinary course of their
business) in personal property having a value of $100,000 or more;
(f) any agreement to acquire equipment or any commitment
to make capital expenditures of $100,000 or more;
(g) other than agreements entered into in the ordinary
course of business, including sales of Other Real Estate Owned, any
agreement for the sale of any property or assets in which CU or CU Bank
has an ownership interest or for the grant of any preferential right to
purchase any such property or asset;
(h) except for any subordinated debt that may be assumed
by CU Bank in connection with the Corporate Bank Merger, any agreement
for the borrowing of any money (other than liabilities or interbank
borrowings made in the ordinary course of their banking business and
reflected in the Financial Statements of CU);
(i) any restrictive covenant contained in any deed to or
lease of real property owned or leased by CU or CU Bank (as lessee)
that materially restricts the use, transferability or value of such
property;
(j) any guarantee or indemnification which involves the
sum of $100,000 or more, other than letters of credit or loan
commitments issued in the normal course of business;
(k) any supply, maintenance or landscape contracts not
terminable by CU or CU Bank without penalty on 30 days or less notice
and which provides for payments in excess of $25,000 per annum;
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(l) any agreement which would be terminable other than by
CU or CU Bank as a result of the consummation of the transactions
contemplated by this Agreement;
(m) any contract of participation with any other bank in
any loan entered into by CU or CU Bank subsequent to December 31, 1994
in excess of $100,000 or any sales of assets of CU or CU Bank with
recourse of any kind to CU or CU Bank except the sale of mortgage
loans, servicing rights, repurchase or reverse repurchase agreements,
securities or other financial transactions in the ordinary course of
business;
(n) any other Understanding of any other kind not
terminable on 30 days' or less notice which involves future payments or
receipts or performances of services or delivery of items requiring
payment of $25,000 or more to or by CU or CU Bank other than payments
made under or pursuant to loan agreements, participation agreements and
other agreements for the extension of credit in the ordinary course of
their business; or
(o) any Understanding that is otherwise material to the
business, financial condition, results of operations or prospects of CU
or CU Bank.
CU has delivered to Home copies of all Scheduled Contracts, including all
amendments and supplements thereto.
5.17. Absence of Material Change. Since December 31, 1994, the
businesses of CU and CU Bank have been conducted, only in the ordinary course,
in the same manner as theretofore conducted and there has not occurred any event
that has had or may reasonably be expected to have a material adverse effect in
the business, financial condition or results of operation of CU on a
consolidated basis.
5.18. Licenses and Permits. CU and CU Bank have all material
licenses and permits that are necessary for the conduct of their respective
businesses, and such licenses are in full force and effect, except for any
failure to be in full force and effect that would not, individually or in the
aggregate, have a material adverse effect on the business, financial condition
or results of operations of CU on a consolidated basis. The properties and
operations of CU and CU Bank are and have been maintained and conducted, in all
material respects, in compliance with all applicable laws and regulations.
5.19. No Material Liabilities; Environmental.
(a) Schedule 5.19 sets forth all material liabilities of
CU and CU Bank, including liabilities for Hazardous Substances or under
any Environmental Law, contingent or otherwise, that are not reflected
or reserved against in the CU Financial Statements, except for
liabilities incurred or accrued since December 31, 1994 in the ordinary
course of business, none of which has had or could reasonably be
expected to have had a material adverse effect on the business,
financial condition, results of operations or prospects of CU on a
consolidated basis. Except as set forth in Schedule 5.19, neither CU
nor CU Bank knows of any basis for the asserting against it of any
liability, obligation or claim that could reasonably be expected to
have a material adverse effect on the business, financial condition, or
results of operations of CU on a consolidated basis.
(b) Except as set forth on Schedule 5.19(b), to the
actual knowledge of the executive officers of CU and CU Bank, (i) there
has not been any generation, use, handling, transportation,
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treatment, storage, release, or disposal of any Hazardous Substance in
connection with the conduct of business of CU or CU Bank that has
resulted or is likely to result in any liability under any
Environmental Law in excess of $1,000,000; (ii) there has never been a
use of the CU Real Property that has resulted, or is likely to result
in any liability under any Environmental Law in excess of $1,000,000;
(iii) no underground storage tanks or surface impoundments are on or in
the CU Real Property; and (iv) no Hazardous Substances are contained or
located on any of the CU Real Property.
5.20. Employee Benefit Plans.
(a) Schedule 5.20 sets forth and describes all employee
benefit plans and any collective bargaining agreements or labor
contracts in which CU or CU Bank participates, or by which they are
bound, including, without limitation, (i) any profit sharing, deferred
compensation, bonus, stock option, stock purchase, pension, retainer
consulting, retirement, welfare or incentive plan or agreement whether
legally binding or not; (ii) any plan providing for "fringe benefits"
to its employees, including but not limited to vacation, sick leave,
medical, hospitalization, life insurance and other insurance plans, and
related benefits; (iii) any written employment agreement and any other
employment agreement not terminable at will; or (iv) any other
"employee benefit plan" (within the meaning of Section 3(3) of ERISA)
(collectively, the "CU Employee Plans"). Except as set forth in
Schedule 5.20, (i) there are no negotiations, demands or proposals that
are pending or threatened that concern matters now covered, or that
would be covered, by any employment agreements or employee benefit
plans other than amendments to plans qualified under Section 401 of the
Code that are required by the Tax Reform Act of 1986 and later
legislation; (ii) CU is in compliance with the material reporting and
disclosure requirements of Part 1 of Subtitle IB of ERISA and the
corresponding provisions of the Code to the extent applicable to all
such employee benefit plans; (iii) CU has performed all of its
obligations under all such employee benefit plans and employment
agreements required to be performed heretofore; and (iv) there are no
actions, suits or claims (other than routine claims for benefits)
pending or, to the best knowledge of CU and CU Bank, threatened against
any such employee benefit plans and employment agreements or the assets
of such plans, and to the best knowledge of CU, no facts exist which
could give rise to any actions, suits or claims (other than routine
claims for benefits) against such plans or the assets of such plans.
(b) The "employee pension benefit plans" (within the
meaning of Section 3(2) of ERISA) described on Schedule 5.20 have been
duly authorized by the Board of Directors of CU. Except as set forth in
Schedule 5.20, each such plan and associated trust intended to be
qualified under Section 401(a) and to be exempt from tax under Section
501(a) of the Code, respectively, has either received a favorable
determination letter from the IRS, has applied for such a determination
letter or will apply for such a determination letter before the
expiration of the remedial amendment period set forth in Section 401(b)
of the Code, as the IRS may extend such period, and to the best
knowledge of CU and CU Bank, no event has occurred that will or could
give rise to disqualification of any such plan which is intended to be
qualified under Section 401(a) of the Code or loss of the exemption
from tax of any such trust which is intended to be exempt from tax
under Section 501(a) of the Code. No event has occurred that will or
could subject any such plans to tax under Section 511 of the Code. None
of such plans has engaged in a merger or consolidation with any other
plan or transferred assets or liabilities from any other plan. No
prohibited transaction (within the meaning of Section 409 or 502(i) of
ERISA or Section 4975 of the Code) or party-in-interest transaction
(within the meaning of Section 406 of ERISA) has occurred with respect
to any of such
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plans which could subject CU of CU Bank to an excise tax or penalty. To
the best knowledge of CU and CU Bank, no employee of CU or CU Bank has
engaged in any transactions which could subject CU or CU Bank to
indemnify such person against liability. All costs of plans have been
provided for on the basis of consistent methods in accordance with
sound actuarial assumptions and practices. No employee benefit plan has
incurred any "accumulated funding deficiency" (as defined in Section
302(2) of ERISA), whether or not waived, taking into account
contributions made within the period described in Section 412(c)(10) of
the Code; nor are there any unfunded amounts under any employee benefit
plan which is required to be funded under Part 3 of Subtitle IB of
ERISA and Section 412 of the Code); nor has CU or CU Bank failed to
make any contributions or pay any amount due and owing as required by
law or the terms of any employee benefit plan or employment agreement.
Subject to amendments that are required by the Tax Reform Act of 1986
and later legislation, since the last valuation date for each employee
pension benefit plan, there has been no amendment or change to such
plan that would increase the amount of benefits thereunder.
(c) Neither CU nor CU Bank sponsors or participates in,
or has sponsored or participated in, any employee benefit pension plan
to which Section 4021 of ERISA applies that would create a liability
under Title IV of ERISA.
(d) Neither CU nor CU Bank sponsors or participates in,
or has sponsored or participated in, any employee benefit pension plan
that is a "multi-employer plan" (within the meaning of Section 3(37) of
ERISA) that would subject such Person to any liability with respect to
any such plan.
(e) All group health plans of CU or CU Bank (including
any plans of Affiliates of CU that must be taken into account under
Section 162(i) or (k) of the Code as in effect immediately prior to the
Technical and Miscellaneous Revenue Act of 1988 and Section 4980B of
the Code) have been operated in compliance with the group health plan
continuation coverage requirements of Section 4980B of the Code to the
extent such requirements are applicable.
(f) There have been no acts or omissions by CU or CU Bank
that have given rise to or may give rise to fines, penalties, taxes, or
related charges under Sections 502(c) or (i) or 4071 of ERISA or
Chapter 43 of the Code which could be imposed on CU or CU Bank.
(g) Except as described in Section 5.20(j), neither CU or
CU Bank maintains any employee benefit plan or employment agreement
pursuant to which any benefit plan or other payment will be required to
be made by CU or CU Bank or pursuant to which any other benefit will
accrue or vest in any director, officer or employee of CU or CU Bank,
in either case as a result of the consummation of the transactions
contemplated by the Agreement.
(h) No "reportable event," as defined in ERISA, has
occurred with respect to any of the employee benefit plans.
(i) All amendments required to bring each of the employee
benefit plans into conformity with all of the provisions of ERISA and
the Code and all other applicable laws, rules and regulations have been
made, or will be made before the expiration of the remedial amendment
period set forth under Section 401(b) of the Code, as such period may
be extended by the IRS.
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(j) Schedule 5.20 sets forth the name of each director,
officer, employee, agent or representative of CU or CU Bank and every
other person entitled to receive any benefit or any payment of any
amount under any existing employment agreement, severance plan or other
benefit plan or Understanding as a result of the consummation of any
transaction contemplated in this Agreement, and with respect to each
such person, the nature of such benefit or the amount of such payment,
the event triggering the benefit or payment, and the date of, and
parties to, such employment agreement, severance or other benefit plan
or Understanding. CU has furnished Home with true and correct copies of
all documents with respect to the plans and agreements referred to in
Schedule 5.20 delivered as of the date of the Agreement, including all
amendments and supplements thereto, and all related summary plan
descriptions. For each of the employee pension benefit plans of CU and
CU Bank referred to in Schedule 5.20 delivered as of the date of the
Agreement, CU has furnished Home with true and correct copies of (i) a
copy of the Form 5500 which was filed in each of the three most recent
plan years, including without limitation, all schedules thereto and all
financial statements with attached opinions of independent accountants
to the extent required; (ii) the most recent determination letter from
the IRS; (iii) the statement of assets and liabilities as of the most
recent valuation date; and (iv) the statement of changes in fund
balance and in financial position or the statement of changes in net
assets available for benefits under each of said plans for the most
recently ended plan year. The documents referred to in subdivisions
(iii) and (iv) fairly present the financial condition of each of said
plans as of and at such dates and the results of operations of each of
said plans, all in accordance with generally accepted accounting
principles or on the cash method of accounting applied on a consistent
basis.
5.21. Corporate Records. The minute books of CU and CU Bank
accurately reflect all material actions taken to this date by the respective
shareholders, boards of directors and committees of CU and CU Bank and contain
true and complete copies of the Articles of Incorporation or Association, Bylaws
and other charter documents, and all amendments thereto.
5.22. Offices and ATMs. Schedule 5.22 sets forth the headquarters of
CU and CU Bank (identified as such) and each of the offices and automated teller
machines ("ATMs") maintained and operated by CU Bank (including, without
limitation, representative and loan production offices and operations centers)
and the location thereof. Except as set forth on Schedule 5.22, neither CU nor
CU Bank maintains any other office or ATM nor conducts business at any other
location. Neither CU nor CU Bank has applied for or received permission to open
any additional branch nor operate at any other location.
5.23. Operating Losses. Schedule 5.23 sets forth a list of any
Operating Loss (as herein defined) which has occurred at CU Bank during the
period after September 30, 1995. To the knowledge of CU or CU Bank, no action
has been taken or omitted to be taken by any employee of CU Bank that has
resulted in the incurrence by CU Bank of an Operating Loss or that might
reasonably be expected to result in the incurrence of any individual Operating
Loss after September 30, 1995, which, net of any insurance proceeds payable in
respect thereof, would exceed $25,000. For purposes of this Agreement "Operating
Loss" means any loss resulting from cash shortages, lost or misposted items,
disputed clerical and accounting errors, forged checks, payment of checks over
stop payment orders, merchant credit card processing, counterfeit money, wire
transfers made in error, theft, robberies, defalcations, check kiting,
fraudulent use of credit cards or electronic teller machines or other similar
acts or occurrences.
5.24. Loan Portfolio. All loans or other extensions of credit, and
guaranties, security agreements or other agreements supporting any loans or
extensions of credit, and investments of CU or CU Bank are,
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in all material respects, legal, enforceable and authorized under applicable
federal and state laws and regulations, except as the enforceability thereof may
be limited by bankruptcy, insolvency, moratorium or other similar laws affecting
the rights of creditors generally and by general equitable principles. Except as
previously disclosed in writing to Home, no loans or investments held by CU Bank
are, as of September 30, 1995 (i) more than ninety (90) days past due with
respect to any scheduled payment of principal or interest; (ii) classified as
"loss," "doubtful," "substandard," "special mention," or "criticized" by any
federal or state banking regulators; or (iii) on a non-accrual status in
accordance with CU Bank's loan review procedures. None of such investments are
subject to any restrictions, contractual, statutory or other, that would
materially impair the ability of the entity holding such investment to dispose
freely of any such investment at any time, except restrictions on the public
distribution or transfer of any such investments under the Securities Act and
the regulations thereunder or state securities laws and pledges or security
interests given in connection with government deposits. Except as previously
disclosed in writing to Home, CU Bank has no loans, leases or other extensions
of credit outstanding, or commitments to make any loans, leases or other
extensions of credit to any Affiliates of CU Bank which are not on substantially
the same terms (including interest rates, repayment terms and collateral) as
would be available for comparable transactions with persons of similar
creditworthiness who are not Affiliates of CU Bank. In the case of each Secured
Loan, to the best knowledge of CU Bank, the security interest has been perfected
and, in the case of each Covered Loan, the guaranty or similar obligation has
been executed and delivered to CU Bank and is still in full force and effect.
5.25. Power of Attorney. Neither CU nor CU Bank has granted any
Person a power of attorney or similar authorization that is presently in effect
or outstanding.
5.26. Disclosure Documents and Applications. None of the information
supplied or to be supplied by or on behalf of CU or CU Bank ("CU Supplied
Information") for inclusion in the documents to be filed with the SEC, FRB, the
OCC, or any other governmental entity in connection with the transactions
contemplated in this Agreement will, at the respective times such documents are
filed or become effective, contain any untrue statement of a material fact, or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
5.27. Accuracy and Currentness of Information Furnished. The
representations and warranties made by CU or CU Bank hereby or in the schedules
hereto contain no statements of fact which are untrue or misleading, or omit to
state any material fact which is necessary under the circumstances to prevent
the statements contained herein or in such schedules from being misleading.
5.28. Loan Servicing Portfolio. Except as set forth on Schedule
5.28, CU Bank services no loans owned in whole or in part by other parties.
5.29. Certain Interests. Schedule 5.29 sets forth a description of
each instance in which an executive officer or director of CU or CU Bank (a) has
any material interest in any property, real or personal, tangible or intangible,
used by or in connection with the business of CU or CU Bank; (b) is indebted to
CU or CU Bank except for normal business expense advances; or (c) is a creditor
(other than as a deposit holder of CU Bank) of CU or CU Bank except for amounts
due under normal salary and related benefits or reimbursement of ordinary
business expenses. Except as set forth in Schedule 5.29, all such arrangements
are arm's length transactions pursuant to normal commercial terms and
conditions.
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5.30. Investment Securities. Except as set forth on Schedule 5.30,
all investment securities held by CU or CU Bank are legal investments under
applicable law and regulations.
ARTICLE VI
COVENANTS OF HOME AND HOME BANK
PENDING EFFECTIVE TIME OF THE MERGERS
Home and Home Bank covenant and agree with CU and CU Bank as follows:
6.1. Limitation on Home's and Home Bank's Conduct Prior to
Effective Time. Between the date hereof and the Effective Time, except as
contemplated by this Agreement, Home and Home Bank agree to conduct their
respective businesses only in the normal and customary manner and in accordance
with sound banking practices, and Home and Home Bank shall not, without the
prior written consent of CU (which consent shall not be unreasonably withheld
and which consent (except with respect to subparagraph (h) of this Section 6.1)
shall be deemed granted if within five (5) business days of CU's receipt of
written notice of a request for prior written consent, written notice of
objection is not received by Home):
(a) issue any Home Stock (except pursuant to the exercise
of Home Options outstanding as of the date hereof), Home preferred
stock, Home Bank Stock, Home Bank preferred stock, any other securities
(including long term debt) of Home or Home Bank or any rights, options
or securities to acquire any Home Stock, Home preferred stock, Home
Bank Stock, Home Bank preferred stock or any other securities
(including long term debt) of Home or Home Bank;
(b) except in accordance with Home's customary and past
practice of paying dividends in an amount equal to $.085 per quarter,
declare, set aside or pay any dividend or make any other distribution
upon, or purchase or redeem any shares of, Home Stock;
(c) except as may be required to effect the transactions
contemplated herein, amend its respective Articles of Incorporation or
its Bylaws;
(d) grant any general or uniform increase in the rate of
pay of employees or employee benefits;
(e) grant any material increase in salary, incentive
compensation or employee benefits or pay any bonus to any Person except
for payments in the ordinary course of business consistent with past
practices or pursuant to the Proposed Retention Agreements or any
pre-existing contract, arrangement or bonus plan;
(f) make any capital expenditure in excess of $100,000,
except for ordinary repairs, renewals and replacements;
(g) compromise or otherwise settle or adjust any
assertion or claim of a deficiency in taxes (or interest thereon or
penalties in connection therewith), extend the statute of limitations
with
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any tax authority or file any pleading in court in any tax litigation
or any appeal from an asserted deficiency;
(h) grant or commit to grant any new extension of credit
or amend the terms of any such credit outstanding on the date hereof to
any executive officer, director or holder of ten percent (10%) or more
of the outstanding Home Stock, or to any corporation, partnership,
trust or other entity controlled by any such person, except consistent
with practices and policies in existence as of the date of this
Agreement;
(i) close or open any offices at which business is
conducted;
(j) adopt or amend any Home Employee Plan or other
benefit plan or arrangement of any such type except for such amendments
as are required by law or do not materially increase the costs or
benefits of such plan or arrangement, except for the Proposed Retention
Agreements;
(k) change any of Home's or Home Bank's policies and
practices with respect to liquidity management and cash flow planning,
lending, personnel practices, accounting or any other material aspect
of Home's business or operations on a consolidated basis, except such
changes as may be required in the opinion of Home's or Home Bank's
management to respond to economic or market conditions or as may be
required by the rules of the American Institute of Certified Public
Accountants or Financial Accounting Standards Board or by applicable
governmental authorities;
(l) grant any Person a power of attorney or similar
authority;
(m) make any material investment by purchase of stock or
securities, contributions to capital, property transfers or otherwise
in any other Person, except for investments made in the ordinary course
of business consistent with past practice;
(n) amend, modify or terminate, except in accordance with
its terms, any Home Scheduled Contract or enter into any agreement or
contract that would be a Home Scheduled Contract under Section 4.16;
(o) create or incur or suffer to exist any mortgage,
lien, pledge, security interest, charge, encumbrance or restraint of
any kind against or in respect of any property or right of Home and/or
Home Bank;
(p) sell, lease or otherwise dispose of any of its assets
which are material, individually or in the aggregate, to Home or Home
Bank, except in the ordinary course of business consistent with past
practice;
(q) make any extraordinary payment to any Person, other
than with respect to the Proposed Retention Agreements; or
(r) except as required by law, take or cause to be taken
any action which would prevent the transactions contemplated hereby
from qualifying as tax free reorganizations under Section 368 of the
Code.
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6.2. No Solicitation, etc.
(a) Home and Home Bank shall not, and shall cause each of
their respective officers, directors, employees, agents, legal and
financial advisors and Affiliates not to, directly or indirectly,
solicit, initiate or, except as contemplated by Section 6.2(b) hereof,
encourage, entertain or enter into any agreement or agreement in
principle, or announce any intention to do any of the foregoing, with
respect to any Alternative Transaction, other than the Alternative
Transaction contemplated by this Agreement.
(b) Home or Home Bank shall not, and shall cause each of
its officers, directors, employees, agents, legal and financial
advisors and Affiliates not to, directly or indirectly, participate in
any negotiations or discussions regarding, or furnish any information
with respect to, or otherwise cooperate in any way in connection with,
or assist or participate in, facilitate or encourage, any effort or
attempt to effect, any Alternative Transaction with or involving any
Person other than CU or CU Bank, unless Home or Home Bank shall have
received an unsolicited written offer from a Person other than CU or CU
Bank to effect an Alternative Transaction and the Board of Directors of
Home determines, based on an opinion of counsel, that in the exercise
of the fiduciary obligations of the Board of Directors such information
should be provided to or such discussions or negotiations undertaken
with the Person submitting such unsolicited written offer.
(c) Home will promptly communicate to CU the terms of any
proposal which it may receive in respect of any Alternative Transaction
and will keep CU informed as to the status of any actions, including
negotiations or discussions, taken pursuant to subsection (b) of this
Section 6.2.
6.3. Affirmative Conduct of Home and Home Bank Prior to Effective
Time. Between the date hereof and the Effective Time, Home and Home Bank
shall:
(a) use and devote their respective best efforts
consistent with this Agreement to maintain and preserve intact their
respective present business organizations and to maintain and preserve
their respective relationships and goodwill with account holders,
borrowers, employees and others having business relationships with Home
or Home Bank;
(b) use their respective best efforts to keep in full
force and effect all of the existing material permits and licenses of
Home or Home Bank;
(c) use their respective best efforts to maintain
insurance coverage at least equal to that now in effect on all
properties for which they are responsible and on their respective
business operations;
(d) perform their respective material contractual
obligations and not become in material default on any thereof;
(e) duly and timely file all reports and returns required
to be filed with any federal, state or local governmental authority,
unless any extensions have been duly granted by such authority;
(f) duly observe and conform to all lawful requirements
applicable to their respective businesses that are material to the
business of Home on a consolidated basis;
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(g) maintain their respective assets and properties in
good condition and repair, normal wear and tear excepted;
(h) promptly advise CU in writing of any event or any
other transaction within Home's or Home Bank's knowledge whereby any
Person or Related Group of Persons acquires, directly or indirectly,
record or beneficial ownership or control (as defined in Rule 13d-3
promulgated by the SEC under the Exchange Act) of five percent (5%) or
more of the outstanding Home Stock prior to the record date fixed for
the Home Shareholders' Meeting or any adjourned meeting thereof to
approve this Agreement and the transactions contemplated herein;
(i) promptly notify CU regarding receipt from any tax
authority of any notification of the commencement of an audit, any
request to extend the statute of limitations, any statutory notice of
deficiency, any revenue agent's report, any notice of proposed
assessment, or any other similar notification of potential adjustments
to the tax liabilities of Home and/or Home Bank, or any actual or
threatened collection enforcement activity by any tax authority with
respect to tax liabilities of Home and/or Home Bank;
(j) furnish to CU, as soon as practicable, and in any
event within fifteen days after it is prepared, (i) a copy of any
report submitted to the board of directors of Home or Home Bank,
provided, however, that Home need not furnish to CU communications of
Home's legal counsel regarding Home's rights and obligations under this
Agreement or books, records and documents covered by the
attorney-client privilege, or which are attorneys' work product, (ii)
copies of all reports, filings, certificates, correspondence and other
documents filed with or received from the SEC, FRB, FDIC,
Superintendent or any other governmental or regulatory entity, and
(iii) monthly unaudited consolidated balance sheets and consolidated
statements of operations of Home;
(k) not later than the 25th day of each calendar month,
amend or supplement the Schedules prepared and delivered pursuant to
Article IV (the "Home Schedules") to ensure that the information set
forth in such Home Schedules accurately reflects the then-current
status of Home and Home Bank. Home shall further amend or supplement
the Home Schedules as of the Closing Date if necessary to reflect any
additional information that needs to be included in the Home Schedules;
(l) use their respective best efforts to obtain any third
party consent with respect to any contract, agreement, lease, license,
amendment, permit or release that is material to the business of Home
on a consolidated basis or that is contemplated or required in
connection with this Agreement, the Merger or Bank Merger;
(m) promptly notify CU of the filing of any material
litigation, or the filing of any governmental or regulatory action,
including any investigation or notice of investigation, or similar
proceeding or notice of any claim against Home or Home Bank or any of
their assets; and
(n) prepare and timely file all tax returns and
amendments thereto required to be filed by them on or before the
Closing Date. CU shall have a reasonable opportunity to review all such
returns and amendments thereto on a pre-filing basis. Home and Home
Bank shall discharge all taxes, assessments and governmental charges in
the nature of taxes upon or against it or any of its
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properties or assets, and all tax liabilities at any time existing,
before the same shall become delinquent and before penalties accrue
thereon, except to the extent and as long as: (i) the same are being
contested in good faith and by appropriate proceedings pursued
diligently and in such manner not to cause any material adverse effect
upon the condition (financial or otherwise) or operations of Home or
Home Bank; and (ii) Home and Home Bank shall have set aside on their
books appropriate reserves in the amount of the demanded principal
imposition together with interest and penalties relating thereto, if
any.
6.4. Access to Information. Home and Home Bank will afford CU and
its representatives, counsel, accountants, agents and employees access during
normal business hours to all of their respective businesses, operations,
properties, books, files and records and will do everything reasonably necessary
to enable CU and its representatives, counsel, accountants, agents and employees
to make a complete examination of the financial statements, businesses, assets
and properties of Home and Home Bank and the condition thereof and to update
such examination at such intervals as CU shall deem appropriate. Such
examination shall be conducted in cooperation with the officers of Home and Home
Bank and in such a manner as to minimize any disruption of, or interference
with, the normal business operations of Home and Home Bank. Upon the request of
CU, Home will request that Arthur Andersen provide reasonable access to
auditors' work papers with respect to the businesses and properties of Home and
Home Bank, including tax accrual work papers prepared for Home and/or Home Bank
during the preceding sixty (60) months, other than (a) books, records and
documents covered by the attorney-client privilege, or that are attorneys' work
product, and (b) books, records and documents that Home or Home Bank is legally
obligated to keep confidential. No examination or review conducted under this
section shall constitute a waiver or relinquishment on the part of CU of the
right to rely upon the representations and warranties made by Home and Home Bank
herein; provided, that CU shall disclose in writing to Home any fact or
circumstance it may discover which CU believes renders any representation or
warranty made by Home or Home Bank hereunder incorrect in any respect. CU
covenants and agrees that it and its representatives, counsel, accountants,
agents and employees will hold in strict confidence all documents and
information concerning Home and Home Bank so obtained (except to the extent that
such documents or information are a matter of public record or require
disclosure in the Proxy Statement or any of the public information of any
applications required to be filed with any governmental or regulatory agency to
obtain the approvals and consents required to effect the transactions
contemplated hereby), and if the transactions contemplated herein are not
consummated, such confidence shall be maintained and all such documents shall be
returned to Home and Home Bank.
6.5. Filings. Home and Home Bank agree that through the Effective
Time, each of their respective reports, registrations, statements and other
filings required to be filed with any applicable governmental or regulatory
authority will comply in all material respects with all the applicable statutes,
rules and regulations enforced or promulgated by the governmental or regulatory
body with which it will be filed and none will contain any untrue statement of
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Any financial statement contained in any
such report, registration, statement or other filing that is intended to present
the financial position of the entity or entities to which it relates will fairly
present the financial position of such entities or entity and will be prepared
in accordance with generally accepted accounting principles consistently applied
during the periods involved.
6.6. Notices; Reports. Home and Home Bank will promptly notify CU
of any event of which Home or Home Bank obtains knowledge which has had or may
reasonably be expected to have a materially adverse effect on the financial
condition, operations, business or prospects of Home on a consolidated basis
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or in the event that Home or Home Bank determines that either is unable to
fulfill any of the conditions to the performance of CU's obligations hereunder,
as set forth in Articles IX or XI herein, and Home and Home Bank will furnish CU
(i) as soon as available, and in any event within thirty (30) days after it is
prepared, any report by Home or Home Bank for submission to the Board of
Directors of Home or Home Bank, (ii) as soon as available, all proxy statements,
information statements, financial statements, reports, letters and
communications sent by Home to its shareholders or other security holders, and
all reports filed by Home or Home Bank with the SEC, FRB or FDIC, and (iii) such
other existing reports as CU may reasonably request relating to Home or Home
Bank.
6.7. Home Shareholders' Meeting. Promptly after the execution of
this Agreement, Home will take all action necessary in accordance with
applicable law and its Articles of Incorporation and Bylaws to convene a meeting
of its shareholders to consider and vote upon this Agreement and the
transactions contemplated hereby. The Board of Directors of Home shall, subject
to its fiduciary duties, recommend that its shareholders approve this Agreement
and the transactions contemplated hereby, and the Board of Directors of Home
shall, subject to its fiduciary duties, use its best efforts to obtain the
affirmative vote of the holders of the largest possible percentage of the
outstanding Home Stock to approve this Agreement and the transactions
contemplated hereby.
6.8. Bank Merger. Home and Home Bank shall (i) take all necessary
corporate and other action, to effect the Bank Merger; (ii) execute, deliver
and, where appropriate, file any and all documents necessary or desirable to
effect the Bank Merger; and (iii) take and cause Home Bank to take any other
action to permit the consummation of any transactions contemplated in connection
with the Bank Merger. Neither Home nor Home Bank shall take any action that
would prevent the performance of the Bank Merger.
6.9. Filings; Applications. Home and Home Bank will cooperate with
CU in the preparation of the Proxy Statement and S-4 and the statements or
applications to be filed to obtain the necessary regulatory approvals to
consummate the transactions contemplated by this Agreement. Home and Home Bank
covenant and agree that all information furnished by Home or Home Bank for
inclusion in the Proxy Statement and S-4 and in all applications or statements
filed with the appropriate regulatory authorities for approval of, or consent
to, the Merger and the Bank Merger will comply in all material respects with the
provisions of applicable law, and will not contain any untrue statement of
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
6.10. Certain Loans and Other Extensions of Credit. Home Bank will
promptly inform CU of the amounts and categories of any loans, leases or other
extensions of credit that have been classified by any bank regulatory authority
or by any unit of Home or Home Bank as "Criticized," "Specially Mentioned,"
"Substandard," "Doubtful," "Loss" or any comparable classification ("Classified
Credits"). Home Bank will furnish CU, as soon as practicable, and in any event
within 15 days after the end of each calendar month, schedules, including the
following: (a) Classified Credits (including with respect to each credit its
classification category and the originating unit); (b) nonaccrual credits
(including the originating unit); (c) accrual exception credits that are
delinquent 90 or more days and have not been placed on nonaccrual status
(including its originating unit); (d) credits delinquent as to payment of
principal or interest (including its originating unit), including an aging into
30-89 and 90+ day categories; (e) participating loans and leases, stating, with
respect to each, whether it is purchased or sold and the originating unit; (f)
loans or leases (including any commitments) by Home or Home Bank to any Home or
Home Bank director, officer at or above the senior vice president level, or
shareholder holding ten percent (10%) or more of the capital stock
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of Home, including with respect to each such loan or lease the identity and, to
the knowledge of Home, the relation of the borrower to Home or Home Bank, and
the outstanding and undrawn amounts; (g) letters of credit (including the
originating unit); (h) loans or leases wholly or partially charged off during
the previous month (including with respect to each loan or lease, the
originating amount, the write-off amount and its originating unit); and (i)
other real estate or assets acquired in satisfaction of debt.
6.11. Termination of Home Stock Option Plan. Home will take all
steps necessary to cause the Home Stock Option Plan to be terminated as of or
prior to the Effective Time, and will cause any options outstanding thereunder
to be either exercised (accompanied with the payment provided for in such
exercised option) on or before the Effective Time, or for those options not so
exercised, to obtain at the earliest practicable date and prior to the Effective
Time a revised stock option contract with each holder of such unexercised
options, incorporating such terms as may be necessary in order to make such
option contracts consistent with the New Stock Option Plan.
6.12. Environmental Audit. Home shall deliver to CU a Phase I
Environmental Assessment Report with respect to the property listed on Schedule
4.9 (the "Phase I Reports"), in a form reasonably satisfactory to CU. The
Parties agree to share equally any and all costs incurred in obtaining the Phase
1 Reports requested after the date hereof in connection with this Section 6.12.
Based on the Parties' review of the Phase I Reports, the Parties shall
determine, in good faith based on a reasonable assessment of the results of the
Phase I Reports, whether to obtain Phase II Site Assessments ("Phase II
Assessments") for any Home Real Property. The Parties shall mutually agree on
the environmental consultant to prepare any such Phase II Assessment and shall
share equally any and all costs incurred in obtaining such Phase II Assessments.
If the amount of remediation expenses related to the Home Real Property, as set
forth in the Phase II Assessments, is estimated to exceed $1,000,000, then Home
shall have an additional ninety (90) days from the date of receipt of such Phase
II Assessments within which to cure the excessive remediation costs and to
reduce the estimated costs of remediation to an amount below $1,000,000.
6.13. D&O Coverage. Home shall obtain (i) coverage for a period of
36 months following the Effective Time for the directors and officers of Home
and Home Bank under a directors' and officers' liability insurance policy which
is no less protective in terms of coverage or limitations then now possessed by
Home covering acts or omissions occurring prior to the Effective Time and (ii)
coverage for a period of at least 36 months following the Effective Time under a
bankers' blanket bond which is no less protective in terms of coverage or
limitations then now possessed by Home which covers losses incurred prior to the
Effective Time and actions related to this Agreement.
ARTICLE VII
COVENANTS OF CU AND CU BANK
PENDING EFFECTIVE TIME OF THE MERGERS
CU and CU Bank covenant and agree with Home and Home Bank as follows:
7.1. Limitation on CU's and CU Bank's Conduct Prior to Effective
Time. Between the date hereof and the Effective Time, except as contemplated by
this Agreement, CU and CU Bank agree to conduct their respective businesses only
in the normal and customary manner and in accordance with sound banking
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practices, and CU and CU Bank shall not, without prior written consent of Home
(which consent shall not be unreasonably withheld and which consent (except with
respect to subparagraph (h) of this Section 7.1) shall be deemed granted if
within five (5) business days of Home's receipt of written notice of a request
for prior written consent, written notice of objection is not received by CU):
(a) except in connection with the Corporate Bank Merger,
issue any CU Stock (except pursuant to the exercise of CU Options
outstanding as of the date hereof), CU preferred stock, CU Bank Stock,
CU Bank preferred stock, any other securities (including long term
debt) of CU or CU Bank or any rights, options or securities to acquire
any CU Stock, CU preferred stock, CU Bank Stock, CU Bank preferred
stock or any other securities (including long term debt) of CU or CU
Bank;
(b) except in accordance with CU's customary and past
practice of paying dividends in an amount equal to $.02 per quarter,
declare, set aside or pay any dividend or make any other distribution
upon, or purchase or redeem any shares of, CU Stock;
(c) except as may be required to effect the transactions
contemplated herein, amend its Articles of Incorporation or
Association, as the case may be, or its Bylaws; provided, however, that
CU Bank shall be permitted to amend and restate its Articles of
Association in the form previously submitted to Home's counsel;
(d) grant any general or uniform increase in the rate of
pay of employees or employee benefits;
(e) grant any material increase in salary, incentive
compensation or employee benefits or pay any bonus to any Person except
for payments in the ordinary course of business consistent with past
practices or pursuant to any pre-existing contract, arrangement or
bonus plan;
(f) make any capital expenditure in excess of $100,000,
except for ordinary repairs, renewals and replacements;
(g) compromise or otherwise settle or adjust any
assertion or claim of a deficiency in taxes (or interest thereon or
penalties in connection therewith), extend the statute of limitations
with any tax authority or file any pleading in court in any tax
litigation or any appeal from an asserted deficiency;
(h) grant or commit to grant any new extension of credit
or amend the terms of any such credit outstanding on the date hereof to
any executive officer, director or holder of ten percent (10%) or more
of the outstanding CU Stock, or to any corporation, partnership, trust
or other entity controlled by any such person, except consistent with
practices and policies in existence as of the date of this Agreement;
(i) close or open any offices at which business is
conducted except in connection with Corporate Bank Merger;
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(j) adopt or amend any CU Employee Plan or other benefit
plan or arrangement of any such type except for such amendments as are
required by law or do not materially increase the costs or benefits of
such plan or arrangement;
(k) change any of CU's or CU Bank's policies and
practices with respect to liquidity management and cash flow planning,
lending, personnel practices, accounting or any other material aspect
of CU's business or operations on a consolidated basis, except such
changes as may be required in the opinion of CU's or CU Bank's
management to respond to economic or market conditions or as may be
required by the rules of the American Institute of Certified Public
Accountants or Financial Accounting Standards Board or by applicable
governmental authorities;
(l) grant any Person a power of attorney or similar
authority;
(m) make any material investment by purchase of stock or
securities, contributions to capital, property transfers or otherwise
in any other Person, except for investments made in the ordinary course
of business consistent with past practice;
(n) amend, modify or terminate, except in accordance with
its terms, any CU Scheduled Contract or enter into any agreement or
contract that would be a CU Scheduled Contract under Section 5.16;
(o) create or incur or suffer to exist any mortgage,
lien, pledge, security interest, charge, encumbrance or restraint of
any kind against or in respect of any property or right of CU and/or CU
Bank;
(p) sell, lease or otherwise dispose of any of its assets
which are material, individually or in the aggregate, to CU or CU Bank,
except in the ordinary course of business consistent with past
practice;
(q) make any extraordinary payment to any Person; or
(r) except as required by law, take or cause to be taken
any action which would prevent the transactions contemplated hereby
form qualifying as tax free reorganizations under Section 368 of the
Code.
7.2. No Solicitation, etc.
(a) CU and CU Bank shall not, and shall cause each of
their respective officers, directors, employees, agents, legal and
financial advisors and Affiliates not to, directly or indirectly,
solicit, initiate or, except as contemplated by Section 7.2(b) hereof,
encourage, entertain or enter into any agreement or agreement in
principle, or announce any intention to do any of the foregoing, with
respect to any Alternative Transaction, other than the Alternative
Transaction contemplated by this Agreement.
(b) CU or CU Bank shall not, and shall cause each of its
officers, directors, employees, agents, legal and financial advisors
and Affiliates not to, directly or indirectly, participate in any
negotiations or discussions regarding, or furnish any information with
respect to, or otherwise
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cooperate in any way in connection with, or assist or participate in,
facilitate or encourage, any effort or attempt to effect any
Alternative Transaction with or involving any Person other than Home or
Home Bank, unless CU or CU Bank shall have received an unsolicited
written offer from a Person other than Home or Home Bank to effect an
Alternative Transaction and the Board of Directors of CU determines,
based on an opinion of counsel, that in the exercise of the fiduciary
obligations of the Board of Directors such information should be
provided to or such discussions or negotiations undertaken with the
Person submitting such unsolicited written offer.
(c) CU will promptly communicate to Home the terms of any
proposal which it may receive in respect of any Alternative Transaction
and will keep Home informed as to the status of any actions, including
negotiations or discussions, taken pursuant to subsection (b) of this
Section 7.2.
7.3. Affirmative Conduct of CU and CU Bank Prior to Effective Time.
Between the date hereof and the Effective Time, CU and CU Bank shall:
(a) use and devote their respective best efforts
consistent with this Agreement to maintain and preserve intact their
respective present business organizations and to maintain and preserve
their respective relationships and goodwill with account holders,
borrowers, employees and others having business relationships with CU
or CU Bank;
(b) use their respective best efforts to keep in full
force and effect all of the existing material permits and licenses of
CU or CU Bank;
(c) use their respective best efforts to maintain
insurance coverage at least equal to that now in effect on all
properties for which they are responsible and on their respective
business operations;
(d) perform their respective material contractual
obligations and not become in material default on any thereof;
(e) duly and timely file all reports and returns required
to be filed with any federal, state or local governmental authority,
unless any extensions have been duly granted by such authority;
(f) duly observe and conform to all lawful requirements
applicable to their respective businesses that are material to the
business of CU on a consolidated basis;
(g) maintain their respective assets and properties in
good condition and repair, normal wear and tear excepted;
(h) promptly advise Home in writing of any event or any
other transaction within CU's or CU Bank's knowledge whereby any Person
or Related Group of Persons acquires, directly or indirectly, record or
beneficial ownership or control (as defined in Rule 13d-3 promulgated
by the SEC under the Exchange Act) of five percent (5%) or more of the
outstanding CU Stock prior to the record date fixed for the CU
Shareholders' Meeting or any adjourned meeting thereof to approve this
Agreement and the transactions contemplated herein;
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(i) promptly notify Home regarding receipt from any tax
authority of any notification of the commencement of an audit, any
request to extend the statute of limitations, any statutory notice of
deficiency, any revenue agent's report, any notice of proposed
assessment, or any other similar notification of potential adjustments
to the tax liabilities of CU and/or CU Bank, or any actual or
threatened collection enforcement activity by any tax authority with
respect to tax liabilities of CU and/or CU Bank;
(j) furnish to Home, as soon as practicable, and in any
event within fifteen days after it is prepared (i) a copy of any report
submitted to the board of directors of CU or CU Bank, provided,
however, that CU need not furnish to Home communications of CU's legal
counsel regarding CU's rights and obligations under this Agreement or
books, records and documents covered by the attorney-client privilege,
or which are attorneys' work product, (ii) copies of all reports,
filings, certificates, correspondence and other documents filed with or
received from the SEC, FRB, FDIC, OCC or any other governmental or
regulatory entity, and (iii) monthly unaudited consolidated balance
sheets and consolidated statements of operations of CU;
(k) not later than the 25th day of each calendar month,
amend or supplement the Schedules prepared and delivered pursuant to
Article IV (the "CU Schedules") to ensure that the information set
forth in such CU Schedules accurately reflects the then-current status
of CU and CU Bank; provided, however, that any such amendment or
supplement required solely as a result of the Corporate Bank Merger
shall be due not later than the 60th day after the consummation of the
Corporate Bank Merger. CU shall further amend or supplement the CU
Schedules as of the Closing Date if necessary to reflect any additional
information that needs to be included in the CU Schedules;
(l) use their respective best efforts to obtain any third
party consent with respect to any contract, agreement, lease, license,
amendment, permit or release that is material to the business of CU on
a consolidated basis or that is contemplated or required in connection
with the Merger or Bank Merger;
(m) promptly notify Home of the filing of any material
litigation, or the filing of any governmental or regulatory action,
including any investigation or notice of investigation, or similar
proceeding, or notice of any claim against CU or CU Bank or any of
their assets; and
(n) prepare and timely file all tax returns and
amendments thereto required to be filed by them on or before the
Closing Date. Home shall have a reasonable opportunity to review all
such returns and amendments thereto on a pre-filing basis. CU and CU
Bank shall discharge all taxes, assessments and governmental charges in
the nature of taxes upon or against it or any of its properties or
assets, and all tax liabilities at any time existing, before the same
shall become delinquent and before penalties accrue thereon, except to
the extent and as long as: (i) the same are being contested in good
faith and by appropriate proceedings pursued diligently and in such
manner not to cause any material adverse effect upon the condition
(financial or otherwise) or operations of CU or CU Bank; and (ii) CU
and CU Bank shall have set aside on their books appropriate reserves in
the amount of the demanded principal imposition together with interest
and penalties relating thereto, if any.
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7.4. Access to Information. CU and CU Bank will afford Home and its
representatives, counsel, accountants, agents and employees access during normal
business hours to all of their respective businesses, operations, properties,
books, files and records and will do everything reasonably necessary to enable
Home and its representatives, counsel, accountants, agents and employees to make
a complete examination of the financial statements, businesses, assets and
properties of CU and CU Bank and the condition thereof and to update such
examination at such intervals as Home shall deem appropriate. Upon the
consummation of the Corporate Bank Merger, CU and CU Bank will afford Home and
its representatives everything reasonably necessary to evaluate and make a
complete examination of the Corporate Bank Merger. Such examination shall be
conducted in cooperation with the officers of CU and CU Bank and in such a
manner as to minimize any disruption of, or interference with, the normal
business operations of CU and CU Bank. Upon the request of Home, CU will request
that Arthur Andersen provide reasonable access to auditors' work papers with
respect to the businesses and properties of CU and CU Bank, including tax
accrual work papers prepared for CU and/or CU Bank during the preceding sixty
(60) months, other than (a) books, records and documents covered by the
attorney-client privilege, or that are attorneys' work product, and (b) books,
records and documents that CU or CU Bank is legally obligated to keep
confidential. No examination or review conducted under this section shall
constitute a waiver or relinquishment on the part of Home of the right to rely
upon the representations and warranties made by CU and CU Bank herein; provided,
that Home shall disclose in writing to CU any fact or circumstance it may
discover which Home believes renders any representation or warranty made by CU
or CU Bank hereunder incorrect in any respect. Home covenants and agrees that it
and its representatives, counsel, accountants, agents and employees will hold in
strict confidence all documents and information concerning CU and CU Bank so
obtained (except to the extent that such documents or information are a matter
of public record or require disclosure in the Proxy Statement or any of the
public information of any applications required to be filed with any
governmental or regulatory agency to obtain the approvals and consents required
to effect the transactions contemplated hereby), and if the transactions
contemplated herein are not consummated, such confidence shall be maintained and
all such documents shall be returned to CU and CU Bank.
7.5. Filings. CU and CU Bank agree that through the Effective Time,
each of their respective reports, registrations, statements and other filings
required to be filed with any applicable governmental or regulatory authority
will comply in all material respects with all the applicable statutes, rules and
regulations enforced or promulgated by the governmental or regulatory body with
which it will be filed and none will contain any untrue statement of material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. Any financial statement contained in any such report,
registration, statement or other filing that is intended to present the
financial position of the entity or entities to which it relates will fairly
present the financial position of such entities or entity and will be prepared
in accordance with generally accepted accounting principles consistently applied
during the periods involved.
7.6. Notices; Reports. CU and CU Bank will promptly notify Home of
any event of which CU or CU Bank obtains knowledge which has had or may
reasonably be expected to have a materially adverse effect on the financial
condition, operations, business or prospects of CU on a consolidated basis or in
the event that CU or CU Bank determines that either is unable to fulfill any of
the conditions to the performance of Home's obligations hereunder, as set forth
in Articles IX or XI herein, and CU and CU Bank will furnish Home (i) as soon as
available, and in any event within thirty (30) days after it is prepared, any
report by CU or CU Bank for submission to the Board of Directors of CU or CU
Bank, (ii) as soon as available, all proxy statements, information statements,
financial statements, reports, letters and communications sent by CU to
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its shareholders or other security holders, and all reports filed by CU or CU
Bank with the SEC, FRB or FDIC, and (iii) such other existing reports as Home
may reasonably request relating to CU or CU Bank.
7.7. CU Shareholders' Meeting. Promptly after the execution of this
Agreement, CU will take all action necessary in accordance with applicable law
and its Articles of Incorporation and Bylaws to convene a meeting of its
shareholders to consider and vote upon this Agreement and the transactions
contemplated hereby. The Board of Directors of CU shall, subject to its
fiduciary duties, recommend that its shareholders approve this Agreement and the
transactions contemplated hereby, and the Board of Directors of CU shall,
subject to its fiduciary duties, use its best efforts to obtain the affirmative
vote of the holders of the largest possible percentage of the outstanding CU
Stock to approve this Agreement and the transactions contemplated hereby.
7.8. Bank Merger. CU and CU Bank shall (i) take all necessary
corporate and other action to effect the Bank Merger; (ii) execute, deliver and,
where appropriate, file any and all documents necessary or desirable to permit
the Bank Merger; and (iii) take and cause CU Bank to take any other action to
permit the consummation of the Bank Merger. Neither CU nor CU Bank shall take
any action that would prevent performance of the Bank Merger.
7.9. Filings; Applications. CU and CU Bank will prepare promptly
and file the Proxy Statement, the S-4 and any statements or applications
necessary to obtain the regulatory approvals required to consummate the
transactions contemplated by this Agreement. CU and CU Bank covenant and agree
that all information included by CU or CU Bank in the Proxy Statement and S-4
and in all applications or statements filed with the appropriate regulatory
authorities for approval of, or consent to, the Merger and the Bank Merger, and
other transactions contemplated by this Agreement, will comply in all material
respects with the provisions of applicable law, and will not contain any untrue
statement of material fact or omit to state any material fact required to be
stated therein or necessary to make the statements contained therein, in light
of the circumstances under which they were made, not misleading.
7.10. Certain Loans and Other Extensions of Credit. CU Bank will
promptly inform Home of the amounts and categories of any loans, leases or other
extensions of credit that have been classified by any bank regulatory authority
or by any unit of CU or CU Bank as "Criticized," "Specially Mentioned,"
"Substandard," "Doubtful," "Loss" or any comparable classification ("Classified
Credits"). CU Bank will furnish Home, as soon as practicable, and in any event
within 15 days after the end of each calendar month, schedules including the
following: (a) Classified Credits (including with respect to each credit its
classification category and the originating unit); (b) nonaccrual credits
(including the originating unit); (c) accrual exception credits that are
delinquent 90 or more days and have not been placed on nonaccrual status
(including its originating unit); (d) credits delinquent as to payment of
principal or interest (including its originating unit), including an aging into
30-89, and 90+ day categories; (e) participating loans and leases, stating, with
respect to each, whether it is purchased or sold and the originating unit; (f)
loans or leases (including any commitments) by CU or CU Bank to any CU or CU
Bank director, officer at or above the senior vice president level, or
shareholder holding ten percent (10%) or more of the capital stock of CU,
including with respect to each such loan or lease the identity and, to the
knowledge of CU, the relation of the borrower to CU or CU Bank, and the
outstanding and undrawn amounts; (g) letters of credit (including the
originating unit); (h) loans or leases wholly or partially charged off during
the previous month (including with respect to each loan or lease, the
originating amount, the write-off amount and its originating unit); and (i)
other real estate or assets acquired in satisfaction of debt.
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7.11. CU Stock Option Plan. CU will take all steps necessary to
adopt the New Stock Option Plan and take any other actions necessary or
appropriate as of or prior to the Effective Time, in order to effect the
transactions contemplated by Section 2.9. CU shall recommend that its
shareholders approve the New Stock Option Plan and the Board of Directors of CU
shall, subject to its fiduciary duties, use its best efforts to obtain the
affirmative vote of the outstanding CU Stock to approve such New Stock Option
Plan.
7.12. Dividends. Subject to applicable law and regulations and the
good faith determination of the Surviving Company Board of Directors, it is the
intention of CU that the Surviving Company shall pay quarterly dividends to its
shareholders for each of the eight quarters following the Effective Time in an
amount per share which is no less than $.06 per share.
7.13. Articles of Incorporation. CU will take all steps necessary to
amend its Articles of Incorporation, including without limitation obtaining
shareholder approval at the CU Shareholders' meeting, to effect any name change
of the Surviving Company agreed upon by the Parties in accordance with Section
2.6.
ARTICLE VIII
GENERAL COVENANTS
The parties hereto hereby mutually covenant and agree with each other
as follows:
8.1. Best Efforts. Subject to the terms and conditions of this
Agreement, each party will use its best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate the transactions
contemplated by this Agreement as promptly as practical.
8.2. Public Announcements. CU and Home will consult with each other
before any Party hereto issues any press release or makes any public statement
with respect to this Agreement or the transactions contemplated hereby, and
except as may be required by applicable law or any listing agreement, neither CU
nor Home will issue any such press release or make any such public statement
prior to such consultation.
8.3. S-4 and the Proxy Statement. Home and CU shall use their
respective best efforts to have the S-4 declared effective under the Securities
Act as promptly as practicable. CU shall take any action required to be taken
under any applicable state securities laws in connection with the issuance of CU
Stock in the Merger, and Home shall furnish all information concerning Home as
may be reasonably requested in connection with any such action. Each Party shall
immediately notify the other Party in writing in the event that such Party
becomes aware that the S-4 or Proxy Statement at any time contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading or that
the S-4 or the Proxy Statement otherwise is required to be amended or
supplemented, which notice shall specify, in reasonable detail, the
circumstances thereof.
8.4. Merger of Home Bank and CU Bank. The parties agree to use
their reasonable efforts between the date of this Agreement and the Closing to
take all actions necessary or desirable, including the filing of any regulatory
applications, so that the Bank Merger will occur substantially concurrently
with, or
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as soon as practicable after, the Effective Time. A copy of the Bank Merger
Agreement is attached hereto as Exhibit B. The original of such Bank Merger
Agreement shall be executed and delivered as soon as practicable after the
execution and delivery of this Agreement.
ARTICLE IX
CONDITIONS PRECEDENT TO THE MERGERS
The obligations of each of the Parties hereto to consummate the
transactions contemplated herein are subject to the satisfaction, on or before
the Closing Date, of the following conditions:
9.1. Shareholder Approval. The transactions contemplated hereby
shall have received all requisite approvals of the shareholders of CU, CU Bank,
Home and Home Bank.
9.2. No Judgments or Orders. No judgment, decree, injunction, order
or proceeding shall be outstanding or threatened by any governmental entity
which prohibits or restricts the effectuation of, or threatens to invalidate or
set aside, the Merger or the Bank Merger substantially in the form contemplated
by this Agreement, unless counsel to the party against whom such action or
proceeding was instituted or threatened renders to the other parties hereto a
favorable opinion that such judgment, decree, injunction, order or proceeding is
without merit.
9.3. Regulatory Approvals. To the extent required by applicable law
or regulation, all approvals or consents of any governmental authority,
including, without limitation, those of the FRB and the OCC shall have been
obtained or granted for the Merger and Bank Merger and the transactions
contemplated hereby, and the applicable waiting period under all laws shall have
expired. All other statutory or regulatory requirements for the valid completion
of the transactions contemplated hereby shall have been satisfied.
9.4. Tax Opinion. CU and Home shall have received an opinion from
Manatt, Phelps & Phillips or Arthur Andersen that the Merger and the Bank Merger
will not result in the recognition of gain or loss for federal income tax
purposes to CU, CU Bank, Home or Home Bank, nor will the issuance of the CU
Stock result in the recognition of gain or loss by the holders of Home Stock who
receive such stock in connection with the Merger.
9.5. Pooling of Interests Accounting Treatment. Arthur Andersen
shall have confirmed in writing to CU and Home that the Merger and Bank Merger
will qualify for pooling of interests accounting treatment.
9.6. S-4 and Proxy Statement. The S-4 shall have become effective
under the Securities Act and shall not be subject to any stop order or
proceeding seeking a stop order and copies of the Proxy Statement shall have
been mailed to every shareholder of record of CU and Home on the record date not
less than 20 days prior to the date of the shareholders' meetings called to act
upon the Merger.
9.7. Dissenters. The sum of (i) the shares of Home Stock that will
not be converted into CU Stock due to the exercise of dissenters' rights granted
under the California Corporations Code and (ii) the shares of CU Stock that
become Dissenting Shares shall not exceed 10% of the aggregate number of issued
and outstanding shares of Home Stock and CU Stock.
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ARTICLE X
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF HOME AND HOME BANK
All of the obligations of Home and Home Bank to effect the transactions
contemplated hereby shall be subject to the satisfaction, on or before the
Closing Date, of the following conditions, any of which may be waived in writing
by Home and Home Bank:
10.1. Legal Opinion. Home and Home Bank shall have received the
opinion of Anita Wolman, general counsel of CU and CU Bank, dated as of the
Closing Date, in substantially the form of Exhibit E hereto.
10.2. Representations and Warranties; Performance of Covenants. All
covenants, terms and conditions of this Agreement to be complied with and
performed by CU and CU Bank at or before the Closing Date shall have been
complied with and performed in all material respects; the representations and
warranties of CU and CU Bank contained in Article V hereof shall have been true
and correct in all material respects on and as of the date of this Agreement and
on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date. It
is understood and acknowledged that the representations being made on and as of
the Closing Date shall be made with respect to the CU Schedules as updated in
accordance with Section 7.3(k).
10.3. Authorization of Mergers; Option Plan.
(a) All actions necessary to authorize the execution,
delivery and performance of this Agreement, the Agreement of Merger and the Bank
Merger Agreement by CU and CU Bank, as the case may be, and the consummation of
the transactions contemplated hereby and thereby shall have been duly and
validly taken by the Board of Directors and shareholders of CU and CU Bank, as
the case may be, as required by applicable law, and CU and CU Bank shall have
full power and right to merge pursuant to the Agreement of Merger and Bank
Merger Agreement, respectively.
(b) The shareholders of CU shall have voted in favor of
the adoption of the New Stock Option Plan.
10.4. Absence of Certain Changes. Between the date of this Agreement
and the Effective Time, there shall not have occurred any event that has had or
could reasonably be expected to have a material adverse effect on the business,
financial condition, results of operations or prospects of CU on a consolidated
basis, whether or not such event, change or effect is reflected in the CU
Schedules as amended or supplemented after the date of this Agreement.
10.5. Officers' Certificate. There shall have been delivered to Home
and Home Bank on the Closing Date a certificate executed by the Chief Executive
Officer and the Chief Financial Officer of CU certifying , to the best of their
knowledge, compliance with all of the provisions of Sections 10.2, 10.3 and
10.4.
10.6. Fairness Opinion. Home shall have received a letter from Piper
Jaffray Inc., dated as of a date within five (5) days of the mailing of the
Proxy Statement and S-4 to the shareholders of Home, to the
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effect that the transactions contemplated by this Agreement are fair from a
financial point of view to the shareholders of Home.
10.7. Shareholder's Voting Agreements. Concurrently with the
execution of this Agreement, the CU directors shall have executed and delivered
to Home an agreement substantially in the form of Exhibit F.
10.8. Home Warrant Agreement. Concurrently with the execution of
this Agreement, CU shall have executed and delivered to Home the Home Warrant
and the Home Warrant Agreement.
10.9. Appointment of Directors. All necessary action shall have been
taken to have the five persons designated by Home elected or appointed to serve,
from and after the Effective Time, as directors of Surviving Company.
10.10. Validity of Transactions. The validity of all transactions
herein contemplated, as well as the form and substance of all opinions,
certificates, instruments of transfer and other documents to be delivered to
Home or Home Bank hereunder, shall be subject to the approval, to be reasonably
exercised, of Manatt, Phelps & Phillips, special counsel for Home and Home Bank.
10.11. Third Party Consents. CU and CU Bank shall have obtained all
consents of other parties to their respective material mortgages, notes, leases,
franchises, agreements, licenses and permits as may be necessary to permit the
Merger and the Bank Merger and the transactions contemplated herein to be
consummated without a material default, acceleration, breach or loss of rights
or benefits thereunder.
10.12. NASDAQ Listing. The shares of CU Stock issuable pursuant to
this Agreement shall have been duly authorized for listing, subject to notice of
issuance, on the NASDAQ, National Market System or any other national exchange
on which the shares of CU Stock may be listed.
10.13. CU Board. All necessary action shall have been taken to have
the five persons designated by CU elected or appointed to serve, from and after
the Effective Time, as directors of the Surviving Company and CU shall have
delivered to Home the written resignations of those directors of CU who will not
be serving on the Surviving Company's Board of Directors.
10.14. Non-Performing Loans. CU Bank's Non-Performing Loans shall not
exceed 75% of (i) the shareholders' equity of CU Bank plus (ii) the loan loss
reserves of CU Bank.
ARTICLE XI
CONDITIONS PRECEDENT TO OBLIGATIONS OF CU AND CU BANK
All of the obligations of CU and CU Bank to effect the transactions
contemplated hereby shall be subject to the satisfaction, on or before the
Closing Date, of the following conditions, any of which may be waived in writing
by CU and CU Bank:
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11.1. Legal Opinion. CU and CU Bank shall have received the opinion
of Manatt, Phelps & Phillips., special counsel to Home and Home Bank, dated as
of the Closing Date, in substantially the form of Exhibit G hereto.
11.2. Representations and Warranties; Performance of Covenants. All
the covenants, terms and conditions of this Agreement to be complied with and
performed by Home or Home Bank at or before the Closing Date shall have been
complied with and performed in all material respects; the representations and
warranties of Home and Home Bank contained in Article IV hereof shall have been
true and correct in all material respects on and as of the date of this
Agreement and on and as of the Closing Date, with the same effect as though such
representations and warranties had been made on and as of the Closing Date. It
is understood and acknowledged that the representations being made on and as of
the Closing Date shall be made with respect to the Home Schedules as updated in
accordance with Section 7.3(j).
11.3. Authorization of Mergers. All actions necessary to authorize
the execution, delivery and performance of this Agreement, the Agreement of
Merger and the Bank Merger Agreement by Home and Home Bank, as the case may be,
and the consummation of the transactions contemplated hereby and thereby shall
have been duly and validly taken by the Boards of Directors and shareholders of
Home and Home Bank, as the case may be, as required by applicable law, and Home
and Home Bank shall have full power and right to merge pursuant to the Agreement
of Merger and Bank Merger Agreement, respectively.
11.4. Regulatory Approvals and Related Conditions. Any governmental
and regulatory approvals and consents which are referred to in this Agreement
and are required to consummate the Merger and the Bank Merger shall have been
granted without the imposition of conditions that are or would have become
applicable to CU or the Surviving Bank and that CU reasonably and in good faith
concludes would materially adversely affect the consolidated financial condition
or operations of CU or otherwise would be materially burdensome to CU on a
consolidated basis and all applicable waiting periods shall have expired.
11.5. Third Party Consents. Home and Home Bank shall have obtained
all consents of other parties to their respective material mortgages, notes,
leases, franchises, agreements, licenses and permits as may be necessary to
permit the Merger and Bank Merger and the transactions contemplated herein to be
consummated without a material default, acceleration, breach or loss of rights
or benefits thereunder.
11.6. Absence of Certain Changes. Between the date of this Agreement
and the Effective Time, there shall not have occurred any event that has had or
could reasonably be expected to have a material adverse effect on the business,
financial condition, results of operations or prospects of Home on a
consolidated basis, whether or not such event, change or effect is reflected in
the Home Schedules as amended or supplemented after the date of this Agreement.
11.7. Officers' Certificate. There shall have been delivered to CU
on the Closing Date a certificate executed by the President and the Chief
Financial Officer of each of Home and Home Bank certifying, to the best of their
knowledge, compliance with all of the provisions of Sections 11.2, 11.3, 11.5
and 11.6.
11.8. Fairness Opinion. CU shall have received a letter from Van
Kasper & Company dated as of a date within five (5) days of the mailing of the
Proxy Statement to the shareholders of CU, to the effect that the transactions
contemplated by this Agreement are fair from a financial point of view to the
shareholders of CU.
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11.9. Validity of Transactions. The validity of all transactions
herein contemplated, as well as the form and substance of all opinions,
certificates, instruments of transfer and other documents to be delivered to CU
hereunder, shall be subject to the approval, to be reasonably exercised, of
Anita Wolman, general counsel of CU.
11.10. Blue Sky Matters. The issuance of the CU Stock in the Merger
shall have been qualified or registered with the appropriate governmental entity
under state securities or Blue Sky laws, and such qualifications or
registrations are in effect on the Closing Date.
11.11. Insurance Coverage. Home shall have obtained (i) coverage for
a period of 36 months following the Effective Time for the directors and
officers of Home and Home Bank under a directors' and officers' liability
insurance policy covering acts or omissions occurring prior to the Effective
Time and (ii) coverage for a period of at least 36 months following the
Effective Time under a bankers' blanket bond which is no less protective in
terms of coverage or limitations than possessed by Home prior to the Effective
Time which covers losses incurred prior to the Effective Time and actions
related to this Agreement.
11.12. Shareholder's Voting Agreements. Concurrently with the
execution of this Agreement, the Home directors shall have executed and
delivered to CU an agreement substantially in the form of Exhibit H.
11.13. CU Warrant Agreement. Concurrently with the execution of this
Agreement, Home shall have executed and delivered to CU the CU Warrant and the
CU Warrant Agreement.
11.14. Affiliate Agreements. Those persons listed on Annex I hereto
shall have executed and delivered to CU an agreement in substantially the form
of Exhibit I.
11.15. Non-Performing Loans. Home Bank's Non-Performing Loans shall
not exceed 75% of (i) the shareholders' equity of Home Bank as of the month end
prior to the Effective Time plus (ii) the loan loss reserves of Home Bank.
11.16. Absence of Excess Remediation. Subject to Home's right to cure
pursuant to Section 6.12 hereto, the Home Real Property, based on a reasonable
analysis of the Phase II Assessments, shall not require remediation expenses in
excess of $1,000,000.
ARTICLE XII
EMPLOYEE BENEFITS
12.1. Employee Benefits. At and as of the Effective Time the former
officers and employees of Home and Home Bank who become officers and employees
of the Surviving Bank ("Transferred Employees") shall, in that capacity, be
entitled to participate in all employee benefits and benefit programs of the
Surviving Bank in accordance with the terms of such employee benefit programs.
Surviving Bank shall recognize such Transferred Employees' service with Home and
Home Bank for purposes of eligibility and vesting under all such benefit
programs. Surviving Bank shall also cover under its health plans, without the
application of any pre-existing limitation or exclusion, all Transferred
Employees and their covered dependents who are covered under similar Home or
Home Bank health plans as of the Closing Date and who
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change coverage to Surviving Bank's health plans at the time such Transferred
Employees are first provided the option to enroll in Surviving Bank's health
plans.
ARTICLE XIII
TERMINATION
13.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time of the Merger upon the occurrence of any of the
following:
(a) By mutual agreement of the parties, in writing;
(b) By Home or CU immediately upon the failure of the
shareholders of Home or CU to approve this Agreement and the
transactions contemplated hereby;
(c) By Home immediately upon expiration of twenty (20)
days from delivery of written notice by Home to CU of CU's breach of or
failure to satisfy any covenant or agreement contained herein resulting
in a material impairment of the benefit reasonably expected to be
derived by Home from the performance or satisfaction of such covenant
or agreement (provided that such breach has not been waived by Home and
Home Bank or cured by CU prior to expiration of such twenty (20) day
period);
(d) By CU immediately upon expiration of twenty (20) days
from delivery of written notice by CU to Home of Home's or Home Bank's
breach of or failure to satisfy any covenant or agreement contained
herein resulting in a material impairment of the benefit reasonably
expected to be derived by CU and CU Bank from the performance or
satisfaction of such covenant or agreement (provided that such breach
has not been waived by CU or cured by Home or Home Bank, as the case
may be, prior to expiration of such twenty (20) day period);
(e) By Home or CU upon the expiration of thirty (30) days
after any governmental or regulatory authority denies or refuses to
grant any approval, consent or authorization required to be obtained in
order to consummate the transactions contemplated by this Agreement
unless, within said thirty (30) day period after such denial or
refusal, all parties hereto agree to submit the application to the
regulatory authority that has denied; or refused to grant the approval,
consent or qualification requested; or
(f) By Home, if any conditions set forth in Article X
shall not have been met, by CU if any conditions set forth in Article
XI shall not have been met, or by Home or CU, if any conditions set
forth in Article IX shall not have been met by September 30, 1996, or
such earlier time as it becomes apparent that such conditions cannot be
met.
13.2. Termination Date. This Agreement shall be terminated if the
Closing Date shall not have occurred by September 30, 1996, unless extended in
writing by the parties.
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13.3. Effect of Termination. No termination of this Agreement under
this Article XIII for any reason or in any manner shall release, or be construed
as so releasing, CU or CU Bank or Home or Home Bank from their respective
obligations under the CU Warrant Agreement or Home Warrant Agreement, the last
sentence of Section 6.4, Section 7.4 or under Section 14.1 hereof, or any party
hereto from any liability or damage to any other party hereto arising out of in
connection with or otherwise relating to, directly or indirectly, said party's
material breach, default or failure in performance of any of its covenants,
agreements, duties or obligations arising hereunder.
ARTICLE XIV
MISCELLANEOUS
14.1. Expenses. Each party hereto shall pay its own costs and
expenses, including but not limited to those of its attorneys and accountants,
in connection with this Agreement, the Agreement of Merger, the Bank Merger and
the transactions covered and contemplated hereby and thereby. Notwithstanding
the foregoing, CU and Home shall share equally the cost of printing the Proxy
Statement and S-4.
14.2. Notices. Any notice, request, instruction or other document to
be given hereunder by any party hereto to another shall be in writing and
delivered personally or by facsimile transmission or sent by registered or
certified mail, postage prepaid, with return receipt requested, addressed as
follows:
To CU or CU Bank: 16030 Ventura Boulevard
Encino, California 91436-4487
Attention: Stephen G. Carpenter
Facsimile Number: (818) 907-5024
With a copy to: Anita Wolman, Esq.
16030 Ventura Boulevard
Encino, California 91436-4487
To Home or Home Bank: Home Bancorp
2633 Cherry Avenue
Signal Hill, California 90806
Attention: Jim Staes
Facsimile Number: (310) 426-4526
With copies to: Manatt, Phelps & Phillips
11355 West Olympic Boulevard
Los Angeles, California 90064
Attention: Barbara S. Polsky, Esq.
Facsimile Number: (310) 312-4224
Any such notice, request, instruction or other document shall be deemed
received on the date delivered personally or sent by facsimile transmission, or
on the third business day after it was sent by registered or certified mail,
postage prepaid. Any of the persons shown above may change its address for
purposes of this section by giving notice in accordance herewith.
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14.3. Successors and Assigns. All terms and conditions of this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective transferees, successors and assigns; provided,
however, that this Agreement and all rights, privileges, duties and obligations
of the parties hereto may not be assigned or delegated by any party hereto
without the prior written consent of the other parties hereto.
14.4. Counterparts. This Agreement may be executed in one or more
counterparts, all of which, taken together, shall constitute one original
document.
14.5. Effect of Representations and Warranties. The representations
and warranties contained in this Agreement or the Schedules shall terminate
immediately after the Effective Time.
14.6. Third Parties. Each party hereto intends that this Agreement
shall not benefit or create any right or cause of action to any person other
than parties hereto.
14.7. Lists; Exhibits; Integration. Each Schedule, exhibit and
letter delivered pursuant to this Agreement shall be in writing and shall
constitute a part of the Agreement, although Schedules and letters need not be
attached to each copy of this Agreement. This Agreement, together with such
Schedules, exhibits and letters, constitutes the entire agreement between the
parties pertaining to the subject matter hereof and supersedes all prior
agreements and understandings of the parties in connection therewith.
14.8. Knowledge. In all representations and warranties concerning
the knowledge of Home, Home Bank, CU or CU Bank, wherever included herein, the
only knowledge imputed to Home, Home Bank, CU or CU Bank shall be the knowledge
of their respective officers at the level of senior vice-president and above.
14.9. Governing Law. This Agreement is made and entered into in the
State of California, except to the extent that the provisions of federal law are
mandatorily applicable, and the laws of the State of California shall govern the
validity and interpretation hereof and the performance of the parties hereto of
their respective duties and obligations hereunder.
14.10. Schedules. The Schedules are an integral part of this
Agreement, and each Schedule shall be applicable as if set forth in full in the
text hereof. In the event there is any absolute unconditional representation
contained in this Agreement, said representation shall be modified by any
contrary information set forth in any Schedule. In the event there is any
representation contained in this Agreement that is modified by a Schedule, said
representation shall also be modified by any other applicable information
contained in any other Schedule.
14.11. Captions. The captions contained in this Agreement are for
convenience of reference only and do not form a part of this Agreement and shall
not affect the interpretation hereof.
14.12. Severability. If any portion of this Agreement shall be deemed
by a court of competent jurisdiction to be unenforceable, the remaining portions
shall be valid and enforceable only if, after excluding the portion deemed to be
unenforceable, the remaining terms hereof shall provide for the consummation of
the transactions contemplated herein in substantially the same manner as
originally set forth at the date this Agreement was executed.
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14.13. Waiver and Modification. No waiver of any term, provision or
condition of this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be or construed as a further or continuing waiver
of any such term, provision or condition of this Agreement. Except as otherwise
required by law, this Agreement, the Agreement of Merger and Bank Merger
Agreement, when executed and delivered, may be modified or amended by action of
the Boards of Directors of CU, CU Bank, Home or Home Bank without action by
their respective shareholders. This Agreement may be modified or amended only by
an instrument of equal formality signed by the parties or their duly authorized
agents.
14.14. Attorney's Fees. In the event any of the parties to this
Agreement brings an action or suit against any other party by reason of any
breach of any covenant, agreement, representation, warranty or other provision
hereof, or any breach of any duty or obligation created hereunder by such other
party, the prevailing party, as determined by the court or other body having
jurisdiction, shall be entitled to have and recover of and from the losing
party, as determined by the court or other body having jurisdiction, all
reasonable costs and expenses incurred or sustained by such prevailing party in
connection with such suit or action, including, without limitation, legal fees
and court costs (whether or not taxable as such).
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14.15. JURY WAIVER. THE PARTIES HERETO WAIVE TRIAL BY JURY IN ANY
MATTER ARISING OUT OF THIS AGREEMENT OR RELATED TO THIS AGREEMENT OR IN
CONNECTION WITH ANY TRANSACTION OR MATTER CONTEMPLATED IN THIS AGREEMENT.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed
this Agreement as of the day and year first above written.
CU BANCORP
By:_______________________________
Name:
Title:
CALIFORNIA UNITED BANK,
NATIONAL ASSOCIATION
By:_______________________________
Name:
Title:
HOME INTERSTATE BANCORP
By:_______________________________
Name:
Title:
HOME BANK
By:_______________________________
Name:
Title:
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EXHIBIT A
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (the "Merger Agreement") is made and
entered into as of this _____ day of ___________, 1996, by and between CU
Bancorp, a California corporation ("CU") and Home Interstate Bancorp, a
California corporation ("Home"), with reference to the following facts:
RECITALS
1. CU is a California corporation duly organized,
validly existing and in good standing under the laws of the State of California,
with authorized capital of 24,000,000 shares of no par value common stock ("CU
Stock") of which, on the date hereof, there are [4,467,318] shares issued and
outstanding and 10,000,000 shares of serial preferred stock, none of which is
outstanding..
2. Home is a corporation duly organized, validly
existing and in good standing under the laws of the State of California with
authorized capital of 20,000,000 shares of common stock, no par value ("Home
Stock") of which, on the date hereof, there are [4,187,954] shares issued and
outstanding.
3. The respective Boards of Directors of CU and Home
deem it desirable and in the best interests of their respective corporations and
stockholders that Home be merged (the "Merger") with and into CU as provided in
this Merger Agreement pursuant to the laws of the State of California and that
CU be the surviving company (the "Surviving Company").
4. In connection with the Merger, CU and Home, and their
respective wholly-owned banking subsidiaries, entered into an Agreement and Plan
of Reorganization, dated as of January 10, 1996 (the "Reorganization
Agreement").
NOW THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein set forth and for the purpose of
prescribing the terms and conditions of such Merger, the parties hereto agree as
follows:
ARTICLE I
THE MERGER
Upon consummation of the Merger at the Effective Time (as
defined in Article IX hereof), Home shall be merged with and into CU which shall
thereupon be the Surviving Company, and the separate corporate existence of Home
shall cease.
ARTICLE II
NAME
The name of the Surviving Company shall be "_____________".
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ARTICLE III
ARTICLES OF INCORPORATION
The Articles of Incorporation of CU as in effect immediately
prior to the Effective Time shall, at and after the Effective Time, continue to
be the Articles of Incorporation of the Surviving Company.
ARTICLE IV
BYLAWS
The Bylaws of CU as in effect immediately prior to the
Effective Time shall, at and after the Effective Time, continue to be the Bylaws
of the Surviving Company.
ARTICLE V
DIRECTORS
The following persons shall, at and after the Effective Time,
serve as the Directors of the Surviving Company until its next annual meeting of
shareholders or until such time as their successors have been elected and
qualified:
[insert names of directors]
ARTICLE VI
RIGHTS AND DUTIES OF SURVIVING COMPANY
At and after the Effective Time, all rights, privileges,
powers and franchises and all property and assets of every kind and description
of CU and Home shall be vested in and be held and enjoyed by the Surviving
Company, without further act or deed, and all the estates and interests of every
kind of CU and Home, including all debts due to either of them, shall be as
effectively the property of the Surviving Company as they were of CU and Home,
and the title to any real estate vested by deed or otherwise in either CU or
Home shall not revert or be in any way impaired by reason of the Merger; and all
rights of creditors and liens upon any property of CU and Home shall be
preserved unimpaired and all debts, liabilities and duties of CU and Home shall
be debts, liabilities and duties of the Surviving Company and may be enforced
against it to the same extent as if said debts, liabilities and duties had been
incurred or contracted by it.
ARTICLE VII
CONVERSION OF SHARES
In and by virtue of the Merger and at the Effective Time,
pursuant to this Merger Agreement, the shares of CU Stock and Home Stock
outstanding at the Effective Time shall be converted as follows:
(a) Effect on the Home Stock. Each share of Home Stock
issued and outstanding immediately prior to the Effective Time shall, on and
after the Effective Time, be automatically canceled and cease to be an issued
and outstanding share of Home Stock and shall be converted into the right to
receive 1.409 shares of CU Stock. No fractional shares of CU Stock shall be
issued in the Merger. CU
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will pay or cause to be paid cash in lieu of fractional shares of CU Stock which
would otherwise be issuable as provided above.
(b) Effect on CU Stock. Each share of CU Stock issued and
outstanding immediately prior to the Effective Time shall, on and after the
Effective Time, remain outstanding and shall for all purposes be deemed to
represent, one share of common stock of the Surviving Company.
ARTICLE VIII
FURTHER ACTION
The parties hereto shall execute and deliver, or cause to be
executed and delivered, all such deeds and other instruments, and will take or
cause to be taken all further or other action as they may deem necessary or
desirable, in order to vest in and confirm to the Surviving Company title to and
possession of all of CU's and Home's property, rights, privileges, powers and
franchises hereunder, and otherwise to carry out the intent and purposes of this
Merger Agreement.
ARTICLE IX
EFFECTIVE TIME
The Merger will become effective upon the filing, in
accordance with Section 1103 of the California Corporations Code, of a copy of
this Merger Agreement and all other requisite accompanying certificates in the
office of the California Secretary of State (the "Secretary"). The date and time
of such filing with the Secretary is referred to herein as to the "Effective
Time."
ARTICLE X
SUCCESSORS AND ASSIGNS
This Merger Agreement shall be binding upon and enforceable by
the parties hereto and their respective successors, assigns and transferees, but
this Merger Agreement may not be assigned by either party without the written
consent of the other.
ARTICLE XI
GOVERNING LAW
This Merger Agreement has been executed in the State of
California, and the laws of the State of California shall govern the validity
and interpretation hereof and the performance by the parties hereto.
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ARTICLE XII
TERMINATION
This Merger Agreement may, by the mutual consent and action of
the Boards of Directors of CU and Home, be abandoned at any time before or after
approval thereof by the shareholders of CU and Home, but not later than the
filing of this Merger Agreement with the Secretary pursuant to Section 1103 of
the California Corporations Code.
IN WITNESS WHEREOF, CU and Home, pursuant to the approval and
authority duly given by resolution of their respective Board of Directors, have
caused this Merger Agreement to be signed by their respective Presidents and
Secretaries on the day and year first above written.
CU BANCORP
By:_________________________
President
____________________________
Secretary
HOME INTERSTATE BANCORP
By:__________________________
President
_____________________________
Secretary
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EXHIBIT A
WARRANT
No. 1
January 10, 1996 1,082,224 Shares
HOME INTERSTATE BANCORP
This is to certify that, for value received and subject to the terms
and conditions provided for in a Warrant Purchase Agreement dated as of January
10, 1996 (the "Agreement") by and between Home Interstate Bancorp, a California
corporation ("Home"), and CU Bancorp, a California corporation ("CU"), pursuant
to which CU and its assigns are entitled to purchase from Home, on the terms and
conditions set forth therein, 1,082,224 fully paid and nonassessable shares of
common stock of Home ("Common Stock"), subject to adjustment as provided in the
Agreement. Terms not otherwise defined herein shall have the meanings ascribed
to them in the Agreement.
This Warrant may be exercised by the holder (except any holder which
shall not be permitted by the Bank Holding Company Act of 1956, as amended ("BHC
Act"), or other applicable law to own, or shall not have obtained all regulatory
approvals required by such Act or other applicable law as a precondition to its
ownership of, the shares of Common Stock covered hereby) as to the whole or any
part of the shares of Common Stock covered hereby at any time when such exercise
shall be permitted under the terms of this Warrant, by surrender of this Warrant
at the principal office of Home or at the office of any transfer agent for the
Warrant and upon payment to Home of the Warrant Price for shares so purchased by
wire transfer to a bank account designated by Home. Thereupon, this Warrant
shall be deemed to have been exercised and the person exercising the same to
have become a holder of record of shares of Common Stock (or of the other
securities or property to which it is entitled upon such exercise) purchased
hereunder for all purposes, and certificates for shares so purchased shall be
delivered to the purchaser. If this Warrant shall be exercised in respect of a
part of the shares of Common Stock covered hereby, the holder shall be entitled
to receive a new Warrant covering the number of shares in respect of which this
Warrant shall not have been exercised, but otherwise identical hereto.
This Warrant is exchangeable, upon the surrender hereof by the holder
hereof at such office or agency of Home, for new Warrants of this tenor
representing in the aggregate the right to
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subscribe for and purchase the number of shares which may be subscribed for and
purchased hereunder, each of such new Warrants to represent the right to
subscribe for and purchase not less than 1,000 shares of Common Stock (except to
the extent necessary to round out the balance of the number of shares
purchasable hereunder).
Home covenants and agrees that all shares which may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance, be fully
paid and non-assessable and free from all taxes, liens and charges with respect
to the issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue). Home further covenants and agrees that
during the period within which the rights represented by this Warrant may be
exercised, Home will at all times have authorized, and reserved, a sufficient
number of shares of Common Stock to provide for the exercise of the rights
represented by this Warrant, and will at its expense expeditiously upon each
such reservation of shares use its best efforts to procure the listing thereof
(subject to issuance or notice of issuance) on all stock exchanges on which the
shares of Common Stock are then listed, or if Home Shares are not then listed on
a stock exchange on NASDAQ National Market System.
The rights of the holder of this Warrant shall be subject to the
following further terms and conditions:
Section 1.1 Home shall at all times reserve and keep available, free
from preemptive rights, out of its authorized and unissued Common Stock or
shares of Common Stock held in treasury, for the purpose of effecting the
exercise of this Warrant, the full number of shares of Common Stock then
issuable upon the exercise of this and all other outstanding Warrant, computed
on the assumption that the adjustments required by Section 1.11 hereof have
become effective, in the event such is not then the case.
Section 1.2 Home will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Common Stock upon exercise of this
Warrant. Home shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issue and delivery of shares
of Common Stock in a name other than that of the holder of the Warrant or
Warrants to be exercised, and no such issue or delivery shall be made unless and
until the person requesting such issue has paid to Home the amount of any such
tax, or has established, to the satisfaction of Home, that such tax has been
paid.
Section 1.3 This Warrant shall not entitle the holder of any rights of
a shareholder of Home, either at law or in equity, or to any notice of meetings
of shareholders or of any other proceedings of Home.
Section 1.4 Subject to Section 1.5 and the terms and conditions set
forth in the Agreement, this Warrant and all rights hereunder are transferable
(in whole or in part), on the books of Home by the registered holder thereof in
person or by duly authorized attorney, upon surrender
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of this Warrant, properly endorsed, to Home (or if Home shall have notified the
registered holder hereof of the appointment of an independent transfer agent for
Warrants, then to such transfer agent). As used herein the term "this Warrant"
shall mean and include any Warrant or Warrants hereafter issued in consequence
of transfers of this Warrant in whole or in part.
Section 1.5 THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THIS WARRANT MAY NOT BE SOLD OR
TRANSFERRED EXCEPT PURSUANT TO (i) A REGISTRATION STATEMENT WITH RESPECT TO THIS
WARRANT WHICH IS EFFECTIVE UNDER THE SECURITIES ACT, OR (ii) AN OPINION OF
COUNSEL THAT AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT IS
AVAILABLE. THE TRANSFERABILITY OF THIS WARRANT IS FURTHER SUBJECT TO THE
PROVISIONS OF A WARRANT PURCHASE AGREEMENT DATED AS OF JANUARY 10, 1996, A COPY
OF WHICH IS AVAILABLE FOR INSPECTION AT THE OFFICE OF THE SECRETARY OF HOME
INTERSTATE BANCORP.
Section 1.6 The holder of this Warrant, by the acceptance hereof,
agrees that prior to the exercise of any Warrants, at a time when said Warrants
have not been registered under the Securities Act or any similar Federal
statute, it will, if it has not requested or is then not entitled to such
registration pursuant to the provisions of Article III of the Agreement, deliver
to Home a written representation that it is acquiring the shares of Common Stock
issuable upon the exercise of such Warrants for its own account for investment,
and not with a view to, or for sale in connection with, any distribution
thereof, and not with any present intention of distributing or selling the same.
Section 1.7 (a) This Warrant shall terminate and be of no further
force or effect as provided in Article VII of the Agreement.
(b) Notwithstanding any other provision contained
herein, this Warrant and the rights conferred hereby shall terminate, and the
full consideration paid by CU for this Warrant shall be immediately due and
payable to CU, if Home or CU receives written notice from the Federal Reserve
Board to the effect that the execution and delivery of the Agreement or the
issuance of the Warrants is not consistent with Section 3 of the BHC Act.
Section 1.8 This Warrant shall be governed by and construed in
accordance with the laws of the State of California.
Section 1.9 This Warrant incorporates by reference all of the terms and
conditions of the Agreement.
HOME INTERSTATE BANCORP
By:
---------------------------------
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EXHIBIT A
WARRANT
No.
January 10, 1996 1,492,390 Shares
CU BANCORP
This is to certify that, for value received and subject to the terms
and conditions provided for in a Warrant Purchase Agreement dated as of January
10, 1996 (the "Agreement") by and between Home Interstate Bancorp, a California
corporation ("Home"), and CU Bancorp, a California corporation ("CU"), pursuant
to which Home and its assigns are entitled to purchase from CU, on the terms and
conditions set forth therein, 1,492,390 fully paid and nonassessable shares of
common stock of CU ("Common Stock"), subject to adjustment as provided in the
Agreement. Terms not otherwise defined herein shall have the meanings ascribed
to them in the Agreement.
This Warrant may be exercised by the holder (except any holder which
shall not be permitted by the Bank Holding Company Act of 1956, as amended ("BHC
Act"), or other applicable law to own, or shall not have obtained all regulatory
approvals required by such Act or other applicable law as a precondition to its
ownership of, the shares of Common Stock covered hereby) as to the whole or any
part of the shares of Common Stock covered hereby at any time when such exercise
shall be permitted under the terms of this Warrant, by surrender of this Warrant
at the principal office of CU or at the office of any transfer agent for the
Warrant and upon payment to CU of the Warrant Price for shares so purchased by
wire transfer to a bank account designated by CU. Thereupon, this Warrant shall
be deemed to have been exercised and the person exercising the same to have
become a holder of record of shares of Common Stock (or of the other securities
or property to which it is entitled upon such exercise) purchased hereunder for
all purposes, and certificates for shares so purchased shall be delivered to the
purchaser. If this Warrant shall be exercised in respect of a part of the shares
of Common Stock covered hereby, the holder shall be entitled to receive a new
Warrant covering the number of shares in respect of which this Warrant shall not
have been exercised, but otherwise identical hereto.
This Warrant is exchangeable, upon the surrender hereof by the holder
hereof at such office or agency of CU, for new Warrants of this tenor
representing in the aggregate the right to
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subscribe for and purchase the number of shares which may be subscribed for and
purchased hereunder, each of such new Warrants to represent the right to
subscribe for and purchase not less than 1,000 shares of Common Stock (except to
the extent necessary to round out the balance of the number of shares
purchasable hereunder).
CU covenants and agrees that all shares which may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance, be fully
paid and non-assessable and free from all taxes, liens and charges with respect
to the issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue). CU further covenants and agrees that during
the period within which the rights represented by this Warrant may be exercised,
CU will at all times have authorized, and reserved, a sufficient number of
shares of Common Stock to provide for the exercise of the rights represented by
this Warrant, and will at its expense expeditiously upon each such reservation
of shares use its best efforts to procure the listing thereof (subject to
issuance or notice of issuance) on all stock exchanges on which the shares of
Common Stock are then listed, or if CU Shares are not then listed on a stock
exchange on NASDAQ National Market System.
The rights of the holder of this Warrant shall be subject to the
following further terms and conditions:
Section 1.1 CU shall at all times reserve and keep available, free from
preemptive rights, out of its authorized and unissued Common Stock or shares of
Common Stock held in treasury, for the purpose of effecting the exercise of this
Warrant, the full number of shares of Common Stock then issuable upon the
exercise of this and all other outstanding Warrant, computed on the assumption
that the adjustments required by Section 1.11 hereof have become effective, in
the event such is not then the case.
Section 1.2 CU will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Common Stock upon exercise of this
Warrant. CU shall not, however, be required to pay any tax which may be payable
in respect of any transfer involved in the issue and delivery of shares of
Common Stock in a name other than that of the holder of the Warrant or Warrants
to be exercised, and no such issue or delivery shall be made unless and until
the person requesting such issue has paid to CU the amount of any such tax, or
has established, to the satisfaction of CU, that such tax has been paid.
Section 1.3 This Warrant shall not entitle the holder of any rights of
a shareholder of CU, either at law or in equity, or to any notice of meetings of
shareholders or of any other proceedings of CU.
Section 1.4 Subject to Section 1.5 and the terms and conditions set
forth in the Agreement, this Warrant and all rights hereunder are transferable
(in whole or in part), on the books of CU by the registered holder thereof in
person or by duly authorized attorney, upon surrender of this Warrant, properly
endorsed, to CU (or if CU shall have notified the registered holder hereof of
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the appointment of an independent transfer agent for Warrants, then to such
transfer agent). As used herein the term "this Warrant" shall mean and include
any Warrant or Warrants hereafter issued in consequence of transfers of this
Warrant in whole or in part.
Section 1.5 THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THIS WARRANT MAY NOT BE SOLD OR
TRANSFERRED EXCEPT PURSUANT TO (i) A REGISTRATION STATEMENT WITH RESPECT TO THIS
WARRANT WHICH IS EFFECTIVE UNDER THE SECURITIES ACT, OR (ii) AN OPINION OF
COUNSEL THAT AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT IS
AVAILABLE. THE TRANSFERABILITY OF THIS WARRANT IS FURTHER SUBJECT TO THE
PROVISIONS OF A WARRANT PURCHASE AGREEMENT DATED AS OF JANUARY 10, 1996, A COPY
OF WHICH IS AVAILABLE FOR INSPECTION AT THE OFFICE OF THE SECRETARY OF CU
BANCORP.
Section 1.6 The holder of this Warrant, by the acceptance hereof,
agrees that prior to the exercise of any Warrants, at a time when said Warrants
have not been registered under the Securities Act or any similar Federal
statute, it will, if it has not requested or is then not entitled to such
registration pursuant to the provisions of Article III of the Agreement, deliver
to CU a written representation that it is acquiring the shares of Common Stock
issuable upon the exercise of such Warrants for its own account for investment,
and not with a view to, or for sale in connection with, any distribution
thereof, and not with any present intention of distributing or selling the same.
Section 1.7 (a) This Warrant shall terminate and be of no further
force or effect as provided in Article VII of the Agreement.
(b) Notwithstanding any other provision contained herein,
this Warrant and the rights conferred hereby shall terminate, and the full
consideration paid by Home for this Warrant shall be immediately due and payable
to Home, if CU or Home receives written notice from the Federal Reserve Board to
the effect that the execution and delivery of the Agreement or the issuance of
the Warrants is not consistent with Section 3 of the BHC Act.
Section 1.8 This Warrant shall be governed by and construed in
accordance with the laws of the State of California.
Section 1.9 This Warrant incorporates by reference all of the terms and
conditions of the Agreement.
CU BANCORP
By:
---------------------------------
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EXHIBIT B
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (the "Bank Merger Agreement") is made and
entered into as of this _____ day of ___________, 1996, by and between
California United Bank, National Association, a national banking association
("CU Bank") and Home Bank, a California corporation ("Home Bank"), with
reference to the following facts:
RECITALS
1. CU Bank is a national banking association duly organized, validly
existing and in good standing under the laws of the United States, with
authorized capital of 540,000 shares of $5.00 par value common stock ("CU Bank
Stock") of which, on the date hereof, there are [472,973] shares issued and
outstanding. CU Bank has surplus of $____ and undivided profits, including
capital reserves, of $______ as of _____________. CU Bank is the wholly owned
subsidiary of CU Bancorp, a California corporation.
2. Home Bank is a corporation duly organized, validly existing and in
good standing under the laws of the State of California with authorized capital
of [ ] shares of common stock, [ ] par value ("Home Stock") of which, on the
date hereof, there are [ ] shares issued and outstanding. Home Bank has surplus
of $______ and undivided profits, including capital reserves, of $_____ as of
_______. Home Bank is the wholly owned subsidiary of Home Interstate Bancorp, a
California corporation.
3. The respective Boards of Directors of CU Bank and Home Bank, each
acting pursuant to a resolution of its board of directors, adopted by the vote
of a majority of its directors, pursuant to the authority given by and in
accordance with the provisions of 12 U.S.C. Section 215a, deem it desirable and
in the best interests of their respective corporations and shareholders that
Home Bank be merged (the "Bank Merger") with and into CU Bank as provided in
this Bank Merger Agreement pursuant to the laws of the United States of America
and that CU Bank be the surviving bank (the "Surviving Bank").
4. In connection with the Merger, CU Bank, CU Bancorp, a California
corporation ("CU"), Home Bank and Home Interstate Bancorp, a California
corporation ("Home"), entered into an Agreement and Plan of Reorganization,
dated as of January 10, 1996 (the "Reorganization Agreement").
NOW THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein set forth and for the purpose of prescribing the
terms and conditions of such Bank Merger, the parties hereto agree as follows:
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ARTICLE I
THE BANK MERGER
Upon consummation of the Bank Merger at the Effective Time of the Bank
Merger (as defined in Article XI hereof), Home Bank shall be merged with and
into CU Bank which shall thereupon be the Surviving Bank, and the separate
corporate existence of Home Bank shall cease.
ARTICLE II
SHAREHOLDER APPROVAL
This Agreement shall be ratified and approved by the written consent of
the shareholders of each of Home Bank and CU Bank owning at least two-thirds of
the outstanding capital stock.
ARTICLE III
NAME
The name of the Surviving Bank shall be "___________."
ARTICLE IV
ARTICLES OF ASSOCIATION
The Articles of Association of CU Bank as in effect immediately prior
to the Effective Time of the Bank Merger shall, at and after the Effective Time
of the Bank Merger, continue to be the Articles of Association of the Surviving
Bank.
ARTICLE V
BYLAWS
The Bylaws of CU Bank as in effect immediately prior to the Effective
Time of the Bank Merger shall, at and after the Effective Time of the Bank
Merger, continue to be the Bylaws of the Surviving Bank.
ARTICLE VI
DIRECTORS
The following persons shall, at and after the Effective Time of the
Bank Merger, serve as the Directors of the Surviving Bank until its next annual
meeting of shareholders or until such time as their successors have been elected
and qualified:
[insert names of directors]
ARTICLE VII
RIGHTS AND DUTIES OF SURVIVING BANK
At and after the Effective Time of the Bank Merger, all rights,
privileges, powers and franchises and all property and assets of every kind and
description of CU Bank and Home Bank shall be vested in and be held and enjoyed
by the Surviving Bank, without further act or deed, and all the estates
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and interests of every kind of CU Bank and Home Bank, including all debts due to
either of them, shall be as effectively the property of the Surviving Company as
they were of CU Bank and Home Bank, and the title to any real estate vested by
deed or otherwise in either CU Bank or Home Bank shall not revert or be in any
way impaired by reason of the Bank Merger; and all rights of creditors and liens
upon any property of CU Bank and Home Bank shall be preserved unimpaired and all
debts, liabilities and duties of CU Bank and Home Bank shall be debts,
liabilities and duties of the Surviving Bank and may be enforced against it to
the same extent as if said debts, liabilities and duties had been incurred or
contracted by it.
ARTICLE VIII
CONVERSION OF SHARES
In and by virtue of the Bank Merger and at the Effective Time of the
Bank Merger, pursuant to this Bank Merger Agreement, the shares of CU Bank Stock
and Home Bank Stock outstanding at the Effective Time of the Bank Merger shall
be converted as follows:
(a) Effect on the Home Bank Stock. Each share of Home Bank Stock issued
and outstanding immediately prior to the Effective Time of the Bank Merger,
except for shares as to which dissenters' rights are perfected pursuant to 12
U.S.C. 215a(b) ("Perfected Dissenting Shares") shall, on and after the Effective
Time of the Bank Merger, be automatically canceled and cease to be an issued and
outstanding share of Home Bank Stock.
(b) Effect on CU Bank Stock. Each share of CU Bank Stock issued and
outstanding immediately prior to the Effective Time of the Bank Merger, except
for Perfected Dissenting Shares, shall, on and after the Effective Time of the
Bank Merger, remain outstanding and shall for all purposes be deemed to
represent, one share of common stock of the Surviving Bank.
ARTICLE IX
CAPITAL STRUCTURE OF SURVIVING BANK
The amount of capital stock of the Surviving Bank shall be $_____,
divided into ____ shares of common stock, each of $___ par value, and at the
time the Bank Merger shall become effective the Surviving Bank shall have a
surplus of $____ and undivided profits of $______, including capital reserves,
which when combined with the Surviving Bank's capital and surplus will be equal
to the combined capital structures of Home Bank and CU Bank as stated in the
preamble of this Agreement, adjusted, however, for normal earnings and expenses
between ______ and the Effective Time of the Bank Merger.
ARTICLE X
FURTHER ACTION
The parties hereto shall execute and deliver, or cause to be executed
and delivered, all such deeds and other instruments, and will take or cause to
be taken all further or other action as they may deem necessary or desirable, in
order to vest in and confirm to the Surviving Bank title to and possession of
all of CU Bank's and Home Bank's property, rights, privileges, powers and
franchises hereunder, and otherwise to carry out the intent and purposes of this
Agreement.
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CU Bank and Home Bank agree that solely for the purpose of completing
the merger of Home Bank with and into CU Bank or obtaining any necessary
regulatory approval therefor or approving, signing, ratifying or confirming any
related Bank Merger Agreement or conferring any necessary or appropriate
corporate authority related thereto or taking any other corporate act or
satisfying any other corporate requirement necessary therefor, the board of
directors of the Surviving Bank, as it will be constituted upon the
effectiveness of the Bank Merger, may act as such in advance of such
effectiveness, and CU, the shareholder of the Surviving Bank upon such
effectiveness, may act as such in advance of such effectiveness.
ARTICLE XI
EFFECTIVE TIME OF THE BANK MERGER
The Bank Merger will become effective in accordance with 12 U.S.C. 215a
at the time specified in the approval to be issued by the Comptroller of the
Currency. The date and time of such approval specified by the Comptroller is
referred to herein as to the "Effective Time of the Bank Merger."
ARTICLE XII
SUCCESSORS AND ASSIGNS
This Bank Merger Agreement shall be binding upon and enforceable by the
parties hereto and their respective successors, assigns and transferees, but
this Bank Merger Agreement may not be assigned by either party without the
written consent of the other.
ARTICLE XIII
TERMINATION
This Bank Merger Agreement may, by the mutual consent and action of the
Boards of Directors of CU Bank and Home Bank, be abandoned at any time before or
after approval thereof by the shareholders of CU Bank and Home Bank, but not
later than the Effective Time of the Bank Merger. This Agreement shall
automatically be terminated and of no further force and effect if, prior to the
Effective Time of the Bank Merger, the Reorganization Agreement is terminated in
accordance with the terms thereof.
ARTICLE XIV
SATISFACTION OF CONDITION AND OBLIGATIONS
(a) The obligations of CU Bank to proceed with the Closing are subject
to the satisfaction at or prior to the Closing of all of the conditions to the
obligations of CU Bank and CU under the Reorganization Agreement, any one or
more of which, to the extent it is or they are waivable, may be waived, in whole
or in part, by CU Bank.
(b) The obligations of Home Bank to proceed with the Closing are
subject to the satisfaction at or prior to the Closing of all of the conditions
to the obligations of Home and Home Bank under the Reorganization Agreement, any
one or more of which, to the extent it is or they are waivable, may be waived,
in whole or in party, by Home Bank.
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IN WITNESS WHEREOF, CU Bank and Home Bank, pursuant to the approval and
authority duly given by resolution of their respective Board of Directors, have
caused this Bank Merger Agreement to be signed by their respective Presidents
and Secretaries on the day and year first above written.
CALIFORNIA UNITED BANK,
NATIONAL ASSOCIATION
By:
-------------------------
President
----------------------------
Secretary
DIRECTORS OF
CALIFORNIA UNITED BANK, N.A.
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HOME BANK
By:
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President
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Secretary
DIRECTORS OF HOME BANK
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EXHIBIT C
WARRANT PURCHASE AGREEMENT
This WARRANT PURCHASE AGREEMENT (the "Agreement"), dated as of
January 10, 1996, between CU Bancorp, a California corporation ("CU"), and Home
Interstate Bancorp, a California corporation ("Home") is made with reference to
the following:
RECITALS
A. CU, California United Bank, National Association, a wholly owned
subsidiary of CU ("CU Bank"), Home and Home Bank, a wholly owned subsidiary of
Home ("Home Bank"), have entered into an Agreement and Plan of Reorganization
(the "Merger Agreement") whereby Home and Home Bank would be merged with and
into CU and CU Bank, respectively (collectively, the "Merger").
B. As partial consideration to Home for entering into the Merger
Agreement, CU has agreed to issue to Home a warrant entitling the holder thereof
to purchase up to 19.9% (or 1,492,390) of the outstanding common stock of CU
("Common Stock"), assuming the exercise of all Warrants (as hereafter defined),
and all other options, warrants or other securities convertible into Common
Stock, subject to such restrictions and conditions as may be imposed by bank
regulatory authorities having jurisdiction over Home and CU, respectively.
C. Concurrent with the execution of this Agreement, Home and CU shall
enter into a separate warrant agreement, with substantially identical terms and
conditions as are set forth in this Agreement, pursuant to which Home shall
issue to CU a warrant entitling the holder thereof, upon the occurrence of
certain events as set forth in such agreement, to purchase up to 19.9% (on a
fully diluted basis) of the outstanding common stock of Home.
D. Terms used herein and not otherwise defined shall have the
meanings ascribed to them in Article VI hereof.
In consideration of these premises and of the representations,
covenants and agreements hereinafter set forth, CU and Home hereby agree as
follows:
ARTICLE I
ISSUANCE AND SALE OF WARRANT
Section 1.1 Issuance and Sale of the Warrant. Subject to the
terms and conditions of this Agreement, and in reliance upon the representations
and warranties hereinafter set forth, and in consideration for the execution and
delivery of the Merger Agreement, CU hereby issues to Home one or more warrants
(such warrants, together with any warrants issued pursuant to Section 1.4, the
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"Warrants") entitling the holder thereof to purchase in the aggregate 1,492,390
duly authorized and newly issued shares of Common Stock, subject to adjustment
as provided below. The Warrants being issued at the time of the execution of
this Agreement will be evidenced by a single certificate in the form of Exhibit
A hereto. All Warrants issued pursuant to Section 1.4 will be evidenced by one
or, at Home's request, more certificates in the form of Exhibit A hereto, dated
the date of their issuance, exercisable at the adjusted exercise price at the
time in effect for the Warrants issued pursuant to this Section 1.1.
Section 1.2 Warrant Price. The initial exercise price at which
shares of Common Stock may be acquired pursuant to exercise of the Warrants
shall be $9.834 per share (the "Warrant Price"), subject to adjustment as
provided in Section 1.4.
Section 1.3 Exercise of Warrants.
(a) The Warrants may be exercised in whole or in part only after
the occurrence of an Acquisition Event.
(b) As used herein, an "Acquisition Event" means any of the
following events:
(i) any person (other than Home or an Affiliate of Home)
shall have commenced (as such term is defined in Rule 14d-2 under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), or shall have filed a registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), with
respect to, a tender offer or exchange offer to purchase any
shares of Common Stock such that, upon consummation of such offer,
such person would own or control 10% or more of the then
outstanding Common Stock;
(ii) CU or CU Bank, without having received Home's prior
written consent or except as permitted by the Merger Agreement,
shall have authorized, recommended, proposed or publicly announced
an intention to authorize, recommend or propose, or entered into,
an agreement with any person (other than Home or any Affiliate of
Home to (A) effect a merger, consolidation or similar transaction
involving CU or CU Bank, (B) sell, lease or otherwise dispose of
assets of CU or CU Bank representing 10% or more of the
consolidated assets of CU or CU Bank, or (C) issue, sell or
otherwise dispose of (including by way of merger, consolidation,
share exchange or any similar transaction) securities representing
10% or more of the voting power of CU or CU Bank (any of the
foregoing an "Acquisition Transaction");
(iii) any person (other than Home or Home Bank or CU or CU
Bank in a fiduciary capacity) shall have acquired beneficial
ownership (as such term is defined in Rule 13d-3 under the
Exchange Act) or the right to acquire beneficial ownership of, or
any "group" (as such term is defined in the Exchange Act) shall
have been
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formed which beneficially owns or has the right to acquire
beneficial ownership of, 10% or more of the then outstanding
Common Stock; or
(iv) the holders of Common Stock shall not have approved the
Merger Agreement at the meeting of such stockholders held for the
purpose of voting on the Merger Agreement, such meeting shall not
have been held or shall have been canceled prior to termination of
the Merger Agreement or CU's Board of Directors shall have
withdrawn or modified in a manner adverse to Home the
recommendation of CU's Board of Directors with respect to the
Merger Agreement, in each case after any person (other than Home)
shall have (A) publicly announced a proposal, or publicly
disclosed an intention to make a proposal, to engage in an
Acquisition Transaction or (B) filed an application (or given a
notice), whether in draft or final form, under the BHC Act or the
Change in Bank Control Act for approval to engage in an
Acquisition Transaction.
As used in this Agreement, "person" shall have the meaning specified in Sections
3(a)(9) and 13(d)(3) of the Exchange Act.
(c) In the event Home is entitled to and wishes to exercise the
Warrants, it shall send to CU a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of shares it
will purchase pursuant to such exercise and (ii) a place and date not earlier
than three Business Days nor later than 60 Business Days from the Notice Date
for the closing of such purchase (the "Closing Date"); provided that if prior
notification to or approval of the Federal Reserve Board or any other regulatory
agency is required in connection with such purchase, Home shall promptly file
the required notice or application for approval, shall promptly notify CU of
such filing, and shall expeditiously process the same and the period of time
that otherwise would run pursuant to this sentence shall run instead from the
date on which any required notification periods have expired or been terminated
or such approvals have been obtained and any requisite waiting period or periods
shall have passed.
(d) At the closing referred to in subsection (c), Home shall pay
to CU the aggregate purchase price for the shares of Common Stock purchased
pursuant to the exercise of the Warrants in immediately available funds by wire
transfer to a bank account designated by CU, provided that failure or refusal of
CU to designate such a bank account shall not preclude Home from exercising the
Warrants.
(e) At such closing, simultaneously with the delivery of
immediately available funds as provided in subsection (d), CU shall deliver to
Home a certificate or certificates representing the number of shares of Common
stock purchased by Home.
(f) Upon the giving by Home to CU of the written notice of
exercise of the Warrants provided for under subsection (c) and the tender of the
applicable purchase price in
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immediately available funds, Home shall be deemed to be the holder of record of
the shares of Common Stock issuable upon such exercise, notwithstanding that the
stock transfer books of CU shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered to
Home. CU shall pay all expenses, and any and all federal, state and local taxes
or other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates hereunder in the name of Home.
Section 1.4 Additional Warrants; Adjustments to Warrant Price and
Number of Shares. The number of shares to which the Warrants may be exercised
and the Warrant Price shall be subject to adjustment as provided below:
(a) Additional Warrants. If CU shall, on one or more
occasions after the date hereof, issue additional shares of Common Stock, and
if, as a result of any such issuance the shares of Common Stock issued or
issuable upon the exercise of Warrants issued pursuant to Section 1.1 hereof
shall represent less than 19.9% of the outstanding Common Stock, assuming the
exercise of all Warrants and all other options, warrants or other securities
convertible into Common Stock, CU shall issue to Home, promptly upon Home's
demand, without further consideration, Warrants to purchase a number of
authorized but unissued shares of Common Stock which, when added to the shares
issued or issuable upon the exercise of such previously issued Warrants, would
represent 19.9% as the case may be of the outstanding Common Stock.
(b) Adjustment for Stock Splits and Combinations. If CU at
any time or from time to time after the date of this Agreement effects a
subdivision of the Common Stock, the Warrant Price then in effect immediately
before that subdivision shall be proportionately decreased, and conversely, if
CU at any time or from time to time after the date of this Agreement combines
the outstanding shares of Common Stock, the Warrant Price then in effect
immediately before the combination shall be proportionately increased. Any
adjustment under this subsection (b) shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(c) Adjustment for Certain Dividends and Distributions. In
the event CU at any time or from time to time after the date of this Agreement
makes, or fixes a record date for the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in additional
shares of Common Stock, then and in each such event the Warrant Price then in
effect shall be decreased as of the time of such issuance or, in the event such
a record date is fixed, as of the close of business on such record date, by
multiplying the Warrant Price then in effect by a fraction (i) the numerator of
which is the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of business on such
record date, and (ii) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date plus the number of
shares of Common Stock issuable in payment of such dividend or distribution;
provided, however, that if such record date is fixed and such dividend is not
fully paid or if such distribution is not fully made on the date fixed therefor,
the Warrant Price shall be
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recomputed accordingly as of the close of business on such record date and
thereafter the Warrant Price shall be adjusted pursuant to this subsection (c)
as of the time of actual payment of such dividends or distributions.
(d) Adjustments for Other Dividends and Distributions. In the
event CU at any time or from time to time after the date of this Agreement
makes, or fixes a record date for the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in securities of CU
other than shares of Common Stock, then in each such event provision shall be
made so that the holders of Warrants shall receive upon exercise thereof, in
addition to the number of shares of Common Stock receivable thereupon, the
amount of securities of CU which they would have received had their Warrants
been converted into Common Stock on the date of such event and had they
thereafter, during the period from the date of such event to and including the
date of exercise of the Warrants, retained such securities receivable by them as
aforesaid during such period, subject to all other adjustments called for during
such period under this Section 1.4.
(e) Adjustment for Reclassification, Exchange and
Substitution. If the Common Stock issuable upon the exercise of the Warrants is
changed into the same or a different number of shares of any class or classes of
stock, whether by recapitalization, reclassification or otherwise (other than a
subdivision or combination of shares or stock dividend or a reorganization,
merger, consolidation or sale of assets provided for elsewhere in this Section
1.4), then and in any such event each holder of Warrants shall have the right
thereafter to receive upon exercise of the Warrants the kind and amount of stock
and other securities and property receivable upon such reorganization,
reclassification or other change by holders of the number of shares of Common
Stock into which such Warrants might have been exercised immediately prior to
such reorganization, reclassification or change, all subject to further
adjustment as provided in this Section 1.4.
(f) Reorganization, Mergers, Consolidations and Sales of
Assets. If at any time or from time to time there is a capital reorganization of
the Common Stock (other than a recapitalization, subdivision, combination,
reclassification or exchange of shares provided for elsewhere in this Section
1.4), or a merger or consolidation of CU with or into another corporation, or
the sale of all or substantially all of CU's properties and assets to any other
person, then, as a part of such reorganization, merger, consolidation or sale,
provision shall be made so that the holders of the Warrants shall thereafter be
entitled to receive upon exercise of the Warrants the number of shares of stock
or other securities or property of CU, or of the successor corporation resulting
from such merger or consolidation or sale, to which a holder of Common Stock
deliverable upon exercise of the Warrants would have been entitled in such
capital reorganization, merger, consolidation or sale. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 1.4 and the other terms and conditions with respect to the rights
of the holders of the Warrants after the reorganization, merger, consolidation
or sale to the end that the provisions of this Agreement, including this Section
1.4 (including adjustment of the Warrant Price then in effect and number of
shares purchasable upon exercise of the Warrants) shall be applicable after that
event and be as nearly equivalent to the provisions hereof as may be
practicable.
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(g) Sale of Shares Below Warrant Price.
(i) If at any time or from time to time after the date
of this Agreement, CU issues or sells, or is deemed by the express provisions of
this subsection (g) to have issued or sold, Additional Shares of Common Stock
(as hereinafter defined), other than as a dividend or other distribution on any
class of stock as provided in subsection (c) above and other than upon a
subdivision or combination of shares of Common Stock as provided in subsection
(b) above, for an Effective Price (as hereinafter defined) less than the Warrant
Price (or, if an adjusted Warrant Price shall be in effect by reason of a
previous adjustment, then less than such adjusted Warrant Price) then and in
each such case the then existing Warrant Price shall be reduced, as of the
opening of business on the date of such issuance or sale, to a price determined
by multiplying that Warrant Price by a fraction (i) the numerator of which shall
be (A) the number of shares of Common Stock Deemed Outstanding at the close of
business on the day next preceding the date of such issue or sale plus (B) the
number of shares of Common Stock which the aggregate consideration received (or
by express provision hereof deemed to have been received) by CU for the total
number of Additional Shares of Common Stock so issued would purchase at such
Warrant Price, and (ii) the denominator of which shall be the number of shares
of Common Stock Deemed Outstanding at the close of business on the date of such
issuance after giving effect to such issuance of Additional Shares of Common
Stock. For purposes of this paragraph (i), "Common Stock Deemed Outstanding" at
any given time shall mean the sum of (1) the number of shares of Common Stock
actually outstanding at that time, (2) the number of Additional Shares of Common
Stock then deemed to have been issued under paragraphs (iii) or (iv) of this
subsection (g) and (3) the number of shares of Common Stock then issuable upon
exercise of stock options to the extent not already deemed to have been issued
under paragraphs (iii) or (iv) of this subsection (g).
(ii) For the purpose of making any adjustment required
under this subsection (g), the consideration received by CU for any issuance or
sale of securities shall (i) to the extent it consists of cash be computed at
the net amount of cash received by CU after deduction of any expenses payable by
CU and any underwriting or similar commissions, compensation or concessions paid
or allowed by CU in connection with such issue or sale, (ii) to the extent it
consists of property other than cash, be computed at the fair value of that
property as determined in good faith by the Board and (iii) if Additional Shares
of Common Stock, Convertible Securities (as hereinafter defined) or rights or
options to purchase either Additional Shares of Common Stock or Convertible
Securities are issued or sold together with other stock or securities or other
assets of CU for a consideration which covers both, be computed as the portion
of the consideration so received that may be reasonably determined in good faith
by the Board to be allocable to such Additional Shares of Common Stock,
Convertible Securities or rights or options.
(iii) For the purpose of the adjustment required under
this subsection (g), if at any time or from time to time after the date of this
Agreement CU issues or sells any rights or options for the purchase of, or stock
or other securities convertible into, Additional Shares of Common Stock (such
convertible stock or securities being hereinafter referred to as "Convertible
Securities"), then in each case CU shall be deemed to have issued at the time of
the
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issuance of such rights or options or Convertible Securities the maximum number
of Additional Shares of Common Stock issuable upon exercise or conversion
thereof and to have received as consideration for the issuance of such shares an
amount equal to the total amount of the consideration, if any, received by CU
for the issuance of such rights or options or Convertible Securities plus, in
the case of such options or rights, the amounts of consideration, if any,
payable to CU upon the exercise of such options or rights and, in the case of
Convertible Securities, the amounts of consideration, if any, payable to CU upon
conversion (other than by cancellation of liabilities or obligations evidenced
by such Convertible Securities). No further adjustment of the Warrant Price,
adjusted upon the issuance of such rights, options or Convertible Securities,
shall be made as a result of the actual issuance of Additional Shares of Common
Stock on the exercise of any such rights or options or the conversion of any
such Convertible Securities. If any such rights or options or the conversion
privilege represented by any such Convertible Securities shall expire or be
canceled without having been exercised, the Warrant Price adjusted upon the
issuance of such options, rights or Convertible Securities shall be readjusted
to the Warrant Price which would have been in effect had an adjustment been made
on the basis that the only Additional Shares of Common Stock so issued were the
Additional Shares of Common Stock, if any, actually issued or sold on the
exercise of such rights or options or rights of conversion of such Convertible
Securities, and such Additional Shares of Common Stock, if any, were issued or
sold for the consideration actually received by CU upon such exercise, plus the
consideration, if any, actually received by CU for the granting of all such
rights or options, whether or not exercised, plus the consideration received for
issuing or selling the Convertible Securities actually converted plus the
consideration, if any, actually received by CU (other than by cancellation of
liabilities or obligations evidenced by such Convertible Securities) on the
conversion of such Convertible Securities.
(iv) For the purpose of the adjustment required under
this subsection (g), if at any time or from time to time after the date of this
Agreement CU issues or sells any rights or options for the purchase of
Convertible Securities, then in each such case CU shall be deemed to have issued
at the time of the issuance of such rights or options the maximum number of
Additional Shares of Common Stock issuable upon conversion of the total amount
of Convertible Securities covered by such rights or options and to have received
as consideration for the issuance of such Additional Shares of Common Stock an
amount equal to the amount of consideration, if any, received by CU for the
issuance of such rights or options, plus the minimum amounts of consideration,
if any, payable to CU upon the exercise of such rights or options and plus the
minimum amount of consideration, if any, payable to CU (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities) upon the conversion of such Convertible Securities. No further
adjustment of the Warrant Price, adjusted upon the issuance of such rights or
options, shall be made as a result of the actual issuance of the Convertible
Securities upon the exercise of such rights or options or upon the actual
issuance of Additional Shares of Common Stock upon the conversion of such
Convertible Securities. The provisions of paragraph (iii) above for the
readjustment of the Warrant Price upon the expiration of rights or options or
the rights of conversion of Convertible Securities shall apply in like manner to
the rights, options and Convertible Securities referred to in this paragraph
(iv).
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(v) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued by CU after the date of this Agreement whether or
not subsequently reacquired or retired by CU, other than (i) shares of Common
Stock issued upon exercise of the Warrants and (ii) shares issued by way of
dividend or other distribution on shares of Common Stock excluded from the
definition of Additional Shares of Common Stock by the foregoing clause or
shares of Common Stock resulting from any subdivision or combination of shares
of Common Stock so excluded, or shares issued by way of dividend or other
distribution on, or resulting from any subdivision or combination of, shares of
Common stock excluded from the definition of "Additional Shares of Common Stock"
by the foregoing provision. The "Effective Price" of Additional Shares of Common
Stock shall mean the quotient determined by dividing the total number of
Additional Shares of Common Stock issued or sold, or deemed to have been issued
or sold by CU under this subsection (g), into the aggregate consideration
received or deemed to have been received by CU for such issue under this
subsection (i).
ARTICLE II
REPURCHASE OF WARRANTS AND LIMITATIONS ON SALE
Section 2.1 Repurchase of Warrants.
(a) Prior to the occurrence of an Acquisition Event, CU
shall have no right to repurchase the Warrants and Home shall have no right to
require CU to repurchase the Warrants.
(b) At any time after the occurrence of an Acquisition
Event, CU shall have the right to purchase (or to cause a person designated by
CU to purchase), and Home shall have the right to require that CU repurchase
(or, if CU shall so elect, cause a person designated by CU to purchase), (i) all
(but not fewer than all) the Warrants at the time beneficially owned by Home and
its Affiliates at the Warrant Call Price in effect for such Warrants on the date
of closing (as provided below) and (ii) all (but not fewer than all) of the
shares of Common Stock purchased by Home and its Affiliates pursuant to this
Agreement with respect to which Home has beneficial ownership at a price equal
to the aggregate market value for such shares as of the date of closing (as
provided below). Any purchase pursuant hereto shall take place on a Business Day
specified in a notice given by CU to Home or by Home to CU, as the case may be
(but in no event prior to the 30th day following the date of any such notice to
Home or later than the 30th day following the date of any such notice to CU).
(c) The closing of any repurchase of Warrants pursuant to
this Section 2.1 shall take place at 10:00 a.m. Los Angeles Time, on the date
set forth in the applicable notice given by CU or Home, as the case may be, at
the office of Home at the address set forth in Section 8.1. The amount payable
to Home and its Affiliates upon any repurchase of Warrants shall be paid in
lawful money of the United States by a federal funds check or a wire transfer of
immediately available funds to an account designated by Home. Upon receipt of
such payment, Home shall
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deliver or cause to be delivered to CU the certificates representing all the
Warrants being repurchased free and clear of any liens, security interests,
charges or encumbrances.
Section 2.2 Certain Determinations of Market Value. The calculation of
the Market Value, as required herein, shall be calculated in accordance with
this Section 2.2. In the event that Market Value is to be determined pursuant to
the terms hereof and there is not an established trading market for shares of
Common Stock, or more than 50% of the outstanding shares of Common Stock are
held beneficially or of record by persons, each of whom owns (individually or
together with members of any group of which such persons are members) 5% or more
of the outstanding shares of Common Stock, then Home may elect to have an
investment banking firm mutually agreeable to CU and Home determine (i) whether,
in the opinion of such investment banking firm, as a result of the absence of an
established trading market or the concentration of stock holdings, Market Value
(determined in accordance with the provisions of the definition of Market Value
in Article VI) does not accurately reflect the fair market value of a block of
1,000 shares of Common Stock on the date as of which Market Value is to be
determined, and (ii) if such investment banking firm determines that Market
Value (as so determined) does not accurately reflect such fair market value,
such investment banking firm shall make determination of the fair market value
of a share of Common Stock on the date as of which Market Value is to be
determined, based on whatever factors it deems relevant, as soon as possible and
shall promptly give written notice to Home and CU of its determination. The fees
of such investment banking firm in connection with such determination shall be
paid by Home. Such determination shall be final and binding on the parties
hereto and the fair market value so determined shall, if higher than the Market
Value that would otherwise apply, be the Market Value of a share of Common
Stock. In the event such determination is not transmitted to Home and CU prior
to the scheduled closing date with respect to any repurchase of Warrants or
Common Stock, the scheduled closing of such transaction shall not be postponed,
and CU shall make such payments on the closing date as are required based on the
Market Value of a share of Common Stock determined as if Home had not made an
election under this Section 2.4. Within three Business Days after such
investment banking firm's determination is made and conveyed to Home and CU in
writing, CU shall make a payment to Home, or Home shall make a payment to CU, as
the case may be, equal to the difference between the amount paid on the closing
date and the amount that would have been so payable had such amount been
determined on the basis of such investment banking firm's determination of the
Market Value of a share of Common Stock.
Section 2.3 Limit on Proceeds. Home agrees, as long as CU shall not
have defaulted in its obligations to repurchase Warrants pursuant to Section
2.1, to pay over to CU any amount by which the profits received by Home and its
Affiliates upon the sale or transfer of Warrants (net of all selling expenses,
underwriting discounts, and commissions and other expenses incurred by Home in
connection with such exercise and sale) shall exceed $5,000,000.
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ARTICLE III
RESTRICTIONS ON TRANSFERABILITY OF STOCK;
COMPLIANCE WITH SECURITIES ACT OF 1933
Section 3.1 Restrictions on Transferability. The Warrants acquired by
Home or any Affiliate of Home pursuant to this Agreement and the Common Stock
issuable upon exercise of such Warrants and any shares of capital stock received
or issued in respect thereof, including, without limitation, securities issued
upon any stock split, stock dividend, recapitalization, merger, consolidation or
similar event (such Warrants and all such shares of Common Stock and securities
being collectively called the "Restricted Stock") shall not be hypothecated, nor
shall any claim or liability exist, nor shall any agreement, written or oral, be
entered into by Home or any Affiliate of Home which would cause any claim or
liability to exist with respect to the Restricted Stock, and the Restricted
Stock shall not be transferred except upon the conditions, to the extent
applicable, specified in this Article III. Home will cause any proposed
transferee of Restricted Stock held by Home or any other Affiliate of Home to
agree to take ownership of such Restricted Stock subject to the provisions, to
the extent applicable, of this Article III; provided, however, that the
provisions of this Article shall cease to apply to any Restricted Stock which
shall have been sold in a registered public offering in accordance with the
provisions of this Article III. Home represents that it is purchasing the
Restricted Stock for its own account and not with a view to or for sale in
connection with any distribution of such Restricted Stock.
Section 3.2 Restrictive Legend; Notice of Proposed Transfers.
(a) Each certificate representing Restricted Stock shall (unless
otherwise permitted by the provisions of paragraph (b) of this Section) be
stamped or otherwise imprinted with a legend in substantially the following
form:
THESE SHARES/WARRANTS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. THESE SHARES/WARRANTS MAY NOT BE SOLD OR TRANSFERRED EXCEPT
PURSUANT TO (i) A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH
IS EFFECTIVE UNDER SAID ACT OR (ii) AN OPINION OF COUNSEL THAT AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT IS AVAILABLE. THE TRANSFERABILITY OF THESE
SHARES/ WARRANTS IS FURTHER SUBJECT TO THE PROVISIONS OF A WARRANT PURCHASE
AGREEMENT DATED AS OF JANUARY 10, 1996, A COPY OF WHICH IS AVAILABLE FOR
INSPECTION AT THE OFFICE OF THE SECRETARY OF CU BANCORP.
(b) Each holder of a certificate representing Restricted Stock
by acceptance thereof agrees to comply in all respects with the provisions of
this Section 3.2(b). Prior to any proposed transfer of any Restricted Stock
other than pursuant to a registration under the Securities Act, the holder
thereof shall give written notice to CU of such holder's intention to effect
such transfer. Each such notice shall describe the manner and circumstances of
the proposed transfer
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of the Restricted Stock to be transferred and shall be accompanied by an
unqualified written opinion of counsel reasonably satisfactory to CU to the
effect that such proposed transfer may be effected without registration under
the Securities Act. Subject to Section 3.11 hereof, upon delivery to CU of such
notice and such opinion of counsel, the holder of such Restricted Stock shall be
entitled to transfer such Restricted Stock in accordance with the terms of such
notice delivered by the holder to CU. Each certificate evidencing Restricted
Stock transferred as above provided shall bear the appropriate restrictive
legend set forth in paragraph (a) above, except that such certificate shall not
bear such restrictive legend if the opinion of counsel referred to above shall
be to the further effect that such legend is not required in order to establish
compliance with any provisions of the Securities Act.
Section 3.3 No Transfers Prior to Acquisition Event. Notwithstanding
anything to the contrary set forth in this Agreement or the Restricted Stock,
neither Home nor any Affiliate of Home shall sell, transfer or otherwise dispose
of all or any portion of the Warrants owned by it, other than to an Affiliate of
Home, except after the occurrence of an Acquisition Event; provided, however,
that following an Acquisition Event, if CU or Home shall give notice of its
election to exercise its rights under Section 2.1, then such right of Home and
its Affiliates to sell, transfer or otherwise dispose of the Restricted Stock
shall no longer be exercised unless CU shall have defaulted in its obligation to
repurchase such Restricted Stock on the date specified in any notice.
Section 3.4 Limitations on Transferees and Manner of Transfer.
(a) In the event that Home and its Affiliates become entitled
pursuant to the provisions of Section 3.3 to sell, transfer or otherwise dispose
of Restricted Stock, such Restricted Stock may be sold or transferred (subject
to Section 3.11 hereof) only (i) to a third party (or a third party and its
Affiliates) in a transaction which complies with the provisions of paragraph (b)
of this Section or (ii) to one or more underwriters or dealers in connection
with a broad public distribution complying with the provisions of paragraph (c)
of this Section of the shares of Common Stock issuable pursuant to the exercise
of the transferred Warrants (such shares being hereinafter referred to as the
"Underlying Shares"). The provisions of this Section shall only apply to sales,
transfers or dispositions by Home and its Affiliates, and shall not apply to
sales, transfers or dispositions by transferees of Home or its Affiliates
(except that any sale or disposition by dealers or underwriters shall be
conducted in accordance with the applicable provisions of this Section and
further except that all resales shall be made in accordance with the Securities
Act).
(b) Home and its Affiliates shall be entitled, subject to the
other applicable provisions of this Article III (including Section 3.11) and
Section 2.1, to sell or transfer Restricted Stock in one or more transactions
exempt from the registration requirements of Section 5 of the Securities Act;
provided, however, that the aggregate number of shares of Restricted Stock sold
or transferred to any single purchaser and persons known to Home to be
Affiliates of or persons acting in concert with such purchaser in any such
transaction shall be limited to that amount of Restricted Stock which, when
taken together with the Restricted Stock theretofore sold or transferred to such
purchaser and such Affiliates and persons, would not, upon the exercise in full
of the Warrants so
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transferred, permit the acquisition of more than 2% of the then outstanding
shares of Common Stock, determined as of the date of such sale or transfer. For
purposes of the immediately preceding sentence, it shall be assumed that all
Warrants, if any, that already have been sold or transferred by Home and its
Affiliates are still outstanding and have not been exercised in whole or in part
to purchase shares of Common Stock.
(c) Warrants owned by Home and its Affiliates, unless sold to CU
or an Affiliate of CU or in compliance with paragraph (b) of this Section, may
only be sold or transferred to one or more underwriters or dealers in accordance
with the provisions of this paragraph. Home and its Affiliates may, subject to
the terms and conditions set forth in this paragraph (c), sell or transfer
Warrants in whole or in part to one or more underwriters or dealers who agree in
writing with Home, prior to the effective time of any such sale or transfer, to
exercise such Warrants and offer and sell the Underlying Shares either (i) to
the public in a public offering registered under the Securities Act (or any
successor federal securities laws) pursuant to a distribution in which no single
purchaser and its Affiliates will, to the knowledge of such underwriters or
dealers, acquire Underlying Shares representing more than 2% of the then
outstanding shares of Common Stock or (ii) in other transactions complying with
the requirements of paragraph (b) above. Notwithstanding any other provision of
this Agreement to the contrary, the exercise of any Warrants transferred to
underwriters or dealers in accordance with this Section and the acquisition by
such underwriters or dealers of shares of Common Stock pursuant to such exercise
may be made simultaneously on the date of the closing of the sale or transfer by
Home or its Affiliates of the relevant Warrants to such underwriters or dealers,
provided CU is given written notice of the date of such closing at least five
Business Days prior thereto. At any such closing, against payment of the
exercise price for shares of Common Stock to be acquired pursuant to the
exercise of Warrants, CU will deliver or cause to be delivered certificates
representing the Underlying Shares to such underwriters or dealers, in such
names and denominations as it or they shall designate not fewer than two
Business Days prior to such closing.
Section 3.5 "Demand" Registration. From and after such date as Home and
its Affiliates become entitled pursuant to Section 3.4 to sell or transfer any
Restricted Stock, CU shall, if requested by Home, as expeditiously as possible,
use its best efforts to effect the registration of the Restricted Stock (which
CU has been requested to register on a form in general use under the Securities
Act (or any successor federal securities law) selected by CU, in order to permit
the sale or other disposition of such Restricted Stock in accordance with the
intended method of sale or other disposition set forth in the request (subject
to the provisions of Section 3.4(c)). The right to require registration of the
Restricted Stock under this Section 3.5 may only be exercised once unless Home
is advised in writing by its investment banking firm (a copy of which advice
shall be supplied to CU) that, in the opinion of such firm, an additional or two
additional registrations are appropriate to maximize the benefits to Home of the
proposed distribution of Restricted Stock, in which event Home may exercise once
or twice more, as applicable, its rights under this Section 3.5. Upon the
issuance of a stop order or injunction, CU may withdraw any such registration
statement and abandon the proposed offering which Home shall have demanded, in
which case Home's right shall be reinstated.
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Section 3.6 "Piggyback" Registration. From and after such date as Home
and its Affiliates become entitled pursuant to Section 3.4 to sell or transfer
any Restricted Stock, if at any time CU proposes to register any of its
securities under the Securities Act (or any successor federal securities law),
whether or not for sale for its own account (except with respect to registration
statements filed with respect to the issuance of securities under employee
benefit plans), it will give written notice to Home of its intention to do so.
Upon the written request of Home, given within 15 calendar days after receipt of
CU's notice, CU will use its best efforts to cause to be included in the shares
to be covered by the registration statement proposed to be filed by CU, in
accordance with the request of Home, the Restricted Stock to be sold by dealers
or underwriters in accordance with the provisions of Section 3.4; provided,
however, that CU need not include such Restricted Stock in such registration
statement if CU is advised in writing by its investment banking firm (a copy of
which advise shall be supplied to Home) that the inclusion of such securities
shall, in the opinion of such firm, materially interfere with the orderly sale
and distribution of the CU securities being sold by it. CU may, in its sole
discretion and without the consent of Home, withdraw any such registration
statement and abandon the proposed offering in which Home shall have requested
to participate pursuant to this Section.
Section 3.7 Registration Procedures and Expenses.
(a) If and whenever CU is required by the provisions of this
Article III to use its best efforts to effect the registration of any of the
Restricted Stock under the Securities Act (or any successor federal securities
law), Home and its Affiliates (including the underwriters in the case of a
registration of Underlying Shares) (individually referred to as a "selling
holder" or "holder" and collectively referred to as "selling holders" or
"holders") will furnish in writing such information as is reasonably requested
by CU for inclusion in the registration statement relating to such offering and
such other information and documentation as CU shall reasonably request, and CU
will, as expeditiously as possible:
(i) prepare and file with the SEC or any other federal
agency at the time administering the Securities Act (or a successor federal
securities law) a registration statement with respect to such securities and use
its best efforts to cause such registration statement to become and remain
effective for such period as may be necessary to permit the successful marketing
of such securities, but not exceeding 90 days;
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act;
(iii) furnish to each selling holder of Restricted Stock
being registered such number of copies of a prospectus and preliminary
prospectus in conformity with the requirements of the Securities Act (or any
successor federal securities law), and such other
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documents as such seller may reasonably request in order to facilitate the
public sale or other disposition of the Restricted Stock being registered owned
by such seller;
(iv) furnish, at the request of any holder or holders of
securities being registered pursuant to this Article III, on the date that such
securities are delivered to the underwriters for sale pursuant to such
registration or if such securities are not being sold through underwriters, on
the date the registration statement with respect to such securities becomes
effective (A) an opinion dated such date of independent counsel representing CU
for the purposes of such registration, addressed to the underwriters, if any,
and to the holder or holders making such request, stating that such registration
statement has become effective under the Securities Act (or such successor law)
and that (a) to the best of the knowledge of such counsel, no stop order
suspending the effectiveness thereof has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated under the Securities
Act (or such successor federal securities law); (b) the registration statement,
the related prospectus and each amendment or supplement thereto comply as to
form in all material respects with the requirements of the Securities Act (or
such successor law) and the applicable rules and regulations of the SEC
thereunder, except that such counsel need express no opinion as to financial
information or information provided by selling holders contained therein; (c)
such counsel (subject to such customary limitation on the scope of their
investigation as shall be set forth in such opinion) has no reason to believe
that either the registration statement or the prospectus, or any amendment or
supplement thereto, contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading except that such counsel need express no
opinion as to financial information or information provided by selling holders
contained therein; (d) the descriptions in the registration statement and in the
prospectus, or any amendment or supplement thereto, of all legal and
governmental matters and all contracts and other legal documents or instruments
are accurate and fairly present the information required to be shown; and (e)
such counsel does not know of any legal or governmental proceedings, pending or
contemplated, required to be described in the registration statement or
prospectus, or any amendment or supplement thereto, or to be filed as exhibits
to the registration statement which are not described and filed as required; and
(B) a letter dated such date, from the independent certified public accountants
of CU, addressed to the underwriters, if any, and to the holder or holders by or
on behalf of whom a request is made, stating that they are independent certified
public accountants within the meaning of the Securities Act (or such successor
law) and that in the opinion of such accountants the financial statements and
other financial data of CU included in the registration statement or the
prospectus, or any amendment or supplement thereto, comply as to form in all
material respects with the applicable accounting requirements of the Securities
Act (or such successor law). Such letter from the independent certified public
accountants shall additionally cover such other financial matters (including
information as to the period ending not more than five business days prior to
the date of such letter) with respect to the registration in respect of which
such letter is being given as the holder of Restricted Stock being registered
may reasonably request;
(v) use its best efforts to register or qualify the
Restricted Stock covered by such registration statement under such other
securities or blue sky laws of such
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jurisdictions as each such selling holder of such Restricted Stock shall
reasonably request and do any and all other acts and things which may be
necessary or reasonably desirable to enable such seller to consummate the public
sale or other disposition in such jurisdictions as may be requested by such
seller; provided, however, that CU shall have no obligation to qualify to do
business in any jurisdiction or to file a general consent to service of process
in any jurisdiction;
(vi) notify each selling holder of Restricted Stock covered
by such registration statement, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act (or any successor Federal
securities law), of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing;
(vii) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering the
period of at least twelve months, but not more than eighteen months, beginning
with the first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act;
(viii) provide a transfer agent and registrar for all
Restricted Stock covered by such registration statement not later than the
effective date of such registration statement;
(ix) use its best efforts to list all Common Stock covered
by such registration statement on each securities exchange, if any, on which any
of the Common Stock is then listed (unless such Common Stock is already so
listed) if such listing is then permitted under the rules of such exchange or
with the NASDAQ, National Market System; and
(x) undertake to take such further actions as may be
reasonably requested by the underwriters.
(b) If any registration statement pursuant to Section 3.5 or 3.6
shall have been declared effective and, in the judgment of CU, (A) any event
shall occur or state of facts exist (other than as described in clause (B))
which requires a notice to the selling holders of Restricted Stock pursuant to
clause (vi) of paragraph (a) of this Section 3.7 or (B) the offering at the time
of Restricted Stock pursuant to such registration statement would adversely
affect, or would be improper in view of, a public offering, financing,
reorganization, recapitalization, merger, consolidation, acquisition, or other
similar transaction, or negotiations, discussions or pending proposals with
respect thereto, immediately upon receipt of notice to such effect from CU, Home
shall cease to offer or sell any Restricted Stock registered thereunder and
cease to deliver or use the prospectus in use thereunder. In the case of any
matter described in clause (A), CU shall, as promptly as practicable, furnish to
each selling holder a reasonable number of copies of a supple-
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ment to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchaser of such securities, such prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing. In the case of
any matter described in clause (B), CU shall promptly notify Home at such times
as, in CU's judgment, such offering may be recommended (which shall be no later
than 90 days following such suspension); provided that Home may, in its sole
discretion, discontinue such offering with respect to the Restricted Stock
covered thereby, in which event Home shall be entitled to "demand" registration
rights hereunder to the full extent as if such offering had not been requested.
All expenses incurred by CU in complying with Sections 3.5 and 3.6
hereof, including, without limitation, all registration and filing fees,
printing expenses, fees and disburse ments of counsel for CU and blue sky fees
and expenses are herein called "Registration Expenses," except for all
underwriting discounts and selling commissions applicable to the sales, all fees
and disbursements of counsel for any selling holder or holders (including
counsel designated by any seller for a "due diligence" investigation of CU) and
the expense of any special audits incident to or required by such registration,
all of which are herein called "Selling Expenses." CU shall pay all Registration
Expenses and the selling holder or holders of Restricted Stock being registered
shall pay all Selling Expenses.
Section 3.8 Indemnification. In the event of a registration of any of
the Restricted Stock under the Securities Act (or any successor Federal
securities law) pursuant to this Article III, CU will indemnify and hold
harmless each underwriter of such Restricted Stock, Home and its Affiliates as
the transferors of the Restricted Stock or any portion thereof to underwriters,
and each other person, if any, who controls such seller, assignor or underwriter
within the meaning of Section 15 of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such seller,
underwriter, assignor or controlling person may become subject under the
Securities Act (or such successor law) or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such Restricted Stock
shall have been registered under the Securities Act (or such successor law), any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; and will reimburse such
seller, transferor and underwriter and each such controlling person for any
legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that CU will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, said preliminary prospectus or said
prospectus or said amendment or supplement in reliance upon and in conformity
with written information furnished to CU through an instrument executed by such
seller, transferor or underwriter specifically for use in the preparation
thereof; and provided further that if any losses, claims, damages or liabilities
arise out of or are based
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upon an untrue statement, alleged untrue statement, omission or alleged omission
contained in any preliminary prospectus which did not appear in the final
prospectus, CU shall not have any such liability with respect thereto to such
seller, transferor or underwriter or any person who controls such seller,
transferor or underwriter within the meaning of Section 15 of the Securities Act
if such seller, transferor or underwriter or any person on their behalf
delivered a copy of the preliminary prospectus to the person alleging such
losses, claims, damages or liabilities and failed to deliver a copy of the final
prospectus, as amended or supplemented if it has been amended or supplemented,
to such person at or prior to the written confirmation of the sale to such
person.
In the event of any registration of any Restricted Stock under the
Securities Act (or a successor Federal securities law) pursuant to this Article
III, each seller of such Restricted Stock (other than any underwriter or dealer
purchasing Underlying Shares), and Home and its Affiliates, as transferors of
Restricted Stock, severally and not jointly, will indemnify and hold harmless
CU, each person, if any who controls CU within the meaning of Section 15 of the
Securities Act, each officer of CU who signs the registration statement and each
director of CU against any and all such losses, claims, damages, or liabilities
arising out of or based upon any untrue statement or alleged untrue statement in
or omission or alleged omission from any such registration statement,
prospectus, amendment or supplement, if the untrue statement or omission or
alleged untrue statement or omission in respect of which such loss, claim,
damage or liability is asserted was made in reliance upon and in conformity with
information furnished in writing to CU by or on behalf of such seller or
transferor specifically for use in connection with the preparation of such
registration statement, preliminary prospectus, prospectus, amendment or
supplement; provided, however, that, if any losses, claims, damages or
liabilities arise out of or are based upon an untrue statement, alleged untrue
statement, omission or alleged omission contained in any preliminary prospectus
which did not appear in the final prospectus, such seller or transferor shall
not have any such liability with respect thereto to CU, any person who controls
CU within the meaning of Section 15 of the Securities Act, any officer of CU who
signed the registration statement of any director of CU if CU or any person on
their behalf delivered a copy of the preliminary prospectus to the person
alleging such losses, claims, damages or liabilities and failed to deliver a
copy of the final prospectus, as amended or supplemented if it has been amended
or supplemented, to such person at or prior to the written confirmation of the
sale to such person; and provided further that the liability of any such seller
or transferor so to indemnify shall be limited to an amount equal to the amount
received by such seller upon the sale of such Restricted Stock pursuant to such
registration statement, or by such transferor from the seller, as the case may
be.
Payments in respect of indemnifications required by this Section 3.8
shall be made by periodic payments during the course of the investigation or
defense, as and when bills are received or expenses incurred. Any party which
proposes to assert the right to be indemnified under this Section 3.8 will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim is to be made against
an indemnifying party under this Section 3.8, notify each such indemnifying
party of the commencement of such action, suit or proceeding, enclosing a copy
of all papers served, but the omission so to notify such indemnifying party of
any such action, suit or proceeding shall not relieve it from any liability
which
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it may have to any indemnified party otherwise than under this Section 3.8. In
case any such action, suit or proceeding shall be brought against any
indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate in, and, to the
extent that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof with counsel reasonably satisfactory to
such indemnified party, and after notice from such indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its own counsel in any such
action, but the fees and expenses of such counsel shall be at the expense of
such indemnified party, when and as incurred, unless (i) the employment of
counsel by such indemnified party has been authorized in writing by the
indemnifying party, (ii) the indemnified party shall have reasonably concluded
that there may be a conflict of interest between the indemnifying party and the
indemnified party in the conduct of the defense of such action (in which case
the indemnifying party shall not have the right to direct the defense of such
action on behalf of the indemnified party) or (iii) the indemnifying party shall
not in fact have employed counsel to assume the defense of such action. An
indemnifying party shall not be liable for employed counsel to assume the
defense of such action. An indemnifying party shall not be liable for any
settlement of any action or claim effected without its consent. In no event
shall an indemnifying party be required to pay for more than one counsel for an
indemnified party, exclusive of local counsel.
Section 3.9 Obligations of CU with Respect to Underwritten Offering. In
the event that Restricted Stock shall be sold pursuant to a registration
statement in an underwritten offering pursuant to Section 3.5, CU agrees to
enter into an underwriting agreement containing customary representations and
warranties with respect to the business and operations of an issuer of the
securities being registered and customary covenants and agreements to be
performed by such issuer, including, without limiting the generality of the
foregoing, customary provisions with respect to indemnification by CU of the
underwriters of such offering. CU shall have the right to approve the managing
underwriters for such offering (which in no event shall include an affiliate of
Home); provided, however, that such approval shall not be unreasonably withheld.
Section 3.10 Rule 144 Requirements. CU shall undertake to make publicly
available and available to the holders of Restricted Stock, pursuant to Rule 144
of the SEC under the Securities Act, such information as shall be necessary, and
to take such further action as any such holder may reasonably request, to enable
the holders of Restricted Stock to make sales of Restricted Stock pursuant to
the Rule. CU shall furnish to any holder of Restricted Stock upon request (after
the preceding sentences shall have become applicable), a written statement
executed by CU as to the steps it has taken to comply with the current public
information requirements of Rule 144.
Section 3.11 Rights of First Refusal.
(a) In the event Home or its Affiliates intend, at any time
after the occurrence of an Acquisition Event to sell, transfer or dispose of any
Restricted Stock (other than
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to an Affiliate of Home in a transaction not intended to circumvent the transfer
restrictions contained in this Agreement) other than (i) pursuant to a sale or
transfer of Warrants to one or more underwriters or dealers in accordance with
Section 3.4(c) (in which case Section 3.11(b) shall govern) or (ii) at any time
after CU has failed for any reason to repurchase such Restricted Stock pursuant
to Article II hereof on the closing date scheduled for such repurchase, then:
(i) Home shall notify CU in writing of its or its
Affiliate's intention to sell, transfer or dispose of such Restricted Stock
specifying the number of shares or amount of Warrants, as the case may be,
proposed to be disposed of, the identity or identities of the prospective
purchaser or purchasers thereof, the proposed purchase price therefor and the
material terms of any agreement relating thereto (the "Sale Notice"); and
(ii) CU shall have the right, by written notice of its
exercise of its right of first refusal given to Home within 15 calendar days
after CU's receipt of such notice of intention from Home, to purchase (or to
cause a Person designated by CU to purchase) all, but not less than all of, the
Restricted Stock specified in such notice of intention for cash at the gross
price set forth therein (including broker's commissions and other transaction
costs of Home or its Affiliate to be paid or absorbed by the prospective
purchaser) if the terms set forth in such notice of intention provide for a cash
sale. If the purchase price specified in such notice of intention include any
property other than cash, the purchase price at which CU shall be entitled to
purchase shall be (x) the amount of cash included in the purchase price
specified in such notice of intention plus (y) property, to the extent feasible,
substantially similar to the property described in such notice of intention and
in any case of equivalent value to such property (as agreed to by CU and Home,
or as determined by a nationally recognized investment banking firm selected by
Home and CU).
If CU shall have exercised its right of first refusal under this
paragraph (a) (including the designation of another purchaser as referred to in
the next subparagraph), the closing of the purchase of the Restricted Stock as
to which such right CU shall have been exercised shall take place as promptly as
practicable, but in no event more than 10 Business Days after CU gives notice of
such exercise, and if such closing does not occur within such 10 days, such
right of first refusal provided for herein (including any assignment thereof)
shall be null and void and of no further force and effect with respect to such
Restricted Stock and this Section 3.11 shall no longer apply to any sale or
dispo sition or proposed sale or disposition of such Restricted Stock; provided
that if prior notification to or approval of the Federal Reserve Board or any
other regulatory authority is required in connection with such purchase, CU
shall promptly file the required notice or application for approval and shall
expeditiously process the same and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which, as the case
may be, (i) any required notification period has expired or been terminated, or
(ii) such approval has been obtained and, in either event, any requisite waiting
period shall have passed.
If CU elects not to exercise, or fails to exercise or cause to be
exercised, its right of first refusal provided in this paragraph (a) within the
time specified for such exercise or if the Federal Reserve Board or any other
regulatory authority disapproves of CU's proposed purchase, Home and
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its Affiliates shall be free thereafter for a period of 90 days to consummate
the sale, transfer or other disposition with any purchaser or purchasers of the
Restricted Stock who shall have been specified in the sale notice at the price
(or at any price in excess of such price) and on substantially the terms
specified therein.
The right of first refusal provided for in this paragraph (a) may only
be exercised with respect to the initial sale, transfer or other disposition of
the Restricted Stock by Home or an Affiliate (whether in blocks or as a whole)
to a person that is not an Affiliate of Home and not to subsequent sales,
transfers or other dispositions by purchasers of Restricted Stock.
(b) If Home or its Affiliates at any time propose to transfer
any Warrants to any underwriters or dealers pursuant to the provisions of
Section 3.4, other than at any time after CU has failed for any reason to
repurchase such Warrants pursuant to Article II hereof on the closing date
scheduled for such repurchase, then Home shall first notify CU in writing of
such intention, specifying the Warrants which it proposes to sell or transfer
and the name or names of the proposed dealers or of the proposed managing
underwriters in the underwriting syndicate to which the sale or transfer is
proposed to be made. CU shall have the right, exercisable by written notice
given to Home 15 calendar days after CU's receipt of notice from Home pursuant
to the immediately preceding sentence, to repurchase, or to cause a third party
designated by CU to purchase, all, but not fewer than all, the Warrants proposed
to be sold or transferred on the terms and conditions hereinafter set forth. Any
notice given by CU of exercise of its repurchase rights under this paragraph (b)
shall specify a place in Los Angeles and a Business Day not earlier than 10 days
and not later than 15 days after the date of such notice for the closing of the
repurchase of the Warrants being repurchased. The purchase price payable to CU
or its designee for the repurchase of Warrants pursuant to this paragraph (b)
shall be a cash price equal to the product of (x) the number of Underlying
Shares covered by the relevant Warrants (calculated as of the date of the
closing of the repurchase) and (y) the Share Price on such date. At the closing
of a sale of Warrants pursuant to the foregoing provisions, CU or its designee
will make payment to Home of the aggregate price for the Warrants to be
repurchased in one of the manners set forth in Section 2.1(c). At such closing,
Home shall deliver to CU or its designee the certificates representing the
Warrants to be repurchased and CU shall deliver to Home replacement certificates
representing the Warrants (if any) which are not to be repurchased but were
covered by the certificate or certificates surrendered by Home. Any election by
CU pursuant to this paragraph to exercise its repurchase rights in respect of
Warrants shall be irrevocable. In the event CU fails timely to exercise its
repurchase rights in respect of Warrants within the period specified above
during which it must do so or notifies Home in writing prior to the expiration
of such period that it does not intend to exercise such rights or its designee
fails to repurchase Warrants on the date set for the closing of such a purchase,
Home and its Affiliates shall be free thereafter to consummate the sale and
transfer of the Warrants specified in this notice to CU under this paragraph to
any underwriters or dealers who agree to exercise the Warrants and sell the
Underlying Shares in accordance with the provisions of Section 3.4(c), and this
Section 3.11 shall no longer apply to such sale or transfer of such Warrants.
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(c) Home shall have the right to withdraw any notice given by it
pursuant to this Section 3.11 at any time before CU shall have given notice of
its intention to exercise its right of first refusal hereunder (including by
designation of another purchaser).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CU
CU represents and warrants to Home that:
Section 4.1 Authorization of Agreement; No Conflicts.
(a) The execution and delivery of this Agreement by CU and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of CU. This Agreement has been
duly executed and delivered by CU and constitutes a valid and binding obligation
of CU, enforceable in accordance with its terms.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with, or
result in any violation of or default or loss of a material benefit under any
provision of the articles of incorporation, articles or association or bylaws of
CU or CU Bank or, except for the necessity of obtaining Requisite Regulatory
Approvals, any material mortgage, indenture, lease agreement or other material
instrument or any permit, concession, grant, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to CU or
CU Bank or their respective properties, other than any such conflict, violation,
default or loss which will not have a material adverse effect on CU or CU Bank.
No material consent, approval, order or authorization of, or registration,
declaration or filing with, any governmental authority is required in connection
with the execution and delivery of this Agreement by CU and CU Bank or the
consummation by CU of the transactions contemplated hereby except for any
approvals required to be obtained pursuant to the BHC Act or the Policy State
ment of the Board of Governors of the Federal Reserve System on Nonvoting Equity
Investments by Bank Holding Companies, 12 C.F.R. Section 225.143 (the "FRB
Guidelines"), or any other applicable laws, for the execution and delivery of
this Agreement and the issuance of the Warrants by CU.
Section 4.2 Authorized Stock CU has taken all necessary corporate and
other action to authorize and reserve and, subject to obtaining the governmental
and other approvals and consents referred to herein, to permit it to issue, and,
at all times from the date hereof until the obligation to deliver Common Stock
upon the exercise of the Warrants terminates, will have reserved for issuance,
upon exercise of the Warrants, shares of Common Stock necessary for Home to
exercise the Warrants, and CU will take all necessary corporate action to
authorize and reserve for issuance all additional shares of Common Stock or
other securities which may be issued pursuant to this Agreement. The shares of
Common Stock to be issued upon due exercise of the Warrants, including all
additional shares of Common Stock or other securities which may be issuable
pursuant to this
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Agreement, upon issuance pursuant hereto, shall be duly and validly issued,
fully paid and nonassessable, and shall be delivered free and clear of all
liens, claims, charges and encumbrances of any kind or nature whatsoever,
including any preemptive rights of any stockholder of CU.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF HOME
Home represents and warrants to CU that:
Section 5.1 Due Execution of Agreement; No Conflicts.
(a) This Agreement has been duly executed and delivered by Home
and constitutes a valid and binding obligation of Home, enforceable in
accordance with its terms.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with, or
result in any violation of or default or loss of a material benefit under, any
provision of the certificate of incorporation or By-laws of Home or, except for
the necessity of obtaining Requisite Regulatory Approvals, any material
mortgage, indenture, lease, agreement or other material instrument, or any
permit, concession, grant, franchise, license, judgment, order decree, statute,
law, ordinance, rule or regulation applicable to Home or its respective
properties, other than any such conflict, violation, default or loss which (i)
will not have a material adverse effect on Home and its Subsidiaries taken as a
whole. No material consent, approval, order or authorization of, or
registration, declaration or filing with, any Govern mental Entity is required
in connection with the execution and delivery of this Agreement by Home or the
consummation by Home of the transactions contemplated hereby, except for (a)
filings required in order to obtain Requisite Regulatory Approvals, and (b) any
approvals required to be obtained pursuant to the BHC Act, or the FRB Guidelines
or any other applicable law for the execution and delivery of this Agreement by
CU, Home and the issuance of the Warrants.
ARTICLE VI
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set forth
below (in their singular and plural forms as applicable) shall have the meanings
set forth below.
"Affiliate" or "affiliate" shall mean, with respect to any corporation,
any person that, directly or indirectly, controls or is controlled by or is
under common control with such corporation.
"BHC Act" means the Bank Holding Company Act of 1956, as amended.
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"Business Day" shall mean any day, other than a Saturday, Sunday or
legal holiday in the State of California, on which banks are open for
substantially all their banking business in Los Angeles.
"Change in Bank Control Act" means the Change in Bank Control Act of
1978, as amended.
"Covered Shares" shall mean on any date, with respect to any Warrants,
the maximum number of shares of Common Stock that would be purchasable upon the
exercise on such date of such Warrants, assuming that such Warrants may be
exercised on such date to purchase the maximum number of shares of Common Stock
purchasable pursuant to the terms thereof (including the limitations contained
in the second paragraph of the certificate evidencing each such Warrant) without
regard to any provision therein (other than such limitations) or in this
Agreement or in any law limiting the right of any holder of such Warrants to
acquire shares otherwise purchasable thereunder.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"Governmental Entity" shall mean any court, administrative agency or
commission or other governmental authority or instrumentality.
"Market Value" shall mean, on any date, the average of the closing sale
prices of a share of Common Stock on the principal securities exchange on which
the Common Stock is traded, or, if the Common Stock is not at the time listed on
any national securities exchange, as reported by the National Association of
Securities Dealers Automated Quotation System ("NASDAQ"), on the 10 trading days
immediately preceding such date, (or such fewer number of trading days
immediately preceding such date for which shares of Common Stock have been
listed for trading on such exchange or quoted on NASDAQ); provided, however,
that if Home seeks a determination of the fair market value of a share of Common
Stock pursuant to the provisions of Section 2.2, Market Value shall, if required
pursuant to the terms of such Section, mean the fair market value of a share of
Common Stock on such date determined pursuant to such Section.
"Person" or "person" shall mean an individual, corporation,
partnership, joint venture, trust or unincorporated organization, or a
government or any agency or political subdivision thereof.
"Regulatory Authority" shall mean any United States federal or state
government or governmental authority the approval of which is legally required
for consummation of the Merger.
"Requisite Regulatory Approvals" shall mean all material permits,
approvals and consents required to be obtained, and all waiting periods required
to expire, prior to the consummation of the issuance of the Covered Shares under
applicable federal laws of the United States or applicable laws of any state
having jurisdiction over Home or CU.
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"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Share Price" shall mean, with respect to any Warrants, the amount by
which, on the date of the Acquisition Event triggering the exercisability of the
Warrants (i) the Warrant Price on such date is less than (ii) the greatest of:
(i) the Market Value of a share of Common Stock on such
date; and
(ii) the highest price paid on or prior to such date for a
share of Common Stock (including in any merger or consolidation) by a purchaser
or group of purchasers acting in concert of 50% or more of the outstanding
shares of Common Stock, or, in the case of a purchaser of 50% or more of the
consolidated assets of CU (as shown on the books of CU), the Market Value of a
share of Common Stock on the date of consummation of such asset acquisition.
"Subsidiary" shall mean, with respect to any corporation (the
"parent"), any other corporation, association or other business entity of which
more than 50% of the shares of the Voting Stock are owned or controlled,
directly or indirectly, by the parent or by one or more Subsidiaries of the
parent, or by the parent and one or more of its Subsidiaries.
"Voting Stock" shall mean the stock entitling the holders thereof to
vote in the election of the directors or trustees of the corporation,
association, or other business entity in question, except that it shall not
include any stock so entitling the holders thereof to vote only upon the
happening of a contingency, whether or not such contingency has occurred.
"Warrant Call Price" shall mean, when used with respect to any Warrant,
the product of (i) the number of Covered Shares on such date and (ii) the Share
Price on such date; provided that the Warrant Call Price with respect to any
Warrant shall in no event exceed (x) the quotient obtained by dividing
$5,000,000 by the number of Covered Shares subject to all the outstanding
Warrants multiplied by (y) the number of Covered Shares subject to such Warrant.
ARTICLE VII
TERMINATION
Section 7.1 Termination. Subject to Section 7.2, this Agreement may be
terminated in the following circumstances:
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(a) at the effective time of the Merger, as set forth in the
Merger Agreement;
(b) at the termination of the Merger Agreement prior to the
occurrence of an Acquisition Event; or
(c) two years after the occurrence of an Acquisition Event.
Section 7.2 Effect of Termination. In the event of termination of this
Agreement pursuant to Section 7.1(c), the rights of the parties hereto shall
forthwith become void; provided that, if the Agreement shall terminate pursuant
to Section 7.1(c) and any party has filed an application to purchase securities
with any regulatory authority, the Agreement shall not terminate as provided in
Section 7.1(c), but shall remain in full force and effect until the day which is
30 Business Days (plus any applicable waiting periods) after the receipt or
denial of regulatory approval or consent, at which time the Agreement shall then
terminate.
Section 7.3 Indemnification for Breach. Each party to this Agreement
agrees to indemnify and hold harmless the other party against any loss, claim,
damage or liability arising out of or based upon a Default of this Agreement by
such defaulting party in accordance with the procedures set forth in the last
paragraph of Section 3.8 of this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or mailed
by registered or certified mail (return receipt requested) to the parties at the
following addresses (or any such other address for a party as shall be specified
by like notice):
(a) If to CU at:
16030 Ventura Boulevard
Encino, CA 91436
Attn: Stephen G. Carpenter
Fax: (818) 907-5024
with a copy to:
Anita Wolman, Esq.
16030 Ventura Boulevard
Encino, CA 91436
Fax: (818) 907-5024
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(b) If to Home at:
2633 Cherry Avenue
Signal Hill, CA 90806
Attn: James Staes
Phone: (310) 988-9600
Fax: (310) 426-4526
with a copy to:
Manatt, Phelps & Phillips
11355 West Olympic Boulevard
Los Angeles, California 90064
Attn: Barbara S. Polsky, Esq.
Fax: (310) 312-4224
Section 8.2 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 8.3 Amendment. This Agreement may be amended by the parties
hereto, by action taken by their respective Boards of Directors or the duly
authorized committees thereof. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto. The
parties hereto agree to make such amendments as may be necessary to respond to
the request of any Regulatory Authority with respect to this Agreement.
Section 8.4 Waiver. Any term or provision of this Agreement may be
waived in writing at any time by the party which is, or whose shareholders are,
entitled to the benefits thereof.
Section 8.5 Miscellaneous. This Agreement (including the documents and
instruments referred to herein) (a) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof; (b) except as
contemplated in this Agreement, is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder; and (c) except as
contemplated in this Agreement, shall not be assigned by operation of law or
otherwise. CU and Home agree that, except as required by law, it shall not issue
any press release with respect to the transactions contemplated by this
Agreement without consulting with each other party hereto.
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Section 8.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
IN WITNESS WHEREOF, CU and Home have caused this Agreement to be signed
by their respective officers thereunto duly authorized, all as of the date first
above written.
CU BANCORP
By:
---------------------------------
HOME INTERSTATE BANCORP
By:
---------------------------------
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EXHIBIT D
WARRANT PURCHASE AGREEMENT
This WARRANT PURCHASE AGREEMENT (the "Agreement"), dated as of January
10, 1996, between CU Bancorp, a California corporation ("CU"), and Home
Interstate Bancorp, a California corporation ("Home") is made with reference to
the following:
RECITALS
A. CU, California United Bank, National Association, a wholly owned
subsidiary of CU ("CU Bank"), Home and Home Bank, a wholly owned subsidiary of
Home ("Home Bank"), have entered into an Agreement and Plan of Reorganization
(the "Merger Agreement") whereby Home and Home Bank would be merged with and
into CU and CU Bank, respectively (collectively, the "Merger").
B. As partial consideration to CU for entering into the Merger
Agreement, Home has agreed to issue to CU a warrant entitling the holder thereof
to purchase up to 19.9% (or 1,082,224 shares) of the outstanding common stock of
Home ("Common Stock"), assuming the exercise of all Warrants (as hereafter
defined), and all other options, warrants or other securities convertible into
Common Stock, subject to such restrictions and conditions as may be imposed by
bank regulatory authorities having jurisdiction over CU and Home, respectively.
C. Concurrent with the execution of this Agreement, CU and Home shall
enter into a separate warrant agreement, with substantially identical terms and
conditions as are set forth in this Agreement, pursuant to which CU shall issue
to Home a warrant entitling the holder thereof, upon the occurrence of certain
events as set forth in such agreement, to purchase up to 19.9% (on a fully
diluted basis) of the outstanding common stock of CU.
D. Terms used herein and not otherwise defined shall have the
meanings ascribed to them in Article VI hereof.
In consideration of these premises and of the representations,
covenants and agreements hereinafter set forth, Home and CU hereby agree as
follows:
ARTICLE I
ISSUANCE AND SALE OF WARRANT
Section 1.1 Issuance and Sale of the Warrant. Subject to the terms and
conditions of this Agreement, and in reliance upon the representations and
warranties hereinafter set forth, and in consideration for the execution and
delivery of the Merger Agreement, Home hereby issues to CU one or more warrants
(such warrants, together with any warrants issued pursuant to Section 1.4, the
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"Warrants") entitling the holder thereof to purchase in the aggregate 1,082,224
duly authorized and newly issued shares of Common Stock, subject to adjustment
as provided below. The Warrants being issued at the time of the execution of
this Agreement will be evidenced by a single certificate in the form of Exhibit
A hereto. All Warrants issued pursuant to Section 1.4 will be evidenced by one
or, at CU's request, more certificates in the form of Exhibit A hereto, dated
the date of their issuance, exercisable at the adjusted exercise price at the
time in effect for the Warrants issued pursuant to this Section 1.1.
Section 1.2 Warrant Price. The initial exercise price at which shares
of Common Stock may be acquired pursuant to exercise of the Warrants shall be
$12.050 per share (the "Warrant Price"), subject to adjustment as provided in
Section 1.4.
Section 1.3 Exercise of Warrants.
(a) The Warrants may be exercised in whole or in part only after the
occurrence of an Acquisition Event.
(b) As used herein, an "Acquisition Event" means any of the following
events:
(i) any person (other than CU or an Affiliate of CU) shall have
commenced (as such term is defined in Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), or shall have
filed a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to, a tender offer or
exchange offer to purchase any shares of Common Stock such that, upon
consummation of such offer, such person would own or control 10% or
more of the then outstanding Common Stock;
(ii) Home or Home Bank, without having received CU's prior
written consent or except as permitted by the Merger Agreement, shall
have authorized, recommended, proposed or publicly announced an
intention to authorize, recommend or propose, or entered into, an
agreement with any person (other than CU or any Affiliate of CU to (A)
effect a merger, consolidation or similar transaction involving Home or
Home Bank, (B) sell, lease or otherwise dispose of assets of Home or
Home Bank representing 10% or more of the consolidated assets of Home
or Home Bank, or (C) issue, sell or otherwise dispose of (including by
way of merger, consolidation, share exchange or any similar
transaction) securities representing 10% or more of the voting power of
Home or Home Bank (any of the foregoing an "Acquisition Transaction");
(iii) any person (other than Home or Home Bank or CU or CU Bank
in a fiduciary capacity) shall have acquired beneficial ownership (as
such term is defined in Rule 13d-3 under the Exchange Act) or the right
to acquire beneficial ownership of, or any "group" (as such term is
defined in the Exchange Act) shall have been
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formed which beneficially owns or has the right to acquire beneficial
ownership of, 10% or more of the then outstanding Common Stock; or
(iv) the holders of Common Stock shall not have approved the
Merger Agreement at the meeting of such stockholders held for the
purpose of voting on the Merger Agreement, such meeting shall not have
been held or shall have been canceled prior to termination of the
Merger Agreement or Home's Board of Directors shall have withdrawn or
modified in a manner adverse to CU the recommendation of Home's Board
of Directors with respect to the Merger Agreement, in each case after
any person (other than CU) shall have (A) publicly announced a
proposal, or publicly disclosed an intention to make a proposal, to
engage in an Acquisition Transaction or (B) filed an application (or
given a notice), whether in draft or final form, under the BHC Act or
the Change in Bank Control Act for approval to engage in an Acquisition
Transaction.
As used in this Agreement, "person" shall have the meaning specified in Sections
3(a)(9) and 13(d)(3) of the Exchange Act.
(c) In the event CU is entitled to and wishes to exercise the
Warrants, it shall send to Home a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of shares it
will purchase pursuant to such exercise and (ii) a place and date not earlier
than three Business Days nor later than 60 Business Days from the Notice Date
for the closing of such purchase (the "Closing Date"); provided that if prior
notification to or approval of the Federal Reserve Board or any other regulatory
agency is required in connection with such purchase, CU shall promptly file the
required notice or application for approval, shall promptly notify Home of such
filing, and shall expeditiously process the same and the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which any required notification periods have expired or been terminated or such
approvals have been obtained and any requisite waiting period or periods shall
have passed.
(d) At the closing referred to in subsection (c), CU shall pay to
Home the aggregate purchase price for the shares of Common Stock purchased
pursuant to the exercise of the Warrants in immediately available funds by wire
transfer to a bank account designated by Home, provided that failure or refusal
of Home to designate such a bank account shall not preclude CU from exercising
the Warrants.
(e) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (d), Home shall deliver to CU a
certificate or certificates representing the number of shares of Common stock
purchased by CU.
(f) Upon the giving by CU to Home of the written notice of exercise
of the Warrants provided for under subsection (c) and the tender of the
applicable purchase price in
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immediately available funds, CU shall be deemed to be the holder of record of
the shares of Common Stock issuable upon such exercise, notwithstanding that the
stock transfer books of Home shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered to
CU. Home shall pay all expenses, and any and all federal, state and local taxes
or other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates hereunder in the name of CU.
Section 1.4 Additional Warrants; Adjustments to Warrant Price and
Number of Shares. The number of shares to which the Warrants may be exercised
and the Warrant Price shall be subject to adjustment as provided below:
(a) Additional Warrants. If Home shall, on one or more occasions
after the date hereof, issue additional shares of Common Stock, and if, as a
result of any such issuance the shares of Common Stock issued or issuable upon
the exercise of Warrants issued pursuant to Section 1.1 hereof shall represent
less than 19.9% of the outstanding Common Stock, assuming the exercise of all
Warrants and all other options, warrants or other securities convertible into
Common Stock, Home shall issue to CU, promptly upon CU's demand, without further
consideration, Warrants to purchase a number of authorized but unissued shares
of Common Stock which, when added to the shares issued or issuable upon the
exercise of such previously issued Warrants, would represent 19.9% as the case
may be of the outstanding Common Stock.
(b) Adjustment for Stock Splits and Combinations. If Home at any time
or from time to time after the date of this Agreement effects a subdivision of
the Common Stock, the Warrant Price then in effect immediately before that
subdivision shall be proportionately decreased, and conversely, if Home at any
time or from time to time after the date of this Agreement combines the
outstanding shares of Common Stock, the Warrant Price then in effect immediately
before the combination shall be proportionately increased. Any adjustment under
this subsection (b) shall become effective at the close of business on the date
the subdivision or combination becomes effective.
(c) Adjustment for Certain Dividends and Distributions. In the event
Home at any time or from time to time after the date of this Agreement makes, or
fixes a record date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in additional shares of Common
Stock, then and in each such event the Warrant Price then in effect shall be
decreased as of the time of such issuance or, in the event such a record date is
fixed, as of the close of business on such record date, by multiplying the
Warrant Price then in effect by a fraction (i) the numerator of which is the
total number of shares of Common Stock issued and outstanding immediately prior
to the time of such issuance or the close of business on such record date, and
(ii) the denominator of which shall be the total number of shares of Common
Stock issued and outstanding immediately prior to the time of such issuance or
the close of business on such record date plus the number of shares of Common
Stock issuable in payment of such dividend or distribution; provided, however,
that if such record date is fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the Warrant Price
shall be
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recomputed accordingly as of the close of business on such record date and
thereafter the Warrant Price shall be adjusted pursuant to this subsection (c)
as of the time of actual payment of such dividends or distributions.
(d) Adjustments for Other Dividends and Distributions. In the event
Home at any time or from time to time after the date of this Agreement makes, or
fixes a record date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in securities of Home other
than shares of Common Stock, then in each such event provision shall be made so
that the holders of Warrants shall receive upon exercise thereof, in addition to
the number of shares of Common Stock receivable thereupon, the amount of
securities of Home which they would have received had their Warrants been
converted into Common Stock on the date of such event and had they thereafter,
during the period from the date of such event to and including the date of
exercise of the Warrants, retained such securities receivable by them as
aforesaid during such period, subject to all other adjustments called for during
such period under this Section 1.4.
(e) Adjustment for Reclassification, Exchange and Substitution. If
the Common Stock issuable upon the exercise of the Warrants is changed into the
same or a different number of shares of any class or classes of stock, whether
by recapitalization, reclassification or otherwise (other than a subdivision or
combination of shares or stock dividend or a reorganization, merger,
consolidation or sale of assets provided for elsewhere in this Section 1.4),
then and in any such event each holder of Warrants shall have the right
thereafter to receive upon exercise of the Warrants the kind and amount of stock
and other securities and property receivable upon such reorganization,
reclassification or other change by holders of the number of shares of Common
Stock into which such Warrants might have been exercised immediately prior to
such reorganization, reclassification or change, all subject to further
adjustment as provided in this Section 1.4.
(f) Reorganization, Mergers, Consolidations and Sales of Assets. If
at any time or from time to time there is a capital reorganization of the Common
Stock (other than a recapitalization, subdivision, combination, reclassification
or exchange of shares provided for elsewhere in this Section 1.4), or a merger
or consolidation of Home with or into another corporation, or the sale of all or
substantially all of Home's properties and assets to any other person, then, as
a part of such reorganization, merger, consolidation or sale, provision shall be
made so that the holders of the Warrants shall thereafter be entitled to receive
upon exercise of the Warrants the number of shares of stock or other securities
or property of Home, or of the successor corporation resulting from such merger
or consolidation or sale, to which a holder of Common Stock deliverable upon
exercise of the Warrants would have been entitled in such capital
reorganization, merger, consolidation or sale. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section
1.4 and the other terms and conditions with respect to the rights of the holders
of the Warrants after the reorganization, merger, consolidation or sale to the
end that the provisions of this Agreement, including this Section 1.4 (including
adjustment of the Warrant Price then in effect and number of shares purchasable
upon exercise of the Warrants) shall be applicable after that event and be as
nearly equivalent to the provisions hereof as may be practicable.
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(g) Sale of Shares Below Warrant Price.
(i) If at any time or from time to time after the date of this
Agreement, Home issues or sells, or is deemed by the express provisions of this
subsection (g) to have issued or sold, Additional Shares of Common Stock (as
hereinafter defined), other than as a dividend or other distribution on any
class of stock as provided in subsection (c) above and other than upon a
subdivision or combination of shares of Common Stock as provided in subsection
(b) above, for an Effective Price (as hereinafter defined) less than the Warrant
Price (or, if an adjusted Warrant Price shall be in effect by reason of a
previous adjustment, then less than such adjusted Warrant Price) then and in
each such case the then existing Warrant Price shall be reduced, as of the
opening of business on the date of such issuance or sale, to a price determined
by multiplying that Warrant Price by a fraction (i) the numerator of which shall
be (A) the number of shares of Common Stock Deemed Outstanding at the close of
business on the day next preceding the date of such issue or sale plus (B) the
number of shares of Common Stock which the aggregate consideration received (or
by express provision hereof deemed to have been received) by Home for the total
number of Additional Shares of Common Stock so issued would purchase at such
Warrant Price, and (ii) the denominator of which shall be the number of shares
of Common Stock Deemed Outstanding at the close of business on the date of such
issuance after giving effect to such issuance of Additional Shares of Common
Stock. For purposes of this paragraph (i), "Common Stock Deemed Outstanding" at
any given time shall mean the sum of (1) the number of shares of Common Stock
actually outstanding at that time, (2) the number of Additional Shares of Common
Stock then deemed to have been issued under paragraphs (iii) or (iv) of this
subsection (g) and (3) the number of shares of Common Stock then issuable upon
exercise of stock options to the extent not already deemed to have been issued
under paragraphs (iii) or (iv) of this subsection (g).
(ii) For the purpose of making any adjustment required under this
subsection (g), the consideration received by Home for any issuance or sale of
securities shall (i) to the extent it consists of cash be computed at the net
amount of cash received by Home after deduction of any expenses payable by Home
and any underwriting or similar commissions, compensation or concessions paid or
allowed by Home in connection with such issue or sale, (ii) to the extent it
consists of property other than cash, be computed at the fair value of that
property as determined in good faith by the Board and (iii) if Additional Shares
of Common Stock, Convertible Securities (as hereinafter defined) or rights or
options to purchase either Additional Shares of Common Stock or Convertible
Securities are issued or sold together with other stock or securities or other
assets of Home for a consideration which covers both, be computed as the portion
of the consideration so received that may be reasonably determined in good faith
by the Board to be allocable to such Additional Shares of Common Stock,
Convertible Securities or rights or options.
(iii) For the purpose of the adjustment required under this
subsection (g), if at any time or from time to time after the date of this
Agreement Home issues or sells any rights or options for the purchase of, or
stock or other securities convertible into, Additional Shares of Common Stock
(such convertible stock or securities being hereinafter referred to as
"Convertible Securities"), then in each case Home shall be deemed to have issued
at the time of the
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issuance of such rights or options or Convertible Securities the maximum number
of Additional Shares of Common Stock issuable upon exercise or conversion
thereof and to have received as consideration for the issuance of such shares an
amount equal to the total amount of the consideration, if any, received by Home
for the issuance of such rights or options or Convertible Securities plus, in
the case of such options or rights, the amounts of consideration, if any,
payable to Home upon the exercise of such options or rights and, in the case of
Convertible Securities, the amounts of consideration, if any, payable to Home
upon conversion (other than by cancellation of liabilities or obligations
evidenced by such Convertible Securities). No further adjustment of the Warrant
Price, adjusted upon the issuance of such rights, options or Convertible
Securities, shall be made as a result of the actual issuance of Additional
Shares of Common Stock on the exercise of any such rights or options or the
conversion of any such Convertible Securities. If any such rights or options or
the conversion privilege represented by any such Convertible Securities shall
expire or be canceled without having been exercised, the Warrant Price adjusted
upon the issuance of such options, rights or Convertible Securities shall be
readjusted to the Warrant Price which would have been in effect had an
adjustment been made on the basis that the only Additional Shares of Common
Stock so issued were the Additional Shares of Common Stock, if any, actually
issued or sold on the exercise of such rights or options or rights of conversion
of such Convertible Securities, and such Additional Shares of Common Stock, if
any, were issued or sold for the consideration actually received by Home upon
such exercise, plus the consideration, if any, actually received by Home for the
granting of all such rights or options, whether or not exercised, plus the
consideration received for issuing or selling the Convertible Securities
actually converted plus the consideration, if any, actually received by Home
(other than by cancellation of liabilities or obligations evidenced by such
Convertible Securities) on the conversion of such Convertible Securities.
(iv) For the purpose of the adjustment required under this
subsection (g), if at any time or from time to time after the date of this
Agreement Home issues or sells any rights or options for the purchase of
Convertible Securities, then in each such case Home shall be deemed to have
issued at the time of the issuance of such rights or options the maximum number
of Additional Shares of Common Stock issuable upon conversion of the total
amount of Convertible Securities covered by such rights or options and to have
received as consideration for the issuance of such Additional Shares of Common
Stock an amount equal to the amount of consideration, if any, received by Home
for the issuance of such rights or options, plus the minimum amounts of
consideration, if any, payable to Home upon the exercise of such rights or
options and plus the minimum amount of consideration, if any, payable to Home
(other than by cancellation of liabilities or obligations evidenced by such
Convertible Securities) upon the conversion of such Convertible Securities. No
further adjustment of the Warrant Price, adjusted upon the issuance of such
rights or options, shall be made as a result of the actual issuance of the
Convertible Securities upon the exercise of such rights or options or upon the
actual issuance of Additional Shares of Common Stock upon the conversion of such
Convertible Securities. The provisions of paragraph (iii) above for the
readjustment of the Warrant Price upon the expiration of rights or options or
the rights of conversion of Convertible Securities shall apply in like manner to
the rights, options and Convertible Securities referred to in this paragraph
(iv).
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(v) "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by Home after the date of this Agreement whether or not
subsequently reacquired or retired by Home, other than (i) shares of Common
Stock issued upon exercise of the Warrants and (ii) shares issued by way of
dividend or other distribution on shares of Common Stock excluded from the
definition of Additional Shares of Common Stock by the foregoing clause or
shares of Common Stock resulting from any subdivision or combination of shares
of Common Stock so excluded, or shares issued by way of dividend or other
distribution on, or resulting from any subdivision or combination of, shares of
Common stock excluded from the definition of "Additional Shares of Common Stock"
by the foregoing provision. The "Effective Price" of Additional Shares of Common
Stock shall mean the quotient determined by dividing the total number of
Additional Shares of Common Stock issued or sold, or deemed to have been issued
or sold by Home under this subsection (g), into the aggregate consideration
received or deemed to have been received by Home for such issue under this
subsection (i).
ARTICLE II
REPURCHASE OF WARRANTS AND LIMITATIONS ON SALE
Section 2.1 Repurchase of Warrants.
(a) Prior to the occurrence of an Acquisition Event, Home shall
have no right to repurchase the Warrants and CU shall have no right to require
Home to repurchase the Warrants.
(b) At any time after the occurrence of an Acquisition Event,
Home shall have the right to purchase (or to cause a person designated by Home
to purchase), and CU shall have the right to require that Home repurchase (or,
if Home shall so elect, cause a person designated by Home to purchase), (i) all
(but not fewer than all) the Warrants at the time beneficially owned by CU and
its Affiliates at the Warrant Call Price in effect for such Warrants on the date
of closing (as provided below) and (ii) all (but not fewer than all) of the
shares of Common Stock purchased by CU and its Affiliates pursuant to this
Agreement with respect to which CU has beneficial ownership at a price equal to
the aggregate Market Value for such shares as of the date of closing (as
provided below). Any purchase pursuant hereto shall take place on a Business Day
specified in a notice given by Home to CU or by CU to Home, as the case may be
(but in no event prior to the 30th day following the date of any such notice to
CU or later than the 30th day following the date of any such notice to Home).
(c) The closing of any repurchase of Warrants pursuant to this
Section 2.1 shall take place at 10:00 a.m. Los Angeles Time, on the date set
forth in the applicable notice given by Home or CU, as the case may be, at the
office of CU at the address set forth in Section 8.1. The amount payable to CU
and its Affiliates upon any repurchase of Warrants shall be paid in lawful money
of the United States by a federal funds check or a wire transfer of immediately
available funds to an account designated by CU. Upon receipt of such payment, CU
shall deliver or cause to
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be delivered to Home the certificates representing all the Warrants being
repurchased free and clear of any liens, security interests, charges or
encumbrances.
Section 2.2 Certain Determinations of Market Value. The calculation of
the Market Value, as required herein, shall be calculated in accordance with
this section 2.2 In the event that Market Value is to be determined pursuant to
the terms hereof and there is not an established trading market for shares of
Common Stock, or more than 50% of the outstanding shares of Common Stock are
held beneficially or of record by persons, each of whom owns (individually or
together with members of any group of which such persons are members) 5% or more
of the outstanding shares of Common Stock, then CU may elect to have an
investment banking firm mutually agreeable to Home and CU determine (i) whether,
in the opinion of such investment banking firm, as a result of the absence of an
established trading market or the concentration of stock holdings, Market Value
(determined in accordance with the provisions of the definition of Market Value
in Article VI) does not accurately reflect the fair market value of a block of
1,000 shares of Common Stock on the date as of which Market Value is to be
determined, and (ii) if such investment banking firm determines that Market
Value (as so determined) does not accurately reflect such fair market value,
such investment banking firm shall make determination of the fair market value
of a share of Common Stock on the date as of which Market Value is to be
determined, based on whatever factors it deems relevant, as soon as possible and
shall promptly give written notice to CU and Home of its determination. The fees
of such investment banking firm in connection with such determination shall be
paid by CU. Such determination shall be final and binding on the parties hereto
and the fair market value so determined shall, if higher than the Market Value
that would otherwise apply, be the Market Value of a share of Common Stock. In
the event such determination is not transmitted to CU and Home prior to the
scheduled closing date with respect to any repurchase of Warrants or Common
Stock, the scheduled closing of such transaction shall not be postponed, and
Home shall make such payments on the closing date as are required based on the
Market Value of a share of Common Stock determined as if CU had not made an
election under this Section 2.4. Within three Business Days after such
investment banking firm's determination is made and conveyed to CU and Home in
writing, Home shall make a payment to CU, or CU shall make a payment to Home, as
the case may be, equal to the difference between the amount paid on the closing
date and the amount that would have been so payable had such amount been
determined on the basis of such investment banking firm's determination of the
Market Value of a share of Common Stock.
Section 2.3 Limit on Proceeds. CU agrees, as long as Home shall not
have defaulted in its obligations to repurchase Warrants pursuant to Section
2.1, to pay over to Home any amount by which the profits received by CU and its
Affiliates upon the sale or transfer of Warrants (net of all selling expenses,
underwriting discounts, and commissions and other expenses incurred by CU in
connection with such exercise and sale) shall exceed $5,000,000.
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ARTICLE III
RESTRICTIONS ON TRANSFERABILITY OF STOCK;
COMPLIANCE WITH SECURITIES ACT OF 1933
Section 3.1 Restrictions on Transferability. The Warrants acquired by
CU or any Affiliate of CU pursuant to this Agreement and the Common Stock
issuable upon exercise of such Warrants and any shares of capital stock received
or issued in respect thereof, including, without limitation, securities issued
upon any stock split, stock dividend, recapitalization, merger, consolidation or
similar event (such Warrants and all such shares of Common Stock and securities
being collectively called the "Restricted Stock") shall not be hypothecated, nor
shall any claim or liability exist, nor shall any agreement, written or oral, be
entered into by CU or any Affiliate of CU which would cause any claim or
liability to exist with respect to the Restricted Stock, and the Restricted
Stock shall not be transferred except upon the conditions, to the extent
applicable, specified in this Article III. CU will cause any proposed transferee
of Restricted Stock held by CU or any other Affiliate of CU to agree to take
ownership of such Restricted Stock subject to the provisions, to the extent
applicable, of this Article III; provided, however, that the provisions of this
Article shall cease to apply to any Restricted Stock which shall have been sold
in a registered public offering in accordance with the provisions of this
Article III. CU represents that it is purchasing the Restricted Stock for its
own account and not with a view to or for sale in connection with any
distribution of such Restricted Stock.
Section 3.2 Restrictive Legend; Notice of Proposed Transfers.
(a) Each certificate representing Restricted Stock shall (unless
otherwise permitted by the provisions of paragraph (b) of this Section) be
stamped or otherwise imprinted with a legend in substantially the following
form:
THESE SHARES/WARRANTS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. THESE SHARES/WARRANTS MAY NOT BE SOLD OR TRANSFERRED EXCEPT
PURSUANT TO (i) A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH
IS EFFECTIVE UNDER SAID ACT OR (ii) AN OPINION OF COUNSEL THAT AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT IS AVAILABLE. THE TRANSFERABILITY OF THESE
SHARES/ WARRANTS IS FURTHER SUBJECT TO THE PROVISIONS OF A WARRANT PURCHASE
AGREEMENT DATED AS OF JANUARY 10, 1996, A COPY OF WHICH IS AVAILABLE FOR
INSPECTION AT THE OFFICE OF THE SECRETARY OF HOME INTERSTATE BANCORP.
(b) Each holder of a certificate representing Restricted Stock
by acceptance thereof agrees to comply in all respects with the provisions of
this Section 3.2(b). Prior to any proposed transfer of any Restricted Stock
other than pursuant to a registration under the Securities Act, the holder
thereof shall give written notice to Home of such holder's intention to effect
such transfer. Each such notice shall describe the manner and circumstances of
the proposed transfer of the Restricted Stock to be transferred and shall be
accompanied by an unqualified written
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opinion of counsel reasonably satisfactory to Home to the effect that such
proposed transfer may be effected without registration under the Securities Act.
Subject to Section 3.11 hereof, upon delivery to Home of such notice and such
opinion of counsel, the holder of such Restricted Stock shall be entitled to
transfer such Restricted Stock in accordance with the terms of such notice
delivered by the holder to Home. Each certificate evidencing Restricted Stock
transferred as above provided shall bear the appropriate restrictive legend set
forth in paragraph (a) above, except that such certificate shall not bear such
restrictive legend if the opinion of counsel referred to above shall be to the
further effect that such legend is not required in order to establish compliance
with any provisions of the Securities Act.
Section 3.3 No Transfers Prior to Acquisition Event. Notwithstanding
anything to the contrary set forth in this Agreement or the Restricted Stock,
neither CU nor any Affiliate of CU shall sell, transfer or otherwise dispose of
all or any portion of the Warrants owned by it, other than to an Affiliate of
CU, except after the occurrence of an Acquisition Event; provided, however, that
following an Acquisition Event, if Home or CU shall give notice of its election
to exercise its rights under Section 2.1, then such right of CU and its
Affiliates to sell, transfer or otherwise dispose of the Restricted Stock shall
no longer be exercised unless Home shall have defaulted in its obligation to
repurchase such Restricted Stock on the date specified in any notice.
Section 3.4 Limitations on Transferees and Manner of Transfer.
(a) In the event that CU and its Affiliates become entitled
pursuant to the provisions of Section 3.3 to sell, transfer or otherwise dispose
of Restricted Stock, such Restricted Stock may be sold or transferred (subject
to Section 3.11 hereof) only (i) to a third party (or a third party and its
Affiliates) in a transaction which complies with the provisions of paragraph (b)
of this Section or (ii) to one or more underwriters or dealers in connection
with a broad public distribution complying with the provisions of paragraph (c)
of this Section of the shares of Common Stock issuable pursuant to the exercise
of the transferred Warrants (such shares being hereinafter referred to as the
"Underlying Shares"). The provisions of this Section shall only apply to sales,
transfers or dispositions by CU and its Affiliates, and shall not apply to
sales, transfers or dispositions by transferees of CU or its Affiliates (except
that any sale or disposition by dealers or underwriters shall be conducted in
accordance with the applicable provisions of this Section and further except
that all resales shall be made in accordance with the Securities Act).
(b) CU and its Affiliates shall be entitled, subject to the
other applicable provisions of this Article III (including Section 3.11) and
Section 2.1, to sell or transfer Restricted Stock in one or more transactions
exempt from the registration requirements of Section 5 of the Securities Act;
provided, however, that the aggregate number of shares of Restricted Stock sold
or transferred to any single purchaser and persons known to CU to be Affiliates
of or persons acting in concert with such purchaser in any such transaction
shall be limited to that amount of Restricted Stock which, when taken together
with the Restricted Stock theretofore sold or transferred to such purchaser and
such Affiliates and persons, would not, upon the exercise in full of the
Warrants so transferred, permit the acquisition of more than 2% of the then
outstanding shares of Common Stock,
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determined as of the date of such sale or transfer. For purposes of the
immediately preceding sentence, it shall be assumed that all Warrants, if any,
that already have been sold or transferred by CU and its Affiliates are still
outstanding and have not been exercised in whole or in part to purchase shares
of Common Stock.
(c) Warrants owned by CU and its Affiliates, unless sold to Home
or an Affiliate of Home or in compliance with paragraph (b) of this Section, may
only be sold or transferred to one or more underwriters or dealers in accordance
with the provisions of this paragraph. CU and its Affiliates may, subject to the
terms and conditions set forth in this para graph (c), sell or transfer Warrants
in whole or in part to one or more underwriters or dealers who agree in writing
with CU, prior to the effective time of any such sale or transfer, to exercise
such Warrants and offer and sell the Underlying Shares either (i) to the public
in a public offering registered under the Securities Act (or any successor
federal securities laws) pursuant to a distribution in which no single purchaser
and its Affiliates will, to the knowledge of such underwriters or dealers,
acquire Underlying Shares representing more than 2% of the then outstanding
shares of Common Stock or (ii) in other transactions complying with the
requirements of paragraph (b) above. Notwithstanding any other provision of this
Agreement to the contrary, the exercise of any Warrants transferred to
underwriters or dealers in accordance with this Section and the acquisition by
such underwriters or dealers of shares of Common Stock pursuant to such exercise
may be made simultaneously on the date of the closing of the sale or transfer by
CU or its Affiliates of the relevant Warrants to such underwriters or dealers,
provided Home is given written notice of the date of such closing at least five
Business Days prior thereto. At any such closing, against payment of the
exercise price for shares of Common Stock to be acquired pursuant to the
exercise of Warrants, Home will deliver or cause to be delivered certificates
representing the Underlying Shares to such underwriters or dealers, in such
names and denominations as it or they shall designate not fewer than two
Business Days prior to such closing.
Section 3.5 "Demand" Registration. From and after such date as CU and
its Affiliates become entitled pursuant to Section 3.4 to sell or transfer any
Restricted Stock, Home shall, if requested by CU, as expeditiously as possible,
use its best efforts to effect the registration of the Restricted Stock (which
Home has been requested to register on a form in general use under the
Securities Act (or any successor federal securities law) selected by Home, in
order to permit the sale or other disposition of such Restricted Stock in
accordance with the intended method of sale or other disposition set forth in
the request (subject to the provisions of Section 3.4(c)). The right to require
registration of the Restricted Stock under this Section 3.5 may only be
exercised once unless CU is advised in writing by its investment banking firm (a
copy of which advice shall be supplied to Home) that, in the opinion of such
firm, an additional or two additional registrations are appropriate to maximize
the benefits to CU of the proposed distribution of Restricted Stock, in which
event CU may exercise once or twice more, as applicable, its rights under this
Section 3.5. Upon the issuance of a stop order or injunction, Home may withdraw
any such registration statement and abandon the proposed offering which CU shall
have demanded, in which case CU's right shall be reinstated.
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Section 3.6 "Piggyback" Registration. From and after such date as CU
and its Affiliates become entitled pursuant to Section 3.4 to sell or transfer
any Restricted Stock, if at any time Home proposes to register any of its
securities under the Securities Act (or any successor federal securities law),
whether or not for sale for its own account (except with respect to registration
statements filed with respect to the issuance of securities under employee
benefit plans), it will give written notice to CU of its intention to do so.
Upon the written request of CU, given within 15 calendar days after receipt of
Home's notice, Home will use its best efforts to cause to be included in the
shares to be covered by the registration statement proposed to be filed by Home,
in accordance with the request of CU, the Restricted Stock to be sold by dealers
or underwriters in accordance with the provisions of Section 3.4; provided,
however, that Home need not include such Restricted Stock in such registration
statement if Home is advised in writing by its investment banking firm (a copy
of which advise shall be supplied to CU) that the inclusion of such securities
shall, in the opinion of such firm, materially interfere with the orderly sale
and distribution of the Home securities being sold by it. Home may, in its sole
discretion and without the consent of CU, withdraw any such registration
statement and abandon the proposed offering in which CU shall have requested to
participate pursuant to this Section.
Section 3.7 Registration Procedures and Expenses.
(a) If and whenever Home is required by the provisions of this
Article III to use its best efforts to effect the registration of any of the
Restricted Stock under the Securities Act (or any successor federal securities
law), CU and its Affiliates (including the underwriters in the case of a
registration of Underlying Shares) (individually referred to as a "selling
holder" or "holder" and collectively referred to as "selling holders" or
"holders") will furnish in writing such information as is reasonably requested
by Home for inclusion in the registration statement relating to such offering
and such other information and documentation as Home shall reasonably request,
and Home will, as expeditiously as possible:
(i) prepare and file with the SEC or any other federal
agency at the time administering the Securities Act (or a successor federal
securities law) a registration statement with respect to such securities and use
its best efforts to cause such registration statement to become and remain
effective for such period as may be necessary to permit the successful marketing
of such securities, but not exceeding 90 days;
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act;
(iii) furnish to each selling holder of Restricted Stock
being registered such number of copies of a prospectus and preliminary
prospectus in conformity with the requirements of the Securities Act (or any
successor federal securities law), and such other
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documents as such seller may reasonably request in order to facilitate the
public sale or other disposition of the Restricted Stock being registered owned
by such seller;
(iv) furnish, at the request of any holder or holders of
securities being registered pursuant to this Article III, on the date that such
securities are delivered to the underwriters for sale pursuant to such
registration or if such securities are not being sold through underwriters, on
the date the registration statement with respect to such securities becomes
effective (A) an opinion dated such date of independent counsel representing
Home for the purposes of such registration, addressed to the underwriters, if
any, and to the holder or holders making such request, stating that such
registration statement has become effective under the Securities Act (or such
successor law) and that (a) to the best of the knowledge of such counsel, no
stop order suspending the effectiveness thereof has been issued and no
proceedings for that purpose have been instituted or are pending or contemplated
under the Securities Act (or such successor federal securities law); (b) the
registration statement, the related prospectus and each amendment or supplement
thereto comply as to form in all material respects with the requirements of the
Securities Act (or such successor law) and the applicable rules and regulations
of the SEC thereunder, except that such counsel need express no opinion as to
financial information or information provided by selling holders contained
therein; (c) such counsel (subject to such customary limitation on the scope of
their investigation as shall be set forth in such opinion) has no reason to
believe that either the registration statement or the prospectus, or any
amendment or supplement thereto, contains any untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading except that such counsel
need express no opinion as to financial information or information provided by
selling holders contained therein; (d) the descriptions in the registration
statement and in the prospectus, or any amendment or supplement thereto, of all
legal and governmental matters and all contracts and other legal documents or
instruments are accurate and fairly present the information required to be
shown; and (e) such counsel does not know of any legal or governmental
proceedings, pending or contemplated, required to be described in the
registration statement or prospectus, or any amendment or supplement thereto, or
to be filed as exhibits to the registration statement which are not described
and filed as required; and (B) a letter dated such date, from the independent
certified public accountants of Home, addressed to the underwriters, if any, and
to the holder or holders by or on behalf of whom a request is made, stating that
they are independent certified public accountants within the meaning of the
Securities Act (or such successor law) and that in the opinion of such
accountants the financial statements and other financial data of Home included
in the registration statement or the prospectus, or any amendment or supplement
thereto, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act (or such successor law). Such
letter from the independent certified public accountants shall additionally
cover such other financial matters (including information as to the period
ending not more than five business days prior to the date of such letter) with
respect to the registration in respect of which such letter is being given as
the holder of Restricted Stock being registered may reasonably request;
(v) use its best efforts to register or qualify the
Restricted Stock covered by such registration statement under such other
securities or blue sky laws of such
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jurisdictions as each such selling holder of such Restricted Stock shall
reasonably request and do any and all other acts and things which may be
necessary or reasonably desirable to enable such seller to consummate the public
sale or other disposition in such jurisdictions as may be requested by such
seller; provided, however, that Home shall have no obligation to qualify to do
business in any jurisdiction or to file a general consent to service of process
in any jurisdiction;
(vi) notify each selling holder of Restricted Stock covered
by such registration statement, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act (or any successor Federal
securities law), of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing;
(vii) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering the
period of at least twelve months, but not more than eighteen months, beginning
with the first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act;
(viii) provide a transfer agent and registrar for all
Restricted Stock covered by such registration statement not later than the
effective date of such registration statement;
(ix) use its best efforts to list all Common Stock covered
by such registration statement on each securities exchange, if any, on which any
of the Common Stock is then listed (unless such Common Stock is already so
listed) if such listing is then permitted under the rules of such exchange or
with the NASDAQ, National Market System; and
(x) undertake to take such further actions as may be
reasonably requested by the underwriters.
(b) If any registration statement pursuant to Section 3.5 or 3.6
shall have been declared effective and, in the judgment of Home, (A) any event
shall occur or state of facts exist (other than as described in clause (B))
which requires a notice to the selling holders of Restricted Stock pursuant to
clause (vi) of paragraph (a) of this Section 3.7 or (B) the offering at the time
of Restricted Stock pursuant to such registration statement would adversely
affect, or would be improper in view of, a public offering, financing,
reorganization, recapitalization, merger, consolidation, acquisition, or other
similar transaction, or negotiations, discussions or pending proposals with
respect thereto, immediately upon receipt of notice to such effect from Home, CU
shall cease to offer or sell any Restricted Stock registered thereunder and
cease to deliver or use the prospectus in use thereunder. In the case of any
matter described in clause (A), Home shall, as promptly as practicable, furnish
to each selling holder a reasonable number of copies of a supple-
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ment to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchaser of such securities, such prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing. In the case of
any matter described in clause (B), Home shall promptly notify CU at such times
as, in Home's judgment, such offering may be recommended (which shall be no
later than 90 days following such suspension); provided that CU may, in its sole
discretion, discontinue such offering with respect to the Restricted Stock
covered thereby, in which event CU shall be entitled to "demand" registration
rights hereunder to the full extent as if such offering had not been requested.
All expenses incurred by Home in complying with Sections 3.5 and 3.6
hereof, including, without limitation, all registration and filing fees,
printing expenses, fees and disburse ments of counsel for Home and blue sky fees
and expenses are herein called "Registration Expenses," except for all
underwriting discounts and selling commissions applicable to the sales, all fees
and disbursements of counsel for any selling holder or holders (including
counsel designated by any seller for a "due diligence" investigation of Home)
and the expense of any special audits incident to or required by such
registration, all of which are herein called "Selling Expenses." Home shall pay
all Registration Expenses and the selling holder or holders of Restricted Stock
being registered shall pay all Selling Expenses.
Section 3.8 Indemnification. In the event of a registration of any of
the Restricted Stock under the Securities Act (or any successor Federal
securities law) pursuant to this Article III, Home will indemnify and hold
harmless each underwriter of such Restricted Stock, CU and its Affiliates as the
transferors of the Restricted Stock or any portion thereof to underwriters, and
each other person, if any, who controls such seller, assignor or underwriter
within the meaning of Section 15 of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such seller,
underwriter, assignor or controlling person may become subject under the
Securities Act (or such successor law) or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such Restricted Stock
shall have been registered under the Securities Act (or such successor law), any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; and will reimburse such
seller, transferor and underwriter and each such controlling person for any
legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that Home will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, said preliminary prospectus or said
prospectus or said amendment or supplement in reliance upon and in conformity
with written information furnished to Home through an instrument executed by
such seller, transferor or underwriter specifically for use in the preparation
thereof; and provided further that if any losses, claims, damages or liabilities
arise out of or are based
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upon an untrue statement, alleged untrue statement, omission or alleged omission
contained in any preliminary prospectus which did not appear in the final
prospectus, Home shall not have any such liability with respect thereto to such
seller, transferor or underwriter or any person who controls such seller,
transferor or underwriter within the meaning of Section 15 of the Securities Act
if such seller, transferor or underwriter or any person on their behalf
delivered a copy of the preliminary prospectus to the person alleging such
losses, claims, damages or liabilities and failed to deliver a copy of the final
prospectus, as amended or supplemented if it has been amended or supplemented,
to such person at or prior to the written confirmation of the sale to such
person.
In the event of any registration of any Restricted Stock under the
Securities Act (or a successor Federal securities law) pursuant to this Article
III, each seller of such Restricted Stock (other than any underwriter or dealer
purchasing Underlying Shares), and CU and its Affiliates, as transferors of
Restricted Stock, severally and not jointly, will indemnify and hold harmless
Home, each person, if any who controls Home within the meaning of Section 15 of
the Securities Act, each officer of Home who signs the registration statement
and each director of Home against any and all such losses, claims, damages, or
liabilities arising out of or based upon any untrue statement or alleged untrue
statement in or omission or alleged omission from any such registration
statement, prospectus, amendment or supplement, if the untrue statement or
omission or alleged untrue statement or omission in respect of which such loss,
claim, damage or liability is asserted was made in reliance upon and in
conformity with information furnished in writing to Home by or on behalf of such
seller or transferor specifically for use in connection with the preparation of
such registration statement, preliminary prospectus, prospectus, amendment or
supplement; provided, however, that, if any losses, claims, damages or
liabilities arise out of or are based upon an untrue statement, alleged untrue
statement, omission or alleged omission contained in any preliminary prospectus
which did not appear in the final prospectus, such seller or transferor shall
not have any such liability with respect thereto to Home, any person who
controls Home within the meaning of Section 15 of the Securities Act, any
officer of Home who signed the registration statement of any director of Home if
Home or any person on their behalf delivered a copy of the preliminary
prospectus to the person alleging such losses, claims, damages or liabilities
and failed to deliver a copy of the final prospectus, as amended or supplemented
if it has been amended or supplemented, to such person at or prior to the
written confirmation of the sale to such person; and provided further that the
liability of any such seller or transferor so to indemnify shall be limited to
an amount equal to the amount received by such seller upon the sale of such
Restricted Stock pursuant to such registration statement, or by such transferor
from the seller, as the case may be.
Payments in respect of indemnifications required by this Section 3.8
shall be made by periodic payments during the course of the investigation or
defense, as and when bills are received or expenses incurred. Any party which
proposes to assert the right to be indemnified under this Section 3.8 will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim is to be made against
an indemnifying party under this Section 3.8, notify each such indemnifying
party of the commencement of such action, suit or proceeding, enclosing a copy
of all papers served, but the omission so to notify such indemnifying party of
any such action, suit or proceeding shall not relieve it from any liability
which
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it may have to any indemnified party otherwise than under this Section 3.8. In
case any such action, suit or proceeding shall be brought against any
indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate in, and, to the
extent that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof with counsel reasonably satisfactory to
such indemnified party, and after notice from such indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its own counsel in any such
action, but the fees and expenses of such counsel shall be at the expense of
such indemnified party, when and as incurred, unless (i) the employment of
counsel by such indemnified party has been authorized in writing by the
indemnifying party, (ii) the indemnified party shall have reasonably concluded
that there may be a conflict of interest between the indemnifying party and the
indemnified party in the conduct of the defense of such action (in which case
the indemnifying party shall not have the right to direct the defense of such
action on behalf of the indemnified party) or (iii) the indemnifying party shall
not in fact have employed counsel to assume the defense of such action. An
indemnifying party shall not be liable for employed counsel to assume the
defense of such action. An indemnifying party shall not be liable for any
settlement of any action or claim effected without its consent. In no event
shall an indemnifying party be required to pay for more than one counsel for an
indemnified party, exclusive of local counsel.
Section 3.9 Obligations of Home with Respect to Underwritten Offering.
In the event that Restricted Stock shall be sold pursuant to a registration
statement in an underwritten offering pursuant to Section 3.5, Home agrees to
enter into an underwriting agreement containing customary representations and
warranties with respect to the business and operations of an issuer of the
securities being registered and customary covenants and agreements to be
performed by such issuer, including, without limiting the generality of the
foregoing, customary provisions with respect to indemnification by Home of the
underwriters of such offering. Home shall have the right to approve the managing
underwriters for such offering (which in no event shall include an affiliate of
CU); provided, however, that such approval shall not be unreasonably withheld.
Section 3.10 Rule 144 Requirements. Home shall undertake to make
publicly available and available to the holders of Restricted Stock, pursuant to
Rule 144 of the SEC under the Securities Act, such information as shall be
necessary, and to take such further action as any such holder may reasonably
request, to enable the holders of Restricted Stock to make sales of Restricted
Stock pursuant to the Rule. Home shall furnish to any holder of Restricted Stock
upon request (after the preceding sentences shall have become applicable), a
written statement executed by Home as to the steps it has taken to comply with
the current public information requirements of Rule 144.
Section 3.11 Rights of First Refusal.
(a) In the event CU or its Affiliates intend, at any time after
the occurrence of an Acquisition Event to sell, transfer or dispose of any
Restricted Stock (other than to an Affiliate
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of CU in a transaction not intended to circumvent the transfer restrictions
contained in this Agreement) other than (i) pursuant to a sale or transfer of
Warrants to one or more underwriters or dealers in accordance with Section
3.4(c) (in which case Section 3.11(b) shall govern) or (ii) at any time after
Home has failed for any reason to repurchase such Restricted Stock pursuant to
Article II hereof on the closing date scheduled for such repurchase, then:
(i) CU shall notify Home in writing of its or its
Affiliate's intention to sell, transfer or dispose of such Restricted Stock
specifying the number of shares or amount of Warrants, as the case may be,
proposed to be disposed of, the identity or identities of the prospective
purchaser or purchasers thereof, the proposed purchase price therefor and the
material terms of any agreement relating thereto (the "Sale Notice"); and
(ii) Home shall have the right, by written notice of its
exercise of its right of first refusal given to CU within 15 calendar days after
Home's receipt of such notice of intention from CU, to purchase (or to cause a
Person designated by Home to purchase) all, but not less than all of, the
Restricted Stock specified in such notice of intention for cash at the gross
price set forth therein (including broker's commissions and other transaction
costs of CU or its Affiliate to be paid or absorbed by the prospective
purchaser) if the terms set forth in such notice of intention provide for a cash
sale. If the purchase price specified in such notice of intention include any
property other than cash, the purchase price at which Home shall be entitled to
purchase shall be (x) the amount of cash included in the purchase price
specified in such notice of intention plus (y) property, to the extent feasible,
substantially similar to the property described in such notice of intention and
in any case of equivalent value to such property (as agreed to by Home and CU,
or as determined by a nationally recognized investment banking firm selected by
CU and Home).
If Home shall have exercised its right of first refusal under this
paragraph (a) (including the designation of another purchaser as referred to in
the next subparagraph), the closing of the purchase of the Restricted Stock as
to which such right Home shall have been exercised shall take place as promptly
as practicable, but in no event more than 10 Business Days after Home gives
notice of such exercise, and if such closing does not occur within such 10 days,
such right of first refusal provided for herein (including any assignment
thereof) shall be null and void and of no further force and effect with respect
to such Restricted Stock and this Section 3.11 shall no longer apply to any sale
or disposition or proposed sale or disposition of such Restricted Stock;
provided that if prior notification to or approval of the Federal Reserve Board
or any other regulatory authority is required in connection with such purchase,
Home shall promptly file the required notice or application for approval and
shall expeditiously process the same and the period of time that otherwise would
run pursuant to this sentence shall run instead from the date on which, as the
case may be, (i) any required notification period has expired or been
terminated, or (ii) such approval has been obtained and, in either event, any
requisite waiting period shall have passed.
If Home elects not to exercise, or fails to exercise or cause to be
exercised, its right of first refusal provided in this paragraph (a) within the
time specified for such exercise or if the Federal Reserve Board or any other
regulatory authority disapproves of Home's proposed purchase,
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CU and its Affiliates shall be free thereafter for a period of 90 days to
consummate the sale, transfer or other disposition with any purchaser or
purchasers of the Restricted Stock who shall have been specified in the sale
notice at the price (or at any price in excess of such price) and on
substantially the terms specified therein.
The right of first refusal provided for in this paragraph (a) may only
be exercised with respect to the initial sale, transfer or other disposition of
the Restricted Stock by CU or an Affiliate (whether in blocks or as a whole) to
a person that is not an Affiliate of CU and not to subsequent sales, transfers
or other dispositions by purchasers of Restricted Stock.
(b) If CU or its Affiliates at any time propose to transfer any
Warrants to any underwriters or dealers pursuant to the provisions of Section
3.4, other than at any time after Home has failed for any reason to repurchase
such Warrants pursuant to Article II hereof on the closing date scheduled for
such repurchase, then CU shall first notify Home in writing of such intention,
specifying the Warrants which it proposes to sell or transfer and the name or
names of the proposed dealers or of the proposed managing underwriters in the
underwriting syndicate to which the sale or transfer is proposed to be made.
Home shall have the right, exercisable by written notice given to CU 15 calendar
days after Home's receipt of notice from CU pursuant to the immediately
preceding sentence, to repurchase, or to cause a third party designated by Home
to purchase, all, but not fewer than all, the Warrants proposed to be sold or
transferred on the terms and conditions hereinafter set forth. Any notice given
by Home of exercise of its repurchase rights under this paragraph (b) shall
specify a place in Los Angeles and a Business Day not earlier than 10 days and
not later than 15 days after the date of such notice for the closing of the
repurchase of the Warrants being repurchased. The purchase price payable to Home
or its designee for the repurchase of Warrants pursuant to this paragraph (b)
shall be a cash price equal to the product of (x) the number of Underlying
Shares covered by the relevant Warrants (calculated as of the date of the
closing of the repurchase) and (y) the Share Price on such date. At the closing
of a sale of Warrants pursuant to the foregoing provisions, Home or its designee
will make payment to CU of the aggregate price for the Warrants to be
repurchased in one of the manners set forth in Section 2.1(c). At such closing,
CU shall deliver to Home or its designee the certificates representing the
Warrants to be repurchased and Home shall deliver to CU replacement certificates
representing the Warrants (if any) which are not to be repurchased but were
covered by the certificate or certificates surrendered by CU. Any election by
Home pursuant to this paragraph to exercise its repurchase rights in respect of
Warrants shall be irrevocable. In the event Home fails timely to exercise its
repurchase rights in respect of Warrants within the period specified above
during which it must do so or notifies CU in writing prior to the expiration of
such period that it does not intend to exercise such rights or its designee
fails to repurchase Warrants on the date set for the closing of such a purchase,
CU and its Affiliates shall be free thereafter to consummate the sale and
transfer of the Warrants specified in this notice to Home under this paragraph
to any underwriters or dealers who agree to exercise the Warrants and sell the
Underlying Shares in accordance with the provisions of Section 3.4(c), and this
Section 3.11 shall no longer apply to such sale or transfer of such Warrants.
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(c) CU shall have the right to withdraw any notice given by it
pursuant to this Section 3.11 at any time before Home shall have given notice of
its intention to exercise its right of first refusal hereunder (including by
designation of another purchaser).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HOME
Home represents and warrants to CU that:
Section 4.1 Authorization of Agreement; No Conflicts.
(a) The execution and delivery of this Agreement by Home and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Home. This Agreement has been
duly executed and delivered by Home and constitutes a valid and binding
obligation of Home, enforceable in accordance with its terms.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with, or
result in any violation of or default or loss of a material benefit under any
provision of the articles of incorporation, articles or association or bylaws of
Home or Home Bank or, except for the necessity of obtaining Requisite Regulatory
Approvals, any material mortgage, indenture, lease agreement or other material
instrument or any permit, concession, grant, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Home or
Home Bank or their respective properties, other than any such conflict,
violation, default or loss which will not have a material adverse effect on Home
or Home Bank. No material consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental authority is required
in connection with the execution and delivery of this Agreement by Home and Home
Bank or the consummation by Home of the transactions contemplated hereby except
for any approvals required to be obtained pursuant to the BHC Act or the Policy
Statement of the Board of Governors of the Federal Reserve System on Nonvoting
Equity Investments by Bank Holding Companies, 12 C.F.R. Section 225.143 (the
"FRB Guidelines"), or any other applicable laws, for the execution and
delivery of this Agreement and the issuance of the Warrants by Home.
Section 4.2 Authorized Stock Home has taken all necessary corporate and
other action to authorize and reserve and, subject to obtaining the governmental
and other approvals and consents referred to herein, to permit it to issue, and,
at all times from the date hereof until the obligation to deliver Common Stock
upon the exercise of the Warrants terminates, will have reserved for issuance,
upon exercise of the Warrants, shares of Common Stock necessary for CU to
exercise the Warrants, and Home will take all necessary corporate action to
authorize and reserve for issuance all additional shares of Common Stock or
other securities which may be issued pursuant to this Agreement. The shares of
Common Stock to be issued upon due exercise of the Warrants, including all
additional shares of Common Stock or other securities which may be issuable
pursuant to this
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Agreement, upon issuance pursuant hereto, shall be duly and validly issued,
fully paid and nonassessable, and shall be delivered free and clear of all
liens, claims, charges and encumbrances of any kind or nature whatsoever,
including any preemptive rights of any stockholder of Home.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CU
CU represents and warrants to Home that:
Section 5.1 Due Execution of Agreement; No Conflicts.
(a) This Agreement has been duly executed and delivered by CU
and constitutes a valid and binding obligation of CU, enforceable in accordance
with its terms.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with, or
result in any violation of or default or loss of a material benefit under, any
provision of the certificate of incorporation or By-laws of CU or, except for
the necessity of obtaining Requisite Regulatory Approvals, any material
mortgage, indenture, lease, agreement or other material instrument, or any
permit, concession, grant, franchise, license, judgment, order decree, statute,
law, ordinance, rule or regulation applicable to CU or its respective
properties, other than any such conflict, violation, default or loss which (i)
will not have a material adverse effect on CU and its Subsidiaries taken as a
whole. No material consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required in
connection with the execution and delivery of this Agreement by CU or the
consummation by CU of the transactions contemplated hereby, except for (a)
filings required in order to obtain Requisite Regulatory Approvals, and (b) any
approvals required to be obtained pursuant to the BHC Act, or the FRB Guidelines
or any other applicable law for the execution and delivery of this Agreement by
Home, CU and the issuance of the Warrants.
ARTICLE VI
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set forth
below (in their singular and plural forms as applicable) shall have the meanings
set forth below.
"Affiliate" or "affiliate" shall mean, with respect to any corporation,
any person that, directly or indirectly, controls or is controlled by or is
under common control with such corporation.
"BHC Act" means the Bank Holding Company Act of 1956, as amended.
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"Business Day" shall mean any day, other than a Saturday, Sunday or
legal holiday in the State of California, on which banks are open for
substantially all their banking business in Los Angeles.
"Change in Bank Control Act" means the Change in Bank Control Act of
1978, as amended.
"Covered Shares" shall mean on any date, with respect to any Warrants,
the maximum number of shares of Common Stock that would be purchasable upon the
exercise on such date of such Warrants, assuming that such Warrants may be
exercised on such date to purchase the maximum number of shares of Common Stock
purchasable pursuant to the terms thereof (including the limitations contained
in the second paragraph of the certificate evidencing each such Warrant) without
regard to any provision therein (other than such limitations) or in this
Agreement or in any law limiting the right of any holder of such Warrants to
acquire shares otherwise purchasable thereunder.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"Governmental Entity" shall mean any court, administrative
agency or commission or other governmental authority or
instrumentality.
"Market Value" shall mean, on any date, the average of the closing sale
prices of a share of Common Stock on the principal securities exchange on which
the Common Stock is traded, or, if the Common Stock is not at the time listed on
any national securities exchange, as reported by the National Association of
Securities Dealers Automated Quotation System ("NASDAQ"), on the 10 trading days
immediately preceding such date, (or such fewer number of trading days
immediately preceding such date for which shares of Common Stock have been
listed for trading on such exchange or quoted on NASDAQ); provided, however,
that if CU seeks a determination of the fair market value of a share of Common
Stock pursuant to the provisions of Section 2.2, Market Value shall, if required
pursuant to the terms of such Section, mean the fair market value of a share of
Common Stock on such date determined pursuant to such Section.
"Person" or "person" shall mean an individual, corporation,
partnership, joint venture, trust or unincorporated organization, or a
government or any agency or political subdivision thereof.
"Regulatory Authority" shall mean any United States federal or state
government or governmental authority the approval of which is legally required
for consummation of the Merger.
"Requisite Regulatory Approvals" shall mean all material permits,
approvals and consents required to be obtained, and all waiting periods required
to expire, prior to the consummation of the issuance of the Covered Shares under
applicable federal laws of the United States or applicable laws of any state
having jurisdiction over CU or Home.
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"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Share Price" shall mean, with respect to any Warrants, the amount by
which, on the date of the Acquisition Event triggering the exercisability of the
Warrants(i) the Warrant Price on such date is less than (ii) the greatest of:
(i) the Market Value of a share of Common Stock on such
date; and
(ii) the highest price paid on or prior to such date for a
share of Common Stock (including in any merger or consolidation) by a purchaser
or group of purchasers acting in concert of 50% or more of the outstanding
shares of Common Stock, or, in the case of a purchaser of 50% or more of the
consolidated assets of Home (as shown on the books of Home), the Market Value of
a share of Common Stock on the date of consummation of such asset acquisition.
"Subsidiary" shall mean, with respect to any corporation (the
"parent"), any other corporation, association or other business entity of which
more than 50% of the shares of the Voting Stock are owned or controlled,
directly or indirectly, by the parent or by one or more Subsidiaries of the
parent, or by the parent and one or more of its Subsidiaries.
"Voting Stock" shall mean the stock entitling the holders thereof to
vote in the election of the directors or trustees of the corporation,
association, or other business entity in question, except that it shall not
include any stock so entitling the holders thereof to vote only upon the
happening of a contingency, whether or not such contingency has occurred.
"Warrant Call Price" shall mean, when used with respect to any Warrant,
the product of (i) the number of Covered Shares on such date and (ii) the Share
Price on such date; provided that the Warrant Call Price with respect to any
Warrant shall in no event exceed (x) the quotient obtained by dividing
$5,000,000 by the number of Covered Shares subject to all the outstanding
Warrants multiplied by (y) the number of Covered Shares subject to such Warrant.
ARTICLE VII
TERMINATION
Section 7.1 Termination. Subject to Section 7.2, this Agreement may be
terminated in the following circumstances:
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(a) at the effective time of the Merger, as set forth in the
Merger Agreement;
(b) at the termination of the Merger Agreement prior to the
occurrence of an Acquisition Event; or
(c) two years after the occurrence of an Acquisition Event.
Section 7.2 Effect of Termination. In the event of termination of this
Agreement pursuant to Section 7.1(c), the rights of the parties hereto shall
forthwith become void; provided that, if the Agreement shall terminate pursuant
to Section 7.1(c) and any party has filed an application to purchase securities
with any regulatory authority, the Agreement shall not terminate as provided in
Section 7.1(c), but shall remain in full force and effect until the day which is
30 Business Days (plus any applicable waiting periods) after the receipt or
denial of regulatory approval or consent, at which time the Agreement shall then
terminate.
Section 7.3 Indemnification for Breach. Each party to this Agreement
agrees to indemnify and hold harmless the other party against any loss, claim,
damage or liability arising out of or based upon a Default of this Agreement by
such defaulting party in accordance with the procedures set forth in the last
paragraph of Section 3.8 of this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or mailed
by registered or certified mail (return receipt requested) to the parties at the
following addresses (or any such other address for a party as shall be specified
by like notice):
(a) If to CU at:
16030 Ventura Boulevard
Encino, CA 91436
Attn: Stephen G. Carpenter
Fax: (818) 907-5024
with a copy to:
Anita Wolman, Esq.
16030 Ventura Boulevard
Encino, CA 91436
Fax: (818) 907-5024
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(b) If to Home at:
2633 Cherry Avenue
Signal Hill, CA 90806
Attn: James Staes
Phone: (310) 988-9600
Fax: (310) 426-4526
with a copy to:
Manatt, Phelps & Phillips
11355 West Olympic Boulevard
Los Angeles, California 90064
Attn: Barbara S. Polsky, Esq.
Fax: (310) 312-4224
Section 8.2 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 8.3 Amendment. This Agreement may be amended by the parties
hereto, by action taken by their respective Boards of Directors or the duly
authorized committees thereof. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto. The
parties hereto agree to make such amendments as may be necessary to respond to
the request of any Regulatory Authority with respect to this Agreement.
Section 8.4 Waiver. Any term or provision of this Agreement may be
waived in writing at any time by the party which is, or whose shareholders are,
entitled to the benefits thereof.
Section 8.5 Miscellaneous. This Agreement (including the documents and
instruments referred to herein) (a) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof; (b) except as
contemplated in this Agreement, is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder; and (c) except as
contemplated in this Agreement, shall not be assigned by operation of law or
otherwise. Home and CU agree that, except as required by law, it shall not issue
any press release with respect to the transactions contemplated by this
Agreement without consulting with each other party hereto.
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Section 8.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
IN WITNESS WHEREOF, Home and CU have caused this Agreement to be signed
by their respective officers thereunto duly authorized, all as of the date first
above written.
CU BANCORP
By:
---------------------------------
HOME INTERSTATE BANCORP
By:
---------------------------------
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EXHIBIT F
CU SHAREHOLDER'S AGREEMENT
This SHAREHOLDER'S AGREEMENT (this "Agreement"), dated as of
January 10, 1996, is entered into by and among Home Bank, a California banking
corporation ("Home Bank"), Home Interstate Bancorp, a California corporation
("Home"), and ___________________________ (the "Shareholder").
R E C I T A L S
A. Home, Home Bank, CU Bancorp, a California corporation ("CU"), and
California United Bank, National Association, a national banking association,
entered into that certain Agreement and Plan of Reorganization dated as of
January 10, 1996 (the "Reorganization Agreement").
B. The Shareholder is a beneficial shareholder of shares of common
stock, no par value, of CU (the "CU Stock").
C. The Shareholder is a director of CU.
D. As an inducement to Home and Home Bank to enter into the
Reorganization Agreement, and in order to ensure pooling-of-interests accounting
treatment for the Merger contemplated by the Reorganization Agreement, the
Shareholder desires to enter into this Agreement.
E. Unless otherwise provided in this Agreement, capitalized terms
shall have the meanings ascribed to such terms in the Reorganization Agreement.
NOW, THEREFORE, in consideration of the premises and of the respective
representations, warranties and covenants, agreements and conditions contained
herein and in the Reorganization Agreement, and intending to be legally bound
hereby, Home, Home Bank and Shareholder agree as follows:
ARTICLE I
SHAREHOLDER'S AGREEMENT
1.1 Agreement to Vote. Shareholder shall vote or cause to be voted at
any meeting of shareholders of CU to approve the principal terms of the
Reorganization Agreement, the Merger and the transactions contemplated thereby
(the "Shareholders' Meeting"), all of the shares of CU Stock as to which
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Shareholder has sole or shared voting power (the "Shares") as of the record date
established to determine shareholders who have the right to vote at any such
Shareholders' Meeting (the "Record Date").
1.2 Legend. The Shareholder agrees to stamp, print or type on the
face of his certificates of CU Stock evidencing the Shares the following legend:
"THE VOTING, SALE, ASSIGNMENT, TRANSFER, PLEDGE,
HYPOTHECATION OR OTHER ENCUMBRANCE OR DISPOSITION OF THE SHARES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO A SHAREHOLDER'S
AGREEMENT DATED AS OF THE 10TH DAY OF JANUARY, 1996 BY AND AMONG
HOME INTERSTATE BANCORP, HOME BANK AND (THE RECORD OWNER HEREOF),
COPIES OF WHICH ARE ON FILE AT THE OFFICES OF HOME BANK"
1.3 Restrictions on Dispositions. The Shareholder agrees that, from
and after the date of this Agreement and during the term of this Agreement, the
Shareholder will not take any action that will alter or affect in any way the
right to vote the Shares, except (i) with the prior written consent of Home or
(ii) to change such right from that of a shared right of the Shareholder to vote
the Shares to a sole right of the Shareholder to vote the Shares.
1.4 Shareholder Approval. The Shareholder, in his capacity as a
director, shall (i) recommend shareholder approval of the Reorganization
Agreement, the Agreement of Merger and the transactions contemplated thereby at
the Shareholders' Meeting and (ii) advise the CU shareholders to reject any
subsequent proposal or offer received by CU relating to any Alternative
Transaction or purchase, sale, acquisition, merger or other form of business
combination involving CU or any of its assets, equity securities or debt
securities and to proceed with the transactions contemplated by the
Reorganization Agreement; provided, however, that the Shareholder shall not be
obligated to take any action specified in clause (ii) if the Board of Directors
of CU is advised in writing by outside legal counsel (Loeb and Loeb, or such
other counsel that is reasonably acceptable to Home and Home Bank) that, in the
exercise of his fiduciary duties, a director of CU should not take such action.
1.5 Restrictions on Disposition of CU Stock After the Merger.
Notwithstanding any other provisions of this Agreement to the contrary, none of
the shares of CU Stock held by the undersigned at the Effective Time of the
Merger will be sold, transferred or otherwise disposed of and the undersigned
will not in any other way reduce the undersigned's risk of ownership or
investment in any of the shares of CU Stock so held by the undersigned until
financial results covering a period of at least thirty (30) days of combined
operations of CU and Home following the Effective Time of the Merger have been
published by CU (provided that the undersigned may make bona fide gifts or
distributions without consideration so long as the recipients thereof agree not
to sell, transfer or otherwise dispose of the CU Stock except as provided
herein).
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
The Shareholder represents and warrants to Home and Home Bank that the
statements set forth below are true and correct as of the date of this
Agreement, except those that are specifically as of a different date:
2.1 Ownership and Related Matters.
(a) Schedule 2.1(a) hereto correctly sets forth the number of
Shares beneficially owned by Shareholder and the nature of Shareholder's voting
power with respect thereto. Within five Business Days after the Record Date, the
Shareholder shall amend said Schedule 2.1(a) to correctly reflect the number of
Shares and the nature of Shareholder's voting power with respect thereto as of
the Record Date.
(b) There are no proxies, voting trusts or other agreements or
understandings to or by which the Shareholder or the Shareholder's spouse is a
party or bound or that expressly requires that any of the Shares be voted in any
specific manner other than as provided in this Agreement.
2.2 Authorization and Binding Agreement. The Shareholder has the
legal right, power, capacity and authority to execute, deliver and perform this
Agreement, and this Agreement is the valid and binding obligation of the
Shareholder enforceable in accordance with its terms, except as the enforcement
thereof may be limited by general principles of equity.
2.3 Non-contravention. The execution, delivery and performance of
this Agreement by the Shareholder will not (a) conflict with or result in the
breach of, or default or actual or potential loss of any benefit under, any
provision of any agreement, instrument or obligation to which the Shareholder or
the Shareholder's spouse is a party or by which any of Shareholder's properties
or the Shareholder's spouse's properties are bound, or give any other party to
any such agreement, instrument or obligation a right to terminate or modify any
term thereof; (b) require the consent or approval of any third party; (c) result
in the creation or imposition of any lien, mortgage or encumbrance on any of the
Shares or any other assets of the Shareholder or the Shareholder's spouse; or
(d) violate any law, rule or regulation to which the Shareholder or the
Shareholder's spouse is subject.
ARTICLE III
GENERAL
3.1 Amendments. To the fullest extent permitted by law, this
Agreement and any schedule or exhibit attached hereto may be amended by
agreement in writing of the parties hereto at any time.
3.2 Integration. This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter hereof and (except for
other documents to be executed pursuant to the Reorganization Agreement)
supersedes all prior agreements and understandings of the parties in connection
therewith.
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3.3 Specific Performance. The Shareholder, Home and Home Bank each
expressly acknowledge that, in view of the uniqueness of the obligations of the
Shareholder contemplated hereby, Home and Home Bank would not have an adequate
remedy at law for money damages in the event that this Agreement has not been
performed by the Shareholder in accordance with its terms, and therefore the
Shareholder, Home and Home Bank agree that Home and Home Bank shall be entitled
to specific enforcement of the terms hereof in addition to any other remedy to
which it may be entitled at law or in equity.
3.4 Termination. This Agreement shall terminate automatically without
further action at the earlier of the Effective Time of the Merger or the
termination of the Reorganization Agreement in accordance with its terms. Upon
such termination of this Agreement, the respective obligations of the parties
hereto shall immediately become void and have no further force and effect.
3.5 No Assignment. Neither this Agreement nor any rights, duties or
obligations hereunder shall be assignable by Home, Home Bank or the Shareholder,
in whole or in part. Any attempted assignment in violation of this prohibition
shall be null and void. Subject to the foregoing, all of the terms and
provisions hereof shall be binding upon, and inure to the benefit of, the
successors of the parties hereto.
3.6 Headings. The descriptive headings of the several Articles and
Sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
3.7 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
party hereto and delivered to each party hereto.
3.8 Notices. Any notice or communication required or permitted
hereunder, shall be deemed to have been given if in writing and (a) delivered in
person, (b) delivered by confirmed facsimile transmission (c) sent by overnight
carrier, postage prepaid with return receipt requested or (d) mailed by
certified or registered mail, postage prepaid with return receipt requested,
addressed as follows:
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If to Home and Home Bank, addressed to:
Home Interstate Bancorp
2633 Cherry Avenue
Signal Hill, California 90806
Attention: James Staes
Telecopier Number: (310) 426-4526
With a copy addressed to:
Manatt, Phelps & Phillips
11355 West Olympic Blvd.
Los Angeles, CA 90064
Attention: Barbara S. Polsky, Esq.
Telecopier No: (310) 312-4224
If to Shareholder, addressed to:
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
With a copy addressed to:
Anita Wolman, Esq.
CU Bancorp
16030 Ventura Boulevard
Encino, California 91436-4224
Telecopier No: (818) 907-5024
or at such other address and to the attention of such other person as a party
may notice to the others in accordance with this Section 3.8. Any such notice or
communication shall be deemed received on the date delivered personally or
delivered by confirmed facsimile transmission, on the first Business Day after
it was sent by overnight carrier, postage prepaid with return receipt requested
or on the third Business Day after it was sent by certified or registered mail,
postage prepaid with return receipt requested.
3.9 Governing Law. This Agreement and the legal relations between the
parties shall be governed by and construed in accordance with the laws of the
State of California applicable to contracts between California parties made and
performed in such State.
3.10 Severability and the Like If any provision of this Agreement
shall be held by a court of competent jurisdiction to be unreasonable as to
duration, activity or subject, it shall be deemed to extend only over the
maximum duration, range of activities or subjects as to which such provision
shall be valid and enforceable under applicable law. If any provisions shall,
for any reason, be held by a court of competent jurisdiction to be invalid,
illegal or unenforceable, such invalidity, illegality or unenforceability
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shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal or unenforceable provision had never
been contained herein.
3.11 Waiver of Breach. Any failure or delay by Home and Home Bank in
enforcing any provision of his Agreement shall not operate as a waiver thereof.
The waiver by Home and Home Bank of a breach of any provision of this Agreement
shall not operate as a waiver thereof. The waiver by Home and Home Bank of a
breach of any provision of this Agreement by the Shareholder shall not operate
or be construed as a waiver of any subsequent breach or violation thereof. All
waivers shall be in writing and signed by the party to be bound.
IN WITNESS WHEREOF, the parties to this Agreement have caused and duly
executed this Agreement as of the day and year first above written.
HOME INTERSTATE BANCORP
By:
---------------------------------
Title:
------------------------------
HOME BANK
By:
---------------------------------
Title:
------------------------------
SHAREHOLDER
------------------------------------
(Shareholder's Name)
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SPOUSAL CONSENT
I am the spouse of __________________, the Shareholder in the above
Agreement. I understand that I may consult independent legal counsel as to the
effect of this Agreement and the consequences of my execution of this Agreement
and, to the extent I felt it necessary, I have discussed it with legal counsel.
I hereby confirm this Agreement and agree that it shall bind my interest in the
Shares, if any.
------------------------------------
(Shareholder's Spouse's Name)
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EXHIBIT H
HOME SHAREHOLDER'S AGREEMENT
This SHAREHOLDER'S AGREEMENT (this "Agreement"), dated as of January
10, 1996, is entered into by and among California United Bank, National
Association, a national banking association ("CU Bank"), CU Bancorp, a
California corporation ("CU"), and ___________________________ (the
"Shareholder").
R E C I T A L S
A. CU Bank, CU, Home Interstate Bancorp, a California corporation
("Home"), and Home Bank, a California banking corporation ("Home Bank"), entered
into that certain Agreement and Plan of Reorganization dated as of January 10,
1996 (the "Reorganization Agreement").
B. The Shareholder is a beneficial shareholder of shares of common
stock, no par value, of Home (the "Home Stock").
C. The Shareholder is a director of Home.
D. As an inducement to CU Bank and CU to enter into the
Reorganization Agreement, and in order to ensure pooling-of-interests accounting
treatment for the Merger contemplated by the Reorganization Agreement, the
Shareholder desires to enter into this Agreement.
E. Unless otherwise provided in this Agreement, capitalized terms
shall have the meanings ascribed to such terms in the Reorganization Agreement.
NOW, THEREFORE, in consideration of the premises and of the respective
representations, warranties and covenants, agreements and conditions contained
herein and in the Reorganization Agreement, and intending to be legally bound
hereby, CU Bank, CU and Shareholder agree as follows:
ARTICLE I
SHAREHOLDER'S AGREEMENT
1.1 Agreement to Vote. Shareholder shall vote or cause to be voted at
any meeting of shareholders of Home to approve the principal terms of the
Reorganization Agreement, the Merger and the transactions contemplated thereby
(the "Shareholders' Meeting"), all of the shares
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144
of Home Stock as to which Shareholder has sole or shared voting power (the
"Shares") as of the record date established to determine shareholders who have
the right to vote at any such Shareholders' Meeting (the "Record Date").
1.2 Legend. The Shareholder agrees to stamp, print or type on the
face of his certificates of Home Stock evidencing the Shares the following
legend:
"THE VOTING, SALE, ASSIGNMENT, TRANSFER, PLEDGE,
HYPOTHECATION OR OTHER ENCUMBRANCE OR DISPOSITION OF THE SHARES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO A SHAREHOLDER'S
AGREEMENT DATED AS OF THE 10TH DAY OF JANUARY, 1996 BY AND
BETWEEN CU BANCORP, CALIFORNIA UNITED BANK, N.A. AND (THE RECORD
OWNER HEREOF), COPIES OF WHICH ARE ON FILE AT THE OFFICES OF CU
BANCORP."
1.3 Restrictions on Dispositions. The Shareholder agrees that, from
and after the date of this Agreement and during the term of this Agreement, the
Shareholder will not take any action that will alter or affect in any way the
right to vote the Shares, except (i) with the prior written consent of CU or
(ii) to change such right from that of a shared right of the Shareholder to vote
the Shares to a sole right of the Shareholder to vote the Shares.
1.4 Shareholder Approval. The Shareholder shall, in his capacity as a
director, (i) recommend shareholder approval of the Reorganization Agreement,
the Agreement of Merger and the transactions contemplated thereby at the Home
Shareholders' Meeting and (ii) advise the Home shareholders to reject any
subsequent proposal or offer received by Home relating to any Alternative
Transaction or purchase, sale, acquisition, merger or other form of business
combination involving Home or any of its assets, equity securities or debt
securities and to proceed with the transactions contemplated by the
Reorganization Agreement; provided, however, that the Shareholder shall not be
obligated to take any action specified in clause (ii) if the Board of Directors
of Home is advised in writing by outside legal counsel (Manatt, Phelps &
Phillips, or such other counsel that is reasonably acceptable to CU and CU Bank)
that, in the exercise of his fiduciary duties, a director of Home should not
take such action.
1.5 Restrictions on Disposition of CU Stock Received Pursuant to the
Merger. Notwithstanding any other provisions of this Agreement to the contrary,
none of the shares of CU Stock to be received by the undersigned pursuant to the
Merger will be sold, transferred or otherwise disposed of and the undersigned
will not in any other way reduce the undersigned's risk of ownership or
investment in any of the shares of CU Stock so received by the undersigned until
financial results covering a period of at least thirty (30) days of combined
operations of CU and Home following the Effective Time of the Merger have been
published by CU (provided that the
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145
undersigned may make bona fide gifts or distributions without consideration so
long as the recipients thereof agree not to sell, transfer or otherwise dispose
of the CU Stock except as provided herein).
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
The Shareholder represents and warrants to CU and CU Bank that the
statements set forth below are true and correct as of the date of this
Agreement, except those that are specifically as of a different date:
2.1 Ownership and Related Matters.
(a) Schedule 2.1(a) hereto correctly sets forth the number of
Shares beneficially owned by Shareholder and the nature of Shareholder's voting
power with respect thereto. Within five Business Days after the Record Date, the
Shareholder shall amend said Schedule 2.1(a) to correctly reflect the number of
Shares and the nature of Shareholder's voting power with respect thereto as of
the Record Date.
(b) There are no proxies, voting trusts or other agreements or
understandings to or by which the Shareholder or the Shareholder's spouse is a
party or bound or that expressly requires that any of the Shares be voted in any
specific manner other than as provided in this Agreement.
2.2 Authorization and Binding Agreement. The Shareholder has the
legal right, power, capacity and authority to execute, deliver and perform this
Agreement, and this Agreement is the valid and binding obligation of the
Shareholder enforceable in accordance with its terms, except as the enforcement
thereof may be limited by general principles of equity.
2.3 Non-contravention. The execution, delivery and performance of
this Agreement by the Shareholder will not (a) conflict with or result in the
breach of, or default or actual or potential loss of any benefit under, any
provision of any agreement, instrument or obligation to which the Shareholder or
the Shareholder's spouse is a party or by which any of Shareholder's properties
or the Shareholder's spouse's properties are bound, or give any other party to
any such agreement, instrument or obligation a right to terminate or modify any
term thereof; (b) require the consent or approval of any third party; (c) result
in the creation or imposition of any lien, mortgage or encumbrance on any of the
Shares or any other assets of the Shareholder or the Shareholder's spouse; or
(d) violate any law, rule or regulation to which the Shareholder or the
Shareholder's spouse is subject.
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146
ARTICLE III
GENERAL
3.1 Amendments. To the fullest extent permitted by law, this
Agreement and any schedule or exhibit attached hereto may be amended by
agreement in writing of the parties hereto at any time.
3.2 Integration. This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter hereof and (except for
other documents to be executed pursuant to the Reorganization Agreement)
supersedes all prior agreements and understandings of the parties in connection
therewith.
3.3 Specific Performance. The Shareholder, CU and CU Bank each
expressly acknowledge that, in view of the uniqueness of the obligations of the
Shareholder contemplated hereby, CU and CU Bank would not have an adequate
remedy at law for money damages in the event that this Agreement has not been
performed by the Shareholder in accordance with its terms, and therefore the
Shareholder, CU and CU Bank agree that CU and CU Bank shall be entitled to
specific enforcement of the terms hereof in addition to any other remedy to
which it may be entitled at law or in equity.
3.4 Termination. This Agreement shall terminate automatically without
further action at the earlier of the Effective Time of the Merger or the
termination of the Reorganization Agreement in accordance with its terms. Upon
such termination of this Agreement, the respective obligations of the parties
hereto shall immediately become void and have no further force and effect.
3.5 No Assignment. Neither this Agreement nor any rights, duties or
obligations hereunder shall be assignable by CU, CU Bank or the Shareholder, in
whole or in part. Any attempted assignment in violation of this prohibition
shall be null and void. Subject to the foregoing, all of the terms and
provisions hereof shall be binding upon, and inure to the benefit of, the
successors of the parties hereto.
3.6 Headings. The descriptive headings of the several Articles and
Sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
3.7 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
party hereto and delivered to each party hereto.
3.8 Notices. Any notice or communication required or permitted
hereunder, shall be deemed to have been given if in writing and (a) delivered in
person, (b) delivered by confirmed facsimile transmission (c) sent by overnight
carrier, postage prepaid with return receipt requested
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147
or (d) mailed by certified or registered mail, postage prepaid with return
receipt requested, addressed as follows:
If to CU and CU Bank, addressed to:
CU Bancorp
16030 Ventura Boulevard
Encino, California 91436-4487
Attention: Stephen G. Carpenter
With a copy addressed to:
Anita Wolman, Esq.
CU Bancorp
16030 Ventura Boulevard
Encino, California 91436-4487
Telecopier No: (818) 907-5024
If to Shareholder, addressed to:
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
With a copy addressed to:
Manatt, Phelps & Phillips
11355 West Olympic Blvd.
Los Angeles, CA 90064
Attention: Barbara S. Polsky, Esq.
Telecopier No: (310) 312-4224
or at such other address and to the attention of such other person as a party
may notice to the others in accordance with this Section 3.8. Any such notice or
communication shall be deemed received on the date delivered personally or
delivered by confirmed facsimile transmission, on the first Business Day after
it was sent by overnight carrier, postage prepaid with return receipt requested
or on the third Business Day after it was sent by certified or registered mail,
postage prepaid with return receipt requested.
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148
3.9 Governing Law. This Agreement and the legal relations between the
parties shall be governed by and construed in accordance with the laws of the
State of California applicable to contracts between California parties made and
performed in such State.
3.10 Severability and the Like. If any provision of this Agreement
shall be held by a court of competent jurisdiction to be unreasonable as to
duration, activity or subject, it shall be deemed to extend only over the
maximum duration, range of activities or subjects as to which such provision
shall be valid and enforceable under applicable law. If any provisions shall,
for any reason, be held by a court of competent jurisdiction to be invalid,
illegal or unenforceable, such invalidity, illegality or unenforceability shall
not affect any other provision of this Agreement, but this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.
3.11 Waiver of Breach. Any failure or delay by CU and CU Bank in
enforcing any provision of his Agreement shall not operate as a waiver thereof.
The waiver by CU and CU Bank of a breach of any provision of this Agreement
shall not operate as a waiver thereof. The waiver by CU and CU Bank of a breach
of any provision of this Agreement by the Shareholder shall not operate or be
construed as a waiver of any subsequent breach or violation thereof. All waivers
shall be in writing and signed by the party to be bound.
IN WITNESS WHEREOF, the parties to this Agreement have caused and duly
executed this Agreement as of the day and year first above written.
CU BANCORP
By:
--------------------------------
Title:
-----------------------------
CALIFORNIA UNITED BANK,
NATIONAL ASSOCIATION
By:
--------------------------------
Title:
-----------------------------
SHAREHOLDER
-----------------------------------
(Shareholder's Name)
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149
SPOUSAL CONSENT
I am the spouse of __________________, the Shareholder in the above
Agreement. I understand that I may consult independent legal counsel as to the
effect of this Agreement and the consequences of my execution of this Agreement
and, to the extent I felt it necessary, I have discussed it with legal counsel.
I hereby confirm this Agreement and agree that it shall bind my interest in the
Shares, if any.
------------------------------------
(Shareholder's Spouse's Name)
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