SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-9477
FIRST COMMERCIAL BANCORP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-2693725
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
865 Howe Avenue, Sacramento, California 95825
---------------------------------------------
(address of principal executive offices) (Zip Code)
(916) 641-3288
--------------
(Registrant's telephone number, including area code)
--------------------------------------------------------------------
(Former name, former address, and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No ____
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Outstanding at
Class October 31, 1997
----- ----------------
Common Stock, $1.25 par value 845,779
<PAGE>
FIRST COMMERCIAL BANCORP, INC.
INDEX
Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as of September 30, 1997
and December 31, 1996 -1-
Consolidated Statements of Income for the three
and nine month periods ended September 30, 1997
and 1996 -2-
Consolidated Statements of Cash Flows for the nine
months ended September 30, 1997 and 1996 -3-
Notes to Consolidated Financial Statements -4-
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations -7-
PART II OTHER INFORMATION
Item 5. Other -13-
Item 6. Exhibits and Reports on Form 8-K -14-
Signatures -15-
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
FIRST COMMERCIAL BANCORP, INC.
Consolidated Balance Sheets (unaudited)
(dollars expressed in thousands, except per share data)
September 30, December 31,
1997 1996
---- ----
ASSETS
------
Cash and cash equivalents:
<S> <C> <C>
Cash and due from banks................................................. $ 9,073 9,410
Federal funds sold...................................................... 18,000 11,500
-------- -------
Total cash and cash equivalents..................................... 27,073 20,910
-------- -------
Investment securities - available for sale, at fair value.................. 46,287 38,229
Loans:
Commercial and financial................................................ 38,684 32,756
Real estate construction and development................................ 23,817 13,807
Real estate mortgage.................................................... 37,956 39,103
Consumer and installment................................................ 6,216 9,244
-------- -------
Total loans......................................................... 106,673 94,910
Unearned discount........................................................ (540) (413)
Allowance for possible loan losses....................................... (4,947) (4,597)
-------- -------
Net loans........................................................... 101,186 89,900
-------- -------
Bank premises and equipment, net of accumulated depreciation............... 1,747 1,894
Accrued interest receivable................................................ 1,366 1,197
Other real estate owned.................................................... 85 192
Other assets............................................................... 1,117 711
-------- -------
Total assets........................................................ $178,861 153,033
======== =======
LIABILITIES
-----------
Deposits:
Demand:
Non-interest bearing.................................................. $ 29,248 24,026
Interest bearing...................................................... 15,437 16,956
Savings................................................................ 46,837 30,042
Time:
Time deposits of $100 or more......................................... 10,687 9,284
Other time deposits................................................... 59,163 55,828
--------- -------
Total deposits...................................................... 161,372 136,136
Accrued interest payable................................................... 1,721 1,098
Accrued and other liabilities.............................................. 2,022 2,969
12% convertible debentures................................................. 6,500 6,500
Total liabilities................................................... 171,615 146,703
--------- -------
STOCKHOLDERS' EQUITY
--------------------
Preferred stock, $.01 par value, 5,000,000 shares authorized;
no shares issued and outstanding....................................... -- --
Common stock, $1.25 par value, 10,000,000 shares authorized;
845,779 and 846,127 shares issued and outstanding at
September 30, 1997 and December 31, 1996, respectively................. 1,057 1,058
Capital surplus............................................................ 5,266 5,272
Retained earnings since elimination of accumulated deficit of $30,881
effective December 31, 1996............................................ 785 --
Net fair value adjustment for securities available for sale................ 138 --
--------- -------
Total stockholders' equity.......................................... 7,246 6,330
Total liabilities and stockholders' equity.......................... $ 178,861 153,033
========= =======
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
FIRST COMMERCIAL BANCORP, INC.
Consolidated Statements of Income (unaudited)
(dollars expressed in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1997 1996 1997 1996
---- ---- ---- ----
Interest income:
<S> <C> <C> <C> <C>
Interest and fees on loans................................... $ 2,648 2,214 7,348 6,147
Investment securities........................................ 677 580 1,883 2,248
Federal funds sold and other................................. 147 126 475 390
-------- ------- ------- -------
Total interest income.................................... 3,472 2,920 9,706 8,785
-------- ------- ------- -------
Interest expense:
Deposits:
Interest-bearing demand.................................... 56 57 168 211
Savings.................................................... 329 355 787 1,086
Time deposits of $100 or more.............................. 142 139 376 492
Other time deposits........................................ 823 552 2,427 1,743
Other borrowings............................................. 232 225 686 677
Total interest expense................................... 1,582 1,328 4,444 4,209
-------- ------- ------- -------
Net interest income...................................... 1,890 1,592 5,262 4,576
Provision for possible loan losses.............................. --- 100 -- 1,150
-------- ------- ------- -------
Net interest income after provision
for possible loan losses................................ 1,890 1,492 5,262 3,426
-------- ------- ------- -------
Noninterest income:
Service charges on deposit accounts
and customer service fees............................... 131 177 469 581
Other income............................................... 24 855 101 921
-------- ------- ------- -------
Total noninterest income................................. 155 1,032 570 1,502
-------- ------- ------- -------
Noninterest expense:
Salaries and employee benefits............................. 466 471 1,490 1,705
Occupancy, net of rental income............................ 146 183 475 668
Furniture and equipment.................................... 62 77 237 309
Federal Deposit Insurance Corporation premiums............. 5 60 13 281
Postage, printing and supplies............................. 32 180 117 440
Data processing fees....................................... 85 97 266 304
Legal, examination and professional fees................... 68 67 238 372
Losses and expenses on foreclosed
real estate, net of gains................................ 8 729 45 952
Other expenses............................................. 501 541 1,339 1,503
-------- ------- ------- -------
Total noninterest expense................................ 1,373 2,405 4,220 6,534
-------- ------- ------- -------
Income (loss) before income taxes........................ 672 119 1,612 (1,606)
Provision (benefit) for income taxes............................ 457 (152) 827 (732)
-------- ------- ------- -------
Net income (loss)........................................ $ 215 271 785 (874)
======== ======= ======= =======
Earnings (loss) per share:
Primary...................................................... $ .25 .32 .93 (1.74)
Fully-diluted................................................ .25 .30 .84 (1.74)
======== ======= ======= =======
Weighted average shares of common stock and
common stock equivalents outstanding......................... 845,779 846,127 845,779 702,304
======== ======= ======= =======
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
FIRST COMMERCIAL BANCORP, INC.
Consolidated Statements of Cash Flows (unaudited)
(dollars expressed in thousands)
<TABLE>
<CAPTION>
Nine months ended
September 30,
----------------
1997 1996
Cash flows from operating activities:
<S> <C> <C>
Net income (loss).................................................................. $ 785 (874)
Adjustments to reconcile net income (loss) to net cash:
Depreciation and amortization.................................................... 231 144
(Increase) decrease in accrued interest receivable............................... (169) 52
Interest accrued on liabilities.................................................. 4,444 4,209
Payments of interest on liabilities.............................................. (3,821) (3,884)
Provision (benefit) for income taxes............................................. 827 (732)
Payments of income taxes......................................................... (888) --
Provision for possible loan losses............................................... -- 1,150
Other, net....................................................................... (1,368) 536
--------- ------
Net cash provided by operating activities...................................... 41 601
--------- ------
Cash flows from investing activities:
Maturities of investment securities................................................ 26,191 66,825
Purchases of investment securities................................................. (34,101) (28,805)
Net increase in loans.............................................................. (12,083) (23,873)
Recoveries of loans previously charged off......................................... 621 248
Proceeds from sale of other real estate owned...................................... 323 1,967
Other investing activities......................................................... (58) 729
---------- ------
Net cash provided by (used in) investing activities............................ (19,107) 17,091
---------- ------
Cash flows from financing activities:
Increase (decrease) in deposits.................................................... 25,236 (22,508)
Proceeds from issuance of common stock............................................. -- 3,217
Other financing activities......................................................... (7) --
---------- -------
Net cash provided by (used in) financing activities............................ 25,229 (19,291)
---------- -------
Net increase (decrease) in cash and cash equivalents........................... 6,163 (1,599)
Cash and cash equivalents, beginning of period........................................ 20,910 18,768
---------- ------
Cash and cash equivalents, end of period.............................................. $ 27,073 17,169
========== ======
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
FIRST COMMERCIAL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
The accompanying consolidated financial statements of First Commercial Bancorp,
Inc. (FCB) and its sole subsidiary, First Commercial Bank (Bank), are unaudited
and should be read in conjunction with the consolidated financial statements
contained in the 1996 annual report on Form 10-K. In the opinion of management,
all adjustments, consisting of normal recurring accruals considered necessary
for a fair presentation of the results of operations for the interim period
presented herein, have been included. Operating results for the three and nine
month periods ended September 30, 1997 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1997. Certain
reclassifications of 1996 amounts have been made to conform with the 1997
presentation.
FCB and the Bank were recapitalized during 1995 and 1996 through a
series of transactions with First Banks, Inc. (First Banks) and an offering of
FCB's common stock to existing common shareholders, other than First Banks. As a
result of these transactions, First Banks' ownership of FCB was 61.48% at
September 30, 1997. If the 12% convertible debentures acquired by First Banks as
part of the recapitalization and the accrued interest thereon had been converted
as of September 30, 1997, First Banks' ownership of FCB would have increased to
77.98%. As a result of these transactions, First Banks owns the majority of the
voting securities of FCB and, accordingly, controls the management and policies
of FCB and the election of its directors.
The net income (loss) per share has been computed using the weighted
average number of shares of common stock and common stock equivalents
outstanding during the period. In December 1996, FCB implemented a reverse stock
split, whereby each 125 shares of outstanding common stock was converted into
one share of common stock. For consistency, the number of shares referred to
throughout this report on Form 10-Q have been restated to give effect to the
reverse split.
The Board of Directors of FCB elected to implement an accounting
adjustment referred to as a "quasi-reorganization," effective December 31, 1996.
In accordance with accounting provisions applicable to a quasi-reorganization,
the assets and liabilities of FCB were adjusted to fair value and the retained
deficit of $30.9 million was eliminated as of December 31, 1996. FCB caused the
Bank to accomplish a similar quasi-reorganization, also effective December 31,
1996.
(2) Transactions with First Banks
Following the recapitalization, FCB began purchasing certain services
and supplies from First Banks. FCB's financial position and operating results
could significantly differ from those that would be obtained if FCB's
relationship with First Banks did not exist.
The Bank receives services under a management services agreement with
First Banks and receives and provides services under cost sharing agreements
with First Bank & Trust, Irvine, California (FB&T), a wholly owned subsidiary of
First Banks, and Sunrise Bank of California, Roseville, California (Sunrise
Bank), a majority owned indirect subsidiary of First Banks.
The management fee agreement provides that the Bank compensates First
Banks on an hourly basis for its use of personnel for various functions
including internal auditing, loan review, income tax preparation and assistance,
<PAGE>
accounting and other management and administrative services. Hourly rates for
such services compare favorably with those of similar services from unrelated
sources, as well as the internal costs of the Bank personnel which were used
previously. Fees paid under this agreement were $125,000 and $391,000 for the
three and nine months ended September 30, 1997, compared to $167,000 and
$495,000 for the three and nine months ended September 30, 1996, respectively,
and are included in other expense in the consolidated statements of income.
Because of this affiliation through First Banks and the geographic
proximity of certain of these banking offices, the Bank, FB&T and Sunrise Bank
share the cost of certain personnel and services used by these banks. This
includes the salaries and benefits of certain loan and administrative personnel.
These banks have entered into cost sharing agreements for the purpose of
allocating expenses between them. Expenses associated with loan origination
personnel are allocated based on the relative loan volume between the banks.
Costs of most other personnel are allocated on an hourly basis. Because this
involves distributing essentially fixed costs over a larger asset base, it
allows each bank to receive the benefit of personnel and services at a reduced
cost. The net fees paid by the Bank under these agreements were $70,000 and
$245,000 for the three and nine month periods ended September 30, 1997, compared
to $142,000 and $286,000 for the three and nine months ended September 30, 1996,
respectively, and are included in other expense in the consolidated statements
of income.
Effective April 1, 1997, First Services L.P., a limited partnership
indirectly owned by First Banks' Chairman and his children through its General
Partners and Limited Partners, began providing data processing and various
related services to FCB. Fees paid for these services were $85,000 and $173,000
for the three and nine month periods ended September 30, 1997, respectively. A
subsidiary of First Banks provided data processing and various related services
to FCB through March 31, 1997. Fees paid under this agreement were $87,000 for
the nine month period ended September 30, 1997, compared to $90,000 and $291,000
for the three and nine month periods ended September 30, 1996, respectively, and
are included in other expense in the consolidated statements of income
The management services agreement, cost sharing agreements and data
processing agreements are subject to the review and approval of the Bank's
regulatory authorities. The aggregate cost for such services compares favorably
with that previously incurred separately by the Bank.
In connection with the recapitalization of FCB, First Banks purchased
convertible debentures of FCB of $1.5 million and $5.0 million on October 31,
1995 and December 28, 1995, respectively. The related interest expense,
including the amortization of debt issuance costs, for these debentures was
$218,000 for the three month periods ended September 30, 1997 and 1996,
respectively, and $647,000 and $649,000 for the nine month periods ended
September 30, 1997 and 1996, respectively.
The Bank has $19.5 million and $17.9 million in whole loans and loan
participations outstanding at September 30, 1997 and December 31, 1996,
respectively, that were purchased from banks affiliated with First Banks. In
addition, the Bank has sold $12.7 million and $2.0 million in loan
participations to affiliates at September 30, 1997 and December 31, 1996,
respectively. These loans and loan participations were acquired and sold at
interest rates and terms prevailing at the dates of their purchase or sale and
under standards and policies followed by the Bank.
(3) Regulatory Capital
FCB and the Bank are subject to various regulatory capital
requirements administered by federal and state banking agencies. Failure to meet
minimum capital requirements can cause the initiation of certain mandatory--and
possibly additional discretionary--actions by regulators which, if undertaken,
could have a direct material effect on FCB's and the Bank's financial condition.
Under capital adequacy guidelines and the regulatory framework for Prompt
Corrective Action applicable to all banks, the Bank must meet specific capital
guidelines that involve quantitative measures of the Bank's assets, liabilities,
and certain off-balance-sheet items as calculated under regulatory accounting
practices. In addition, the Bank's capital amounts and regulatory classification
are also subject to qualitative judgments by the regulators about components,
risk weighting, and other factors which may effect regulatory actions.
Quantitative measures established by regulations to ensure capital
adequacy require the Bank to maintain certain minimum ratios. The Bank is
required to maintain a minimum risk-based capital to risk-weighted assets ratio
of 8.0%, with at least 4.0% being "Tier 1" capital (as defined in the
regulations). In addition, a minimum leverage ratio (Tier 1 capital to total
assets) of 3.0% plus an additional cushion of 100 to 200 basis points is
expected. In order to be well capitalized under Prompt Corrective Action
provisions, the Bank is required to maintain a total capital to risk weighted
<PAGE>
assets ratio of at least 10%, a Tier 1 to risk weighted assets ratio of at least
6%, and a leverage ratio of at least 5%. As of November 12, 1996, the date of
the most recent notification from the Bank's primary regulator, the Bank was
categorized as adequately capitalized due to the existence of certain regulatory
agreements. As the regulatory agreements were terminated subsequent to November
12, 1996, management believes, as of September 30, 1997 and December 31, 1996,
the Bank is well-capitalized as defined by the FDIC Act.
At September 30, 1997 and December 31, 1996, FCB's and the Bank's
capital ratios were as follows:
<TABLE>
<CAPTION>
Risk-Based Capital Ratios
-------------------------
Total Tier 1 Leverage Ratio
---------------- ------------------ ----------------
1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
FCB 6.85% 6.95% 5.57% 5.66% 4.30% 4.25%
Bank 12.80 13.13 11.52 11.84 8.90 8.87
===== ===== ===== ===== ==== ====
</TABLE>
(4) Proposed Business Combinations
On October 3, 1997, FCB and First Banks America, Inc. (FBA), a majority
owned subsidiary of First Banks, executed an Agreement and Plan of Merger
(Agreement) providing for the merger of the two companies. Under the terms of
the Agreement, FCB will be merged into FBA, and the Bank will be merged into a
newly formed commercial banking subsidiary of FBA (the Northern California
Bank). In the transaction, which is subject to the approval of regulatory
authorities and the shareholders of both FCB and FBA, the FCB shareholders will
receive .8888 shares of FBA common stock for each share of FCB common stock
which they hold. In total, FCB's shareholders will receive approximately 752,000
shares of FBA common stock in the transaction. The Agreement was negotiated and
approved by special committees of the Boards of Directors of FCB and FBA. These
special committees were comprised of independent directors of the two respective
Boards of Directors.
FBA operates two wholly owned subsidiary banks, BankTEXAS N.A., which
has six offices in Houston, Dallas and McKinney, Texas, and Sunrise Bank, which
has two offices in Roseville and Rancho Cordova, California. As of September 30,
1997, FBA had total assets of $376.5 million, and reported net income of $2.1
million for the nine month period then ended. Approximately 29.8% of the
outstanding stock of FBA is publicly held and traded on the New York Stock
Exchange. The remaining 70.2% is owned by First Banks. In addition, FBA is in
process of acquiring Surety Bank, Vallejo, California (Surety Bank) and Pacific
Bay Bank, San Pablo, California (Pacific Bay). Surety Bank's and Pacific Bay's
total assets were $75.2 million and $37.5 million at September 30, 1997,
respectively, and will be merged into the Northern California Bank. The
acquisitions of Surety Bank and Pacific Bay, which are subject to regulatory and
shareholder approval, are expected to be completed by December 31, 1997 and
March 31, 1998, respectively.
In connection with and contingent upon its merger into FBA, FCB has
executed an Agreement to Exchange Certain Assets and Assume Certain Liabilities
by and between First Commercial and FB&T (Exchange Agreement) pursuant to which
FCB's banking office in Campbell, California would be exchanged for FB&T's
banking office in Walnut Creek, California. Because of the close proximity of
the Walnut Creek office to FCB's Concord office and of the Campbell office to
FB&T's San Jose office, it was determined the exchange would allow a more
effective control of the costs of operating the offices, avoid unnecessary
customer confusion between the entities and more clearly delineate separate
market areas. Although the offices are approximately equivalent in size, the
Exchange Agreement provides for the payment of a net premium based on the
deposit differential and composition at the date of closing. Based on the
deposits of the branches as of September 30, 1997, this would require FCB to pay
FB&T a net premium of approximately $5,000.
<PAGE>
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations
General
FCB is a registered Sacramento, California-based bank holding company
which reincorporated in Delaware in 1990 and conducts business through the Bank,
a California state-chartered bank. The Bank commenced operations in 1979, and
operates a commercial banking business through its headquarters office and five
branch offices located in Sacramento, Roseville (two branches), San Francisco,
Concord and Campbell, California. At September 30, 1997, FCB had approximately
$178.9 million in total assets, $106.1 million in total loans, net of unearned
discount, $161.4 million in total deposits, and $7.2 million in total
stockholders' equity.
Through the Bank, FCB offers a broad range of commercial and personal
banking services including certificate of deposit accounts, individual
retirement and other time deposit accounts, checking and other demand deposit
accounts, interest checking accounts, savings accounts and money market
accounts. Loans include commercial, financial, agricultural, real estate
construction and development, residential real estate and consumer and
installment loans. Other financial services include automatic teller machines,
cash management and safe deposit boxes.
Financial Condition
FCB reported losses from operations for each of the three years ended
December 31, 1995 and the three months ended March 31, 1996. As a result of
these losses, FCB and the Bank were subject to certain regulatory agreements
which placed significant restrictions on their operations, including the payment
of dividends. Through the recapitalization of FCB and the Bank, the improvement
of asset quality , the attainment of profitable operations subsequent to March
31, 1996 and numerous other actions which have been taken by FCB and the Bank,
all of the regulatory agreements have been terminated, and, accordingly, FCB and
the Bank no longer operate under these restrictions.
FCB's total assets increased by $25.9 million to $178.9 million at
September 30, 1997 from $153.0 million at December 31, 1996. The increase is
primarily reflected in an increase in total loans, net of unearned discount, by
$11.6 million to $106.1 million at September 30, 1997 from $94.5 million at
December 31, 1996, and Federal funds sold and investment securities which
increased by $6.5 million and $8.1 million, respectively, over the same periods.
The growth in total assets was funded by deposits, which increased by $25.3
million to $161.4 million at September 30, 1997 from $136.1 million at December
31, 1996.
Results of Operations
Net Income
Net income was $215,000 for the three months ended September 30, 1997,
compared to net income of $271,000 for the same period in 1996. Net income for
the nine months ended September 30, 1997 was $785,000, compared to a net loss of
$874,000 for the same period in 1996. As more fully described below, the
fluctuations in the operating results of FCB are attributable to the
recapitalization of FCB and the Bank, the increase in net interest income, the
improvement in asset quality and the reduction in noninterest expense.
Net Interest Income
Net interest income was $1.89 million and $5.26 million, or 4.69% and
4.60% of average interest-earning assets, for the three and nine month periods
ended September 30, 1997, respectively, in comparison $1.59 million and $4.58
million or 4.43% and 4.15% of average interest earning assets for the same
periods in 1996. The improved net interest income for 1997 is attributable to
the growth and improved quality of the loan portfolio and the reduction in the
level of nonperforming assets to $1.10 million and $1.06 million at September
30, 1997 and December 31, 1996, respectively, from $5.91 million at December 31,
1995.
<PAGE>
The following table sets forth certain information relating to FCB's
average balance sheet, and reflects the average yield earned on interest-earning
assets, the average cost of interest-bearing liabilities and the resulting net
interest income for the three and nine month periods ended September 30:
<TABLE>
<CAPTION>
Three months ended September 30, Nine months ended September 30,
-------------------------------- -------------------------------
1997 1996 1997 1996
---- ---- ---- ----
Interest Interest Interest Interest
Average Income/ Yield/ Average income/ Yield/ Average Income/ Yield/ Average Income/Yield/
balance expense rate balance expense rate balance expense rate balance expense rate
------- ------- ----- ------- ------- ----- ------- ------- ---- --------------------
(dollars expressed in thousands)
Assets
------
Interest-earning assets:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans $104,663 2,648 10.05% $93,670 2,214 9.40% $ 98,289 7,348 10.00% $ 85,461 6,147 9.59%
Investment securities 44,926 677 5.98 39,791 580 5.80 42,681 1,883 5.90 51,933 2,248 5.77
Federal funds sold and other 10,572 147 5.52 9,349 126 5.36 11,858 475 5.34 9,740 390 5.34
-------- --- ------- ----- --------- --- -------- -----
Total interest-earning assets 160,161 3,472 8.61 142,810 2,920 8.13 152,828 9,706 8.49 147,134 8,785 7.96
Nonearning assets 5,301 7,596 5,328 8,350
-------- -------- --------- --------
Total assets $165,462 $150,406 $ 158,156 $155,484
======== ======== ========= ========
Liabilities and Stockholders'Equity
-----------------------------------
Interest-bearing liabilities:
Interest-bearing demand deposits $ 15,773 56 1.41% $16,900 57 1.34% 16,015 168 1.40% $ 18,151 211 1.55%
Savings deposits 36,505 329 3.59 34,048 355 4.15 32,561 787 3.23 35,256 1,086 4.11
Time deposits of $100 or more 10,199 142 5.54 10,842 139 5.10 9,328 376 5.39 12,251 492 5.35
Other time deposits 58,333 823 5.62 50,553 552 4.34 58,440 2,427 5.55 52,239 1,743 4.45
-------- ----- ------- ----- -------- ----- ------- -----
Total interest-bearing
deposits 120,810 1,350 4.45 112,343 1,103 3.91 116,344 3,758 4.32 117,897 3,532 3.99
Notes payable and other 7,355 232 12.51 6,500 225 13.77 7,237 686 12.67 6,500 677 13.89
-------- ----- ------- ----- -------- ----- ------- -----
Total interest-bearing
liabilities 128,165 1,582 4.90 118,843 1,328 4.45 123,581 4,444 4.81 124,397 4,209 4.51
----- ----- ----- -----
Noninterest-bearing liabilities:
Demand deposits 26,608 23,273 24,311 24,130
other liabilities 3,612 2,579 3,532 2,806
-------- ------- -------- --------
Total liabilities 158,385 144,695 151,424 151,333
Stockholders' equity 7,077 5,711 6,732 4,151
-------- ------- -------- --------
Total liabilities and
stockholders' equity $165,462 $150,406 $158,156 $155,484
======== ======== ======== ========
Net interest income 1,890 1,592 5,262 4,576
===== ===== ===== =====
Net interest margin 4.69% 4.43% 4.60% 4.15%
==== ==== ==== ====
</TABLE>
Provision for Possible Loan Losses
Improved asset quality has resulted in eliminating the need for a
provision for possible loan losses for the three and nine month periods ended
September 30, 1997, compared to $100,000 and $1.15 million for the same periods
in 1996. Tables summarizing nonperforming assets, past due loans and loan loss
experience are presented under "--Lending and Credit Management" of this Form
10-Q.
FCB realized net loan recoveries of $87,000 and $350,000 for the three
and nine month periods ended September 30, 1997, compared to net loan
charge-offs of $1.37 million and $2.50 million for the same periods in 1996. The
allowance for possible loan losses was $4.95 million, or 4.66% of loans, net of
unearned discount, as of September 30, 1997, compared to $4.60 million, or 4.86%
of loans, net of unearned discount, as of December 31, 1996.
<PAGE>
Noninterest Income
Noninterest income was $155,000 and $570,000 for the three and nine
month periods ended September 30, 1997, respectively, compared to $1.03 million
and $1.50 million for the same periods in 1996. For 1997, noninterest income
consists primarily of service charges on deposit accounts and other related
fees. The decrease in noninterest income is primarily attributable to a gain of
$795,000 recognized during the three month period ended September 30, 1996. The
gain resulted from the sale of railroad cars which were owned by the Bank and
leased to a third party.
Service charges on deposit accounts and other related fees were
$131,000 and $469,000 for the three and nine month periods ended September 30,
1997, respectively, compared to $177,000 and $581,000 for the same periods in
1996. The decrease is primarily attributable to the reduction in the number of
demand deposit accounts and a reduction in the minimum balance requirements
related to the Bank's promotional efforts.
Noninterest Expense
Noninterest expense decreased by $1.04 million and $2.31 million to
$1.37 million and $4.22 million for the three and nine month periods ended
September 30, 1997, respectively, compared to $2.41 million and $6.53 million
for the same periods in 1996. The decrease is consistent with the cost savings
anticipated by the data processing conversion and centralization of various bank
operating functions to First Banks' systems completed during 1996. In addition,
the decrease in the level of nonperforming assets has reduced the noninterest
expense associated with servicing those assets.
Salaries and employee benefits decreased to $466,000 and $1.49 million
for the three and nine month periods ended September 30, 1997, respectively,
compared to $471,000 and $1.71 million for the same periods in 1996. The
decrease reflects the downsizing of the organization through the closure of a
branch office in August 1996 and the conversion and centralization of FCB's data
processing and various operating functions into First Banks' systems completed
in 1996, partially offset by FCB's expansion of its corporate lending function.
Occupancy expense decreased to $146,000 and $475,000 for the three and
nine month periods ended September 30, 1997, respectively, compared to $183,000
and $668,000 for the same periods in 1996. The decrease is primarily
attributable to the closure of a branch office in August 1996 and the downsizing
of the corporate and administrative offices resulting from the conversion and
centralization of FCB's data processing and various operating functions into
First Banks' systems.
Legal, examination and professional fees were $68,000 and $238,000 for
the three and nine month periods ended September 30, 1997, respectively,
compared to $67,000 and $372,000 for the same periods in 1996. The overall
decrease for 1997 is attributable to the improved asset quality of the Bank, the
elimination of consultants which had been used extensively for certain functions
in 1996 and the overall coordination of legal and professional fees consistent
with the current structure of FCB. FCB and the Bank utilize outside legal
counsel and other professional services in their management and disposition of
nonperforming assets.
Contributing further to the decrease in noninterest expense was a
reduction in the Federal Deposit Insurance Corporation (FDIC) premiums to $5,000
and $13,000 for the three and nine month periods ended September 30, 1997,
respectively, compared to $60,000 and $281,000 for the same periods in 1996.
This decrease is consistent with the premium rate reductions instituted by the
FDIC and the improved financial condition of FCB.
Losses and expenses of holding and disposing of foreclosed real
estate, net of gains, decreased to $8,000 and $45,000 for the three and nine
month periods ended September 30, 1997, respectively, from $729,000 and $952,000
for the same periods in 1996. During the three months ended September 30, 1996,
the Bank determined that its potential loss in connection with a foreclosed
property held as other real estate had become more probable and, accordingly,
provided $747,000 to reflect this exposure.
<PAGE>
Lending and Credit Management
Interest earned on the loan portfolio is the primary source of income
of FCB. Total loans, net of unearned discount, represented 59.3% and 61.7% of
total assets as of September 30, 1997 and December 31, 1996, respectively. Total
loans, net of unearned discount, increased by $11.6 million to $106.1 million
from $94.5 million at September 30, 1997 and December 31, 1996, respectively.
The increase is reflective of FCB's decision to rebuild and expand its corporate
lending function, which commenced during 1996.
FCB's nonperforming loans, consisting of loans on a nonaccrual status
and loans on which the original terms have been restructured, were $1.01 million
and $864,000 at September 30, 1997 and December 31, 1996, respectively. Loans
past due over 30 days to 90 days and over 90 days and still accruing increased
to $2.27 million and $145,000 at September 30, 1997, respectively, from $831,000
and $32,000 at December 31, 1996, respectively.
The following is a summary of nonperforming assets and past due loans
at the dates indicated:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
---- ----
(dollars expressed in thousands)
Nonperforming assets:
<S> <C> <C>
Nonperforming loans $ 1,013 864
Other real estate 85 192
---------- -------
Total nonperforming assets $ 1,098 1,056
========== =======
Loans past due:
Over 30 days to 90 days $ 2,269 831
Over 90 days and still accruing 145 32
-- ---------- -------
Total past due loans $ 2,414 863
========== =======
Loans, net of unearned discount $ 106,133 94,497
========== =======
Allowance for possible loan losses to loans 4.66% 4.86%
Nonperforming loans to loans .95 .91
Allowance for possible loan losses to
nonperforming loans 488.35 532.06
Nonperforming assets to loans and other real estate 1.03 1.12
========= =======
</TABLE>
The allowance for possible loan losses is based on past loan loss
experience, on management's evaluation of the quality of the loans in the
portfolio and on the anticipated effect of national and local economic
conditions relative to the ability of loan customers to repay. Each month, the
allowance for possible loan losses is reviewed relative to FCB's internal watch
list and other data utilized to determine its adequacy. The provision for
possible loan losses is management's estimate of the amount necessary to
maintain the allowance at a level consistent with this evaluation. As
adjustments to the allowance for possible loan losses are considered necessary,
they are reflected in the results of operations.
<PAGE>
The following is a summary of the loan loss experience for the three
and nine month periods ended September 30:
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------- -------------
1997 1996 1997 1996
---- ---- ---- ----
(dollars expressed in thousands)
Allowance for possible loan losses, beginning of period $ 4,860 5,303 4,597 5,388
------- ----- ----- -----
<S> <C> <C> <C> <C>
Loans charged-off (171) (1,513) (271) (2,749)
Recoveries of loans previously charged-off 258 147 621 248
------- ----- ----- ------
Net loan (charge-offs) recoveries 87 (1,366) 350 (2,501)
Provision for possible loan losses -- 100 -- 1,150
------- ----- ----- -----
Allowance for possible loan losses, end of period $ 4,947 4,037 4,947 4,037
======= ===== ===== =====
</TABLE>
Liquidity
The liquidity of FCB and the Bank is the ability to maintain a cash
flow which is adequate to fund operations, service debt obligations and meet
other commitments on a timely basis. The primary sources of funds for liquidity
are derived from customer deposits, loan payments, maturities, sales of
investments and operations. In addition, FCB and the Bank may avail themselves
of more volatile sources of funds through issuance of certificates of deposit in
denominations of $100,000 or more, federal funds borrowed and securities sold
under agreements to repurchase. The aggregate amount of these more volatile
funds was $11.3 million at September 30, 1997 and $10.0 million at December 31,
1996.
At September 30, 1997, FCB's more volatile sources of funds mature as
follows:
(dollars expressed in thousands)
Three months or less $ 5,712
Over three months through six months 1,389
Over six months through twelve months 3,480
Over twelve months 753
---------
Total $ 11,334
=========
Effects of New Accounting Standards
FCB adopted the provisions of SFAS 125, Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities (SFAS 125)
prospectively on January 1, 1997. SFAS 125 established accounting and reporting
standards for transfers and servicing of financial assets and extinguishment of
liabilities.
The standards established by SFAS 125 are based on consistent
application of a financial-components approach that focuses on control. Under
that approach, after a transfer of financial assets, an entity recognizes the
financial and servicing assets it controls and the liabilities it has incurred,
derecognizes financial assets when control has been surrendered, and
derecognizes liabilities when extinguished. This statement provides consistent
standards for distinguishing transfers of financial assets that are sales from
transfers that are secured borrowings.
The implementation of SFAS 125 did not have a material effect on the
consolidated financial position or results of operation of FCB.
In February 1997, the FASB issued SFAS 128, Earnings Per Share (SFAS
128). SFAS 128 supersedes Accounting Principles Board Opinion No. 15, Earnings
Per Share (APB 15) and specifies the computation, presentation, and disclosure
requirements for earnings per share (EPS) for entities with publicly held common
stock or potential common stock. SFAS 128 was issued to simplify the computation
of EPS and to make the U.S. standard more compatible with the EPS standards of
other countries and that of the International Accounting Standards Committee. It
replaces the presentation of primary EPS with a presentation of basic EPS and
fully diluted EPS with diluted EPS. SFAS 128 also requires dual presentation of
basic and diluted EPS on the face of the income statement for all entities with
complex capital structures, and requires a reconciliation of the numerator and
denominator of the basic EPS computation to the numerator and denominator of the
diluted EPS computation.
<PAGE>
Basic EPS, unlike primary EPS, excludes dilution and is computed by
dividing income available to common stockholders by the weighted average number
of common shares outstanding for the period. Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised and converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the entity. Diluted EPS is
computed similarly to fully diluted EPS under APB 15.
SFAS 128 is effective for financial statements for both interim and
annual periods ending after December 15, 1997. Earlier application is not
permitted. After adoption, all prior-period EPS data presented shall be restated
to conform with SFAS 128.
FCB does not believe the implementation of SFAS 128 will have a
material effect on its computation of earnings per share.
In February 1997, the FASB issued SFAS 129, Disclosure of Information
about Capital Structure (SFAS 129). SFAS 129 establishes standards for
disclosing information about an entity's capital structure and applies to all
entities. SFAS 129 continues the previous requirements to disclose certain
information about an entity's capital structure found in APB 10, Omnibus
Opinion-1966, APB 15 and SFAS No. 47, Disclosure of Long-Term Obligations, for
entities that were subject to the requirements of those standards. SFAS 129
eliminates the exemption of nonpublic entities from certain disclosure
requirements of APB 15 as provided by SFAS No. 21, Suspension of the Reporting
of Earnings per Share and Segment Information by Nonpublic Enterprises. It
supersedes specific disclosure requirements of APB 10, APB 15 and SFAS 47 and
consolidates them in SFAS 129 for ease of retrieval and for greater visibility
to nonpublic entities.
SFAS 129 is effective for financial statements for periods ending after
December 15, 1997. It contains no change in disclosure requirements for FCB as
it was previously subject to the requirements of APB 10 and 15 and SFAS 47.
In June 1997, the FASB issued SFAS 130, Reporting Comprehensive Income
(SFAS 130). SFAS 130 establishes standards for reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements. Comprehensive income is defined as "the change in equity
(net assets) of a business enterprise during a period from transactions and
other events and circumstances from nonowner sources. It includes all changes in
equity during a period except those resulting from investments by owners and
distributions to owners."
SFAS 130 requires all items recognized under accounting standards as
components of comprehensive income to be reported in a financial statement that
is displayed with the same prominence as other financial statements. It also
requires publicly traded companies to report a total for comprehensive income in
condensed financial statements of interim periods issued to shareholders. SFAS
130 requires an entity to: (1) classify items of other comprehensive income by
their nature in a statement of financial performance and (2) display the
accumulated balances of items of other comprehensive income separately from
retained earnings and additional paid-in capital in the equity section of a
statement of financial position.
SFAS 130 is effective for fiscal years beginning after December 15,
1997. Reclassification of financial statements for earlier periods provided for
comparative purposes is required. FCB's management is in the process of
analyzing SFAS 130 and its impact on FCB's financial position and results of
operations.
In June 1997, the FASB issued SFAS 131, Disclosures about Segments of
an Enterprise and Related Information (SFAS 131). SFAS 131 establishes standards
for the way that public business enterprises report information about operating
segments in annual financial statements and requires that those enterprises
report selected information about operating segments in interim financial
reports to shareholders. It also establishes standards for related disclosures
about products and services, geographic areas, and major customers.
<PAGE>
SFAS 131 requires that a public business enterprise report financial
and descriptive information about its reportable operating segments. Operating
segments are components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance. Generally, financial information is required to be reported on the
basis that it is used internally for evaluating segment performance and deciding
how to allocate resources to segments.
SFAS 131 is effective for financial statements for periods beginning
after December 15, 1997. In the initial year of application, comparative
information for earlier years is to be restated. SFAS 131 need not be applied to
interim financial statements in the initial year of application, but comparative
information for interim periods in the initial year of application is to be
reported in financial statements for interim periods in the second year of
application. FCB's management is in the process of analyzing SFAS 131 and its
impact on FCB's financial position and results of operations.
<PAGE>
PART II - OTHER INFORMATION
Item 5 - Other
On October 3, 1997, FCB and First Banks America, Inc. (FBA), a majority
owned subsidiary of First Banks, executed an Agreement and Plan of Merger
(Agreement) providing for the merger of the two companies. Under the terms of
the Agreement, FCB will be merged into FBA, and the Bank will be merged into a
newly formed commercial banking subsidiary of FBA (the Northern California
Bank). In the transaction, which is subject to the approval of regulatory
authorities and the shareholders of both FCB and FBA, the FCB shareholders will
receive .8888 shares of FBA common stock for each share of FCB common stock
which they hold. In total, FCB's shareholders will receive approximately 752,000
shares of FBA common stock in the transaction. The Agreement was negotiated and
approved by special committees of the Boards of Directors of FCB and FBA. These
special committees were comprised of independent directors of the two respective
Boards of Directors.
FBA operates two wholly owned subsidiary banks, BankTEXAS N.A., which
has six offices in Houston, Dallas and McKinney, Texas, and Sunrise Bank, which
has two offices in Roseville and Rancho Cordova, California. As of September 30,
1997, FBA had total assets of $376.5 million, and reported net income of $2.1
million for the nine month period then ended. Approximately 29.8% of the
outstanding stock of FBA is publicly held and traded on the New York Stock
Exchange. The remaining 70.2% is owned by First Banks. In addition, FBA is in
process of acquiring Surety Bank, Vallejo, California (Surety Bank) and Pacific
Bay Bank, San Pablo, California (Pacific Bay). Surety Bank's and Pacific Bay's
total assets were $75.2 million and $37.5 million at September 30, 1997,
respectively, and will be merged into the Northern California Bank. The
acquisitions of Surety Bank and Pacific Bay, which are subject to regulatory and
shareholder approval, are expected to be completed by December 31, 1997 and
March 31, 1998, respectively.
In connection with and contingent upon its merger into FBA, FCB has
executed an Agreement to Exchange Certain Assets and Assume Certain Liabilities
by and between First Commercial and FB&T (Exchange Agreement) pursuant to which
FCB's banking office in Campbell, California would be exchanged for FB&T's
banking office in Walnut Creek, California. Because of the close proximity of
the Walnut Creek office to FCB's Concord office and of the Campbell office to
FB&T's San Jose office, it was determined the exchange would allow a more
effective control of the costs of operating the offices, avoid unnecessary
customer confusion between the entities and more clearly delineate separate
market areas. Although the offices are approximately equivalent in size, the
Exchange Agreement provides for the payment of a net premium based on the
deposit differential and composition at the date of closing. Based on the
deposits of the branches as of September 30, 1997, this would require FCB to pay
FB&T a net premium of approximately $5,000.
<PAGE>
Item 6 - Exhibits and Reports on Form 8-K
(a) The exhibit is numbered in accordance with the Exhibit Table of Item
601 of Regulation S-K.
Exhibit
Number Description
------ -----------
2(a) Agreement and Plan of Merger by and between First Banks
America, Inc. and First Commercial Bancorp, Inc.,
dated October 3, 1997.
10.11 Agreement to Exchange Certain Assets and Assume Certain
Liabilities by and between First Commercial Bank and
First Bank & Trust, dated October 3, 1997.
11 Earnings (loss) per share.
27 Article 9 - Financial Data Schedule (EDGAR only).
(b) FCB filed no Reports on Form 8-K during the three months ended
September 30, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST COMMERCIAL BANCORP, INC.
Registrant
Date: November 7, 1997 By: /s/Donald W. Williams
---------------------
Donald W. Williams
Chairman, President
and Chief Executive Officer
Date: November 7, 1997 By:/s/Kathryn L. Perrine
---------------------
Kathryn L. Perrine
Chief Financial Officer
<PAGE>
Exhibit 2(a)
AGREEMENT AND PLAN OF MERGER
by and between
FIRST BANKS AMERICA, INC.,
a Delaware corporation,
and
FIRST COMMERCIAL BANCORP, INC.
a Delaware corporation
October 3, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
ARTICLE I - TERMS OF THE MERGER & CLOSING; EXCHANGE OF SHARES
<S> <C> <C>
Section 1.01.The Merger................................................................ 1
Section 1.02.Effect of the Merger...................................................... 1
Section 1.03.Conversion of Shares...................................................... 1
Section 1.04.The Closing............................................................... 2
Section 1.05.Closing Date.............................................................. 2
Section 1.06.Actions At Closing........................................................ 2
Section 1.07.Exchange Procedures; Surrender of Certificates............................ 4
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF FIRST COMMERCIAL
Section 2.01.Organization and Capital Stock............................................ 5
Section 2.02.Authorization; No Defaults................................................ 6
Section 2.03.First Commercial Subsidiaries............................................. 6
Section 2.04.Financial Information..................................................... 7
Section 2.05.Absence of Changes........................................................ 7
Section 2.06.Regulatory Enforcement Matters............................................ 8
Section 2.07.Tax Matters............................................................... 8
Section 2.08.Litigation................................................................ 8
Section 2.09.Properties, Contracts, Employee Benefit Plans and
Other Agreements.................................................................. 8
Section 2.10.Reports................................................................... 9
Section 2.11.Investment Portfolio...................................................... 9
Section 2.12.Loan Portfolio............................................................ 10
Section 2.13.Employee Matters and ERISA................................................ 10
Section 2.14.Title to Properties; Insurance............................................ 11
Section 2.15.Compliance with Law....................................................... 11
Section 2.16.Brokerage................................................................. 11
Section 2.17.No Undisclosed Liabilities................................................ 11
Section 2.18.Statements True and Correct............................................... 12
Section 2.19.Commitments and Contracts................................................. 12
Section 2.20.Material Interest of Certain Persons...................................... 13
Section 2.21.Conduct to Date........................................................... 13
Section 2.22.Environmental Matters......................................................14
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF FBA
Section 3.01.Organization and Capital Stock............................................ 14
Section 3.02.Authorization; No Defaults................................................ 15
Section 3.03.FBA Subsidiaries.......................................................... 15
Section 3.04.Financial Information..................................................... 16
Section 3.05.Absence of Changes........................................................ 16
Section 3.06.Regulatory Enforcement Matters............................................ 17
Section 3.07.Tax Matters............................................................... 17
Section 3.08 Litigation................................................................ 17
Section 3.09. Properties, Contracts, Employee Benefit Plans
and Other Agreements............................................................ 17
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section 3.10.Reports................................................................... 18
Section 3.11.Investment Portfolio...................................................... 18
Section 3.12.Loan Portfolio............................................................ 19
Section 3.13.Employee Matters and ERISA................................................ 19
Section 3.14.Title to Properties; Insurance............................................ 19
Section 3.15.Compliance with Law....................................................... 20
Section 3.16.Brokerage................................................................. 20
Section 3.17.No Undisclosed Liabilities................................................ 20
Section 3.18.Statements True and Correct............................................... 20
Section 3.19.Commitments and Contracts................................................. 21
Section 3.20.Material Interest of Certain Persons...................................... 21
Section 3.21.Conduct to Date........................................................... 22
Section 3.22.Environmental Matters......................................................22
ARTICLE IV - AGREEMENTS OF FIRST COMMERCIAL
Section 4.01.Business in Ordinary Course............................................... 23
Section 4.02.Breaches.................................................................. 25
Section 4.03.Submission to Stockholders................................................ 25
Section 4.04.Consummation of Agreement................................................. 26
Section 4.05.Access to Information..................................................... 26
Section 4.06.Consents to Contracts and Leases.......................................... 26
Section 4.07.Subsequent Financial Statements........................................... 26
Section 4.08.Merger of Banks; Branch Exchange.......................................... 26
ARTICLE V - AGREEMENTS OF FBA
Section 5.01.Business in Ordinary Course............................................... 27
Section 5.02.Regulatory Approvals...................................................... 28
Section 5.03.Breaches.................................................................. 28
Section 5.04.Consummation of Agreement................................................. 29
Section 5.05.Indemnification........................................................... 29
Section 5.06.Access to Information..................................................... 29
Section 5.07.Registration Statement, Prospectus and Joint Proxy
Statement; Listing Application.....................................29
Section 5.08.Subsequent Financial Statements............................................30
ARTICLE VI - CONDITIONS PRECEDENT TO THE MERGER
Section 6.01.Conditions to the Obligations of FBA...................................... 31
Section 6.02.Conditions to the Obligations of First Commercial......................... 32
ARTICLE VII - TERMINATION
Section 7.01.Mutual Agreement.......................................................... 33
Section 7.02.Breach of Agreements...................................................... 33
Section 7.03.Failure of Conditions..................................................... 34
Section 7.04.Denial of Regulatory Approval............................................. 34
Section 7.05.Regulatory Enforcement Matters............................................ 34
Section 7.06.Unilateral Termination.................................................... 34
Section 7.07.Damages and Limitation on Damages......................................... 34
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARTICLE VIII - GENERAL PROVISIONS
<S> <C> <C>
Section 8.01.Confidential Information.................................................. 35
Section 8.02.Publicity................................................................. 35
Section 8.03.Return of Documents....................................................... 35
Section 8.04.Notices................................................................... 36
Section 8.05.Nonsurvival of Representations, Warranties
and Agreements..................................................... 37
Section 8.06.Costs and Expenses........................................................ 37
Section 8.07.Entire Agreement.......................................................... 37
Section 8.08.Headings and Captions..................................................... 37
Section 8.09.Waiver, Amendment or Modification......................................... 37
Section 8.10.Rules of Construction..................................................... 38
Section 8.11.Counterparts.............................................................. 38
Section 8.12.Successors and Assigns.................................................... 38
Section 8.13.Governing Law............................................................. 38
</TABLE>
<PAGE>
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of October 3, 1997, is by
and between First Banks America, Inc., a bank holding company organized as a
Delaware corporation ("FBA"), and First Commercial Bancorp, Inc., a bank holding
company organized as a Delaware corporation ("First Commercial"). This Agreement
and Plan of Merger is hereinafter referred to as the "Agreement."
In consideration of the mutual representations, warranties, agreements
and covenants contained herein, FBA and First Commercial hereby agree as
follows:
ARTICLE I
TERMS OF THE MERGER & CLOSING; EXCHANGE
OF SHARES
Section 1.01. The Merger. Pursuant to the terms and provisions of this
Agreement and the corporation law of the State of Delaware governing the merger
of First Commercial with FBA ("Corporate Law"), First Commercial shall merge
with and into FBA, and FBA will be the surviving corporation (the "Merger").
This Agreement also contemplates that, immediately following the Effective Time
(as defined in Section 1.05 hereof), the Bank Merger and the Branch Exchange (as
such terms are defined in Section 4.0 8) will occur.
Section 1.02. Effect of the Merger. The Merger shall have all of the
effects provided by Corporate Law and this Agreement, and the separate corporate
existence of First Commercial shall cease on consummation of the Merger and be
combined in FBA.
Section 1.03. Conversion of Shares.
(a) At the Effective Time, each share of common stock, $1.25 par value,
of First Commercial ("First Commercial Common") issued and outstanding
immediately prior to the Effective Time shall be converted into the right to
receive 0.8888 shares of common stock, par value $.15 per share, of FBA ("FBA
Common Stock"); provided, however, that (i) no fractional shares of FBA Common
Stock shall be issued as a result of the Merger, but cash shall be paid in lieu
thereof as provided in Section 1.07 hereof; and (ii) each share of First
Commercial Common held in the treasury of First Commercial or by any direct or
indirect subsidiary of First Commercial immediately prior to the Effective Time
shall be cancelled.
(b) At the Effective Time, by virtue of the Merger and without any
action on the part of the holders thereof, all of the shares of First Commercial
Common shall cease to be outstanding and be cancelled. Upon the surrender of any
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of First Commercial Common (the "Certificate"),
each holder thereof shall cease to have any rights with respect to such shares,
except the right of the holder to receive (i) a new certificate representing the
number of whole shares of FBA Common Stock, and (ii) the amount of cash in lieu
of fractional shares, if any, into which the shares of First Commercial Common
represented by the Certificate have been converted.
(c) Issued and outstanding shares of First Commercial held by a
dissenting holder shall not be converted as described in this Section 1.03, but
from and after the Effective Time shall represent only the right to receive such
consideration as may be determined to be due pursuant to applicable Corporate
Law; provided, however, that each share of First Commercial Common outstanding
immediately prior to the Effective Time and held by a dissenting holder who
shall, after the Effective Time, withdraw his demand for appraisal or lose his
right of appraisal shall have only such rights as are provided under applicable
Corporate Law.
<PAGE>
(d)(i) Each option granted by First Commercial to purchase shares of
First Commercial Common (each a "First Commercial Option") outstanding
immediately prior to the Effective Time shall cease to represent the right to
acquire shares of First Commercial Common and shall be converted automatically
into an option to purchase shares of FBA Common Stock. The number of shares of
FBA Common Stock subject to a new option shall be the product of the number of
shares of First Commercial Common subject to the First Commercial Option times
0.8888, and the exercise price of the new option shall be the quotient obtained
by dividing the exercise price of the First Commercial Option by 0.8888.
(ii) Promptly after the Effective Time, FBA and each holder of an
option subject to such conversion shall enter into an option agreement setting
forth the terms of the new option into which the corresponding First Commercial
Option has been converted, having substantially the same terms as those of the
First Commercial Option except as otherwise provided herein.
Section 1.04. The Closing. The closing of the Merger (the "Closing")
shall take place at the location mutually agreeable to the parties hereto at
10:00 a.m. local time on the Closing Date described in Section 1.05 of this
Agreement.
Section 1.05. Closing Date. At FBA's election, the Closing shall take
place on either (i) one of the last five (5) business days of the month, or (ii)
the first business day of the month following the month, or (iii) the first
business day of the first month of the next calendar quarter following the
month, in each case, during which each of the conditions in Sections 6.01 and
6.02 is satisfied or waived by the appropriate party or on such other date as
First Commercial and FBA may agree (the "Closing Date"). The Merger shall be
effective upon the filing of Articles of Merger with the Secretary of State of
the State of Delaware (the "Effective Time").
Section 1.06. Actions At Closing. (a) At the Closing, First Commercial
shall deliver to FBA:
(i) certified copies of the Certificate of Incorporation and Bylaws
of First Commercial and the certificate or articles of incorporation
and bylaws of each of its subsidiaries;
(ii) a Certificate signed by an appropriate officer of First Commercial
stating that (A) each of the representations and warranties contained
in Article II is true and correct in all material respects at the time
of the Closing (except for those made as of a specified date), with the
same force and effect as if such representations and warranties had
been made at the Closing, and (B) all of the conditions set forth in
Section 6.01 have been satisfied or waived as provided therein;
(iii) certified copies of the resolutions of First Commercial's Board
of Directors and stockholders, establishing the requisite approvals
under applicable Corporate Law of this Agreement, the Merger and the
other transactions contemplated hereby;
(iv) a Certificate of the Secretary of State of the State of
Delaware, dated a recent date, stating that First Commercial is in
good standing; and
(v) a legal opinion from counsel for First Commercial regarding First
Commercial, this Agreement and the transactions contemplated hereby, in
form reasonably satisfactory to FBA and its counsel.
(b) At the Closing, FBA shall deliver to First Commercial:
(i) certified copies of the Certificate of Incorporation and Bylaws
of FBA and the certificate or articles of incorporation and bylaws
of each of its subsidiaries;
(ii) a Certificate signed by an appropriate officer of FBA stating that
(A) each of the representations and warranties contained in Article III
is true and correct in all material respects at the time of the Closing
(except for those made as of a specified date), with the same force and
effect as if such representations and warranties had been made at the
Closing, and (B) all of the conditions set forth in Section 6.02 have
been satisfied or waived as provided therein;
<PAGE>
(iii) certified copies of the resolutions of FBA's Board of Directors
and stockholders, establishing the requisite approvals under applicable
Corporate Law of this Agreement, the Merger and the other transactions
contemplated hereby;
(iv) a Certificate of the Secretary of State of the State of
Delaware, dated a recent date, stating that FBA is in good standing;
and
(v) a legal opinion from counsel for FBA regarding FBA, this Agreement
and the transactions contemplated hereby, in form reasonably
satisfactory to First Commercial and its counsel.
Section 1.07. Exchange Procedures; Surrender of Certificates.
(a) Chase Mellon Shareholder Services, or another firm selected by FBA
to which First Commercial has no reasonable objection, shall act as Exchange
Agent in the Merger (the "Exchange Agent").
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each record holder of shares of First Commercial
Common a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to Certificates representing such shares
shall pass, only upon proper delivery of the Certificates to the Exchange Agent
and shall be in such form and have such other provisions as the Exchange Agent
may reasonably specify) (each such letter, the "Letter of Transmittal") and
instructions for use in effecting the surrender of Certificates. Upon surrender
to the Exchange Agent of a Certificate, together with a duly executed Letter of
Transmittal and any other required documents, the holder of a Certificate shall
be entitled to receive in exchange therefor solely the Merger Consideration,
without interest. If shares of FBA Common Stock are to be issued in a name other
than a person in whose name a surrendered Certificate is registered, it shall be
a condition of acceptance of the surrendered Certificate that the same shall be
properly endorsed or otherwise in proper form for transfer and that the person
requesting such payment shall pay to the Exchange Agent any required transfer or
other taxes or establish to the satisfaction of the Exchange Agent that such
taxes have been paid or are not applicable.
(c) Each holder of shares of First Commercial Common who would
otherwise be entitled to receive a fraction of a share of FBA Common Stock
(after taking into account all Certificates delivered by such holder) shall
receive in lieu thereof cash, without interest, in an amount equal to such
fraction multiplied by the product of the closing price of a share of FBA Common
Stock on the New York Stock Exchange--Composite Transactions List on the
business day immediately preceding the Effective Time times 0.8888.
(d) At any time following six months after the Effective Time, FBA
shall be entitled to terminate the Exchange Agent relationship, and thereafter
holders of Certificates shall be entitled to look only to FBA (subject to
abandoned property, escheat or other similar laws) with respect to the surrender
of any Certificate.
<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF FIRST COMMERCIAL
First Commercial represents and warrants to FBA as follows:
Section 2.01. Organization and Capital Stock.
(a) First Commercial is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has the
corporate power to own all of its property and assets, to incur all of its
liabilities and to carry on its business as now being conducted.
(b) As of the date hereof, the authorized capital stock of First
Commercial consists of 10,000,000 shares of common stock, par value $ 1.25 per
share ("First Commercial Common"), of which 846,127 are outstanding, duly and
validly issued, fully paid and non-assessable, and 5,000,000 shares of preferred
stock, par value $.01 per share, none of which is outstanding. A certificate of
designation has been filed with the Delaware Secretary of State designating
500,000 shares of such preferred stock as "Series A Participating Preferred
Stock," none of which has been issued. None of the outstanding shares of First
Commercial Common has been issued in violation of any preemptive rights. There
are currently outstanding First Commercial Options representing the right to
acquire an aggregate of 240 shares of First Commercial Common Stock for the
aggregate exercise price of $221,400. To the best of First Commercial's
knowledge, First Commercial does not have a material liability arising from the
issuance of stock certificates in replacement of certificates which have been
lost, stolen or destroyed.
The stockholders of First Commercial adopted a stockholders rights plan
(the "Rights Plan") in 1990. Under the Rights Plan, holders of outstanding
shares of First Commercial Common are entitled to purchase a fractional interest
in First Commercial's Series A Participating Preferred Stock under certain
circumstances. The rights granted under the Rights Plan attach to each share of
First Commercial Common and no separate certificates for such rights have been
issued. No "Distribution Date," as such term is defined in the Rights Plan, has
occurred.
(c) Except as disclosed in Section 2.01(b), and except for convertible
debentures in the principal amount of $6.5 million which are convertible into
shares of First Commercial Common (the "Debentures"), there are no shares of
capital stock or other equity securities of First Commercial issued or
outstanding and no outstanding options, warrants, rights to subscribe for, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of the capital stock of First
Commercial or contracts, commitments, understandings or arrangements by which
First Commercial is or may be obligated to issue additional shares of its
capital stock.
(d) Pursuant to that certain Stock Purchase Agreement dated as of
August 7, 1995 by and between First Commercial and First Banks, Inc. ("First
Banks"), as amended by that certain Additional Investment Agreement dated as of
October 31, 1995, by and between First Commercial and First Banks, and as
further amended by that certain Standby Agreement dated as of December 28, 1995
by and between First Commercial and First Banks (collectively, the "Stock
Purchase Agreement"), stockholders of First Commercial as of October 6, 1995
were issued certain appreciation rights by First Commercial (the "Appreciation
Rights"). Holders of Appreciation Rights are entitled to receive certain
payments from First Commercial based upon recoveries First Commercial Bank
experiences on certain specified assets. The Stock Purchase Agreement sets forth
those specified assets, certain measurement formulas, and the three dates as of
which such measurement formulas are to be applied to determine whether any
payment is due to holders of the Appreciation Rights. The first measurement date
was June 30, 1996, and no payments were due under the measurement formulas as of
that date. The second measurement date is December 31, 1997, and the third
measurement date is October 31, 1998. Under the terms of the Stock Purchase
Agreement, payments for the second and third measurement dates may be in the
form of cash or stock, as determined in the sole discretion of the First
Commercial Board of Directors. First Commercial anticipates that some payment
will be made with respect to the second measurement date, but the precise amount
cannot be determined at this time.
<PAGE>
Section 2.02. Authorization; No Defaults. First Commercial's Board of
Directors has by all requisite action approved this Agreement and the Merger and
authorized the execution and delivery hereof on its behalf by its duly
authorized officers and the performance by First Commercial of its obligations
hereunder. Nothing in the Certificate of Incorporation or Bylaws of First
Commercial or any other agreement, instrument, decree, proceeding, law or
regulation (except as specifically referred to in or contemplated by this
Agreement) by or to which First Commercial or any of its subsidiaries is bound
or subject would prohibit or inhibit First Commercial from consummating this
Agreement and the Merger on the terms and conditions herein contained. This
Agreement has been duly and validly executed and delivered by First Commercial
and constitutes a legal, valid and binding obligation of First Commercial,
enforceable against First Commercial in accordance with its terms. First
Commercial and its subsidiaries are neither in default under nor in violation of
any provision of their respective articles or certificates of incorporation,
bylaws, or any promissory note, indenture or any evidence of indebtedness or
security therefor, lease, contract, purchase or other commitment or any other
agreement which is material to First Commercial and its subsidiaries taken as a
whole.
Section 2.03. First Commercial Subsidiaries. Each of First Commercial's
direct and indirect subsidiaries (hereinafter referred to singly as a "First
Commercial Subsidiary" and collectively as the "First Commercial Subsidiaries"),
the names and jurisdictions of incorporation of which are disclosed in Section
2.03 of that certain document delivered by First Commercial to FBA, entitled the
"First Commercial Disclosure Schedule" and executed by both First Commercial and
FBA concurrently with the execution and delivery of this Agreement (the "First
Commercial Disclosure Schedule"), is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, and each
of the First Commercial Subsidiaries has the corporate power to own its
properties and assets, to incur its liabilities and to carry on its business as
now being conducted. The number of issued and outstanding shares of capital
stock of each First Commercial Subsidiary and the ownership of such shares is
set forth in Section 2.03 of the First Commercial Disclosure Schedule; and all
of such shares are owned by First Commercial or a First Commercial Subsidiary,
free and clear of all liens, encumbrances, rights of first refusal, options or
other restrictions of any nature whatsoever, except that the common stock of
First Commercial Bank is pledged to secure the repayment of the Debentures.
There are no options, warrants or rights outstanding to acquire any capital
stock of any First Commercial Subsidiary, and no person or entity has any other
right to purchase or acquire any unissued shares of stock of any First
Commercial Subsidiary, nor does any First Commercial Subsidiary have any
obligation of any nature with respect to its unissued shares of stock. Except as
disclosed in Section 2.03 of the First Commercial Disclosure Schedule, neither
First Commercial nor any First Commercial Subsidiary is a party to any
partnership or joint venture or owns an equity interest in any other business or
enterprise.
Section 2.04. Financial Information. All of (i) the audited
consolidated balance sheets of First Commercial and the First Commercial
Subsidiaries as of December 31, 1996 and related consolidated income statements
and statements of changes in shareholders' equity and of cash flows for the
three years ended December 31, 1996, together with the notes thereto, included
in First Commercial's Annual Report on Form 10-K for the year ended December 31,
1996, as currently on file with the Securities and Exchange Commission (the
"SEC"); (ii) the unaudited consolidated balance sheets of First Commercial and
the First Commercial Subsidiaries as of June 30, 1997 and related consolidated
income statements and statements of changes in shareholders' equity and of cash
flows for the six months ended June 30, 1997, together with the notes thereto,
included in First Commercial's Quarterly Report on Form 10-Q for the six months
ended June 30, 1997 as currently on file with the SEC; and (iii) the year-end
and quarter-end Reports of Condition and Reports of Income of First Commercial
Bank for 1996 and for the six-month period ended June 30, 1997, respectively, as
filed with the Federal Deposit Insurance Corporation (the "FDIC") (such
financial statements and notes collectively referred to herein as the "First
Commercial Financial Statements"), have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis (except
as may be disclosed therein and except for regulatory reporting differences
required by First Commercial Bank's reports) and fairly present the consolidated
financial position and the consolidated results of operations, changes in
shareholders' equity and cash flows of the respective entity and its respective
consolidated subsidiaries as of the dates and for the periods indicated.
Section 2.05. Absence of Changes. Since June 30, 1997 there has not
been any material adverse change in the financial condition, the results of
operations or the business or prospects of First Commercial and its subsidiaries
taken as a whole, nor have there been any events or transactions having such a
material adverse effect which should be disclosed in order to make the First
Commercial Financial Statements not misleading. Since June 30, 1996, there has
been no material adverse change in the financial condition, the results of
operations or the business of First Commercial Bank except for any such changes
as are disclosed in First Commercial Bank's Reports of Condition and Income
filed with the FDIC since such date.
<PAGE>
Section 2.06. Regulatory Enforcement Matters. Neither First Commercial
nor any First Commercial Subsidiary is subject to, or has received any notice or
advice that it may become subject to, any order, agreement, memorandum of
understanding or other regulatory enforcement action or proceeding with or by
any federal or state agency charged with the supervision or regulation of banks
or bank holding companies or engaged in the insurance of bank deposits or any
other governmental agency having supervisory or regulatory authority with
respect to First Commercial or any of its subsidiaries.
Section 2.07. Tax Matters. First Commercial and the First Commercial
Subsidiaries have filed all federal, state and local income, franchise, excise,
sales, use, real and personal property and other tax returns required to be
filed. All such returns fairly reflect the information required to be presented
therein. All provisions for accrued but unpaid taxes contained in the First
Commercial Financial Statements were made in accordance with generally accepted
accounting principles and in the aggregate do not materially fail to provide for
potential tax liabilities.
Section 2.08. Litigation. Except as disclosed in Section 2.08 of the
First Commercial Disclosure Schedule, there is no litigation, claim or other
proceeding involving an amount in controversy in excess of $50,000 pending or,
to the knowledge of First Commercial, threatened against First Commercial or any
of the First Commercial Subsidiaries, or of which the property of First
Commercial or any of the First Commercial Subsidiaries is or would be subject.
Section 2.09. Properties, Contracts, Employee Benefit Plans and
Other Agreements. Section 2.09 of the First Commercial Disclosure Schedule
specifically identifies the following:
(a) all real property owned by First Commercial or any First Commercial
Subsidiary and the principal buildings and structures located thereon, together
with a legal description of such real estate, and each lease of real property to
which First Commercial or any First Commercial Subsidiary is a party,
identifying the parties thereto, the annual rental payable, the expiration date
thereof and a brief description of the property covered;
(b) all loan and credit agreements, conditional sales contracts or
other title retention agreements or security agreements relating to money
borrowed by First Commercial or a First Commercial Subsidiary, exclusive of
deposit agreements with customers of First Commercial Bank entered into in the
ordinary course of business, agreements for the purchase of federal funds,
repurchase agreements and the Debentures;
(c) all agreements, loans, contracts, guaranties, letters of credit,
lines of credit or commitments of First Commercial or any First Commercial
Subsidiary not referred to elsewhere in this Section 2.09 which:
(i) (except for loans, loan commitments or lines of credit)
involve payment by First Commercial or any First
Commercial Subsidiary of more than $25,000;
(ii) involve payments based on profits of First Commercial or
any First Commercial Subsidiary;
(iii) relate to the future purchase of goods or services in
excess of the requirements of its respective business
at current levels or for normal operating purposes;
(iv) were not made in the ordinary course of business; or
(v) materially affect the business or financial condition
of First Commercial or any First Commercial Subsidiary;
(d) all leases, subleases or licenses with respect to real or personal
property, whether as lessor, lessee, licensor or licensee, with annual rental or
other payments due thereunder in excess of $25,000;
(e) all agreements for the employment, retention or engagement, or with
respect to the severance, of any officer, employee, agent, consultant or other
person or entity which by its terms is not terminable by First Commercial or a
First Commercial Subsidiary on thirty (30) days written notice or less without
any payment by reason of such termination; and
<PAGE>
(f) the name and annual salary as of January 1, 1997 of each director
or employee of First Commercial or any First Commercial Subsidiary with a salary
in excess of $100,000.
Copies of each document, plan or contract identified in Section 2.09 of
the First Commercial Disclosure Schedule have been made available for inspection
by FBA and shall remain available at all times prior to the Closing Date.
Section 2.10. Reports. First Commercial and the First Commercial
Subsidiaries have filed all reports and statements, together with any amendments
required to be made with respect thereto, required to be filed with the SEC, the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
the Department of Financial Institutions of the State of California (the
"Financial Institutions Department"), the FDIC and any other governmental
authority with jurisdiction over First Commercial or any First Commercial
Subsidiary. As of the dates indicated thereon, each of such reports and
documents, including any financial statements, exhibits and schedules thereto,
complied in all material respects with the relevant statutes, rules and
regulations enforced or promulgated by the regulatory authority with which they
were filed, and did not 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.
Section 2.11. Investment Portfolio. All United States Treasury
securities, obligations of other United States Government agencies and
corporations, obligations of States and political subdivisions of the United
States and other investment securities held by First Commercial or any First
Commercial Subsidiary, as reflected in the latest consolidated balance sheet of
First Commercial included in the First Commercial Financial Statements, are
carried in accordance with generally accepted accounting principles.
Section 2.12. Loan Portfolio. Except as disclosed in Section 2.12 of
the First Commercial Disclosure Schedule, to the best of First Commercial's
knowledge: (i) all loans and discounts shown on the First Commercial Financial
Statements at June 30, 1997 or which were or will be entered into after June 30,
1997 but before the Closing Date were and will be made in all material respects
for good, valuable and adequate consideration in the ordinary course of the
business of First Commercial and the First Commercial Subsidiaries, in
accordance in all material respects with sound lending practices, and they are
not subject to any material known defenses, setoffs or counterclaims, including
without limitation any such as are afforded by usury or truth in lending laws,
except as may be provided by bankruptcy, insolvency or similar laws or by
general principles of equity; (ii) the notes and other evidences of indebtedness
evidencing such loans and all forms of pledges, mortgages and other collateral
documents and security agreements are and will be in all material respects
enforceable, valid, true and genuine and what they purport to be; and (iii)
First Commercial and the First Commercial Subsidiaries have complied and will
through the Closing Date comply with all laws and regulations relating to such
loans, or to the extent there has not been such compliance, such failure to
comply will not materially interfere with the collection of any loan. To the
best of First Commercial's knowledge, except as disclosed in Section 2.12 of the
First Commercial Disclosure Schedule, all loans and loan commitments extended by
First Commercial Bank and any extensions, renewals or continuations of such
loans and loan commitments were made in accordance with its customary lending
standards in the ordinary course of business. Such loans are evidenced by
appropriate and sufficient documentation based upon customary and ordinary past
practices of First Commercial Bank. The reserve for possible loan and lease
losses shown on the Report of Condition and Income of First Commercial Bank as
of June 30, 1997 is adequate in all material respects under the requirements of
generally accepted accounting principles to provide for possible losses, net of
recoveries relating to loans previously charged off, on loans outstanding
(including, without limitation, accrued interest receivable) as of June 30,
1997.
Section 2.13. Employee Matters and ERISA.
(a) Neither First Commercial nor any First Commercial Subsidiary has
entered into any collective bargaining agreement with any labor organization
with respect to any group of employees of First Commercial or any First
Commercial Subsidiary, and to the knowledge of First Commercial there is no
present effort nor existing proposal to attempt to unionize any group of
employees of First Commercial or any First Commercial Subsidiary.
<PAGE>
(b) All arrangements of First Commercial and the First Commercial
Subsidiaries relating to employees, including all benefit plans and deferred
compensation, bonus, stock or incentive plans for the benefit of current or
former employees (the "First Commercial Employee Plans") are administered by
First Banks, Inc. All costs, liabilities and obligations arising from the First
Commercial Employee Plans are properly reflected in accordance with generally
accepted accounting principles in the First Commercial Financial Statements.
Section 2.14. Title to Properties; Insurance. Except as disclosed in
Section 2.14 of the First Commercial Disclosure Schedule: (i) First Commercial
and the First Commercial Subsidiaries have marketable title, insurable at
standard rates, free and clear of all liens, charges and encumbrances (except
taxes which are a lien but not yet payable and liens, charges or encumbrances
reflected in the First Commercial Financial Statements and easements,
rights-of-way, and other restrictions which are not material, and further
excepting in the case of other Real Estate Owned ("OREO"), as such real estate
is internally classified on the books of First Commercial or any First
Commercial Subsidiary, rights of redemption under applicable law), to all of
their real properties; (ii) all leasehold interests for real property and any
material personal property used by First Commercial or a First Commercial
Subsidiary in its business are held pursuant to lease agreements which are valid
and enforceable in accordance with their terms; (iii) all such properties comply
in all material respects with all applicable private agreements, zoning
requirements and other governmental laws and regulations relating thereto, and
there are no condemnation proceedings pending or, to the knowledge of First
Commercial, threatened with respect to any of such properties; (iv) First
Commercial and the First Commercial Subsidiaries have valid title or other
ownership rights under licenses to all material intangible personal or
intellectual property used by First Commercial or any First Commercial
Subsidiary in its business, free and clear of any material claim, defense or
right of any other person or entity, subject only to rights of the licensors
pursuant to applicable license agreements, which rights do not materially and
adversely interfere with the use of such property; and (v) all material
insurable properties owned or held by First Commercial or a First Commercial
Subsidiary are adequately insured by financially sound and reputable insurers in
such amounts and against fire and other risks insured against by extended
coverage and public liability insurance, as is customary with bank holding
companies of similar size.
Section 2.15. Compliance with Law. First Commercial and the First
Commercial Subsidiaries have all licenses, franchises, permits and other
governmental authorizations that are legally required to enable them to conduct
their respective businesses in all material respects, are qualified to conduct
business in every jurisdiction in which such qualification is legally required
and are in compliance in all material respects with all applicable laws and
regulations.
Section 2.16. Brokerage. Except for fees payable by First Commercial to
Mercer Capital Management, Inc., there are no existing claims or agreements for
brokerage commissions, finders' fees, financial advisory fees or similar
compensation in connection with the transactions contemplated by this Agreement
payable by First Commercial or any First Commercial Subsidiary.
Section 2.17. No Undisclosed Liabilities. Neither First Commercial nor
any First Commercial Subsidiary has any material liability, whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated, and whether due or to become due (and there is no
past or present fact, situation, circumstance, condition or other basis for any
present or future action, suit or proceeding, hearing, charge, complaint, claim
or demand against First Commercial or any First Commercial Subsidiary giving
rise to any such liability), except (i) liabilities reflected in the First
Commercial Financial Statements and (ii) liabilities of the same type incurred
in the ordinary course of business of First Commercial and the First Commercial
Subsidiaries since June 30, 1997.
Section 2.18. Statements True and Correct. None of the information
supplied or to be supplied by First Commercial for inclusion in any document to
be filed with the SEC or any banking or other regulatory authority in connection
with the transactions contemplated hereby will, at the respective times such
documents are filed, and, in the case of the Joint Proxy Statement (as defined
in Section 5.07), when first mailed to the stockholders of First Commercial and
at the times of the First Commercial Stockholders' Meeting (as defined in
Section 4.03) and the FBA Stockholders' Meeting (as defined in Section 5.07), be
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein not misleading,
or omit to state any material fact required to be stated in order to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for the First Commercial Stockholders' Meeting. All documents that First
Commercial is responsible for filing with the SEC or any banking or other
regulatory authority in connection with the transactions contemplated hereby
will comply in all material respects with the provisions of applicable law and
the applicable rules and regulations thereunder.
<PAGE>
Section 2.19. Commitments and Contracts. Except as disclosed in Section
2.19 of the First Commercial Disclosure Schedule (and with a true and correct
copy of the document or other item in question having been made available to FBA
for inspection), neither First Commercial nor any First Commercial Subsidiary is
a party or subject to any of the following (whether written or oral, express or
implied):
(i) any agreement, arrangement or commitment not made in the ordinary
course of business;
(ii) any agreement, indenture or other instrument not reflected in the
First Commercial Financial Statements relating to the borrowing of
money by First Commercial or a First Commercial Subsidiary or the
guarantee by First Commercial or a First Commercial Subsidiary of any
obligation, other than (A) trade payables or instruments related to
transactions entered into in the ordinary course of business by First
Commercial or a First Commercial Subsidiary, such as deposits, federal
funds borrowings and repurchase agreements, (B) the Appreciation
Rights, or (C) agreements, indentures or instruments providing for
annual payments of less than $25,000; or
(iii) any contract containing covenants which limit the ability of
First Commercial to compete in any line of business or with any person
or containing any restriction of the geographical area in which, or
method by which, First Commercial or any First Commercial Subsidiary
may carry on its business (other than as may be required by law or any
applicable regulatory authority).
Section 2.20. Material Interest of Certain Persons. (a) Except as
disclosed in Section 2.20 of the First Commercial Disclosure Schedule, no
officer or director of First Commercial or any "associate" (as such term is
defined in Rule 14a-1 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of any such officer or director, has any material interest in
any material contract or property (real or personal, tangible or intangible),
used in or pertaining to the business of First Commercial or any First
Commercial Subsidiary.
(b) All outstanding loans from First Commercial Bank to any present
officer, director, employee or any associate or related interest of any such
person which was required to be approved by or reported to First Commercial
Bank's Board of Directors ("Insider Loans") were approved by or reported to the
Board of Directors in accordance with all applicable laws and regulations.
Section 2.21. Conduct to Date. Except as disclosed in Section 2.21 of
the First Commercial Disclosure Schedule, from and after June 30, 1997 through
the date of this Agreement, neither First Commercial nor any First Commercial
Subsidiary has (i) failed to conduct its business in the ordinary and usual
course consistent with past practices; (ii) issued, sold, granted, conferred or
awarded any common or other stock, or any corporate debt securities which would
be classified under generally accepted accounting principles applied on a
consistent basis as long-term debt on the balance sheets of First Commercial or
any First Commercial Subsidiary; (iii) effected any stock split or adjusted,
combined, reclassified or otherwise changed its capitalization; (iv) declared,
set aside or paid any dividend or other distribution in respect of its capital
stock, or purchased, redeemed, retired, repurchased, or exchanged, or otherwise
directly or indirectly acquired or disposed of any of its capital stock; (v)
incurred any material obligation or liability (absolute or contingent), except
normal trade or business obligations or liabilities incurred in the ordinary
course of business, or subjected to lien any of its assets or properties other
than in the ordinary course of business consistent with past practice; (vi)
discharged or satisfied any material lien or paid any material obligation or
liability (absolute or contingent), other than in the ordinary course of
business; (vii) sold, assigned, transferred, leased, exchanged, or otherwise
disposed of any of its properties or assets other than for a fair consideration
in the ordinary course of business; (viii) except as required by contract or
law, (A) increased the rate of compensation of, or paid any bonus to, any of its
directors, officers, or other employees, except merit or promotion increases in
accordance with existing policy, (B) entered into any new, or amended or
supplemented any existing, employment, management, consulting, deferred
compensation, severance or other similar contract, (C) entered into, terminated
or substantially modified any of the Employee Plans or (D) agreed to do any of
the foregoing; (ix) suffered any material damage, destruction, or loss, whether
as the result of fire, explosion, earthquake, accident, casualty, labor trouble,
requisition, or taking of property by any regulatory authority, flood,
windstorm, embargo, riot, act of God or the enemy, or other casualty or event,
and whether or not covered by insurance; (x) cancelled or compromised any debt,
except for debts charged off or compromised in accordance with past practice;
(xi) entered into any material transaction, contract or commitment outside the
ordinary course of its business or (xii) made or guaranteed any loan to any of
the Employee Plans.
Section 2.22. Environmental Matters. As used in this Agreement,
"Environmental Laws" means all local, state and federal environmental, health
and safety laws and regulations in all jurisdictions in which First Commercial
or any First Commercial Subsidiary has done business or owned, leased or
operated property, including, without limitation, the Federal Resource
Conservation and Recovery Act, the Federal Comprehensive Environmental Response,
Compensation and Liability Act, the Federal Clean Water Act, the Federal Clean
Air Act, and the Federal Occupational Safety and Health Act.
Except as disclosed in Section 2.22 of the First Commercial Disclosure
Schedule, neither the conduct nor operation of First Commercial or any First
Commercial Subsidiary nor any condition of any property presently or previously
owned, leased or operated by any of them on their own behalf or in a fiduciary
capacity violates or violated any Environmental Law in any respect material to
the business of First Commercial and the First Commercial Subsidiaries, taken as
a whole, and no condition or event has occurred with respect to any of them or
any property that, with notice or the passage of time, or both, would constitute
a violation material to the business of First Commercial and the First
Commercial Subsidiaries, taken as a whole, of any Environmental Law or obligate
(or potentially obligate) First Commercial or any First Commercial Subsidiary to
remedy, stabilize, neutralize or otherwise alter the environmental condition of
any property, where the aggregate cost of such actions would be material to
First Commercial and the First Commercial Subsidiaries, taken as a whole. Except
as may be disclosed in Section 2.22 of the First Commercial Disclosure Schedule,
neither First Commercial nor any First Commercial Subsidiary has received notice
from any person or entity that First Commercial or any First Commercial
Subsidiary, or the operation or condition of any property ever owned, leased or
operated by any of them on their own behalf or in a fiduciary capacity, are or
were in violation of any Environmental Law, or that First Commercial or any
First Commercial Subsidiary is responsible (or potentially responsible) for
remedying, or the cleanup of, any pollutants, contaminants, or hazardous or
toxic wastes, substances or materials at, on or beneath any such property.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FBA
FBA represents and warrants to First Commercial as follows:
Section 3.01. Organization and Capital Stock.
(a) FBA is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power to
own all of its property and assets, to incur all of its liabilities and to carry
on its business as now being conducted.
(b) As of the date hereof, the authorized capital stock of FBA consists
of 6,666,666 shares of FBA Common Stock, of which 1,059,042 are outstanding,
duly and validly issued, fully paid and non-assessable; 4,000,000 shares of FBA
Class B Stock, par value $.15 per share ("FBA Class B Stock"), of which
2,500,000 are outstanding, duly and validly issued, fully paid and
non-assessable; and 3,000,000 shares of preferred stock, par value $1.00 per
share, none of which is outstanding. None of the outstanding shares of FBA
Common Stock or FBA Class B Stock has been issued in violation of any preemptive
rights. FBA has granted and outstanding (i) stock options representing the right
to acquire an aggregate of 15,001 shares of FBA Common Stock for the aggregate
exercise price of $56,256 (the "FBA Stock Options") and (ii) warrants
representing the right to acquire an aggregate of 65,663 shares of common Stock
for the aggregate price of $5,328,552 (the "FBA Warrants").
(c) Except as disclosed in (i) Section 3.01(b) and (ii) Section 3.01 of
that certain document delivered by FBA to First Commercial entitled the "FBA
Disclosure Schedule" and executed by both FBA and First Commercial concurrently
with the execution and delivery of this Agreement (the "FBA Disclosure
Schedule"), there are no shares of capital stock or other equity securities of
FBA issued or outstanding and no outstanding options, warrants, rights to
subscribe for, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of the capital
stock of FBA or contracts, commitments, understandings or arrangements by which
FBA is or may be obligated to issue additional shares of its capital stock.
<PAGE>
Section 3.02. Authorization; No Defaults. FBA's Board of Directors has
by all requisite action approved this Agreement and the Merger and authorized
the execution and delivery hereof on its behalf by its duly authorized officers
and the performance by FBA of its obligations hereunder. Nothing in the
Certificate of Incorporation or Bylaws of FBA or any other agreement,
instrument, decree, proceeding, law or regulation (except as specifically
referred to in or contemplated by this Agreement) by or to which FBA or any of
its subsidiaries is bound or subject would prohibit or inhibit FBA from
consummating this Agreement and the Merger on the terms and conditions herein
contained. This Agreement has been duly and validly executed and delivered by
FBA and constitutes a legal, valid and binding obligation of FBA, enforceable
against FBA in accordance with its terms. FBA and its subsidiaries are neither
in default under nor in violation of any provision of their respective articles
or certificates of incorporation, bylaws, or any promissory note, indenture or
any evidence of indebtedness or security therefor, lease, contract, purchase or
other commitment or any other agreement which is material to FBA and its
subsidiaries taken as a whole.
Section 3.03. FBA Subsidiaries. Each of FBA's direct and indirect
subsidiaries (hereinafter referred to singly as an "FBA Subsidiary" and
collectively as the "FBA Subsidiaries"), the names and jurisdictions of
incorporation of which are disclosed in Section 3.03 of the FBA Disclosure
Schedule, is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, and each of the FBA Subsidiaries
has the corporate power to own its properties and assets, to incur its
liabilities and to carry on its business as now being conducted. The number of
issued and outstanding shares of capital stock of each FBA Subsidiary and the
ownership of such shares is set forth in Section 3.03 of the FBA Disclosure
Schedule; and all of such shares are owned by FBA or an FBA Subsidiary, free and
clear of all liens, encumbrances, rights of first refusal, options or other
restrictions of any nature whatsoever, except as disclosed in Section 3.03 of
the FBA Disclosure Schedule. There are no options, warrants or rights
outstanding to acquire any capital stock of any FBA Subsidiary, and no person or
entity has any other right to purchase or acquire any unissued shares of stock
of any FBA Subsidiary, nor does any FBA Subsidiary have any obligation of any
nature with respect to its unissued shares of stock. Except as disclosed in
Section 3.03 of the FBA Disclosure Schedule, neither FBA nor any FBA Subsidiary
is a party to any partnership or joint venture or owns an equity interest in any
other business or enterprise.
Section 3.04. Financial Information. All of (i) the audited
consolidated balance sheets of FBA and the FBA Subsidiaries as of December 31,
1996 and related consolidated income statements and statements of changes in
shareholders' equity and of cash flows for the three years ended December 31,
1996, together with the notes thereto, included in FBA's Annual Report on Form
10-K for the year ended December 31, 1996, as currently on file with the SEC;
(ii) the unaudited consolidated balance sheets of FBA and the FBA Subsidiaries
as of June 30, 1997 and related consolidated income statements and statements of
changes in shareholders' equity and of cash flows for the six months ended June
30, 1997, together with the notes thereto, included in FBA's Quarterly Report on
Form 10-Q for the six months ended June 30, 1997 as currently on file with the
SEC; and (iii) the year-end and quarter-end Reports of Condition and Reports of
Income of BankTEXAS and Sunrise Bank, respectively, for 1996 and for the
six-month period ended June 30, 1997, as filed with the Office of the
Comptroller of the Currency (the "OCC") with respect to BankTEXAS and the
Financial Institutions Department with respect to Sunrise Bank (such financial
statements and notes collectively referred to herein as the "FBA Financial
Statements"), have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be disclosed
therein and except for regulatory reporting differences required by reports of
either bank) and fairly present the consolidated financial position and the
consolidated results of operations, changes in shareholders' equity and cash
flows of the respective entity and its consolidated subsidiaries as of the dates
and for the periods indicated.
Section 3.05. Absence of Changes. Since June 30, 1997 there has not
been any material adverse change in the financial condition, the results of
operations or the business or prospects of FBA and its subsidiaries taken as a
whole, nor have there been any events or transactions having such a material
adverse effect which should be disclosed in order to make the FBA Financial
Statements not misleading. Since the dates of the most recent examinations of
Sunrise Bank and BankTEXAS (collectively, the "FBA Banks") by the applicable
regulatory authorities, there has been no material adverse change in the
financial condition, the results of operations or the business of either of the
FBA Banks except for any such changes as are disclosed in their Reports of
Condition and Income filed with the FDIC and the OCC, respectively, since such
date.
Section 3.06. Regulatory Enforcement Matters. Neither FBA nor any FBA
Subsidiary is subject to, or has received any notice or advice that it may
become subject to, any order, agreement, memorandum of understanding or other
regulatory enforcement action or proceeding with or by any federal or state
agency charged with the supervision or regulation of banks or bank holding
companies or engaged in the insurance of bank deposits or any other governmental
agency having supervisory or regulatory authority with respect to FBA or any of
its subsidiaries.
<PAGE>
Section 3.07. Tax Matters. FBA and the FBA Subsidiaries have filed all
federal, state and local income, franchise, excise, sales, use, real and
personal property and other tax returns required to be filed. All such returns
fairly reflect the information required to be presented therein. All provisions
for accrued but unpaid taxes contained in the FBA Financial Statements were made
in accordance with generally accepted accounting principles and in the aggregate
do not materially fail to provide for potential tax liabilities.
Section 3.08. Litigation. Except as disclosed in Section 3.08 of the
FBA Disclosure Schedule, there is no litigation, claim or other proceeding
involving an amount in controversy in excess of $50,000 pending or, to the
knowledge of FBA, threatened against FBA or any of the FBA Subsidiaries, or of
which the property of FBA or any of the FBA Subsidiaries is or would be subject.
Section 3.09. Properties, Contracts, Employee Benefit Plans and Other
Agreements. Section 3.09 of the FBA Disclosure Schedule specifically identifies
the following:
(a) all real property owned by FBA or any of the FBA Subsidiaries and
the principal buildings and structures located thereon, together with a legal
description of such real estate, and each lease of real property to which FBA or
any FBA Subsidiaries is a party, identifying the parties thereto, the annual
rental payable, the expiration date thereof and a brief description of the
property covered;
(b) all loan and credit agreements, conditional sales contracts or
other title retention agreements or security agreements relating to money
borrowed by FBA or an FBA Subsidiary, exclusive of deposit agreements with
customers of Bank entered into in the ordinary course of business, agreements
for the purchase of federal funds and repurchase agreements;
(c) all agreements, loans, contracts, leases, guaranties, letters of
credit, lines of credit or commitments of FBA or any FBA Subsidiary not referred
to elsewhere in this Section 3.09 which:
(i) (except for loans, loan commitments or lines of credit)
involve payment by FBA or any FBA Subsidiary of more than
$25,000;
(ii) involve payments based on profits of FBA or any FBA
Subsidiary;
(iii) relate to the future purchase of goods or services in
excess of the requirements of its respective business
at current levels or for normal operating purposes;
(iv) were not made in the ordinary course of business; or
(v) materially affect the business or financial condition of
FBA or any FBA Subsidiary;
(d) all leases, subleases or licenses with respect to real or personal
property, whether as lessor, lessee, licensor or licensee, with annual rental or
other payments due thereunder in excess of $25,000;
(e) all agreements for the employment, retention or engagement, or with
respect to the severance, of any officer, employee, agent, consultant or other
person or entity which by its terms is not terminable by FBA or an FBA
Subsidiary on thirty (30) days written notice or less without any payment by
reason of such termination; and
(f) the name and annual salary as of January 1, 1997 of each director
or employee of FBA or any FBA Subsidiary with a salary in excess of $100,000.
Copies of each document, plan or contract identified in Section 3.09 of
the FBA Disclosure Schedule have been made available for inspection by First
Commercial and shall remain available at all times prior to the Closing Date.
<PAGE>
Section 3.10. Reports. FBA and the FBA Subsidiaries have filed all
reports and statements, together with any amendments required to be made with
respect thereto, required to be filed with the SEC, the Federal Reserve Board,
the Financial Institutions Department, the OCC, the FDIC and any other
governmental authority with jurisdiction over FBA or any FBA Subsidiary. As of
the dates indicated thereon, each of such reports and documents, including any
financial statements, exhibits and schedules thereto, complied in all material
respects with the relevant statutes, rules and regulations enforced or
promulgated by the regulatory authority with which they were filed, and did not
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.
Section 3.11. Investment Portfolio. All United States Treasury
securities, obligations of other United States Government agencies and
corporations, obligations of States and political subdivisions of the United
States and other investment securities held by FBA or an FBA Subsidiary, as
reflected in the latest consolidated balance sheet of FBA included in the FBA
Financial Statements, are carried in accordance with generally accepted
accounting principles.
Section 3.12. Loan Portfolio. Except as disclosed in Section 3.12 of
the FBA Disclosure Schedule, to the best of FBA's knowledge, (i) all loans and
discounts shown on the FBA Financial Statements at June 30, 1997 or which were
or will be entered into after June 30, 1997 but before the Closing Date were and
will be made in all material respects for good, valuable and adequate
consideration in the ordinary course of the business of FBA and the FBA Banks,
in accordance in all material respects with sound lending practices, and they
are not subject to any material known defenses, setoffs or counterclaims,
including without limitation any such as are afforded by usury or truth in
lending laws, except as may be provided by bankruptcy, insolvency or similar
laws or by general principles of equity; (ii) the notes and other evidences of
indebtedness evidencing such loans and all forms of pledges, mortgages and other
collateral documents and security agreements are and will be in all material
respects enforceable, valid, true and genuine and what they purport to be; and
(iii) FBA and the FBA Banks have complied and will through the Closing Date
comply with all laws and regulations relating to such loans, or to the extent
there has not been such compliance, such failure to comply will not materially
interfere with the collection of any loan. To the best of FBA's knowledge, all
loans and loan commitments extended by the FBA Banks and any extensions,
renewals or continuations of such loans and loan commitments were made in
accordance with their customary lending standards in the ordinary course of
business. Such loans are evidenced by appropriate and sufficient documentation
based upon customary and ordinary past practices of the FBA Banks. The reserves
for possible loan and lease losses shown on the Reports of Condition and Income
of the FBA Banks as of June 30, 1997 are adequate in all material respects under
the requirements of generally accepted accounting principles to provide for
possible losses, net of recoveries relating to loans previously charged off, on
loans outstanding (including, without limitation, accrued interest receivable)
as of June 30, 1997.
Section 3.13. Employee Matters and ERISA.
(a) Neither FBA nor any FBA Subsidiary has entered into any collective
bargaining agreement with any labor organization with respect to any group of
employees of FBA or any FBA Subsidiary, and to the knowledge of FBA there is no
present effort nor existing proposal to attempt to unionize any group of
employees of FBA or any FBA Subsidiary.
(b) All arrangements of FBA and the FBA Subsidiaries relating to
employees, including all benefit plans and deferred compensation, bonus, stock
or incentive plans for the benefit of current or former employees (the "FBA
Employee Plans") are administered by First Banks, Inc. All costs, liabilities
and obligations arising from the FBA Employee Plans are properly reflected in
accordance with generally accepted accounting principles in the FBA Financial
Statements.
Section 3.14. Title to Properties; Insurance. Except as disclosed in
Section 3.14 of the FBA Disclosure Schedule: (i) FBA and the FBA Subsidiaries
have marketable title, insurable at standard rates, free and clear of all liens,
charges and encumbrances (except taxes which are a lien but not yet payable and
liens, charges or encumbrances reflected in the FBA Financial Statements and
easements, rights-of-way, and other restrictions which are not material, and
further excepting in the case of other Real Estate Owned ("OREO"), as such real
estate is internally classified on the books of FBA or any FBA Subsidiary,
rights of redemption under applicable law) to all of their real properties; (ii)
all leasehold interests for real property and any material personal property
used by FBA or a FBA Subsidiary in its business are held pursuant to lease
agreements which are valid and enforceable in accordance with their terms; (iii)
all such properties comply in all material respects with all applicable private
agreements, zoning requirements and other governmental laws and regulations
relating thereto, and there are no condemnation proceedings pending or, to the
knowledge of FBA, threatened with respect to any of such properties; (iv) FBA
and the FBA Subsidiaries have valid title or other ownership rights under
licenses to all material intangible personal or intellectual property used by
FBA or any FBA Subsidiary in its business, free and clear of any material claim,
defense or right of any other person or entity, subject only to rights of the
licensors pursuant to applicable license agreements, which rights do not
materially and adversely interfere with the use of such property; and (v) all
material insurable properties owned or held by FBA or a FBA Subsidiary are
adequately insured by financially sound and reputable insurers in such amounts
and against fire and other risks insured against by extended coverage and public
liability insurance, as is customary with bank holding companies of similar
size.
<PAGE>
Section 3.15. Compliance with Law. FBA and the FBA Subsidiaries have
all licenses, franchises, permits and other governmental authorizations that are
legally required to enable them to conduct their respective businesses in all
material respects, are qualified to conduct business in every jurisdiction in
which such qualification is legally required and are in compliance in all
material respects with all applicable laws and regulations.
Section 3.16. Brokerage. Except for fees payable by FBA to Rauscher
Pierce Refsnes, Inc., there are no existing claims or agreements for brokerage
commissions, finders' fees, financial advisory fees or similar compensation in
connection with the transactions contemplated by this Agreement payable by FBA
or any FBA Subsidiary.
Section 3.17. No Undisclosed Liabilities. Neither FBA nor any FBA
Subsidiary has any material liability, whether known or unknown, asserted or
unasserted, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, and whether due or to become due (and there is no past or present
fact, situation, circumstance, condition or other basis for any present or
future action, suit or proceeding, hearing, charge, complaint, claim or demand
against FBA or any FBA Subsidiary giving rise to any such liability), except for
(i) liabilities reflected in the FBA Financial Statements, and (ii) liabilities
of the same type incurred in the ordinary course of business of FBA and the FBA
Subsidiaries since June 30, 1997.
Section 3.18. Statements True and Correct. None of the information
supplied or to be supplied by FBA for inclusion in any document to be filed with
the SEC or any banking or other regulatory authority in connection with the
transactions contemplated hereby will, at the respective times such documents
are filed, and, in the case of the Joint Proxy Statement, when first mailed to
the stockholders of First Commercial and FBA and at the time of the First
Commercial Stockholders' Meeting and the FBA Stockholders' Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein not misleading, or omit to
state any material fact required to be stated in order to correct any statement
in any earlier communication with respect to the solicitation of any proxy for
the Stockholders' Meeting. All documents that FBA is responsible for filing with
the SEC or any other regulatory authority in connection with the transactions
contemplated hereby will comply as to form in all material respects with the
provisions of applicable law and the applicable rules and regulations
thereunder.
Section 3.19. Commitments and Contracts. Except as disclosed in Section
3.19 of the FBA Disclosure Schedule (and with a true and correct copy of the
document or other item in question having been made available to First
Commercial for inspection), neither FBA nor any FBA Subsidiary is a party or
subject to any of the following (whether written or oral, express or implied):
(i) any agreement, arrangement or commitment not made in the ordinary
course of business;
(ii) any agreement, indenture or other instrument not reflected in the
FBA Financial Statements relating to the borrowing of money by FBA or
any FBA Subsidiary or the guarantee by FBA or any FBA Subsidiary of any
obligation, other than (A) trade payables or instruments related to
transactions entered into in the ordinary course of business by FBA or
an FBA Subsidiary, such as deposits, federal funds borrowings and
repurchase agreements or (B) agreements, indentures or instruments
providing for annual payments of less than $25,000; or
(iii) any contract containing covenants which limit the ability of FBA
to compete in any line of business or with any person or containing any
restriction of the geographical area in which, or method by which, FBA
or any FBA Subsidiary may carry on its business (other than as may be
required by law or any applicable regulatory authority).
Section 3.20. Material Interest of Certain Persons. (a) Except as
disclosed in Section 3.20 of the FBA Disclosure Schedule, no officer or director
of FBA or any "associate" (as such term is defined in Rule 14a-1 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) of any such
officer or director, has any material interest in any material contract or
property (real or personal, tangible or intangible), used in or pertaining to
the business of FBA or any FBA Subsidiary.
(b) All outstanding loans from either of the FBA Banks to any present
officer, director, employee or any associate or related interest of any such
person which was required to be approved by or reported to the Board of
Directors of the lending bank ("Insider Loans") were approved by or reported to
the Board of Directors in accordance with all applicable laws and regulations.
<PAGE>
Section 3.21. Conduct to Date. Except as disclosed in Section 3.21 of
the FBA Disclosure Schedule, from and after June 30, 1997 through the date of
this Agreement, neither FBA nor any FBA Subsidiary has (i) failed to conduct its
business in the ordinary and usual course consistent with past practices; (ii)
issued, sold, granted, conferred or awarded any common or other stock, or any
corporate debt securities which would be classified under generally accepted
accounting principles applied on a consistent basis as long-term debt on the
balance sheets of FBA or any FBA Subsidiary; (iii) effected any stock split or
adjusted, combined, reclassified or otherwise changed its capitalization; (iv)
declared, set aside or paid any dividend or other distribution in respect of its
capital stock, or purchased, redeemed, retired, repurchased, or exchanged, or
otherwise directly or indirectly acquired or disposed of any of its capital
stock; (v) incurred any material obligation or liability (absolute or
contingent), except normal trade or business obligations or liabilities incurred
in the ordinary course of business, or subjected to lien any of its assets or
properties other than in the ordinary course of business consistent with past
practice; (vi) discharged or satisfied any material lien or paid any material
obligation or liability (absolute or contingent), other than in the ordinary
course of business; (vii) sold, assigned, transferred, leased, exchanged, or
otherwise disposed of any of its properties or assets other than for a fair
consideration in the ordinary course of business; (viii) except as required by
contract or law, (A) increased the rate of compensation of, or paid any bonus
to, any of its directors, officers, or other employees, except merit or
promotion increases in accordance with existing policy, (B) entered into any
new, or amended or supplemented any existing, employment, management,
consulting, deferred compensation, severance or other similar contract, (C)
entered into, terminated or substantially modified any of the Employee Plans or
(D) agreed to do any of the foregoing; (ix) suffered any material damage,
destruction, or loss, whether as the result of fire, explosion, earthquake,
accident, casualty, labor trouble, requisition, or taking of property by any
regulatory authority, flood, windstorm, embargo, riot, act of God or the enemy,
or other casualty or event, and whether or not covered by insurance; (x)
cancelled or compromised any debt, except for debts charged off or compromised
in accordance with past practice; (xi) entered into any material transaction,
contract or commitment outside the ordinary course of its business or (xii) made
or guaranteed any loan to any of the Employee Plans.
Section 3.22. Environmental Matters. As used in this Agreement,
"Environmental Laws" means all local, state and federal environmental, health
and safety laws and regulations in all jurisdictions in which FBA or any FBA
Subsidiary has done business or owned, leased or operated property, including,
without limitation, the Federal Resource Conservation and Recovery Act, the
Federal Comprehensive Environmental Response, Compensation and Liability Act,
the Federal Clean Water Act, the Federal Clean Air Act, and the Federal
Occupational Safety and Health Act.
Except as disclosed in Section 3.22 of the FBA Disclosure Schedule,
neither the conduct nor operation of FBA or any FBA Subsidiary nor any condition
of any property presently or previously owned, leased or operated by any of them
on their own behalf or in a fiduciary capacity violates or violated any
Environmental Law in any respect material to the business of FBA and the FBA
Subsidiaries, taken as a whole, and no condition or event has occurred with
respect to any of them or any property that, with notice or the passage of time,
or both, would constitute a violation material to the business of FBA and the
FBA Subsidiaries, taken as a whole, of any Environmental Law or obligate (or
potentially obligate) FBA or any FBA Subsidiary to remedy, stabilize, neutralize
or otherwise alter the environmental condition of any property, where the
aggregate cost of such actions would be material to FBA and the FBA
Subsidiaries, taken as a whole. Except as may be disclosed in Section 3.22 of
the FBA Disclosure Schedule, neither FBA nor any FBA Subsidiary has received
notice from any person or entity that FBA or any FBA Subsidiary, or the
operation or condition of any property ever owned, leased or operated by any of
them on their own behalf or in a fiduciary capacity, are or were in violation of
any Environmental Law, or that FBA or any FBA Subsidiary is responsible (or
potentially responsible) for remedying, or the cleanup of, any pollutants,
contaminants, or hazardous or toxic wastes, substances or materials at, on or
beneath any such property.
ARTICLE IV
AGREEMENTS OF FIRST COMMERCIAL
Section 4.01. Business in Ordinary Course.
(a) First Commercial shall, and shall cause each First Commercial
Subsidiary to, continue to carry on after the date hereof its respective
business and the discharge or incurrence of obligations and liabilities only in
the usual, regular and ordinary course of business, as heretofore conducted, and
by way of amplification and not limitation, First Commercial and each First
Commercial Subsidiary will not:
<PAGE>
(i) declare or pay any dividend or make any other distribution to
stockholders, whether in cash, stock or other property (provided,
however, that this provision shall not prohibit (A) First Commercial
Bank from declaring and paying a dividend of up to $200,000 on its
common stock, (B) First Commercial from paying any and all dividends
declared prior to the date of this Agreement but unpaid as of the date
of this Agreement, together with all interest accrued thereon, or (C)
First Commercial from paying any Appreciation Rights as the same become
due and owing); or
(ii) issue any Common Stock or other capital stock or any options,
warrants, or other rights to subscribe for or purchase Common Stock or
any other capital stock or any securities convertible into or
exchangeable for any capital stock (except for the issuance of Common
Stock pursuant to the valid exercise of First Commercial Stock Options
described in Section 2.01(b) hereof); or
(iii) directly or indirectly redeem, purchase or otherwise acquire any
Common Stock or any other capital stock of First Commercial or any
First Commercial Subsidiary; or
(iv) effect a reclassification, recapitalization, splitup, exchange
of shares, readjustment or other similar change in
or to any capital stock, or otherwise reorganize or recapitalize; or
(v) change its certificate or articles of incorporation or association,
as the case may be, or bylaws, nor enter into any agreement to merge or
consolidate with, or sell a significant portion of its assets to, any
person or entity.
(b) First Commercial and each First Commercial Subsidiary will not,
without the prior written consent of FBA, from and after the date
hereof:
(i) grant any increase (other than ordinary and normal increases
consistent with past practices) in the compensation payable or to
become payable to officers or salaried employees, grant any stock
options or, except as required by law, adopt or make any change in any
bonus, insurance, pension, or other Employee Plan, agreement, payment
or arrangement made to, for or with any of such officers or employees;
or
(ii) borrow or agree to borrow any amount of funds except in the
ordinary course of business, or directly or indirectly guarantee or
agree to guarantee any obligations of others; or
(iii) make or commit to make any new loan or letter of credit or any
new or additional discretionary advance under any existing line of
credit, except in the ordinary course of business in compliance with
applicable laws, regulations and lending policies of the entity making
the loan or advance; or
(iv) enter into any agreement, contract or commitment having a term in
excess of three (3) months other than letters of credit, loan
agreements, deposit agreements, and other lending, credit and deposit
agreements and documents made in the ordinary course of business; or
(v) except in the ordinary course of business, place on any of its
assets or properties any mortgage, pledge, lien, charge, or other
encumbrance; or
(vi) except in the ordinary course of business, cancel or accelerate
any material indebtedness owing to First Commercial or a First
Commercial Subsidiary or any claims which First Commercial or any First
Commercial Subsidiary may possess, or waive any material rights of
substantial value; or
(vii) sell or otherwise dispose of any real property or any material
amount of any tangible or intangible personal property, other than
properties acquired in foreclosure or otherwise in the ordinary
collection of indebtedness; or
<PAGE>
(viii) violate any law, statute, rule, governmental regulation or
order, which violation might have a material adverse effect on the
business, financial condition, or earnings of First Commercial or a
First Commercial Subsidiary; or
(ix) increase or decrease the rate of interest paid on time deposits or
on certificates of deposit, except in a manner consistent with past
practices.
(c) First Commercial and the First Commercial Subsidiaries shall not,
without the prior written consent of FBA, engage in any transaction or take any
action that would render untrue in any material respect any of the
representations and warranties of First Commercial contained in Article Two
hereof, if such representations and warranties were given immediately following
such transaction or action.
(d) First Commercial shall promptly notify FBA of the occurrence of any
matter or event known to and directly involving First Commercial that is
materially adverse to the business, operations, properties, assets, or condition
(financial or otherwise) of First Commercial and the First Commercial
Subsidiaries, taken as a whole.
(e) Nothing in this Section 4.01 shall restrict the right of First
Commercial to enter into and perform its obligations under the Branch Exchange
Agreement.
Section 4.02. Breaches. First Commercial shall, in the event it has
knowledge of the occurrence, or impending or threatened occurrence, of any event
or condition which would cause or constitute a breach (or would have caused or
constituted a breach had such event occurred or been known prior to the date
hereof) of any of its representations or agreements contained or referred to
herein, give prompt written notice thereof to FBA and use its best efforts to
prevent or promptly remedy the same.
Section 4.03. Submission to Stockholders. First Commercial shall
cooperate with FBA in the preparation and filing of the Registration Statement,
Prospectus and Joint Proxy Statement defined in Section 5.07 and, promptly
following the effectiveness thereof, cause to be duly called and held a meeting
of its stockholders (such meeting together with any adjournments is referred to
as the "First Commercial Stockholders' Meeting") for approval of this Agreement
and the Merger as required by Corporate Law. The Special Committee of the Board
of Directors of First Commercial established to consider the transactions
contemplated by this Agreement shall unanimously recommend to the stockholders
of First Commercial the approval of this Agreement and the Merger, and the Board
of Directors shall then adopt the same recommendations and cause the Joint Proxy
Statement to be mailed to stockholders of First Commercial and use its best
efforts to obtain such stockholder approval; provided, however, that neither the
Special Committee nor the Board of Directors of First Commercial shall be
obligated to make such recommendation if, having consulted and considered the
advice of outside legal counsel, the Special Committee and the Board of
Directors have reasonably determined in good faith that the making of such
recommendation would constitute a breach of the fiduciary duties of the members
of the Board of Directors or of the Special Committee of the Board of Directors
under applicable law.
Section 4.04. Consummation of Agreement. First Commercial shall perform
and fulfill all conditions and obligations on its part to be performed or
fulfilled under this Agreement and to effect the Merger in accordance with the
terms and provisions hereof. First Commercial shall furnish to FBA in a timely
manner all information, data and documents in the possession of First Commercial
requested by FBA as may be required to obtain any necessary regulatory or other
approvals of the Merger and shall cooperate fully with FBA in seeking such
approvals and in consummating the transactions contemplated by this Agreement.
Section 4.05. Access to Information. First Commercial shall permit FBA
reasonable access, in a manner which will avoid undue disruption or interference
with First Commercial's normal operations, to its properties and shall cause the
First Commercial Subsidiaries to provide to FBA comparable access to their
properties, and First Commercial shall disclose and make available to FBA all
books, documents, papers and records relating to the assets, stock ownership,
properties, operations, obligations and liabilities of First Commercial and the
First Commercial Subsidiaries including, but not limited to, all books of
account (including the general ledger), tax records, minute books of directors'
and stockholders' meetings, organizational documents, material contracts and
agreements, loan files, filings with any regulatory authority, accountants'
workpapers (if available and subject to the respective independent accountants'
consent), litigation files, plans affecting employees, and any other business
activities or prospects in which FBA may have a reasonable and legitimate
interest in furtherance of the transactions contemplated by this Agreement. FBA
will hold any such information which is nonpublic in confidence in accordance
with the provisions of Section 8.01 hereof.
<PAGE>
Section 4.06. Consents to Contracts and Leases. First Commercial shall
obtain all necessary consents with respect to all interests of First Commercial
and the First Commercial Subsidiaries in any material leases, licenses,
contracts, instruments and rights which require the consent of another person
for the Merger.
Section 4.07. Subsequent Financial Statements. As soon as available
after the date hereof, First Commercial shall deliver to FBA the monthly
unaudited consolidated balance sheets and profit and loss statements of First
Commercial prepared for its internal use, the Report of Condition and Income of
First Commercial Bank for each quarterly period completed prior to the Closing,
and all other financial reports or statements submitted to regulatory
authorities after the date hereof, to the extent permitted by law (collectively,
the "Subsequent First Commercial Financial Statements"). The Subsequent First
Commercial Financial Statements shall be prepared on a basis consistent with
past accounting practices, shall fairly present the financial condition and
results of operations for the dates and periods presented and shall not include
any material assets or omit to state any material liabilities, absolute or
contingent, or other facts, which inclusion or omission would render such
financial statements misleading in any material respect.
Section 4.08. Merger of Banks; Branch Exchange. First Commercial shall
cooperate with FBA in causing First Commercial Bank to execute such documents
and file such applications and notices as may be required or desirable in order
to enable First Commercial Bank to enter into and consummate the following
transactions: (i) a merger with Sunrise Bank (or a successor thereto) (the "Bank
Merger") to be consummated immediately following the Effective Time; and (ii) an
agreement whereby First Commercial Bank will exchange the banking operations and
liabilities of its Campbell, California branch for the banking operations and
liabilities of the Walnut Creek branch now operated by First Bank & Trust,
Irvine, California (the "Branch Exchange").
ARTICLE V
AGREEMENTS OF FBA
Section 5.01. Business in Ordinary Course.
(a) FBA shall, and shall cause each FBA Subsidiary to, continue to
carry on after the date hereof its respective business and the discharge or
incurrence of obligations and liabilities only in the usual, regular and
ordinary course of business, as heretofore conducted, and by way of
amplification and not limitation, FBA and each FBA Subsidiary will not:
(i) declare or pay any dividend or make any other distribution to
stockholders, whether in cash, stock or other property; or
(ii) effect a reclassification, recapitalization, splitup, exchange of
shares, readjustment or other similar change in or to any capital
stock, or otherwise reorganize or recapitalize (but nothing herein
shall be interpreted to prohibit FBA from issuing FBA Common Stock in
exchange for debt currently owed to First Banks, as contemplated by
Section 6.01(j)).
(b) FBA and each FBA Subsidiary will not, without the prior written
consent of First Commercial, from and after the date hereof:
(i) grant any increase (other than ordinary and normal increases
consistent with past practices) in the compensation payable or to
become payable to officers or salaried employees, grant any stock
options or, except as required by law, adopt or make any change in any
bonus, insurance, pension, or other Employee Plan, agreement, payment
or arrangement made to, for or with any of such officers or employees;
or
(ii) make or commit to make any new loan or letter of credit or any new
or additional discretionary advance under any existing line of credit,
except in the ordinary course of business in compliance with applicable
laws, regulations and lending policies of the entity making the loan or
advance; or
<PAGE>
(iii) enter into any agreement, contract or commitment having a term in
excess of three (3) months other than letters of credit, loan
agreements and other agreements and documents made in the ordinary
course of business; or
(iv) except in the ordinary course of business, place on any of its
assets or properties any mortgage, pledge, lien, charge, or other
encumbrance; or
(v) except in the ordinary course of business, cancel or accelerate any
material indebtedness owing to FBA or an FBA Subsidiary or any claims
which FBA or any FBA Subsidiary may possess, or waive any material
rights of substantial value; or
(vi) sell or otherwise dispose of any real property or any material
amount of any tangible or intangible personal property, other than
properties acquired in foreclosure or otherwise in the ordinary
collection of indebtedness; or
(vii) violate any law, statute, rule, governmental regulation or order,
which violation might have a material adverse effect on the business,
financial condition, or earnings of FBA or an FBA Subsidiary; or
(viii) increase or decrease the rate of interest paid on time deposits
or on certificates of deposit, except in a manner consistent with past
practices.
(c) FBA and the FBA Subsidiaries shall not, without the prior written
consent of First Commercial, engage in any transaction or take any action that
would render untrue in any material respect any of the representations and
warranties of FBA contained in Article Three hereof, if such representations and
warranties were given immediately following such transaction or action.
(d) FBA shall promptly notify First Commercial of the occurrence of any
matter or event known to and directly involving FBA that is materially adverse
to the business, operations, properties, assets, or condition (financial or
otherwise) of FBA and the FBA Subsidiaries, taken as a whole.
Section 5.02. Regulatory Approvals. FBA shall file all regulatory
applications required in order to consummate the Merger, the Bank Merger and the
Branch Exchange, including but not limited to the necessary applications for the
prior approval of the Federal Reserve Board. FBA shall keep First Commercial
reasonably informed as to the status of such applications and make available to
First Commercial, upon reasonable request by First Commercial from time to time,
copies of such applications and any supplementally filed materials.
Section 5.03. Breaches. FBA shall, in the event it has knowledge of the
occurrence, or impending or threatened occurrence, of any event or condition
which would cause or constitute a breach (or would have caused or constituted a
breach had such event occurred or been known prior to the date hereof) of any of
its representations or agreements contained or referred to herein, give prompt
written notice thereof to First Commercial and use its best efforts to prevent
or promptly remedy the same.
Section 5.04. Consummation of Agreement. FBA shall use its best efforts
to perform and fulfill all conditions and obligations on its part to be
performed or fulfilled under this Agreement and to effect the Merger in
accordance with the terms and conditions of this Agreement.
Section 5.05. Indemnification.
(a) FBA shall indemnify, defend and hold harmless the present and
former officers, directors, employees and agents of First Commercial and the
First Commercial Subsidiaries (each, an "Indemnified Party") against all losses,
expenses, claims, damages or liabilities arising out of actions or omissions
occurring on or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement) to the full extent then permitted
under Corporate Law and by First Commercial's Certificate of Incorporation as in
effect on the date hereof.
<PAGE>
(b) If after the Effective Time FBA or its successors or assigns (i)
shall consolidate with or merge into any other corporation or entity and shall
not be the continuing or surviving entity of such consolidation or merger, or
(ii) shall transfer all or substantially all of its properties and assets to any
individual, corporation or other entity, then and in each such case, FBA shall
make provision so that its successors and assigns shall assume any remaining
obligations set forth in this Section 5.05. If FBA shall liquidate, dissolve or
otherwise wind up its business, then the successors and assigns of FBA shall be
obligated to assume any remaining obligations set forth in this Section 5.05.
Section 5.06. Access to Information. FBA shall permit First Commercial
reasonable access, in a manner which will avoid undue disruption or interference
with FBA's normal operations, to its properties and shall cause the FBA
Subsidiaries to provide to First Commercial comparable access to their
properties, and FBA shall disclose and make available to First Commercial all
books, documents, papers and records relating to the assets, stock ownership,
properties, operations, obligations and liabilities of FBA and the FBA
Subsidiaries including, but not limited to, all books of account (including the
general ledger), tax records, minute books of directors' and stockholders'
meetings, organizational documents, material contracts and agreements, loan
files, filings with any regulatory authority, accountants' workpapers (if
available and subject to the respective independent accountants' consent),
litigation files, plans affecting employees, and any other business activities
or prospects in which First Commercial may have a reasonable and legitimate
interest in furtherance of the transactions contemplated by this Agreement.
First Commercial will hold any such information which is nonpublic in confidence
in accordance with the provisions of Section 8.01 hereof.
Section 5.07. Registration Statement, Prospectus and Joint Proxy
Statement; Listing Application.
(a) FBA shall promptly (i) prepare and file with the SEC, as
soon as reasonably practicable, a registration statement for the offer and sale
of the FBA Common Stock to be issued in the Merger (the "Registration
Statement"), which shall contain a prospectus relating to such offer and sale
and a joint proxy statement (the "Joint Proxy Statement") for the First
Commercial Stockholders Meeting and a meeting of the stockholders of FBA to be
held promptly after the Registration Statement becomes effective (the "FBA
Stockholders' Meeting"); (ii) hold the FBA Stockholders' Meeting; (iii) use its
best efforts to cause the Registration Statement to become effective; (iv) take
any action required to be taken under any applicable state Blue Sky or
securities laws in connection with the Merger; and (v) file an application with
the NYSE seeking the approval of the NYSE for the listing of the shares of FBA
Common Stock to be issued in the Merger, and use its best efforts to obtain the
approval of such application. The Special Committee of the Board of Directors of
FBA established to consider the transactions contemplated by this Agreement
shall unanimously recommend to the stockholders of FBA the approval of this
Agreement and the Merger, and the Board of Directors shall then adopt the same
recommendations and cause the Joint Proxy Statement to be mailed to stockholders
of FBA and use its best efforts to obtain such stockholder approval; provided,
however, that neither the Special Committee nor the Board of Directors of FBA
shall be obligated to make such recommendation if, having consulted and
considered the advice of outside legal counsel, the Special Committee and the
Board of Directors have reasonably determined in good faith that the making of
such recommendation would constitute a breach of the fiduciary duties of the
members of the Board of Directors or of the Special Committee of the Board of
Directors under applicable law.
(b) FBA shall cooperate and use its best efforts (i) to
prepare all documentation, to effect all filings and to obtain all permits,
consents, approvals and authorizations of all third parties, regulatory
authorities and other authorities necessary to consummate the transactions
contemplated by this Agreement, including, without limitation, approval by the
stockholders of FBA and First Commercial, and (ii) to cause the Merger to be
consummated as expeditiously as reasonably practicable.
Section 5.08. Subsequent Financial Statements. As soon as available
after the date hereof, FBA shall deliver to First Commercial the monthly
unaudited consolidated balance sheets and profit and loss statements of FBA
prepared for its internal use, the Report of Condition and Income of each of the
FBA Banks for each quarterly period completed prior to the Closing, and all
other financial reports or statements submitted to regulatory authorities after
the date hereof, to the extent permitted by law (collectively, the "Subsequent
FBA Financial Statements"). The Subsequent FBA Financial Statements shall be
prepared on a basis consistent with past accounting practices, shall fairly
present the financial condition and results of operations for the dates and
periods presented and shall not include any material assets or omit to state any
material liabilities, absolute or contingent, or other facts, which inclusion or
omission would render such financial statements misleading in any material
respect.
<PAGE>
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
6.01 Conditions to the Obligations of FBA. FBA's obligations to effect
the Merger and the other transactions contemplated by this Agreement shall be
subject to the satisfaction (or waiver by FBA) prior to or on the Closing Date
of the following conditions:
(a) the representations and warranties made by First Commercial in this
Agreement shall be true in all material respects on and as of the Closing Date
(except for those made as of a specified date) with the same effect as though
such representations and warranties had been made or given on and as of the
Closing Date;
(b) First Commercial shall have performed and complied in all material
respects with all of its obligations and agreements required to be performed
prior to the Closing Date;
(c) no temporary restraining order, preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Merger shall be in
effect, nor shall any proceeding by any regulatory authority or other person
seeking any of the foregoing be pending. There shall not be any action taken, or
any statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger which makes the consummation of the Merger illegal;
(d) all necessary approvals, consents and authorizations required by
law for consummation of the Merger, including the requisite approvals of the
stockholders of First Commercial and FBA and all legally required regulatory
approvals, shall have been obtained, and all waiting periods required by law
shall have expired;
(e) FBA shall have received all documents required to be received from
First Commercial on or prior to the Closing Date, all in form and substance
reasonably satisfactory to FBA;
(f) stockholders of First Commercial Common owning no more than ten
percent (10%) of the outstanding First Commercial Common shall have perfected
the right to dissent from the Merger;
(g) FBA shall have obtained within thirty (30) days after the date of
this Agreement a fairness opinion of FBA's financial advisor to the effect that
the transactions contemplated by this Agreement are fair to the stockholders of
FBA from a financial point of view, and such fairness opinion shall not have
been withdrawn by such financial advisor on or before the date of mailing of the
Joint Proxy Statement to the stockholders of FBA;
(h) the Bank Merger and the Branch Exchange shall have been authorized
by all necessary parties, and any regulatory approvals required for the
consummation of the Bank Merger shall have been granted;
(i) FBA shall have received an opinion of Suelthaus & Walsh, P.C.
substantially to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion, the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code"); that, accordingly, no
gain or loss will be recognized by FBA or First Commercial as a result of the
Merger; and that all shareholders of First Commercial, to the extent they
receive only shares of FBA Common, will recognize no gain or loss as a result of
the Merger; and
(j) First Banks shall have (i) purchased 804,000 shares of FBA Common
Stock for a purchase price of $12.43 per share, with the purchase price paid by
a reduction in the balance of the outstanding debt owed by FBA to First Banks
and (ii) exchanged the Debentures for a convertible debenture of FBA in the
principal amount of $6.5 million, with initial accrued interest equal to the
outstanding balance of the Debentures as of the Closing Date (the debenture to
be issued by FBA is to bear interest at the rate of 12% per annum, have terms
generally equivalent to those of the Debentures and will be convertible into FBA
Common Stock at a price of $14. 06 per share).
Section 6.02. Conditions to the Obligations of First Commercial. The
obligations of First Commercial to effect the Merger and the other transactions
contemplated by this Agreement shall be subject to the satisfaction (or waiver
by First Commercial) prior to or on the Closing Date of the following
conditions:
<PAGE>
(a) the representations and warranties made by FBA in this Agreement
shall be true in all material respects on and as of the Closing Date (except for
those made as of a specified date) with the same effect as though such
representations and warranties had been made or given on the Closing Date;
(b) FBA shall have performed and complied in all material respects with
all of its obligations and agreements hereunder required to be performed prior
to the Closing Date;
(c) no temporary restraining order, preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Merger shall be in
effect, nor shall any proceeding by any bank regulatory authority or other
person seeking any of the foregoing be pending. There shall not be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Merger which makes the consummation of the Merger or
the other transactions contemplated hereby illegal;
(d) all necessary approvals, consents and authorizations required by
law for consummation of the Merger, including the requisite approvals of the
stockholders of First Commercial and FBA and all legally required regulatory
approvals, shall have been obtained, and all waiting periods required by law
shall have expired;
(e) First Commercial shall have received all documents required to be
received from FBA on or prior to the Closing Date, all in form and substance
reasonably satisfactory to First Commercial;
(f) First Commercial shall have obtained within thirty (30) days after
the date of this Agreement a fairness opinion of First Commercial's financial
advisor to the effect that the transactions contemplated by this Agreement are
fair to the stockholders of First Commercial from a financial point of view, and
such fairness opinion shall not have been withdrawn by such financial advisor on
or before the date of mailing of the Proxy Statement to the stockholders of
First Commercial;
(g) First Commercial shall have received an opinion of Suelthaus &
Walsh, P.C. substantially to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion, the Merger will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368 of the Internal Revenue Code of 1986, as amended (the "Code");
that, accordingly, no gain or loss will be recognized by FBA or First Commercial
as a result of the Merger; and that all shareholders of First Commercial, to the
extent they receive only shares of FBA Common, will recognize no gain or loss as
a result of the Merger.
(h) First Banks shall have (i) purchased 804,000 shares of FBA Common
Stock for a purchase price of $12.43 per share, with the purchase price paid by
a reduction in the balance of the outstanding debt owed by FBA to First Banks
and (ii) exchanged the Debentures for a convertible debenture of FBA in the
principal amount of $6.5 million, with initial accrued interest equal to the
outstanding balance of the Debentures as of the Closing Date (the debenture to
be issued by FBA is to bear interest at the rate of 12% per annum, have terms
generally equivalent to those of the Debentures and will be convertible into FBA
Common Stock at a price of $14. 06 per share).
ARTICLE VII
TERMINATION
Section 7.01. Mutual Agreement. This Agreement may be terminated by the
mutual written agreement of the parties at any time prior to the Closing Date,
regardless of whether approval of this Agreement and the Merger by the
stockholders of First Commercial or FBA shall have been previously obtained.
Section 7.02. Breach of Agreements. In the event that there is a
material breach of any of the representations and warranties or agreements of
FBA or First Commercial, which breach is not cured within thirty days after
notice to cure such breach is given to the breaching party by the non-breaching
party, then the non-breaching party, regardless of whether approval of this
Agreement and the Merger by the stockholders of First Commercial of FBA, or
both, shall have been previously obtained, may terminate and cancel this
Agreement by providing written notice of such action to the other parties
hereto.
Section 7.03. Failure of Conditions. In the event that any of the
conditions to the obligations of a party are not satisfied or waived on or prior
to the Closing Date, and if any applicable cure period provided in Section 7.02
hereof has lapsed, then such party may, regardless of whether approval of the
<PAGE>
transactions contemplated by this Agreement by the stockholders of First
Commercial or FBA, or both, shall have been previously obtained, terminate and
cancel this Agreement by delivery of written notice of such action to the other
parties.
Section 7.04. Denial of Regulatory Approval. If any regulatory
application filed pursuant to Section 5.02 hereof should be finally denied or
disapproved by a regulatory authority, then this Agreement thereupon shall be
deemed terminated and cancelled; provided, however, that a request for
additional information or undertaking by FBA, as a condition for approval, shall
not be deemed to be a denial or disapproval so long as FBA diligently provides
the requested information or undertaking. In the event an application is denied
pending an appeal, petition for review or similar such act on the part of FBA
(hereinafter referred to as the "Appeal"), then the application will be deemed
denied unless FBA prepares and timely files and continues to pursue an Appeal
seeking the necessary approval. In the event that, as a condition of any
required regulatory approval, FBA would be required to change its business or
operations in a manner material and adverse to FBA, then this Agreement may be
terminated by either party by giving written notice to the other party.
Section 7.05. Regulatory Enforcement Matters. (a) In the event that
First Commercial or any First Commercial Subsidiary shall become a party or
subject to any material written agreement, memorandum of understanding, cease
and desist order, imposition of civil money penalties or other regulatory
enforcement action or proceeding with any regulatory authority after the date of
this Agreement, then FBA may terminate this Agreement by giving written notice
of such termination to First Commercial.
(b) In the event that FBA or any FBA Subsidiary shall become a party or
subject to any material written agreement, memorandum of understanding, cease
and desist order, imposition of civil money penalties or other regulatory
enforcement action or proceeding with any regulatory authority after the date of
this Agreement, then First Commercial may terminate this Agreement by giving
written notice of such termination to FBA.
Section 7.06. Unilateral Termination. If the Closing Date does not
occur on or prior to March 15, 1998, then this Agreement may be terminated by
any party by giving written notice to the other party.
Section 7.07. Damages and Limitation on Damages. In the event that
either FBA or First Commercial shall have (i) breached any provision of this
Agreement and the other party shall have properly terminated this Agreement
pursuant to Section 7.02; or (ii) failed or refused to consummate the Merger for
any reason other than (A) the failure of the other party to perform its
obligations as set forth in this Agreement or (B) the fact that one or more of
the conditions to such party's obligations to consummate the Merger set forth in
Article VI hereof shall not have been satisfied, then the party breaching this
Agreement or failing or refusing to consummate the Merger shall be liable to the
other party (the "Non-Breaching Party") for damages in the amount of all
out-of-pocket costs and expenses incurred by the Non-Breaching Party in
connection with this Agreement and the transactions contemplated hereby,
including the fees and expenses paid to third parties, but the amount of any
recovery shall be limited to a maximum of $100,000.
ARTICLE VIII
GENERAL PROVISIONS
8.01 Confidential Information. The parties acknowledge the confidential
and proprietary nature of the "Information" (as herein defined) which has
heretofore been exchanged and which will be received from each other hereunder
and agree to hold and keep the same confidential. Such Information will include
any and all financial, technical, commercial, marketing, customer or other
information concerning the business, operations and affairs of a party that may
be provided to the others, irrespective of the form of the communications, by
such party's employees or agents. Such Information shall not include information
which is or becomes generally available to the public other than as a result of
a disclosure by a party or its representatives in violation of this Agreement.
The parties agree that the Information will be used solely for the purposes
<PAGE>
contemplated by this Agreement and that such Information will not be disclosed
to any person other than employees and agents of a party who are directly
involved in implementing the Merger, who shall be informed of the confidential
nature of the Information and directed individually to abide by the restrictions
set forth in this Section 8.01. The Information shall not be used in any way
detrimental to a party, including use directly or indirectly in the conduct of
the other party's business or any business or enterprise in which such party may
have an interest, now or in the future, and whether or not now in competition
with such other party. Neither FBA nor First Commercial will purchase or sell
any security issued by the other party for so long as this Agreement remains in
effect.
Section 8.02. Publicity. FBA and First Commercial shall cooperate with
each other in the development and distribution of all news releases and other
public disclosures concerning this Agreement and the Merger. Neither party shall
issue any news release or make any other public disclosure without the prior
consent of the other party, unless such is required by law upon the written
advice of counsel or is in response to published newspaper or other mass media
reports regarding the transaction contemplated hereby, in which latter event the
parties shall consult with each other to the extent practicable regarding such
responsive disclosure.
Section 8.03. Return of Documents. Upon termination of this Agreement
without the Merger becoming effective, each party shall deliver to the others
originals and all copies of all Information made available to such party and
will not retain any copies, extracts or other reproductions, in whole or in
part, of such Information.
Section 8.04. Notices. Any notice or other communication shall be in
writing and shall be deemed to have been given or made on the date of delivery,
in the case of hand delivery, or three (3) business days after deposit in the
United States Registered Mail, postage prepaid, or upon receipt if transmitted
by facsimile telecopy or any other means, addressed (in any case) as follows:
(a) if to FBA: Special Committee of the Board of Directors
First Banks America, Inc.
c/o Charles A. Crocco, Jr., Esq.
Crocco & De Maio, P.C.
241 East 49th Street
New York, New York 10017
Facsimile: (212) 355-2435
and
First Banks America, Inc.
Attention: Allen H. Blake
Chief Financial Officer
11901 Olive Boulevard
Creve Coeur, Missouri 63141
Facsimile: (314) 567-3490
with a copy to: John S. Daniels, Esq.
8117 Preston Road, Suite 800
Dallas, Texas 75225
Facsimile: (214) 692-0508
(b) if to First Commercial: Special Committee of the Board of Directors
First Commercial Bancorp, Inc.
c/o Fred L. Harris, Esq.
12401 Folsom Blvd., Suite 310
Rancho Cordova, California 95742
Facsimile: (916) 482-8644
and
First Commercial Bancorp, Inc.
Attention: James E. Culleton,
Secretary
865 Howe Avenue, Suite 310
Sacramento, California 95825
Facsimile: (916) 924-0157
<PAGE>
with copies to: Larry K. Harris, Esq.
Suelthaus & Walsh, P.C.
7733 Forsyth Boulevard, 12th Floor
St. Louis, Missouri 63105
Facsimile: (314) 727-7166
and
Scott E. Bartell, Esq.
Bartell Eng Linn & Schroder
300 Capitol Mall, Suite 1100
Sacramento, California 95814
Facsimile: 916-442-3442
or to such other address as any party may from time to time designate by notice
to the others.
Section 8.05. Nonsurvival of Representations, Warranties and
Agreements. Except for and as provided in this Section 8.05, no representation,
warranty or agreement contained in this Agreement shall survive the Closing Date
or the earlier termination of this Agreement. The agreements set forth in
Section 5.05 shall survive the Closing Date and the agreements set forth in
Section 7.07 shall survive the earlier termination of this Agreement.
Section 8.06. Costs and Expenses. Except as may be otherwise provided
herein, each party shall pay its own costs and expenses incurred in connection
with this Agreement and the matters contemplated hereby, including without
limitation all fees and expenses of attorneys, accountants, brokers, financial
advisors and other professionals.
Section 8.07. Entire Agreement. This Agreement constitutes the entire
agreement among the parties and supersedes and cancels any and all prior
discussions, negotiations, undertakings, agreements in principle and other
agreements among the parties relating to the subject matter hereof.
Section 8.08. Headings and Captions. The captions of Articles and
Sections hereof are for convenience only and shall not control or affect the
meaning or construction of any of the provisions of this Agreement.
Section 8.09. Waiver, Amendment or Modification. The conditions of this
Agreement which may be waived may only be waived by a written instrument
delivered to the other party. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner affect the right
at a later time to enforce the same. This Agreement may not be amended or
modified except by a written document duly executed by the parties hereto.
Section 8.10. Rules of Construction. Unless the context otherwise
requires: (a) a term has the meaning assigned to it; (b) an accounting term not
otherwise defined has the meaning assigned to it in accordance with generally
accepted accounting principles; (c) "or" is not exclusive; and (d) words in the
singular may include the plural and in the plural include the singular.
Section 8.11. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which shall
be deemed one and the same instrument.
Section 8.12. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. There shall be no third party beneficiaries hereof.
Section 8.13. Governing Law. This Agreement shall be governed by the
laws of the State of Delaware and any applicable federal laws and regulations.
IN WITNESS WHEREOF, FBA and First Commercial have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
<PAGE>
FIRST BANKS AMERICA, INC.
By: /s/ Allen H. Blake
----------------------
Its: Vice President
FIRST COMMERCIAL BANCORP, INC.
By: /s/ Donald W. Williams
--------------------------
Its: President
<PAGE>
Exhibit 10.11
AGREEMENT TO EXCHANGE
CERTAIN ASSETS AND ASSUME CERTAIN LIABILITIES
by and between
FIRST COMMERCIAL BANK,
Sacramento, California
and
FIRST BANK & TRUST
Irvine, California
Dated October 3, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
ARTICLE 1
<S> <C> <C>
Definitions....................................................................1
ARTICLE 2
Assets to be Exchanged and Liabilities to be Assumed...........................4
2.1 Transfer of Assets....................................................4
2.2 Assumption of Liabilities.............................................5
2.3 Records. .........................................................5
2.4 No Other Assets or Liabilities........................................6
2.5 Payment Amount........................................................7
2.6 Prorations, Items in Transit..........................................7
ARTICLE 3
The Closing....................................................................8
3.1 Closing...............................................................8
3.2 Payment Amount at Closing, Adjustments................................8
ARTICLE 4
Covenants......................................................................9
4.1 Conduct of Business Prior to Closing..................................9
4.2 Assistance in Obtaining Regulatory Approvals.........................10
4.3 No Encumbrances......................................................10
4.4 Insurance Policies...................................................10
4.5 Further Assurances...................................................10
4.6 Inspection...........................................................11
4.7 Notification of Material Changes and Litigation......................11
4.8 [Reserved]...........................................................12
4.9 Consent of FDIC and Department of Financial Institutions.............12
4.10 [Reserved]...........................................................12
4.11 Performance of Liabilities...........................................12
ARTICLE 5
Representations and Warranties................................................12
5.1 Representations and Warranties of FCB................................12
5.2 Representations and Warranties of FBT................................15
ARTICLE 6
Conditions Precedent..........................................................18
6.1 Conditions to Obligation of FCB......................................18
6.2 Conditions to Obligation of FBT......................................19
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARTICLE 7
<S> <C> <C>
Survival; Indemnification.....................................................21
7.1 Survival.............................................................21
7.2 Indemnity of FBT.....................................................21
7.3 Indemnity of FCB.....................................................21
ARTICLE 8
Termination...................................................................21
8.1 Termination 21
8.2 Declaration 22
ARTICLE 9
Non-solicitation..............................................................22
9.1 Covenant Against Solicitation........................................22
9.2 Remedies for Breach..................................................23
ARTICLE 10
Other Agreements..............................................................23
10.1 Returned Items.......................................................23
10.2 ACH Deposits.........................................................24
10.3 Backup Withholding...................................................24
10.4 Interest Reporting...................................................24
10.5 Notices to Depositors................................................24
ARTICLE 11
General Provisions............................................................25
11.1 Press Releases.......................................................25
11.2 Law and Section Headings.............................................25
11.3 Modifications........................................................25
11.4 Severability.........................................................26
11.5 Notices..............................................................26
11.6 Expenses; Risk of Loss...............................................27
11.7 Counterparts.........................................................27
11.8 Time of Essence; Best Efforts........................................27
11.9 Closing..............................................................28
11.10 Parties in Interest; Assignment; Third Party Rights..................28
11.11 Entire Agreement; Waiver.............................................28
</TABLE>
<PAGE>
SCHEDULES
Schedule A-1 Campbell Deposits*
Schedule A-2 Walnut Creek Deposits*
Schedule B-1 Campbell Fixed Assets*
Schedule B-2 Walnut Creek Fixed Assets*
Schedule C-1 [Reserved]
Schedule C-2 [Reserved]
Schedule D-1 Campbell Nonstatement Liabilities*
Schedule D-2 Walnut Creek Nonstatement Liabilities*
Schedule 2.5 Deposit Premiums
Schedule 5.1.B Campbell Legal Proceedings
Schedule 5.1.C Campbell Compliance with Laws
Schedule 5.1.D Campbell Brokers
Schedule 5.1.E Campbell Assets Disclosure
Schedule 5.1.L Campbell Consents
Schedule 5.2.B Walnut Creek Legal Proceedings
Schedule 5.2.C Walnut Creek Compliance with Laws
Schedule 5.2.D Walnut Creek Brokers
Schedule 5.2.E Walnut Creek Assets Disclosure
Schedule 5.2.L Walnut Creek Consents
- ---------------------------
*Previously supplied and not attached hereto.
<PAGE>
AGREEMENT TO EXCHANGE CERTAIN ASSETS
AND ASSUME CERTAIN LIABILITIES
This Agreement is made and entered into on the date last below written by
and between FIRST COMMERCIAL BANK, Sacramento, California, a California state
banking corporation ( FCB ) and FIRST BANK & TRUST, Irvine, California, a
California state banking corporation ( FBT ).
WHEREAS, First Commercial Bancorp, Inc. ( First Commercial ), a Delaware
corporation, owns all of the issued and outstanding capital stock of FCB and has
entered into that certain merger agreement (the Merger Agreement ) with First
Banks America, Inc. ( FBA ), pursuant to which First Commercial will merge with
FBA and FCB will merge with Sunrise Bank of California or such bank's successor,
an indirectly wholly owned banking subsidiary of FBA; and
WHEREAS, the parties to the Merger Agreement desire that the transactions
contemplated in this Agreement shall occur (i) either simultaneously with or at
some time after the transactions contemplated in the Merger Agreement, and (ii)
only if the transactions contemplated in the Merger Agreement shall occur; and
WHEREAS, assuming the prior or simultaneous closing of the transactions
contemplated in the Merger Agreement, FCB and FBT desire to exchange certain
assets and assume certain liabilities, subject to the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the foregoing and the representations,
covenants and agreements set forth in this Agreement, the parties agree as
follows:
ARTICLE 1
Definitions
1.1 As used in this Agreement, the following terms have the definitions
indicated:
Accrued Interest shall mean interest on Deposits or Loans, as the case may
be, which is accrued but unpaid through the Transfer Date of a Branch.
Assets shall mean, for each Branch, the Fixed Assets, the Real Property
and Improvements, the Nonstatement Assets and the Records of such Branch. As
used herein, Loans shall not be part of the Assets.
Banks shall mean both of FCB and FBT, and Bank shall mean either of such,
as the context shall require.
<PAGE>
Branches shall mean both the Campbell Branch and the Walnut Creek Branch,
and Branch shall mean either of such, as the context shall require.
Campbell Branch shall mean the branch facility of FCB located at 94 San
Thomas Aquino Road, Campbell, California.
Closing shall have the meaning set forth in Article 3 of this Agreement.
Closing Date shall mean as soon as practicable, but no later than five (5)
days after the date on which all conditions set forth in Article 6 of this
Agreement have been satisfied, unless the parties hereto otherwise agree in
writing.
Closing Statement shall mean the statement of the Assets and Liabilities
of each of the Branches as of the Transfer Date and their value as determined in
accordance with this Agreement prepared from the transferring Bank's books and
records as of the Transfer Date, subject to adjustment pursuant to Section 3.2
hereof, and shall include all information necessary to calculate the Payment
Amount.
Deposits shall mean with respect to each Branch all certificates of
deposit, time, savings, money market, checking, NOW, and other transaction
accounts, and all other demand deposit accounts which are held by FCB with
respect to the Campbell Branch as of the Transfer Date and which are held by FBT
with respect to the Walnut Creek Branch as of the Transfer Date, including all
Accrued Interest thereon, as more specifically identified on Schedule A-1 hereto
with respect to the Campbell Branch, and on Schedule A-2 hereto with respect to
the Walnut Creek Branch, copies of which were provided to FBT and FCB,
respectively, prior to the date of execution of this Agreement, subject to
adjustment pursuant to Section 3.2 hereof.
Encumbrances shall mean all mortgages, claims, charges, liens,
encumbrances, easements, restrictions, options, pledges, calls, commitments,
security interests, conditional sales agreements, title retention agreements,
leases and other restrictions of any kind whatsoever other than the Permitted
Exceptions.
Fixed Assets includes all furniture, equipment, trade fixtures and other
tangible personal property (including safe deposit boxes) located in or upon
each Branch including, without limitation, those assets listed on Schedule B-1
hereto with respect to the Campbell Branch, and on Schedule B-2 hereto with
respect to the Walnut Creek Branch, copies of which were provided to FBT and
FCB, respectively, prior to the date of execution of this Agreement, subject to
adjustment pursuant to Section 3.2 hereof.
Liabilities shall mean all Deposits and all Nonstatement Liabilities.
<PAGE>
Loans shall mean, with respect to the Campbell Branch, all commercial,
residential, installment, and other loans of FCB originated from or carried at
the Campbell Branch as of the Closing Date; and shall mean, with respect to the
Walnut Creek Branch, all commercial, residential, installment, and other loans
of FBT originated from or carried at the Walnut Creek Branch as of the Closing
Date; and with respect to each of the Branches, together with all Accrued
Interest thereon and all right, title and interest of FCB or FBT, as the case
may be, in all collateral securing such loans (including but not limited to each
such Bank's right, title and interest in deeds of trust, mortgages, security
agreements, financing statements, guaranties, pledge agreements, loan
agreements, and other collateral pledge agreements by any borrower on the
Loans).
Net Book Value shall mean the book value of Assets, determined in
accordance with generally accepted accounting principles consistently applied,
as of the Transfer Date.
Nonstatement Assets shall mean (i) each Bank's right to solicit deposits
of the Branch owned by the Bank prior to Closing, (ii) the excess, if any, of
the fair market value over the Net Book Value of any of the Assets, and (iii)
each Bank's right, title and interest in, to and under any leases, agreements
and contracts included in the Liabilities of the Branch respectively owned by
each Bank prior to Closing.
Nonstatement Liabilities shall mean all of each Bank's obligations with
respect to only agreements relating to safe deposit boxes at the Branch
respectively owned by each Bank as of the Transfer Date, each of which is more
specifically identified on Schedule D-1 hereto with respect to the Campbell
Branch and on Schedule D-2 hereto with respect to the Walnut Creek Branch,
copies of which have been provided to FBT and FCB, respectively, prior to the
date of execution of this Agreement, subject to adjustment pursuant to Section
3.2 hereof.
Payment Amount shall have the meaning set forth in Section 2.5 of this
Agreement.
Permitted Exceptions shall mean liens for real estate taxes related to a
Branch accrued but not yet payable and such imperfections of title and
encumbrances as do not materially detract from the value or interfere with the
use of the Real Property and Improvements as an office of a financial
institution.
<PAGE>
Real Property and Improvements shall mean the real property leased by a
Bank on which a Branch is located (including such space as may be leased to
third parties), together with all buildings and improvements and all rights of
such Bank appurtenant thereof.
<PAGE>
Records shall mean, with respect to each of the Branches (i) all available
books and records and original documents (including warranties on such Branch's
Fixed Assets) pertaining to such Branch's Assets, and (ii) all books and records
and original documents relating to such Branch's Liabilities.
Transfer Date shall mean the close of business on the day immediately
following the Closing Date.
Walnut Creek Branch shall mean the branch facility of FBT located at 590
Ygnacio Valley Road, Walnut Creek, California 94546.
ARTICLE 2
Assets to be Exchanged and Liabilities to be Assumed
2.1 Transfer of Assets.
(a) Campbell. At the Closing, subject to the terms and conditions set forth
in this Agreement, FCB shall convey, assign and transfer to FBT all of FCB's
right, title and interest in and to the Campbell Assets, effective as of the
Transfer Date. All Campbell Loans as of the Transfer Date shall remain the
property of FCB. The conveyance of the Campbell Assets shall be effected by
means of such appropriate bills of sale and other assignments, together with
such other appropriate instruments of title as FBT may request, as shall be
sufficient to vest and confirm in FBT good and marketable title thereto, free
and clear of all Encumbrances other than Permitted Exceptions. Any recording
fee, sales tax, documentary transfer tax or other assessment with respect to
recordation of such conveyance shall be paid by FCB.
(b) Walnut Creek. At the Closing, subject to the terms and conditions set
forth in this Agreement, FBT shall convey, assign and transfer to FCB all of
FBT's right, title and interest in and to the Walnut Creek Assets, effective as
of the Transfer Date. All Walnut Creek Loans as of the Transfer Date shall
remain the property of FBT. The conveyance of the Walnut Creek Assets shall be
effected by means of such appropriate bills of sale and other assignments,
together with such other appropriate instruments of title as FCB may request, as
shall be sufficient to vest and confirm in FCB good and marketable title
thereto, free and clear of all Encumbrances other than Permitted Exceptions. Any
recording fee, sales tax, documentary transfer tax or other assessment with
respect to recordation of such conveyance shall be paid by FBT.
2.2 Assumption of Liabilities.
(a) Campbell. As of the Transfer Date, subject to the terms and conditions
set forth in this Agreement, FBT shall assume, defend, pay, perform and
discharge all of the Campbell Liabilities outstanding and unpaid or unperformed
<PAGE>
as of the Transfer Date, and arising thereafter in accordance with their terms.
Specifically, FBT shall assume liability for the payment and performance of
FCB's obligations on the Campbell Deposits, including all Accrued Interest
thereon, in accordance with the terms of the Campbell Deposits and all
agreements with depositors applicable to the Campbell Deposits in effect on the
Transfer Date.
(b) Walnut Creek. As of the Transfer Date, subject to the terms and
conditions set forth in this Agreement, FCB shall assume, defend, pay, perform
and discharge all of the Walnut Creek Liabilities outstanding and unpaid or
unperformed as of the Transfer Date, and arising thereafter in accordance with
their terms. Specifically, FCB shall assume liability for the payment and
performance of FBT's obligations on the Walnut Creek Deposits, including all
Accrued Interest thereon, in accordance with the Walnut Creek Deposits and all
agreements with depositors applicable to the Walnut Creek Deposits on the
Transfer Date.
2.3 Records..
(a) Campbell. FCB, except as provided herein, shall retain all Campbell
Records relating to the Campbell Branch which are not ordinarily maintained at
the Campbell Branch. FBT shall receive possession of, and right, title and
interest in all Campbell Records which are ordinarily maintained at the Campbell
Branch relating to the Campbell Deposits assumed hereunder. In each case the
Campbell Records directly relating to the Campbell Branch operations and either
the Campbell Assets or the Campbell Liabilities prior to the Closing Date which
are retained by one Bank shall be open for inspection by the other Bank and its
authorized agents, representatives and regulators during regular business hours
after the Closing Date and the Bank with the right of inspection may, at its own
expense, make such copies of and excerpts from such Campbell Records as it may
deem desirable. All Campbell Records relating to operations, Campbell Assets and
Campbell Liabilities prior to the Closing Date shall be maintained for a period
which is at least the period required by law. Should one Bank's audit or
inspection of Campbell Records in the other Bank's possession result in the
possessing Bank's employees or agents having to devote any substantial amount of
time or such Bank having to allocate facilities or equipment or having to incur
any substantial costs, then the possessing Bank shall be entitled to reasonable
reimbursement for all such time and costs incurred.
(b) Walnut Creek. FBT, except as provided herein, shall retain all Walnut
Creek Records relating to the Walnut Creek Branch which are not ordinarily
maintained at the Walnut Creek Branch. FCB shall receive possession of, and
right, title and interest in all Walnut Creek Records which are ordinarily
maintained at the Walnut Creek Branch relating to the Walnut Creek Deposits
assumed hereunder. In each case the Walnut Creek Records directly relating to
the Walnut Creek Branch operations and either the Walnut Creek Assets or the
Walnut Creek Liabilities prior to the Closing Date which are retained by one
<PAGE>
Bank shall be open for inspection by the other Bank and its authorized agents,
representatives and regulators during regular business hours after the Closing
Date and the Bank with the right of inspection may, at its own expense, make
such copies of and excerpts from such Walnut Creek Records as it may deem
desirable. All Walnut Creek Records relating to operations, Walnut Creek Assets
and Walnut Creek Liabilities prior to the Closing Date shall be maintained for a
period which is at least the period required by law. Should one Bank's audit or
inspection of Walnut Creek Records in the other Bank's possession result in the
possessing Bank's employees or agents having to devote any substantial amount of
time or such party having to allocate facilities or equipment or having to incur
any substantial costs, then the possessing Bank shall be entitled to reasonable
reimbursement for all such time and costs incurred.
2.4 No Other Assets or Liabilities. Except as expressly set forth in this
Article 2, it is expressly understood and agreed that neither Bank shall receive
in transfer any other assets of the other Bank, nor assume or be liable for any
debts, obligations or liabilities of the other Bank of any kind or nature
whatsoever, known or unknown, contingent or otherwise, including but not limited
to any obligations to provide services incidental to the operation of the
Branches, any tax or debt, any liability for unfair labor practices, any
liability or obligation of either Bank arising out of any threatened or pending
litigation, any liability with respect to personal injury or property damage
claims, any liability arising out of claims of employees employed at the Branch
such Bank is transferring pursuant to this Agreement for bonuses, salaries,
wages or other payments or benefits in respect of services performed at such
Branch prior to the Closing Date, any liability under or in connection with any
employee benefit plan as defined in Section 3(3) of ERISA which is maintained by
either Bank and covers any employees at the Branch such Bank is transferring
pursuant to this Agreement, any liability either Bank may have incurred or will
incur in connection with the transactions contemplated by this Agreement, or any
other liability either Bank may have incurred prior to the Closing Date in
connection with the operation of the Branch such Bank is transferring pursuant
to this Agreement.
2.5 Payment Amount. Subject to adjustment pursuant to Section 3.2 of this
Agreement and the netting of backup withholding amounts pursuant to Section 10.3
of this Agreement, the Payment Amount shall equal the sum of three differences:
(i) the difference of the Campbell Net Book Value of Assets less the
Walnut Creek Net Book Value of Assets;
(ii) the difference of the Walnut Creek Deposits less the Campbell
Deposits; and
<PAGE>
(iii) the difference of the Campbell Deposit Premium less the Walnut
Creek Deposit Premium, where Deposit Premium is calculated
on the basis of Schedule 2.5 hereto.
If the sum of (i), (ii), and (iii) above is positive, the Payment Amount
shall be paid by FBT to FCB. If the sum of (i), (ii), and (iii) above is
negative, the Payment amount shall be paid by FCB to FBT.
2.6 Prorations, Items in Transit. Except as otherwise specifically provided
in this Agreement, it is the intention of the Banks that each Bank shall operate
for its own account the Branch and related business that such Bank is
transferring pursuant to this Agreement until and through the Transfer Date and
that the other Bank shall operate for its own account such Branch and related
business after the Transfer Date. Accordingly, except as otherwise specifically
provided for in this Agreement, all items of prepaid income and expense relating
to the Assets transferred and the Liabilities assumed with respect to a specific
Branch, including prepaid lease payments received, personal property taxes
related to the Fixed Assets, real property taxes related to the Real Property
and Improvements of such Branch, and all other items capable of proration,
including deposit taxes and assessments and Federal Deposit Insurance
Corporation premiums on the Deposits of such Branch, if any, shall be prorated
between the parties as of the Transfer Date on the basis of a 30-day month and
360-day year, and shall be reflected in the Closing Statement.
Each Bank shall, with respect to the Branch and related business being
transferred to such Bank, obtain the benefit of and shall bear all risk of items
relating to or originating from such Branch which are in transit as of the close
of business on the Transfer Date and are handled with due care and in accordance
with the other Bank's usual and customary practices and procedures. FCB and FBT
shall mutually agree to practices and procedures (the Clearing Procedures ) to
assure prompt and timely handling of items in transit in a manner consistent
with this Section. With respect to checks or drafts drawn against Deposits, both
FCB and FBT agree to cooperate and take all responsible steps to insure that
from and after the Closing each such item coded for presentment to one Bank is
available for delivery to the other Bank or its messenger in a timely manner
consistent with the Clearing Procedures or any applicable clearing house rule or
agreement.
ARTICLE 3
The Closing
3.1 Closing. The closing of the transactions contemplated by this
Agreement (the Closing ) shall take place on the Closing Date at such location
as the Banks shall agree. The Closing shall be effective as of the close of
business of FCB on the Transfer Date.
<PAGE>
3.2 Payment Amount at Closing, Adjustments. On the Closing Date, FCB or
FBT, as the case may be, shall pay to the other Bank the Payment Amount
calculated as of the Transfer Date in accordance with Section 2.5 hereof, net of
all other appropriate amounts as FCB and FBT may agree. In the event certain
amounts cannot be calculated prior to or at the Closing, FCB and FBT agree to
close the transactions contemplated by this Agreement based upon the best
available information at the time of Closing.
Within 30 days after the Closing Date, FCB and FBT shall finally determine
any and all adjusted amounts (the Adjustments ) necessary to correctly account
for any amounts on the Closing Statement that were not finally determinable on
the Closing Date. Each of FCB and FBT agree to, no later than 10 days following
the date such Adjustments have been calculated, pay any Adjustments to the other
Bank in such amount and in such a manner to be consistent with the expressed
terms of this Agreement. All payments shall be made with immediately available
funds. If FCB and FBT are unable to agree on such Adjustments within such 30-day
period, the Banks shall as promptly as possible select a mutually acceptable
accounting firm, which firm shall within 60 days prepare and deliver to both
parties a final Closing Statement, reflecting such Adjustments in accordance
with generally accepted accounting principles consistently applied. The costs of
such independent calculation shall be shared equally by FCB and FBT and shall be
final and binding on the parties, absent manifest error.
ARTICLE 4
Covenants
4.1 Conduct of Business Prior to Closing. Except with the prior written
consent of the other Bank or as expressly contemplated or permitted by this
Agreement, during the period from the date of this Agreement and continuing
until the Closing Date, each Bank shall not, with respect to the Branch and
related business being transferred by such Bank:
A. Conduct business at the Branch other than in the usual,
regular and ordinary course, or fail to use its reasonable best efforts
to preserve the Branch intact or to preserve the good will of the
customers at and others having business relations with the Branch;
B. Except in the ordinary course of business, cancel any
claims that it might have possessed with respect to the Branch's
Assets, or cancel or waive any material rights of substantial value
related to such Assets or sell, lease, encumber or otherwise dispose
of, or agree to sell, lease, encumber or otherwise dispose of any of
such Assets;
<PAGE>
C. Cause the Branch to engage or participate in any
material transaction or incur or sustain any material obligation,
except as may arise in the ordinary course of business (other than FCB
entering into a lease for a new location for the Campbell Branch);
D. Offer at the Branch rates on accounts above or below,
or terms on accounts more or less restrictive than those generally
offered on the same type of account by other major financial
institutions in the Branch's banking market, consistent with the Bank's
past practice;
E. Cause the Branch to transfer to such Bank's other
operations or branches any Fixed Assets of the Branch;
F. Cause the Branch to transfer any Deposits of the
Branch, including without limitation to such Bank's other operations or
branches, except upon the unsolicited request of a depositor in the
ordinary course of business, and such Bank will take no action intended
to induce a depositor to request any such transfer;
G. Transfer, assign, encumber or otherwise dispose of
or enter into any commitment, contract, agreement, understanding
or other arrangement to transfer, assign, encumber or otherwise dispose
of any of the Assets of the Branch, except as contemplated by this
Agreement;
H. Invest in any Fixed Assets on behalf of the Branch,
except for commitments made on or before the date of the Agreement
and for replacements of furniture, furnishings and equipment and
normal maintenance and refurbishing purchased or made in the ordinary
course of business;
I. Undertake any actions which are inconsistent with
a program to use its reasonable efforts to maintain good relations
with customers and with employees employed at the Branch, unless such
actions are required or permitted by this Agreement;
J. Violate any law, statute , rule, governmental
regulation, order or undertaking which violation might have an adverse
effect on the Assets of the Branch; or
K. Fail to maintain the Records of the Branch in the
usual manner on a basis consistent with that heretofore employed.
<PAGE>
4.2 Assistance in Obtaining Regulatory Approvals. Each of the Banks agrees
to use its best efforts to obtain all approvals and consents necessary to
complete the transactions contemplated hereby, and provide promptly to the other
Bank or to the appropriate regulatory authorities all information reasonably
required to be submitted in connection with approvals of the transactions
contemplated by this Agreement.
4.3 No Encumbrances. Between the date of this Agreement and the Closing
Date, neither Bank will create or suffer to exist any new Encumbrance on any of
the Assets of the Branch to be transferred by such Bank pursuant to this
Agreement, or otherwise enter into any transaction or make any material
commitment or agreement relating to any of such Assets without the prior written
consent of the other Bank.
4.4 Insurance Policies. Each Bank will maintain in effect until the
Closing all current insurance policies applicable to such Bank.
4.5 Further Assurances. On and after the Closing Date, each Bank shall (i)
give such further assistance to the other Bank and shall execute, acknowledge
and deliver all such bills of sale, deeds, acknowledgments and other instruments
and take such further action as may be necessary and appropriate effectively to
vest in the other Bank full, legal and equitable title to the Assets being
transferred to such Banks, and (ii) use its best efforts to assist the other
Bank in the orderly transition of the operations being acquired by such Bank.
In particular, and without limiting the foregoing:
A. Each Bank will remit to the other Bank promptly after receipt
by the first Bank after the Closing Date at any of its other offices,
amounts intended for deposit to the accounts which are part of the
Deposits or otherwise relating to the Deposits of the Branch being
transferred by the first Bank pursuant to this Agreement; and
B. With respect to checks or drafts drawn against accounts which
are Deposits, each Bank will cooperate with the other Bank and take all
reasonable steps requested by the other Bank to ensure that, on or
after the Closing Date, each such item which is coded for presentment
to the first Bank or to any bank for the account of the first Bank is
made available to the other Bank in a timely manner and in accordance
with applicable law and clearing house rule or agreement.
4.6 Inspection. Each Bank shall permit the accountants, counsel and other
authorized agents and representatives of the other Bank, during normal business
hours, to inspect the facilities, books, Records, files, contracts, agreements,
books of account and other corporate documents related to the Branch being
transferred by the first Bank pursuant to this Agreement and confer with any
<PAGE>
officers or employees of the other Bank as the same relate to such Branch. Each
Bank shall cause to be furnished to the other Bank and its advisors all such
other information concerning its business and properties as the other Bank may
reasonably request from time to time, including without limitation, historical
information relating to deposit accounts previously maintained at the Branch
being transferred by the first Bank pursuant to this Agreement; provided,
however, that such information is in existence as of the date hereof and will
not require the generation of new or previously nonexistent data or reports.
Notwithstanding the foregoing, no investigation or inspection in accordance with
this Section shall affect or otherwise diminish any of the representations and
warranties made by or the conditions to the obligations to consummate the
transactions contemplated hereby of either Bank.
4.7 Notification of Material Changes and Litigation. Each Bank shall
provide the other Bank with prompt written notice of (i) any adverse or
potentially adverse material change in the condition of the Assets or the
Liabilities with respect to the Branch being transferred by the first Bank
pursuant to this Agreement; (ii) any event or condition of any character
(whether actual, threatened or contemplated) that has materially adversely
affected, or can reasonably be expected to materially and adversely affect the
Assets or the Liabilities with respect to the Branch being transferred by the
first Bank pursuant to this Agreement; and (iii) all claims, regulatory
proceedings and litigation involving the Assets or the Liabilities with respect
to the Branch being transferred by the first Bank pursuant to this Agreement.
4.8 [Reserved]
4.9 Consent of FDIC and Department of Financial Institutions. Each Bank
agrees to use its best efforts to assist in obtaining the consent of the Federal
Deposit Insurance Corporation, the California Department of Financial
Institutions and the Federal Reserve Board (if required) to the consummation of
the transactions contemplated hereby.
4.10 [Reserved]
4.11 Performance of Liabilities. From and after the Closing, each Bank
shall fully perform, pay and discharge all of the Liabilities of the Branch
being transferred to such Bank pursuant to this Agreement in accordance with the
terms thereof, and shall protect the rights of depositors and creditors of such
Branch in the same manner and to the same extent as if such Bank had itself
incurred such Liabilities.
<PAGE>
ARTICLE 5
Representations and Warranties
5.1 Representations and Warranties of FCB. FCB hereby represents and
warrants to FBT as follows:
A. Corporate Standing; Authorization. FCB is a state
banking corporation duly organized, validly existing and in good
standing under the laws of the State of California. Neither the
execution and delivery by FCB of this Agreement, nor the consummation
of the transactions contemplated hereby, will result in or cause any
violation of, or constitute a default under, any provision of the
Charter or By-laws of FCB, or of any material lease, mortgage, note,
bond, loan agreement, license, judgment, order or other instrument or
obligation to which FCB is a party or is bound or to which FCB or any
of its properties or assets are subject. The execution and delivery of
this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on
the part of FCB. This Agreement has been duly executed and delivered by
FCB, and constitutes the legal, valid and binding obligation of FCB,
enforceable against FCB in accordance with its terms. FCB has all
requisite corporate power and authority to enter into and to consummate
the transactions contemplated by this Agreement.
B. Legal proceedings. Except as set forth on Schedule
5.1.B hereto, there are no claims of any kind or any actions, suits,
proceedings, arbitrations or investigations pending or, to the
knowledge of FCB, threatened against or affecting FCB or any interest
or right of FCB as such might relate to the Campbell Branch, or
against or affecting any of the Campbell Assets or Campbell
Liabilities in excess of $25,000.
C. Compliance with Laws. Except as set forth on Schedule
5.1.C hereto, FCB is in material compliance with all statutes and
regulations applicable to the conduct of FCB's business. FCB has not
received notice from any agency or department of federal, state or
municipal government asserting a violation of any law, regulation,
ordinance, rule or order (whether executive, judicial, legislative or
administrative) that would have a material adverse effect on the
financial condition, results of operations or business of FCB or the
Campbell Assets or Campbell Liabilities. FCB holds all permits,
licenses, exemptions, orders and approvals of all governmental entities
which are necessary to the operation of the Campbell Branch and is in
compliance with the terms thereof.
D. Brokers. Except as set forth in Schedule 5.1.D
hereto, neither FCB nor any of its respective officers, directors,
employees or agents, has employed any broker, finder or financial
advisor or incurred any liability for fees or commissions in connection
with the negotiations relating to or the transactions contemplated
by this Agreement.
<PAGE>
E. Assets. Except as set forth on Schedule 5.1.E hereto,
FCB has good and marketable title to all of the Campbell Assets, free
and clear of all Encumbrances other than any Permitted Exceptions.
Delivery to FBT of the instruments of transfer of ownership
contemplated by this Agreement will vest good and marketable title to
the Campbell Assets in FBT, free and clear of all Encumbrances other
than any Permitted Exceptions. The current use of the Campbell Real
Property and Improvements complies with all applicable laws,
regulations and ordinances. At Closing all of the Campbell Fixed Assets
will be in good condition and repair, ordinary wear and tear excepted,
and will be sufficient to enable FBT to operate the Campbell Branch in
its intended use.
F. Operation. To the knowledge of FCB, there are no facts
or circumstances existing or threatened which would have a material
adverse effect on the present or future use of the Campbell Branch as a
banking office. The Campbell Branch and the current use thereof are in
compliance with, and FCB has not received notice and has no knowledge
that any governmental authority or any employee or agent thereof
considers the Campbell Branch to violate or to have violated fire,
zoning, health, safety, building, hazardous waste or environmental code
or other ordinance, law or regulation or order of any government or any
agency, body or subdivision thereof, or any private covenants,
restrictions or easements.
G. Insurance. All of the properties and assets of FCB at
the Campbell Branch are covered by effective insurance in amounts at
least equal to their fair market value and against such losses and
risks as are generally insured against by comparable businesses. All of
such insurance policies and bonds are valid and enforceable and in full
force and effect and FCB has not received any notice of premium
increases or cancellations with respect to any of such policies and
bonds.
H. [Reserved]
I. [Reserved]
J. Deposits. The deposit records of FCB accurately reflect
the Campbell Deposits and are and shall be sufficient to enable FBT to
conduct a banking business with respect to the Campbell Branch under
the same standards as FCB has heretofore conducted such business. Since
June 30, 1997, FCB has not transferred any of the Campbell Deposits
held by FCB at the Campbell Branch to any of FCB's other branches, or
to any branch of any affiliate of FCB, except at the express
unsolicited request of the depositor in the ordinary course of
business.
<PAGE>
K. Environmental Matters. To the knowledge of FCB, the
Campbell Real Property and Improvements is in material compliance with
all applicable federal, state and local laws, rules, regulations,
ordinances and requirements relating to the environment (the
Environmental Laws ). There are no actions, suits or proceedings, or
demands, claims, notices or investigations (including, without
limitation, notices, demand letters or requests for information from
any environmental agency) instituted or pending, or, to FCB's actual
knowledge, threatened, alleging violation of any Environmental Laws
relating to the Campbell Real Property and Improvements.
L. Consents. Except as set forth on Schedule 5.1.L hereto,
no filing with or notification, consent, approval or authorization of
any governmental or non-governmental entity, is required for the
execution, delivery and performance by FCB of this Agreement and the
transactions contemplated hereby, other than the approvals of the
Federal Deposit Insurance Corporation and the California Department of
Financial Institutions.
M. [Reserved]
N. [Reserved]
O. Full Disclosure. No representation or warranty of FCB
contained in this Agreement (including any Schedule hereto) and no
statement of FCB contained in this Agreement (including any Schedule
hereto) or in any instrument furnished or to be furnished to FBT
hereunder contains or will contain any untrue statement of a material
fact or omits or will omit to state any material fact necessary to make
the statements contained herein or therein not misleading. To the
extent that any representation, warranty or statement FCB contained in
this Agreement (including any Schedule hereto) is or becomes materially
inaccurate or misleading at any time from the date hereof through
Closing, FCB shall promptly notify FBT of such fact, fully disclose the
nature of and all relevant facts relating to such inaccuracy or
misleading nature and, as appropriate under the circumstances, deliver
to FBT an amended Substitute Schedule appropriately dated.
5.2 Representations and Warranties of FBT. FBT hereby represents and
warrants to FCB that:
A. Corporate Standing; Authorization. FBT is a state
banking corporation duly organized, validly existing and in good
standing under the laws of the State of California. Neither the
execution and delivery by FBT of this Agreement, nor the consummation
of the transactions contemplated hereby, will result in or cause any
violation of, or constitute a default under, any provision of the
Charter or By-laws of FBT, or of any material lease, mortgage, note,
<PAGE>
bond, loan agreement, license, judgment, order or other instrument or
obligation to which FBT is a party or is bound or to which FBT or any
of its properties or assets are subject. The execution and delivery of
this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on
the part of FBT. This Agreement has been duly executed and delivered by
FBT, and constitutes the legal, valid and binding obligation of FBT,
enforceable against FBT in accordance with its terms. FBT has all
requisite corporate power and authority to enter into and to consummate
the transactions contemplated by this Agreement.
B. Legal Proceedings. Except as set forth on Schedule
5.2.B hereto, there are no claims of any kind or any actions, suits,
proceedings, arbitrations or investigations pending or, to the
knowledge of FBT, threatened against or affecting FBT or any interest
or right of FBT as such might relate to the Walnut Creek Branch, or
against or affecting any of the Walnut Creek Assets or Walnut Creek
Liabilities in excess of $25,000.
C. Compliance with Laws. Except as set forth on Schedule
5.2.C hereto, FBT is in material compliance with all statutes and
regulations applicable to the conduct of FBT's business. FBT has not
received notice from any agency or department of federal, state or
municipal government asserting a violation of any law, regulation,
ordinance, rule or order (whether executive, judicial, legislative or
administrative) that would have a material adverse effect on the
financial condition, results of operations or business of FBT or the
Walnut Creek Assets or Walnut Creek Liabilities. FBT holds all permits,
licenses, exemptions, orders and approvals of all governmental entities
which are necessary to the operation of the Walnut Creek Branch and is
in compliance with the terms thereof.
D. Brokers. Except as set forth on Schedule 5.2.D hereto,
neither FBT nor any of its respective officers, directors, employees
or agents, has employed any broker, finder or financial advisor or
incurred any liability for fees or commissions in connection with the
negotiations relating to or the transactions contemplated by this
Agreement.
E. Assets. Except as set forth on Schedule 5.2.E hereto,
FBT has good and marketable title to all of the Walnut Creek Assets,
free and clear of all Encumbrances other than any Permitted Exceptions.
Delivery to FCB of the instruments of transfer of ownership
contemplated by this Agreement will vest good and marketable title to
the Walnut Creek Assets in FCB, free and clear of all Walnut Creek
Encumbrances other than any Permitted Exceptions. The current use of
the Walnut Creek Real Property and Improvements complies with all
applicable laws, regulations and ordinances. At Closing all of the
Walnut Creek Fixed Assets will be in good condition and repair,
ordinary wear and tear excepted, and will be sufficient to enable FCB
to operate the Walnut Creek Branch in its intended use.
<PAGE>
F. Operation. To the knowledge of FBT, there are no facts
or circumstances existing or threatened which would have a material
adverse effect on the present or future use of the Walnut Creek Branch
as a banking office. The Walnut Creek Branch and the current use
thereof are in compliance with, and FBT has not received notice and has
no knowledge that any governmental authority or any employee or agent
thereof considers the Walnut Creek Branch to violate or to have
violated, fire, zoning, health, safety, building, hazardous waste or
environmental code or other ordinance, law or regulation or order of
any government or any agency, body or subdivision thereof, or any
private covenants, restrictions or easements.
G. Insurance. All of the properties and assets of FBT at
the Walnut Creek Branch are covered by effective insurance in amounts
at least equal to their fair market value and against such losses and
risks as are generally insured against by comparable businesses. All of
such insurance policies and bonds are valid and enforceable and in full
force and effect and FBT has not received any notice of premium
increases or cancellations with respect to any of such policies and
bonds.
H. [Reserved]
I. [Reserved]
J. Deposits. The deposit records of FBT accurately reflect
the Walnut Creek Deposits and are and shall be sufficient to enable FCB
to conduct a banking business with respect to the Walnut Creek Branch
under the same standards as FBT has heretofore conducted such business.
Since June 30, 1997, FBT has not transferred any of the Walnut Creek
Deposits held by FBT at the Walnut Creek Branch to any of FBT's other
branches, or to any branch of any affiliate of FBT, except at the
express unsolicited request of the depositor in the ordinary course of
business.
K. Environmental Matters. To the knowledge of FBT, the
Walnut Creek Real Property and Improvements is in material compliance
with all applicable federal, state and local laws, rules, regulations,
ordinances and requirements relating to the environment (the
Environmental Laws ). There are no actions, suits or proceedings, or
demands, claims, notices or investigations (including, without
limitation, notices, demand letters or requests for information from
any environmental agency) instituted or pending, or, to FBT's actual
knowledge, threatened, alleging violation of any Environmental Laws
relating to the Walnut Creek Real Property and Improvements.
<PAGE>
L. Consents. Except as set forth on Schedule 5.2.L hereto,
no filing with or notification, consent, approval or authorization of
any governmental or non-governmental entity, is required for the
execution, delivery and performance by FBT of this Agreement and the
transactions contemplated hereby, other than the approvals of the
Federal Deposit Insurance Corporation and the California Department of
Financial Institutions.
M. [Reserved]
N. [Reserved]
O. Full Disclosure. No representation or warranty of FBT
contained in this Agreement (including any Schedule hereto) and no
statement of FBT contained in this Agreement (including any Schedule
hereto) or in any instrument furnished or to be furnished to FCB
hereunder contains or will contain any untrue statement of a material
fact or omits or will omit to state any material fact necessary to make
the statements contained herein or therein not misleading. To the
extent that any representation, warranty or statement of FBT contained
in this Agreement (including any Schedule hereto) is or becomes
materially inaccurate or misleading at any time from the date hereof
through Closing, FBT shall promptly notify FCB of such fact, fully
disclose the nature of the inaccuracy or misleading nature and, as
appropriate under the circumstances, deliver to FCB an amended
Substitute Schedule appropriately dated.
ARTICLE 6
Conditions Precedent
6.1 Conditions to Obligation of FCB. The obligation of FCB to consummate
the transactions contemplated by this Agreement is subject to the satisfaction
of the following conditions precedent on or before the Closing Date, any of
which may be waived by FCB:
A. The representations and warranties of FBT set forth in
Section 5.2 of this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date as
if made on the Closing Date (except with respect to representations and
warranties that are, by their nature, made only as of a specific date),
and FBT shall have furnished to FCB a certificate executed by an
executive officer of FBT to that effect;
<PAGE>
B. FBT shall have performed and observed its obligations
and covenants as set forth in this Agreement in all material respects
prior to or at the Closing Date and shall have delivered to FCB a
certificate executed by an executive officer of FBT to that effect;
C. Receipt of all permits, consents, approvals and
authorizations from federal and state governmental authorities and
regulatory agencies necessary to effect the transactions contemplated
hereby and the operation of the Walnut Creek Branch by FCB (including
the expiration of all applicable waiting periods), on terms and
conditions reasonable to FCB;
D. [Reserved]
E. FCB shall have received (at its sole cost and expense)
with respect to the Walnut Creek Real Property and Improvements
the consent of the landlord of the Walnut Creek Real Property to the
substitution of FBT as lessee;
F. There shall not be threatened, instituted or pending
any action or proceeding before any domestic or foreign court or
governmental agency or other regulatory or administrative agency or
commission, or by any other person (i) challenging the transactions
contemplated by this Agreement or the terms thereof or (ii) seeking to
prohibit the transactions contemplated by this Agreement, which, in the
opinion of FCB's counsel, has a reasonable probability of success;
G. There shall have been no material adverse change in the
ability to conduct banking operations at the Walnut Creek Branch; and
H. The transactions contemplated in the Merger Agreement
shall have been completed or will be completed simultaneously with
the transactions contemplated in this Agreement.
6.2 Conditions to Obligation of FBT. The obligation of FBT to consummate
the transactions contemplated by this Agreement is subject to the satisfaction
of the following conditions precedent on or before the Closing Date, any of
which may be waived by FBT:
A. The representations and warranties of FCB set forth in
Section 5.1 of this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date as
if made on the Closing Date (except with respect to representations and
warranties that are, by their nature, made only as of a specific date),
and FCB shall have furnished to FBT a certificate executed by an
executive officer of FCB to that effect;
<PAGE>
B. FCB shall have performed and observed its obligations
and covenants as set forth in this Agreement in all material respects
prior to or at the Closing Date and shall have delivered to FBT a
certificate executed by an executive officer of FCB to that effect;
C. Receipt of all permits, consents, approvals and
authorizations from federal and state governmental authorities and
regulatory agencies necessary to effect the transactions contemplated
hereby and the operation of the Campbell Branch by FBT (including the
expiration of all applicable waiting periods), on terms and conditions
reasonably satisfactory to FBT;
D. [Reserved]
E. FBT shall have received (at its sole cost and expense)
with respect to the Campbell Real Property and Improvements the consent
of the landlord of the Campbell Real Property to the substitution of
FCB as lessee;
F. There shall not be threatened, instituted or pending
any action or proceeding before any domestic or foreign court or
governmental agency or other regulatory or administrative agency or
commission, or by any other person (i) challenging the transactions
contemplated by this Agreement or the terms thereof or (ii) seeking to
prohibit the transactions contemplated by this Agreement, which, in the
opinion of FBT's counsel, has a reasonable probability of success;
G. There shall have been no material adverse change in the
ability to conduct banking operations at the Campbell Branch; and
H. The transactions contemplated in the Merger Agreement
shall have been completed or will be completed simultaneously with
the transactions contemplated in this Agreement.
ARTICLE 7
Survival; Indemnification
7.1 Survival. The representations and warranties made by the parties to
this Agreement, and their respective obligations to be performed under the terms
hereof at, prior to or after the Closing shall survive the Closing.
7.2 Indemnity of FBT. FCB will indemnify, defend, and hold harmless FBT
against and in respect of any and all claims, demands, losses, costs, expenses,
obligations, liabilities, damages, recoveries and deficiencies, including
interest, penalties and reasonable attorneys' fees, that FBT incurs or suffers,
<PAGE>
which arise, result from or relate to (i) any breach of, or failure by FCB to
perform, any of the representations, warranties, covenants or agreements in this
Agreement or in any Schedule, certificate or other instrument furnished by FCB
pursuant to this Agreement; (ii) the operation of the Campbell Branch prior to
the Closing; (iii) the operation of the Walnut Creek Branch after Closing; (iv)
ownership of the Campbell Branch after Closing; and (v) any liability of FCB,
whether or not relating to the Campbell Branch, that is not expressly assumed by
FBT under this Agreement. The right of indemnity of FBT as set forth in this
Section shall be in addition to all other rights or remedies which FBT may have
against FCB at law or in equity.
7.3 Indemnity of FCB7.3Indemnity of FCB. FBT will indemnify, defend, and
hold harmless FCB against and in respect of any and all claims, demands, losses,
costs, expenses, obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties and reasonable attorneys' fees, that FCB incurs or
suffers, which arise, result from or relate to (i) any breach of, or failure by
FBT to perform, any of the representations, warranties, covenants or agreements
in this Agreement or in any Schedule, certificate or other instrument furnished
by FBT pursuant to this Agreement; (ii) the operation of the Walnut Creek Branch
prior to Closing, (iii) the operation of the Campbell Branch after the Closing;
and (iv) the ownership of the Walnut Creek Branch after Closing; and (v) any
liability of FBT, whether or not relating to the Walnut Creek branch, that is
not expressly assumed by FCB under this Agreement. The right of indemnity of FCB
as set forth in this Section shall be in addition to all other rights or
remedies which FCB may have against FBT at law or in equity.
ARTICLE 8
Termination
8.1 Termination. This Agreement may be terminated by the mutual agreement
of the Banks. Either Bank may, in addition to other remedies which may be
available, upon prior written notice, terminate this Agreement if the other Bank
materially breaches any representation or warranty or materially breaches any
covenant in this Agreement or upon the failure and nonwaiver of any condition
precedent set out in Article 6 hereof unless, in the case of a material breach
of a covenant or failure of a condition, within 30 days after written notice
from non-breaching Bank, the breaching Bank shall have cured such breach or
failure. Unless the Closing Date shall have occurred on or before, (Date) either
Bank may terminate this Agreement and this Agreement shall be of no further
force or effect.
8.2 Declaration. Any declaration of termination under this Article 8 by
either Bank shall be pursuant to resolution of such Bank's Board of Directors or
by executive officers thereof duly authorized by such Board of Directors to make
such a declaration, shall be made by written notice given to the other Bank
setting forth the grounds for the termination, including, if applicable, the
<PAGE>
alleged material misrepresentation, breach or failure; and, unless, in the case
of a material breach of a covenant or a failure of a condition, such material
breach or failure is timely cured, such notice shall have the effect of
terminating this Agreement effective upon the delivery of such written notice or
the expiration of any applicable cure period (with an appropriate cure of such
breach or failure), whichever is later, whereupon the same shall have no further
effect. Notwithstanding the foregoing, no termination of this Agreement shall
affect the covenants set forth in Section 11.6 relating to expenses, which shall
survive any such termination, and except as otherwise expressly provided herein,
no termination of this Agreement on the grounds of a material misrepresentation
or uncured material breach of any covenant contained herein shall relieve the
breaching Bank from any liability for such uncured material misrepresentation or
uncured material breach of any covenant or agreement contained herein giving
rise to such termination.
ARTICLE 9
Non-solicitation
9.1 Covenant Against Solicitation.
(a) Campbell. FCB covenants and agrees that, for a period of 2 years after
the Closing Date, FCB will not solicit deposits, loans or any other services or
products from or to persons who were customers or depositors at the Campbell
Branch on the date hereof or on the Closing Date, except (i) as may occur in
connection with advertising or solicitations directed to the public generally,
(ii) as may occur as a result of any existing deposit or lending relationships
domiciled at any of FCB's banking offices other than the Campbell Branch, or
(iii) in connection with the modification or renewal of any Campbell Loan. In
the event that any provision hereof relating to the time period or the scope of
restriction or related aspects thereto shall be declared by a court of competent
jurisdiction to exceed the maximum restrictiveness such court deems reasonable
and enforceable, the time period or scope of restriction or related aspects
deemed reasonable and enforceable by the court shall become and thereafter be
the maximum restriction in such regard, and the restriction shall remain
enforceable to the fullest extent deemed reasonable by such court.
(b) Walnut Creek. FBT covenants and agrees that, for a period of 2 years
after the Closing Date, FBT will not solicit deposits, loans or any other
services or products from or to persons who were customers or depositors at the
Walnut Creek Branch on the date hereof or on the Closing Date, except (i) as may
occur in connection with advertising or solicitations directed to the public
generally, (ii) as may occur as a result of any existing deposit or lending
relationships domiciled at any of FBT's banking offices other than the Walnut
Creek Branch, or (iii) in connection with the modification or renewal of any
Walnut Creek Loan. In the event that any provision hereof relating to the time
<PAGE>
period or the scope of restriction or related aspects thereto shall be declared
by a court of competent jurisdiction to exceed the maximum restrictiveness such
court deems reasonable and enforceable, the time period or scope of restriction
or related aspects deemed reasonable and enforceable by the court shall become
and thereafter be the maximum restriction in such regard, and the restriction
shall remain enforceable to the fullest extent deemed reasonable by such court.
9.2 Remedies for Breach. Each of the Banks agrees that there is no adequate
remedy at law for a breach of the provisions of Section 9.1. In the event of a
breach or threatened breach of any of the covenants in Section 9.1, the
non-breaching Bank shall have the right to seek monetary damages for any breach
and such other equitable relief as the court may grant including, but not
limited to, specific performance by means of a restraining order or injunction
to prevent or restrain any such breach.
ARTICLE 10
Other Agreements
10.1 Returned Items. If either Bank is charged for any Returned Item
(defined below) with respect to the Branch being transferred to such Bank
pursuant to this Agreement, such Bank will use its best efforts to obtain
reimbursement from the account to which, or from the party to whom, the Returned
Item was credited. If there are sufficient funds in the account to which such
Returned Item was credited or, to the extent authorized or permitted by law, any
other accounts on deposit at the such Branch or at any other branch office of
such Bank standing in the name of the party liable for such item, such Bank will
debit any or all of such accounts an amount equal in the aggregate to the
Returned Item plus a $15.00 processing fee for each Returned Item. If those
accounts do not contain funds sufficient to reimburse such Bank fully, the other
Bank will, upon notice from the first Bank, immediately repay to the first Bank
the amount of the Returned Item and the first Bank will assign the Returned Item
to the other Bank for collection. Returned Item as used in this Section 10.1
shall mean any item that was credited for deposit to or cashed against an
account at a Branch prior to the Closing and returned unpaid within twelve (12)
months after the Closing.
10.2 ACH Deposits. Each Bank will use its best efforts to have all direct
arrangements transferred to it from the other Bank within 180 days after the
Closing Date. Each Bank will provide to the other Bank no later than 30 days
prior to Closing a list of its ACH entries for electronic transfer accounts
domiciled at the Branch being transferred by such Bank pursuant to this
Agreement, together with all supporting documentation. After the Closing, each
Bank will on a daily basis remit and transfer to the other Bank all ACH entries
and corresponding direct deposits intended for accounts to be transferred
pursuant to this Agreement.
10.3 Backup Withholding. Any amounts required by any governmental agencies
to be withheld from any of the Deposits (the Withholding Obligations) shall be
handled as follows:
<PAGE>
A. With respect to each Branch, any Withholding
Obligations required to be remitted to the appropriate governmental
agency prior to the Closing Date will be withheld and remitted by the
Bank transferring such Branch pursuant to this Agreement.
B. With respect to each Branch, any Withholding
Obligations required to be remitted to the appropriate governmental
agency on or after the Closing Date will be remitted by the Bank to
which such Branch is being transferred pursuant to this Agreement. At
the Closing, each Bank will remit to the other Bank all sums withheld
by the first Bank pursuant to Withholding Obligations which funds are
or may be required to be remitted to governmental agencies on or after
the Closing Date. These sums will be netted against the Payment Amount.
10.4 Interest Reporting10.4Interest Reporting. Each Bank shall report for
the period beginning January 1, 1997, through the Transfer Date all interest
credited to, interest withheld from and early withdrawal penalties charged to
the Deposits with respect to the Branch being transferred by such Bank pursuant
to this Agreement, and after such period all such matters shall be reported by
the other Bank. Said reports shall be made to the holders of these accounts and
to the applicable federal and state regulatory agencies.
10.5 Notices to Depositors. Each Bank shall promptly provide to the other
Bank a customer list of all depositors related to the Deposits to be assumed
pursuant to this Agreement, together with one (1) set of mailing labels, as of
month-end prior to the Closing Date. On the Closing Date, each Bank shall
provide a final customer list on the transferred Deposits. At least 14 days
before the Closing (or on such earlier or later date as may be required by law),
each Bank shall mail notice (the Notice ) to the holders of the Deposits to be
assumed pursuant to this Agreement that, subject to the closing requirements,
the other Bank will be assuming the liability of the Deposits. The Notice will
be based on the list and labels referred to above and a log maintained at the
Branches for the new accounts opened since the date of said list. Each Bank
shall provide the other Bank with a copy of said log up to the date of the
Bank's mailing. After each Bank has mailed the Notice, the other Bank shall send
Notice to the same holders setting out the details of its administration of the
assumed accounts and may communicate with and mail information, brochures,
bulletins, press releases and other communications to depositors of the Branches
concerning the business and operations of the other Bank. Each Bank shall obtain
the approval of the other Bank on the proposed contents of its Notice and any
other communications to depositors of the Branches regarding the transactions
contemplated hereby. Notice may be made jointly if (i) it is permitted by
applicable statutes and regulations and (ii) the Banks can agree to the content
thereof.
<PAGE>
ARTICLE 11
General Provisions
11.1 Press Releases. The Banks agree that any press release or other public
announcement by either Bank pertaining to the transactions contemplated hereby
shall be coordinated with the other Bank hereto; provided, however, that nothing
contained herein shall prohibit either Bank from making any disclosure which its
counsel deems necessary by law.
11.2 Law and Section Headings. This Agreement shall be construed and
interpreted in accordance with the internal laws of the State of California,
without reference to conflict of laws principals. Article and Section headings
are used in this Agreement for convenience only and are to be ignored in the
construction of the terms of this Agreement.
11.3 Modifications. No modification, extension, renewal, rescission,
termination or waiver of any of the provisions contained herein or any future
representation, promise or condition in connection with the subject matter
hereof, shall be binding upon any of the parties unless made in writing and duly
executed by both Banks and authorized by resolution of their respective Boards
of Directors or their respective officers authorized by their respective Boards
of Directors.
11.4 Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of the remaining
provisions.
11.5 Notices. All notices hereunder shall be in writing and shall be deemed
to have been given or made if delivered in person or mailed, first class,
registered or certified mail, postage prepaid, return receipt requested, or
otherwise actually delivered, addressed as follows, until notice of another
address or additional addresses has been received by the other parties:
If to FCB, to:
Mr. James E. Culleton, President
First Commercial Bank
865 Howe Avenue, Suite 310
Sacramento, California 95825
<PAGE>
With copies to:
Mr. Donald W. Williams
c/o First Banks, Inc.
135 N. Meramec
St. Louis, Missouri 63105
Mr. Larry K. Harris
Suelthaus & Walsh, P.C.
7733 Forsyth Blvd., 12th Floor
St. Louis, Missouri 63105
Charles A. Crocco, Jr.
c/o Crocco & DeMaio, P.C.
241 East 49th Street
New York, New York 10017-1547
Edward T. Story, Jr.
c/o SOCO International, Inc.
1221 Lamar, Suite 1200
Houston, Texas 77010
and
John S. Daniels, Esq.
8117 Preston Road, Suite 800
Dallas, Texas 75225
If to FBT, to:
Fred Jensen, President
First Bank & Trust
16531 Bolsa Chica
Huntington Beach, California 92649
With a copy to:
Mr. Allen H. Blake
c/o First Banks, Inc.
11901 Olive Street Road
St. Louis, Missouri 63141
Copies to attorneys shall not constitute the giving of notice.
11.6 Expenses; Risk of Loss. Each Bank will pay its own fees and expenses
incurred in connection with the transactions contemplated by this Agreement.
Until Closing, the risk of loss to the Assets shall remain with Bank
contemplating transferring such Assets pursuant to this Agreement.
11.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute one and the same instrument.
11.8 Time of Essence; Best Efforts. Time is of the essence to the
performance of the obligations set forth in this Agreement. Each Bank agrees to
use its best efforts to consummate the transactions contemplated hereby as soon
as practicable and in connection therewith to obtain the satisfaction of the
conditions to their respective obligations specified herein, and to advise the
other party hereto in writing, as to any unusual delays or impediments in
obtaining same. Notwithstanding the foregoing, the Banks acknowledge that the
transactions contemplated herein are subject to a specific condition precedent
that the transactions contemplated in the Merger Agreement take place prior to
or simultaneously with the transactions contemplated herein.
11.9 Closing. At the Closing, each Bank shall execute and deliver all
documents required by this Agreement, and such further documents as the other
Bank shall reasonably request in order to satisfy the fulfillment of each Bank's
agreements and undertakings hereunder.
11.10 Parties in Interest; Assignment; Third Party Rights. All covenants
and agreements contained in this Agreement by or on behalf of each Bank shall
bind and inure to the benefit of its respective successors and permitted
assigns. Neither Bank may, however, assign its rights hereunder or delegate its
obligations hereunder to any other person or entity without the express prior
written consent of the other Bank, provided, however, that the survivor of the
contemplated merger of FCB and Sunrise Bank shall be deemed the successor in
interest to, and obligated hereunder to the same extent as, FCB. It is the
intention of the Banks that nothing in this Agreement shall be deemed to create
any right with respect to any person or entity not a party to this Agreement,
except as expressly set forth herein.
<PAGE>
11.11 Entire Agreement; Waiver. This Agreement, including the Schedules
hereto (which constitute integral parts of the Agreement), constitutes and
contains the entire agreement of FCB and FBT with respect to the subject matter
hereof and supersedes any prior agreement between the Banks, whether written or
oral. The waiver of a breach of any term or condition of this Agreement must be
in writing signed by the Bank sought to be charged with such waiver and such
waiver shall not be deemed to constitute the waiver of any other breach of the
same or of any other term or condition of this Agreement.
IN WITNESS WHEREOF, the Banks have caused this Agreement to be executed by
their duly authorized officers as of the 3rd day of October, 1997.
FCB: FIRST COMMERCIAL BANK
By:/s/Allen H. Blake
--------------------
Title:Executive Vice President
FBT: FIRST BANK & TRUST
By:/s/ Donald W. Williams
-------------------------
Title:Chairman
<PAGE>
Exhibit 11
FIRST COMMERCIAL BANCORP, INC.
Calculation of Earnings (Loss) per Share
<TABLE>
<CAPTION>
For the three months ended For the nine months ended
September 30, September 30,
------------- -------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Average common shares outstanding 845,779 846,127 845,779 702,304
=========== ========= ========= =======
Primary earnings (loss) per share:
Net income (loss) $ 215,406 270,931 785,011 (874,292)
Primary earnings (loss) per share $ .25 .32 .93 (1.74)
----------- --------- --------- -------
Fully diluted earnings (loss) per share:
12% convertible debentures $ 6,500,000 6,500,000 6,500,000 6,500,000
Accrued interest payable at beginning
of year 830,667 37,667 830,667 37,667
Conversion price per share of
common stock $ 12.50 12.50 12.50 12.50
Common stock issuable upon conversion
12% convertible debentures and
related accrued interest payable 586,453 523,013 586,453 523,013
Average shares of common stock
outstanding 845,779 846,127 845,779 702,304
----------- --------- --------- ---------
1,432,232 1,369,140 1,432,232 1,225,317
=========== ========= ========= =========
Net income (loss) $ 215,406 270,931 785,011 (874,292)
Interest expense on 12% convertible
debentures, including amortization
of debt issuance costs 217,708 217,708 646,624 648,791
Provision for related income taxes (76,198) (76,198) (226,318) (227,077)
Fully-diluted net income (loss) $ 356,916 412,441 1,205,317 (452,578)
----------- --------- --------- --------
=========== ========= ========= ========
Fully-diluted earnings (loss) per share $ .25 .30 .84 (#)
=========== ======== ========= ======
</TABLE>
(#) Conversion of 12% convertible debentures and related accrued interest
payable would be anti-dilutive for the nine month period ended September
30, 1996.
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000315547
<NAME> First Commercial Bancorp, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Sep-30-1997
<CASH> 9,073
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 18,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 46,287
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 106,133
<ALLOWANCE> (4,947)
<TOTAL-ASSETS> 178,861
<DEPOSITS> 161,372
<SHORT-TERM> 0
<LIABILITIES-OTHER> 3,743
<LONG-TERM> 6,500
0
0
<COMMON> 1,057
<OTHER-SE> 6,187
<TOTAL-LIABILITIES-AND-EQUITY> 178,861
<INTEREST-LOAN> 7,348
<INTEREST-INVEST> 1,883
<INTEREST-OTHER> 475
<INTEREST-TOTAL> 9,706
<INTEREST-DEPOSIT> 3,758
<INTEREST-EXPENSE> 4,444
<INTEREST-INCOME-NET> 5,262
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 4,220
<INCOME-PRETAX> 1,612
<INCOME-PRE-EXTRAORDINARY> 1,612
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 785
<EPS-PRIMARY> .93
<EPS-DILUTED> .84
<YIELD-ACTUAL> 8.49
<LOANS-NON> 1,013
<LOANS-PAST> 145
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 2,727
<ALLOWANCE-OPEN> 4,597
<CHARGE-OFFS> 271
<RECOVERIES> 621
<ALLOWANCE-CLOSE> 4,947
<ALLOWANCE-DOMESTIC> 4,947
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
