As filed with the Securities and Exchange Commission on July 1,
1994
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 22, 1994
WEST COAST BANCORP
(Exact name of registrant as specified in its charter)
California 95-3586860
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
Commission file number 0-10897
4770 Campus Drive, Suite 100
Newport Beach, California 92660-1833
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (714) 757-6868
Not Applicable
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
West Coast Bancorp ("WCB"), holder of approximately 94%
of the total outstanding shares of common stock of Sacramento First
National Bank, a California corporation ("Sacramento First"),
announced on June 22, 1994 that WCB, Sacramento First and Business
& Professional Bank ("B&P Bank") have entered into that certain
Plan and Agreement of Consolidation and Merger, dated as of
June 22, 1994 (the "Agreement"), relating to the acquisition of
Sacramento First by B&P Bank. Consummation of the transactions
contemplated by the Agreement are subject to, among other things,
the receipt of necessary regulatory approvals and approval by the
shareholders of B&P Bank and Sacramento First.
Attached to this report as Exhibit 2.1 is a copy of the
executed Agreement. Additional information concerning the merger
of Sacramento First with B&P Bank is set forth in the press release
dated June 22, 1994, attached hereto as Exhibit 99.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
Exhibits
2.1 Plan and Agreement of Consolidation and Merger,
by and between WCB, Bank and B&P Bank, with
exhibits.
2.2 Shareholder Agreement between WCB and B&P Bank
99 Press Release relating to the Agreement and the
transactions contemplated thereunder.
<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 hereunto duly authorized.
WEST COAST BANCORP
(Registrant)
Date: June 30, 1994 By /s/ John B. Joseph
John B. Joseph, Chairman
of the Board, President
and Chief Executive Officer
<PAGE>
Exhibit Index
Page
2.1 Plan and Agreement of Consolidation and Merger,
by and between West Coast Bancorp, Sacramento
First National Bank and Business & Professional
Bank, with exhibits (the "Agreement").
2.2 Shareholder Agreement between West Coast Bancorp
and Business & Professional Bank.
99 Press Release relating to the Agreement and the
transactions contemplated thereunder.
<PAGE>
PLAN AND AGREEMENT OF CONSOLIDATION AND MERGER
AMONG
BUSINESS & PROFESSIONAL BANK
WEST COAST BANCORP
AND
SACRAMENTO FIRST NATIONAL BANK
DATED AS OF: JUNE 22, 1994
PAGE
<PAGE>
TABLE OF CONTENTS
Page
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
CONSOLIDATION
1.1 The Consolidation . . . . . . . . . . . . . . . . . . . 2
1.2 Consolidation Consideration . . . . . . . . . . . . . . 2
1.3 Fractional Shares . . . . . . . . . . . . . . . . . . . 3
1.4 Dissenters. . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Letter of Transmittal . . . . . . . . . . . . . . . . . 3
1.6 Surrender of Bank Stock Certificates. . . . . . . . . . 4
1.7 Closing Date. . . . . . . . . . . . . . . . . . . . . . 5
1.8 Procedure . . . . . . . . . . . . . . . . . . . . . . . 5
1.9 Representative. . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II
THE MERGER
2.1 General . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Procedure . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND BANK
3.1 Organization, Etc . . . . . . . . . . . . . . . . . . . 8
3.2 Binding Effect; No Conflict . . . . . . . . . . . . . . 9
3.3 Capitalization. . . . . . . . . . . . . . . . . . . . . 9
3.4 Intentionally Omitted . . . . . . . . . . . . . . . . . 10
3.5 Governmental and Regulatory Approvals . . . . . . . . . 10
3.6 Financial Statements and Reports. . . . . . . . . . . . 10
3.7 Undisclosed Liabilities . . . . . . . . . . . . . . . . 11
3.8 Absence of Certain Changes. . . . . . . . . . . . . . . 11
3.9 Compliance with Applicable Laws . . . . . . . . . . . . 12
3.10 Authorizations. . . . . . . . . . . . . . . . . . . . . 13
3.11 Contracts and Commitments . . . . . . . . . . . . . . . 13
3.12 Real Property Owned or Leased . . . . . . . . . . . . . 15
3.13 Personal Property . . . . . . . . . . . . . . . . . . . 16
3.14 Litigation. . . . . . . . . . . . . . . . . . . . . . . 16
<PAGE>
3.15 Tax Matters . . . . . . . . . . . . . . . . . . . . . . 17
(a) Definitions . . . . . . . . . . . . . . . . . . 17
(b) Returns Filed and Taxes Paid. . . . . . . . . . 17
(c) Tax Reserves. . . . . . . . . . . . . . . . . . 18
(d) Returns Furnished . . . . . . . . . . . . . . . 18
(e) Tax Deficiencies; Audits; Statutes of
Limitations . . . . . . . . . . . . . . . . . . 18
(f) Tax Elections and Special Tax Status. . . . . . 19
(g) Disclosure. . . . . . . . . . . . . . . . . . . 19
3.16 Employment and Similar Agreements;
Obligations Upon Change in Control . . . . . . . . . . 20
3.17 Benefit Plans . . . . . . . . . . . . . . . . . . . . . 20
3.18 Labor and Employment Matters. . . . . . . . . . . . . . 23
3.19 Certain Interests . . . . . . . . . . . . . . . . . . . 23
3.20 Offering Circular/Joint Proxy Statement and Regulatory
Applications. . . . . . . . . . . . . . . . . . . . . . 24
3.21 Insurance . . . . . . . . . . . . . . . . . . . . . . . 24
3.22 Hazardous Materials . . . . . . . . . . . . . . . . . . 25
3.23 Investment Securities . . . . . . . . . . . . . . . . . 26
3.24 Loans . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.25 Real Estate Owned . . . . . . . . . . . . . . . . . . . 27
3.26 Broker's and Finder's Fees. . . . . . . . . . . . . . . 27
3.27 Regulatory Approvals. . . . . . . . . . . . . . . . . . 27
3.28 Disclosure. . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Organization, Etc.. . . . . . . . . . . . . . . . . . . 28
4.2 Binding Effect. . . . . . . . . . . . . . . . . . . . . 29
4.3 Capitalization. . . . . . . . . . . . . . . . . . . . . 30
4.4 Governmental and Regulatory Approvals . . . . . . . . . 30
4.5 Financial Statements. . . . . . . . . . . . . . . . . . 30
4.6 Offering Circular/Joint Proxy Statement and
Regulatory Applications . . . . . . . . . . . . . . . . 31
4.7 Absence of Certain Changes. . . . . . . . . . . . . . . 31
4.8 Litigation. . . . . . . . . . . . . . . . . . . . . . . 32
4.9 Undisclosed Liabilities . . . . . . . . . . . . . . . . 32
4.10 Compliance with Applicable Laws . . . . . . . . . . . . 32
4.11 Reports . . . . . . . . . . . . . . . . . . . . . . . . 32
4.12 CRA Standing. . . . . . . . . . . . . . . . . . . . . . 32
4.13 Regulatory Approvals. . . . . . . . . . . . . . . . . . 33
4.14 Broker's and Finder's Fees. . . . . . . . . . . . . . . 33
<PAGE>
4.15 Disclosure. . . . . . . . . . . . . . . . . . . . . . . 33
4.16 Financing . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE V
COVENANTS OF PARTIES
5.1 Preparation of Offering Circular/Joint Proxy Statement 33
5.2 Pursuit of Regulatory Approvals . . . . . . . . . . . . 34
5.3 Other Consents. . . . . . . . . . . . . . . . . . . . . 35
5.4 Activities Pending Closing. . . . . . . . . . . . . . . 35
5.5 Ongoing Financial Disclosure. . . . . . . . . . . . . . 36
5.6 Access to Information . . . . . . . . . . . . . . . . . 36
5.7 Confidentiality . . . . . . . . . . . . . . . . . . . . 37
5.8 Meetings of Stockholders. . . . . . . . . . . . . . . . 37
5.9 Compliance with Law . . . . . . . . . . . . . . . . . . 38
5.10 Intentionally Omitted . . . . . . . . . . . . . . . . . 38
5.11 Certain Notifications; Supplemental Disclosure. . . . . 38
5.12 No Shopping . . . . . . . . . . . . . . . . . . . . . . 38
5.13 No Inconsistent Actions . . . . . . . . . . . . . . . . 40
5.14 Taxes; Consent. . . . . . . . . . . . . . . . . . . . . 40
5.15 Post-Closing Tax Matters. . . . . . . . . . . . . . . . 40
5.16 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . 42
5.17 Transactions with Affiliates and Insiders . . . . . . . 42
5.18 Conduct of Business of Buyer. . . . . . . . . . . . . . 42
5.19 Intentionally Omitted . . . . . . . . . . . . . . . . . 43
5.20 Administration of Bank Loans; Reports . . . . . . . . . 43
5.21 Seller's Covenants Regarding the Shares . . . . . . . . 43
5.22 Financing . . . . . . . . . . . . . . . . . . . . . . . 45
5.23 Further Assurances. . . . . . . . . . . . . . . . . . . 45
5.24 Indemnification of Directors and Officers . . . . . . . 45
5.25 Treatment of Transferred Employees Under Buyer's Employee
Benefit Plans . . . . . . . . . . . . . . . . . . . . . 46
5.26 Disposition of Bank's Employee Benefit Plans. . . . . . 46
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions to Seller's and Bank's Obligations to Close. 46
(a) Representations and Warranties, Etc.. . . . . . 47
(b) Regulatory Approvals, Consents. . . . . . . . . 47
<PAGE>
(c) Board and Shareholder Approval. . . . . . . . . 47
(d) No Litigation, Etc. . . . . . . . . . . . . . . 48
(e) Opinion of Counsel. . . . . . . . . . . . . . . 48
(f) Shareholder Agreement . . . . . . . . . . . . . 48
(g) Deposit of Consideration. . . . . . . . . . . . 48
6.2 Conditions to Buyer's Obligations to Close. . . . . . . 48
(a) Representations and Warranties, Etc.. . . . . . 48
(b) Regulatory Approvals; Consents. . . . . . . . . 49
(c) Board and Stockholder Approval. . . . . . . . . 49
(d) No Litigation, Etc. . . . . . . . . . . . . . . 50
(e) Opinions of Counsel . . . . . . . . . . . . . . 50
(f) Voting Agreements . . . . . . . . . . . . . . . 50
(g) Bank Options. . . . . . . . . . . . . . . . . . 50
(h) Employment and/or Noncompetition
Agreement . . . . . . . . . . . . . . . . . . . 50
(i) Shareholder Agreement . . . . . . . . . . . . . 50
(j) Banking Crisis. . . . . . . . . . . . . . . . . 51
(k) Expense Reports; Payment of Expenses. . . . . . 51
ARTICLE VII
TERMINATION
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . 51
7.2 Effect of Termination . . . . . . . . . . . . . . . . . 53
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification of Buyer, the Consolidated Association
and the Surviving Corporation . . . . . . . . . . . . . 53
8.2 Indemnification of Seller . . . . . . . . . . . . . . . 54
8.3 Third Party Claims. . . . . . . . . . . . . . . . . . . 54
8.4 Limitations on Indemnification. . . . . . . . . . . . . 56
8.5 Maximum Liability . . . . . . . . . . . . . . . . . . . 57
8.6 Right of Set-Off. . . . . . . . . . . . . . . . . . . . 57
<PAGE>
ARTICLE IX
MISCELLANEOUS
9.1 Survival of Representations and Warranties. . . . . . . 57
9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . 58
9.3 Governing Law; Consent to Jurisdiction. . . . . . . . . 59
9.4 Entire Agreement. . . . . . . . . . . . . . . . . . . . 59
9.5 Amendments and Waivers. . . . . . . . . . . . . . . . . 59
9.6 Severability. . . . . . . . . . . . . . . . . . . . . . 60
9.7 Counterparts. . . . . . . . . . . . . . . . . . . . . . 60
9.8 Interpretation of Agreement . . . . . . . . . . . . . . 60
9.9 Expenses and Liquidated Damages . . . . . . . . . . . . 60
9.10 Dispute Resolution. . . . . . . . . . . . . . . . . . . 62
9.11 Publicity . . . . . . . . . . . . . . . . . . . . . . . 62
9.12 Binding Effect; Assignment. . . . . . . . . . . . . . . 62
9.13 Third Parties . . . . . . . . . . . . . . . . . . . . . 62
9.14 Gender; Number. . . . . . . . . . . . . . . . . . . . . 63
9.15 Certain Definitions . . . . . . . . . . . . . . . . . . 63
EXHIBITS
A -- AGREEMENT TO CONSOLIDATE. . . . . . . . . . . . . . . . . 1
B -- CONTINGENT PAYMENT RIGHT. . . . . . . . . . . . . . . . . 1
C -- AGREEMENT OF MERGER . . . . . . . . . . . . . . . . . . . 1
D -- FORM OF MORRISON & FOERSTER OPINION . . . . . . . . . . . 1
E -- SHAREHOLDER AGREEMENT . . . . . . . . . . . . . . . . . . 1
F -- FORM OF OPINION OF MANATT, PHELPS & PHILLIPS. . . . . . . 1
G -- FORM OF OPINION OF ORRICK, HERRINGTON & SUTCLIFFE . . . . 1
H -- VOTING AGREEMENT. . . . . . . . . . . . . . . . . . . . . 1
I -- EMPLOYMENT AGREEMENT. . . . . . . . . . . . . . . . . . .A-1
PAGE
<PAGE>
PLAN AND AGREEMENT OF CONSOLIDATION AND MERGER
AMONG
BUSINESS & PROFESSIONAL BANK
WEST COAST BANCORP
AND
SACRAMENTO FIRST NATIONAL BANK
This Plan and Agreement of Consolidation and Merger
("Agreement") is entered as of this 22nd day of June, 1994 among
Business & Professional Bank, a California state-chartered bank
("Buyer"), West Coast Bancorp, a California corporation
("Seller"), and Sacramento First National Bank, a national
banking association ("Bank").
RECITALS
A. Seller owns, beneficially and of record, 580,150
shares (the "Shares") of the issued and outstanding common stock,
$5.00 par value per share (the "Bank Common Stock"), of Bank,
representing approximately 94% of the issued and outstanding Bank
Common Stock.
B. Buyer, Seller and Bank desire to effect a business
combination pursuant to which (i) Buyer will form a California
state-chartered bank as a wholly-owned subsidiary of Buyer
("MergerSub"), (ii) MergerSub will be consolidated with Bank
under Bank's national banking association charter, and the
stockholders of record of Bank Common Stock at the effective time
of such consolidation will receive, in exchange for their shares
of Bank Common Stock, the consideration specified herein (the
"Consolidation") and (iii) immediately after consummation of the
Consolidation, the resulting consolidated association will be
merged with and into Buyer and Buyer shall be the surviving
corporation (the "Merger") (the Consolidation and the Merger are
herein collectively referred to as the "Mergers").
C. The Mergers require certain stockholder and
regulatory approvals as described herein and shall be effected
only after the necessary approvals have been obtained. Certain
capitalized terms not otherwise defined
<PAGE>
herein shall have the meanings set forth in Section 9.15 hereof.
Accordingly, the parties hereto agree as follows:
ARTICLE I
CONSOLIDATION
1.1 The Consolidation. The Consolidation shall take
place upon the terms and subject to the conditions of this
Agreement, and in accordance with the provisions of the
California Financial Code, the California Corporations Code, the
Bank Merger Act, the National Bank Act and a plan of
consolidation substantially in the form of Exhibit A attached
hereto (the "Plan of Consolidation"), pursuant to which, at the
Effective Time:
(i) MergerSub shall be consolidated with Bank
pursuant to 12 U.S.C. { 215 under Bank's national banking
association charter and the separate corporate existence of
each of MergerSub and Bank shall thereupon cease;
(ii) each share of stock of MergerSub issued and
outstanding immediately prior to the Effective Time shall, by
virtue of the Consolidation and without any action on the
part of the holder thereof, be converted into one share of
common stock of the resulting consolidated association (the
"Consolidated Association");
(iii) subject to Sections 1.3 and 1.4 hereof, each
share of Bank Common Stock issued and outstanding immediately
prior to the Effective Time shall, by virtue of the
Consolidation and without any action on the part of the
holder thereof, be cancelled and converted into the right to
receive from Buyer, upon surrender of the certificate
representing such share, the consideration specified in
Section 1.2 hereof (the "Consolidation Consideration");
provided, however, that each share of Bank Common Stock
outstanding immediately prior to the Effective Time held in
the treasury of Bank shall be cancelled and no payment shall
be made or other consideration delivered in respect thereof;
and
(iv) the directors of MergerSub at the Effective
Time shall be the directors of the Consolidated Association
and the officers of MergerSub at the Effective Time shall be
the officers of the Consolidated Association, in each case
until their respective successors are duly elected and have
qualified.
<PAGE>
1.2 Consolidation Consideration. Subject to
Sections 1.3 and 1.4 hereof, as of the Effective Time, each share
of Bank Common Stock issued and outstanding immediately prior to
the Effective Time (other than shares held in the treasury of
Bank) shall, by virtue of the Consolidation and without any
action on the part of the holders thereof, be cancelled and
converted into the right to receive the following (the
"Consolidation Consideration"):
(a) cash (the "Cash Amount") in the amount of the
quotient of (i) $3,930,000 less the amount of any Excess
Expenses, divided by (ii) the total number of shares of Bank
Common Stock issued and outstanding at the Effective Time (the
"Outstanding Shares");
(b) an additional amount in cash (the "Mark-to-
Market Amount") equal to the quotient of (i) the Net Unrealized
Gains, if any, as of the end of the month immediately preceding
the Closing Date in the portfolio of investment securities owned
by Bank on such date, determined in accordance with the
procedures set forth in Schedule 1.2(b) hereto, divided by
(ii) the Outstanding Shares;
(c) that fraction of a share of the common stock,
no par value per share, of Buyer (the "Buyer Common Stock")
(calculated to the nearest ten thousandth) as shall equal the
quotient of (i) $2,500,000 divided by (ii) the product of the
Book Value per Share multiplied by the Outstanding Shares; and
(d) a contingent cash payment (the "Contingent
Payment") in the form of Exhibit B hereto (the "Contingent
Payment Right") representing the right to receive an additional
payment in cash of an amount equal to the quotient of (i) 50% of
the Unutilized Closing Reserve determined in accordance with
Schedule 1.2(d) hereto up to a maximum of $1,000,000, divided by
(ii) the Outstanding Shares, together with interest thereon,
compounded annually, at the annual rate of four percent (4%) in
excess of the average weekly interest rate from time to time
prevailing for one-year Treasury bills, such interest to accrue
from the Initial Computation Date to but excluding the payment
date. The Contingent Payment shall be payable on the terms and
conditions and at the time set forth in Schedule 1.2(d).
1.3 Fractional Shares. No fractional shares of Buyer
Common Stock shall be issued in the Consolidation. If any holder
of Bank Common Stock would otherwise be entitled
<PAGE>
to receive a fractional share pursuant to the terms of
Section 1.2(c) above, such holder shall receive, in lieu thereof,
a cash adjustment for such fraction in an amount equal to the
product determined by multiplying such fraction by the Book Value
per Share.
1.4 Dissenters. Each stockholder of Bank (the
"Stockholders") that is entitled to dissenters' rights pursuant
to the National Bank Act on the date of the meeting of
Stockholders held pursuant to Section 5.8 hereof (the "Bank
Stockholders' Meeting") and that continues to be so entitled
under the National Bank Act is referred to herein as a
"Dissenter". Each outstanding share of Bank Common Stock that is
held by a Dissenter (a "Dissenting Share") shall be converted
into the rights provided by the National Bank Act for Dissenters.
1.5 Letter of Transmittal. Certificates representing
Bank Common Stock shall be delivered in exchange for the
Consolidation Consideration as follows: Buyer shall prepare a
form (the "Form of Transmittal Letter") pursuant to which each
Stockholder shall transmit the certificate or certificates
representing such Stockholder's Bank Common Stock to Buyer in
exchange for such Stockholder's pro rata share of the
Consolidation Consideration. Buyer shall mail such Form of
Transmittal Letter to the Stockholders as promptly as practicable
on or about, but no later than two (2) business days after, the
Effective Time.
1.6 Surrender of Bank Stock Certificates.
(a) Buyer shall select an agent reasonably
acceptable to Bank and Seller (the "Exchange and Paying Agent")
to effect the exchange of Bank Common Stock for the Consolidation
Consideration. On or before the Closing Date, Buyer shall
deposit or cause to be deposited with the Exchange and Paying
Agent, in trust for the benefit of the Stockholders, (i) cash in
the aggregate amount equal to the product of (A) the sum of the
Cash Amount plus the Mark-to-Market Amount, multiplied by (B) the
Outstanding Shares, and (ii) stock certificates representing the
requisite number of shares of Buyer Common Stock and other
certificates representing the Contingent Payment Right. Until
surrender to the Exchange and Paying Agent, together with a
properly completed and executed Form of Transmittal Letter, each
certificate evidencing Bank Common Stock (other than Dissenting
Shares) shall, on and after the Effective Time, be deemed for all
corporate purposes to represent and evidence only the right to
receive a pro rata portion of the Consolidation Consideration.
Subject to the provisions of
<PAGE>
this paragraph concerning lost or stolen certificates, until any
such certificate evidencing Bank Common Stock shall have been so
surrendered, the holder of such Bank Common Stock shall not have
any right to receive such holder's pro rata portion of the
Consolidation Consideration. The payment of the Consolidation
Consideration shall be made by the Exchange and Paying Agent to
any holder of Bank Common Stock who validly delivers at least
300,000 shares of Bank Common Stock in the Consolidation,
together with the Form of Transmittal Letter, duly executed, and
such holder's certificate or certificates representing such
holder's Bank Common Stock, on or after the Effective Time, by
wire transfer of the cash portion of the Consolidation
Consideration to such holder within two business days after the
later of the Effective Time or the date of such delivery, and by
transmittal of the other portion of the Consolidation
Consideration by overnight courier, insured, within two business
days after the later of the Effective Time or the date of such
delivery. The Exchange and Paying Agent shall be authorized to
issue the appropriate portion of the Consolidation Consideration
for any Bank Common Stock certificate which has been lost, stolen
or destroyed upon receipt of evidence reasonably satisfactory to
the Exchange and Paying Agent and Buyer of ownership of the Bank
Common Stock represented thereby, and after indemnification
reasonably satisfactory to the Exchange and Paying Agent and
Buyer. After the Effective Time, no holder of a certificate
evidencing shares of Bank Common Stock shall be entitled to
receive any dividends or other distributions otherwise payable to
holders of record of Buyer Common Stock on any date subsequent to
the Effective Time, unless such holder is entitled to receive
Buyer Common Stock and in such event unless such holder shall
have surrendered such holder's certificates evidencing shares of
Bank Common Stock in exchange for a pro rata portion of the
Consolidation Consideration, provided that such surrender shall
not deprive such holder of any dividends or distributions to
which such holder is entitled as a record holder of Buyer Common
Stock as of a date prior to such surrender. Upon surrender of
such certificates, there shall be paid to the holder so
surrendering such certificates the amount, without interest, of
any cash dividends and any other distributions which theretofore
and subsequent to the Effective Time had been distributed on the
whole number of shares of Buyer Common Stock into which such Bank
Common Stock was converted at the Effective Time. All expenses
of the Exchange and Paying Agent will be paid directly by Buyer.
(b) If any check for cash, any certificate for
Buyer Common Stock or any Contingent Payment Right, is to be
issued hereunder in a name other than that in which
<PAGE>
the certificate(s) for Bank Common Stock surrendered in exchange
therefor is registered, it shall be a condition of such exchange
that the person requesting such exchange shall establish the
right to receive such shares or cash and shall pay to the
Exchange and Paying Agent any transfer or other taxes required by
reason of the issuance of such check or such certificates in a
name other than the registered holder of the certificate
surrendered, or shall establish to the satisfaction of the
Exchange and Paying Agent that such tax has been paid or is not
applicable.
1.7 Closing Date. The closing (the "Closing") of the
Consolidation shall take place on the date to which Buyer, Bank
and Seller may agree (the "Closing Date"); provided, however,
that in the absence of an agreement by the parties to the
contrary, such Closing Date shall be the last Business Day of the
week following the week in which the last of the Regulatory
Approvals set forth in Article VI have been obtained, provided
the other conditions to Closing are satisfied or waived on or
prior to such date.
1.8 Procedure. Buyer, MergerSub and Bank shall
(i) prepare, execute and acknowledge the Plan of Consolidation in
accordance with 12 U.S.C. { 215, (ii) file the Plan of
Consolidation and/or such other documents with the FDIC and the
California Superintendent of Banks (the "Superintendent") for
approval and (iii) upon receipt of such approvals, file the Plan
of Consolidation and/or such other documents with the OCC in such
manner that the Consolidation becomes effective on the Closing
Date. The date and time on which the Consolidation becomes
effective on the Closing Date is herein referred to as the
"Effective Time." Buyer, MergerSub and Bank shall take all such
other and further actions as may be required by Applicable Law to
make the Consolidation effective on the Closing Date. If at any
time Buyer shall be advised that any further assignment or
assurances in law or any other actions are reasonably necessary
or desirable to vest the title of any property or rights of Bank
in the Consolidated Association after the Effective Time, upon
the reasonable request of Buyer, Bank shall take all such action
as may be necessary or desirable to vest title in such property
or rights in the Consolidated Association after the Effective
Time.
1.9 Representative. On the Closing Date, the
Stockholders shall, by virtue of their approval of this Agreement
and the Consolidation by the requisite vote of such Stockholders
be deemed, for themselves and their heirs, representatives,
successors and assigns, to have constituted and appointed,
effective from and after the Effective Time, Seller as their
agent and attorney-in-fact (the
<PAGE>
"Representative") to take all action required or permitted herein
with respect to the interests and rights of the Stockholders in
ascertaining the amount of the Unutilized Closing Reserve for
purposes of Section 1.2(d) hereof. Seller shall remain the
Representative of the Stockholders for purposes of determining
the amount of the Unutilized Closing Reserve notwithstanding any
transfer by Seller of any of the shares of Buyer Common Stock
acquired by Seller in the Consolidation. In the event that
(a) Seller disposes of its entire Contingent Payment Right,
(b) Seller is adjudicated a bankrupt, (c) Seller files, or there
is filed against Seller, a petition for an arrangement or
reorganization under any bankruptcy or insolvency law, (d) Seller
makes any assignment for the benefit of its creditors or (e) a
receiver or trustee is appointed for Seller or any substantial
part of its business or assets (including, without limitation,
Sunwest Bank), then three Stockholders (consisting of John F.
McGrath, Jack M. Kimmel, and Stanley J. Nielsen) who shall act by
majority vote, shall succeed Seller as Representative (it being
understood that if any of such three then shall be unable to
serve or refuse to serve, the remaining of such three shall
select a successor or, if all three such Stockholders then are
unable or unwilling to serve, then holders of a majority in
interest of the Contingent Payment Rights shall select a
successor). The Representative shall not be liable for any good
faith error or judgment on its part or for any action done or
omitted in good faith by it in connection with its duties as the
Representative hereunder, except for gross negligence or willful
misconduct. All fees and expenses incurred by the Representative
in performing its duties hereunder (including legal fees and
expenses related thereto) shall be severally borne by the holders
of the Contingent Payment Rights in proportion to the percentage
of the Contingent Payment payable to each such holder and shall
reduce the amount of the Contingent Payment otherwise payable to
all such holders. In taking any action whatsoever with respect
to the determination of the Unutilized Closing Reserve, the
Representative shall be protected in relying upon any notice,
paper or other document reasonably believed by it to be genuine,
or upon any evidence reasonably deemed by it to be sufficient.
The Representative may consult with counsel in connection with
its duties hereunder and shall be fully protected in any act
taken, suffered or permitted by it in good faith in accordance
with the advice of counsel.
<PAGE>
ARTICLE II
THE MERGER
2.1 General. The Merger shall take place immediately
following the Closing upon the terms and subject to the
conditions set forth herein and in accordance with the provisions
of the California Corporations Code, the California Financial
Code, the Bank Merger Act, the National Bank Act and a plan of
merger substantially in the form of Exhibit C attached hereto
(the "Plan of Merger"). Pursuant to the Merger, at the merger
effective time:
(a) The Consolidated Association shall be merged
with and into Buyer by a statutory merger under Section 1103 of
the California Corporations Code and Section 2093 of the
California Financial Code, the separate corporate existence of
the Consolidated Association shall cease and Buyer shall continue
as the surviving corporation in the Merger (the "Surviving
Corporation");
(b) Each share of stock of Buyer issued and
outstanding immediately prior to the merger effective time shall,
by virtue of the Merger and without any action on the part of the
holder thereof, continue to be outstanding as one share of stock
of Buyer, as the Surviving Corporation;
(c) Each share of capital stock of the
Consolidated Association issued and outstanding immediately prior
to the merger effective time shall, by virtue of the Merger and
without any action on the part of the holder thereof, be
cancelled;
(d) The Articles of Incorporation and the Bylaws
of Buyer shall be the Articles of Incorporation and Bylaws of the
Surviving Corporation; and
(e) The directors and officers of Buyer at the
effective time of the Merger shall be the directors and officers
of the Surviving Corporation, in each case until their respective
successors are duly elected and have qualified.
2.2 Procedure. Buyer and the Consolidated Association
shall (i) prepare, execute and acknowledge the Plan of Merger in
accordance with Section 1103 of the California Corporations Code,
(ii) file the Plan of Merger and/or such other documents with the
FDIC and the Superintendent for approval and (iii) upon receipt
of such approvals, file the Plan of Merger and/or such other
documents with the California Secretary of State and the
<PAGE>
Superintendent in such manner that the Merger becomes effective
immediately after the Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND BANK
Seller and Bank hereby, jointly and severally,
represent and warrant to Buyer as follows, provided that Bank
makes no representations and warranties regarding Seller:
3.1 Organization, Etc.
(a) Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State
of California. Seller has all requisite corporate power and
authority to own its properties and assets and to carry on its
business, and is qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which
such qualification is necessary under Applicable Law, except for
such jurisdictions in which the failure to be so qualified or in
good standing would not have a material adverse effect on Seller.
Seller is a registered bank holding company pursuant to 12 U.S.C
{{ 1841 et seq. Seller has the corporate power and authority to
execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby
subject to receipt of any necessary approvals of Stockholders and
the Regulatory Approvals specified in Sections 5.2(a)(i)(A), (B),
(D), (E), (F) and (G) and 5.2(a)(ii).
(b) Bank is a national banking association, duly
organized, validly existing and in good standing under 12 U.S.C.
{{ 21 et seq. The deposit accounts of Bank are insured by the
Bank Insurance Fund of the FDIC to the fullest extent permitted
under Applicable Law. Bank has all requisite power and authority
to own its properties and assets and to carry on its business.
Bank has the requisite power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby subject to
receipt of any necessary approvals of Stockholders and the
Regulatory Approvals specified in Sections 5.2(a)(i)(A), (B),
(D), (E), (F) and (G) and 5.2(a)(ii).
(c) Seller and Bank have previously delivered to
Buyer true, correct and complete copies of the Articles of
Incorporation and Bylaws of Seller and the Articles of
<PAGE>
Association and Bylaws of Bank, as amended to date, all of which
are in full force and effect.
(d) The minute books of Bank constitute complete
and accurate records of all meetings and actions taken by the
Board of Directors, committees of the Board of Directors and the
stockholders thereof.
3.2 Binding Effect; No Conflict. Subject to receipt of
any necessary approvals of Stockholders and the Regulatory
Approvals specified in Sections 5.2(a)(i)(A), (B), (D), (E), (F)
and (G) and 5.2(a)(ii), this Agreement has been duly and validly
authorized, executed and delivered by Seller and Bank and
constitutes the legal, valid and binding obligation of Seller and
Bank, enforceable against Seller and Bank in accordance with its
terms (except as may be limited by bankruptcy, insolvency,
moratorium, reorganization, conservatorship or similar laws
affecting the rights of creditors of bank holding companies and
insured depository institutions generally and the availability of
equitable remedies and except that no representation is given as
to the enforceability of Sections 5.12 and 5.21 hereof). Neither
the execution, delivery or performance of this Agreement by
Seller or Bank, nor the consummation by Seller or Bank of the
transactions contemplated hereby will (i) conflict with or result
in a breach of any provision of Seller's Articles of
Incorporation or Bylaws or the Articles of Association or Bylaws
of Bank, (ii) except as set forth in Schedule 3.2 hereto,
conflict with or result in the breach of any term, condition or
provision of, or constitute a default under (upon the giving of
notice, the lapse of time or otherwise), or give rise to any
right of termination, cancellation or acceleration with respect
to, or result in the creation of any lien, charge or encumbrance
upon any property or assets of Seller or Bank pursuant to, or
otherwise require the consent of any Person under, any agreement
or obligation to which Seller or Bank is a party or by which any
of their properties or assets may be bound, or, (iii) violate or
conflict with any Applicable Laws, subject to obtaining any
necessary approvals of Stockholders and the Regulatory Approvals
specified in Sections 5.2(a)(i)(A), (B), (D), (E), (F) and (G)
and 5.2(a)(ii).
3.3 Capitalization.
(a)The authorized capital stock of Bank consists of
2,000,000 shares of Bank Common Stock, of which 621,600 shares
are issued and
<PAGE>
outstanding on the date hereof, and 1,000,000 shares of preferred
stock, $10.00 par value per share, of which no shares are issued
and outstanding on the date hereof. All outstanding shares of
Bank Common Stock have been duly authorized and validly issued
and are fully paid and nonassessable (other than as provided in
12 U.S.C. { 55) and free of preemptive rights.
(b) There are outstanding options to purchase
22,855 shares of Bank Common Stock (the "Bank Options") as of the
date hereof. Schedule 3.3(b) sets forth a description of the
exercise or purchase prices, vesting schedules, expiration dates,
holders of and numbers of all such Bank Options.
(c) Except for the foregoing obligations, rights
and arrangements, there are no outstanding or authorized
subscriptions, options, warrants, convertible securities, calls,
rights, commitments or any other agreements of any character
relating to the issued or unissued capital stock or other
securities of Bank that obligate Bank to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of
capital stock or other securities of Bank or obligate Bank to
grant, extend or enter into any subscription, option, warrant,
right, convertible security or other similar agreement or
commitment, and no unissued shares of capital stock or other
securities of Bank are subject to any preemptive rights. There
are no outstanding contractual obligations of Bank to repurchase,
redeem or otherwise acquire any outstanding shares of Bank Common
Stock and there are no outstanding stock appreciation rights
granted by Bank. There are no voting trusts or other agreements
with respect to the voting of Bank Common Stock (i) to which
Seller or Bank is a party or (ii) to Seller's or Bank's
knowledge, to which any other Person is a party. All outstanding
shares of Bank Common Stock were issued in compliance with
Applicable Law.
(d) Except as set forth in Schedule 3.3(d) hereto
and except for equity or other ownership interests held by Bank
in the ordinary course of business as security for the repayment
of any loans made by Bank, Bank does not own, nor during the past
five years has Bank owned, directly or indirectly, any equity or
other ownership interest in any corporation, partnership or other
entity. Bank does not have any Subsidiaries of any kind, whether
wholly or partially owned.
3.4 Intentionally Omitted.
3.5 Governmental and Regulatory Approvals. Except for
the Regulatory Approvals set forth in Sections 5.2(a)(i)(A), (B),
(D), (E), (F) and (G) and 5.2(a)(ii), no consent, permit,
approval or authorization
<PAGE>
of, or declaration, filing or registration with, any Governmental
Authority is required on the part of Seller or Bank in connection
with the execution, delivery and performance of this Agreement by
Seller or Bank or the consummation by Seller or Bank of the
transactions contemplated hereby, except as may be further
required as a condition of any such Regulatory Approvals.
3.6 Financial Statements and Reports.
(a) Seller and Bank have previously delivered to
Buyer true, correct and complete copies of Bank's audited balance
sheets as of December 31, 1993, 1992 and 1991, its audited
statements of income, changes in stockholders' equity and cash
flows for the years ended December 31, 1993, 1992 and 1991, and
its unaudited balance sheet as of, and statements of income for
the three-month period ended, March 31, 1994 (the "Interim
Financial Statements"). Such financial statements have been
prepared from the books and records of Bank, present fairly the
financial condition of Bank as of the relevant dates, and the
results of operations and cash flows of Bank for the relevant
periods, all in accordance with generally accepted accounting
principles consistently applied throughout the periods covered,
except as stated therein and except that the Interim Financial
Statements do not contain footnotes or statements of changes in
stockholders' equity or cash flows and apply SFAS 115.
(b) Since January 1, 1990, Bank has filed all
documents required to be filed by it with the OCC, the
Superintendent and any other Governmental Authority under any
Applicable Law (the "Governmental Reports"), except for any
failures to make such filings which, individually and in the
aggregate, cannot reasonably expected to have a material adverse
effect on Bank. All such Governmental Reports, as finally
amended or corrected, complied in all material respects at the
time of filing and at the time of any amended or supplemented
filing with all requirements of their respective forms and with
all Applicable Laws and did not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading.
3.7 Undisclosed Liabilities. Except as disclosed in
Schedule 3.7 and excluding deposits, Bank is not subject to any
Liabilities of any nature (whether or not required to be accrued
or disclosed under SFAS No. 5) except (i) as set forth in Bank's
audited consolidated financial statements as of December 31, 1993
or the Interim Financial Statements and (ii) Liabilities (other
than deposits), which, individually
<PAGE>
or in the aggregate, cannot reasonably be expected to have a
material adverse effect on Bank.
3.8 Absence of Certain Changes. Except as specifically
required or permitted by this Agreement and except as set forth
in Schedule 3.8 hereto, since March 31, 1994, there has not been:
(a) any change in or effect on the business of
Bank or any occurrence, development or event of any nature, that
has had or may reasonably be expected to have, together with all
such other changes and effects, a material adverse effect on the
business, operations, properties, financial condition, results of
operations or prospects of Bank;
(b) any direct or indirect redemption, purchase or
other acquisition of shares of Bank's capital stock, or
convertible securities or securities exercisable for capital
stock of Bank, or any declaration, setting aside or payment of
any dividend by Bank, or any alteration of any right attaching to
any shares of capital stock of Bank, or any combination or
subdivision of any shares of capital stock of Bank;
(c) any increase in the compensation or benefits
payable or to become payable by Bank to any of its officers,
directors, employees or agents except in the ordinary course of
business and consistent with past practice (provided, however,
that nothing herein shall prohibit Bank from funding any Plans or
making any payments to beneficiaries under such Plans in the
ordinary course of business, consistent with past practice, and
in compliance with the terms of such Plans);
(d) any amendment or termination of any agreement
to which Bank is a party, other than amendments or terminations
which do not and will not, individually or in the aggregate, have
a material adverse effect on the business, operations,
properties, financial condition, results of operations or
prospects of Bank;
(e) any establishment of a new or, except as
required by Applicable Law, any material modification of any
currently existing Plan;
(f) any amendment to the Articles of Association
or Bylaws of Bank;
(g) any change by Bank in any accounting
principles, policies or methods, except any change as may be
<PAGE>
required by GAAP or any applicable Governmental Authority which
is disclosed in writing to Buyer;
(h) any capital expenditure by Bank in excess of
$25,000, individually, or $50,000, in the aggregate;
(i) any loss, damage or destruction (whether or
not covered by insurance) affecting any of the tangible assets or
business of Bank that involves a loss of more than $20,000,
individually, or $50,000, in the aggregate (including
deductibles), in excess of applicable insurance coverage; or
(j) any loan or advance by Bank or any sale,
transfer, or other disposition of any properties or assets of
Bank, except in the ordinary course of business consistent with
prudent banking practice.
3.9 Compliance with Applicable Laws. The business of
Bank is not being conducted in conflict with or violation of, nor
has it been conducted in conflict with or violation of, any
Applicable Law or Governmental Authorization, except for any such
conflicts or violations which, individually or in the aggregate,
cannot reasonably be expected to have a material adverse effect
on Bank. The forms, procedures, and practices now or previously
used by Bank are or were in compliance with all Applicable Laws
and Governmental Authorizations as in effect at the relevant
time, except for any instances of noncompliance which,
individually or in the aggregate, cannot reasonably be expected
to have a material adverse effect on Bank. Other than bank
regulatory examinations conducted in the ordinary course, no
investigation or review by any Governmental Authority concerning
any such possible conflicts or violations is pending, nor to
Seller's or Bank's knowledge, is any such investigation
threatened, nor has any such investigation occurred during the
last three years. No Governmental Authority has delivered any
written notice to Seller of its intention to conduct any such
investigation or review, nor, to Seller's or Bank's knowledge, is
there any basis for any investigation or review of the type
described above, except in each case for regularly scheduled bank
regulatory examinations. Bank is not (i) a party to any written
agreement, stipulation, conditional approval or memorandum of
understanding with any Governmental Authority or (ii) except as
disclosed in Schedule 3.9, subject to any judgment, order, decree
or directive of a Governmental Authority that restricts or
monitors the conduct of its business, or in any manner relates to
its capital adequacy, credit policies, management or customer
base.
<PAGE>
3.10 Authorizations. Bank has obtained all Governmental
Authorizations. Schedule 3.10 contains a true, correct and
complete list of all such Governmental Authorizations. All such
Governmental Authorizations are valid and in full force and
effect. Bank has not received any notice of, and no event exists
or has occurred that with or without notice, lapse of time or
both, should cause the suspension, revocation, impairment,
forfeiture, or non-renewal of any such Governmental
Authorization.
3.11 Contracts and Commitments.
(a) Except for deposits, loans, leases, and other
extensions of credit or commitments to extend credit of Bank and
sales of Real Estate Owned and SBA loans made in the ordinary
course of business consistent with prudent banking practice,
Schedule 3.11(a) contains a list of each agreement to which Bank
is a party:
(i) that is not cancellable by Bank without
penalty on 90 days notice or less and obligates Bank to pay
an amount of $50,000 or more in any twelve-month period;
(ii) that has an unexpired term in excess of
two years, is not cancellable by Bank without penalty on 90
days notice or less and requires aggregate payments by any
party of $50,000 or more;
(iii) that contains a right of first refusal
in favor of a third Person;
(iv) that relates to the purchase or sale by
Bank of any loan (including any participation interest),
lease or other extension or commitment to extend credit or
any interest therein, in each case for an aggregate amount
exceeding $100,000, whether or not servicing rights or
obligations have been retained by Bank;
(v) that restricts Bank from carrying on its
business or any part thereof anywhere in the world or from
competing in any line of business with any Person;
(vi) that is a debt obligation of Bank for
borrowed money (other than a deposit or repurchase
agreement), including, without limitation, guarantees of or
agreements to acquire any such debt obligation of others or
for a leasing transaction of a type required to be
capitalized in accordance with SFAS No. 13;
<PAGE>
(vii) that obligates Bank as guarantor,
surety, co-signer, endorser, co-maker, indemnitor or
otherwise (including any "recourse" sale of assets) in
respect of the obligation of any other Person (other than
routine endorsements and other routine bank collection
obligations entered into in the ordinary course of the
business of Bank) in the amount of $50,000 or more;
(viii) that is an agreement involving the
payment of a commission in the amount of $20,000 or more per
annum to any Person;
(ix) that obligates Bank in an amount of
$50,000 or more in respect of any capital expenditure or
commitment therefor for additions to property, facilities,
equipment or leasehold interests;
(x) that is a lease of personal property
involving aggregate payments by or to Bank of $50,000 or
more;
(xi) that is a mortgage, pledge, conditional
sales contract, security agreement, option, or any other
similar agreement with respect to any interest of Bank (other
than as mortgagee, secured party, or deed of trust
beneficiary in the ordinary course of its lending business)
in property having a value of $100,000 or more;
(xii) that is an agreement for the sale of
any property or assets having a value of $50,000 or more or
for the grant of any preferential right to purchase any such
property or asset (excluding properties and assets in which
Bank holds a security interest granted in the ordinary course
of its lending business); and
(xiii) except for agreements referred to in
subsections (a)(i) through (a)(xii) or elsewhere specifically
disclosed pursuant to this Agreement, that is material to its
business or operations (for purposes hereof, an agreement
shall be deemed "immaterial" and shall not be required to be
disclosed pursuant to this Section 3.11(a) if it calls for
fixed and/or contingent payments over the term thereof of
less than $50,000). Bank shall promptly make available to
Buyer true, correct and complete copies of the agreements
listed in Schedule 3.11(a), including, without limitation,
all amendments and supplements thereto (all such items listed
or required to be listed in Schedule 3.11(a) being referred
to herein as "Scheduled Contracts").
<PAGE>
(b) Except as disclosed in Schedule 3.11(b), each
Scheduled Contract is a legal, valid and binding obligation of
Bank, and, to Seller's and Bank's knowledge, of the other party
thereto, enforceable in accordance with its terms (except as may
be limited by bankruptcy, insolvency, moratorium, reorganization,
conservatorship or similar laws affecting the rights of creditors
of insured depositary institutions generally and the availability
of equitable remedies), and is in full force and effect; Bank has
duly performed in all material respects all of its obligations
thereunder to the extent that such obligations to perform have
accrued; there are no material breaches, violations or defaults
by Bank, or to Seller's and Bank's knowledge, by the other party
thereto and, to Seller's and Bank's knowledge, there are no
allegations or assertions of such by any party under any such
agreement.
3.12 Real Property Owned or Leased.
(a) Schedule 3.12(a) contains a true, correct and
complete list of all real property owned or leased by Bank, other
than Real Estate Owned (the "Bank Real Property"). Bank has
previously provided Buyer with true, correct, and complete copies
of all leases referred to in Schedule 3.10(a).
(b) Each lease of Bank Real Property is a legal,
valid and binding obligation of Bank, and, to Seller's and Bank's
knowledge, the other parties thereto enforceable in accordance
with its terms (except as may be limited by bankruptcy,
insolvency, moratorium, reorganization, conservatorship or
similar laws affecting the rights of creditors of insured
depository institutions generally and the availability of
equitable remedies), and is in full force and effect; there are
no existing material defaults by Bank or, to Seller's and Bank's
knowledge, the other parties thereunder; to Seller's and Bank's
knowledge, there are no allegations or assertions of default by
any party under such agreement or any events that with notice,
lapse of time or both would constitute a material default
thereunder.
(c) Bank has good and marketable title to, or a
valid and enforceable leasehold interest in, or a contract
vendee's interest in, the Bank Real Property, and such interest
is free and clear of all liens, charges or other encumbrances,
except those related to real property taxes, local improvement
district assessments, easements, covenants, restrictions and
other matters of record or otherwise which do not individually or
in the aggregate
<PAGE>
materially adversely affect the use and enjoyment of the relevant
Bank Real Property.
(d) To Seller's and Bank's knowledge, none of the
buildings and structures located on any Bank Real Property, nor
any appurtenances thereto or equipment thereon, nor the operation
or maintenance thereof, violates in any manner any restrictive
covenants or encroaches on any property owned by others, nor does
any building or structure of third parties encroach upon any Bank
Real Property. To Seller's and Bank's knowledge, no condemnation
proceeding is pending or threatened that would preclude or impair
the use of any Bank Real Property for the uses for which it is
currently being used.
(e) To Seller's and Bank's knowledge, all
buildings used in the business of Bank are in all material
respects adequately maintained and are free from defects which
could materially interfere with the current or future use of such
facilities.
3.13 Personal Property. Bank has good title to, or a
valid leasehold interest in, all personal property, whether
tangible or intangible, used in the conduct of its business (the
"Bank Personalty"), free and clear of all liens, charges or other
encumbrances except (a) statutory liens for amounts not yet
delinquent or which are being contested in good faith through
proper proceedings, and (b) such other liens, charges,
encumbrances and imperfections of title as do not individually or
in the aggregate materially adversely affect the use and
enjoyment of the relevant Bank Personalty. Subject to ordinary
wear and tear, the Bank Personalty is in good operating condition
and repair and is adequate for the uses to which it is being put.
3.14 Litigation. Except as set forth in Schedule 3.14,
there are no suits, claims, actions, investigations or
proceedings of any nature by any Person that are pending or, to
Seller's or Bank's knowledge, threatened (as used in this
Agreement, the term "threatened" shall include matters that are
to the knowledge of Seller or Bank under consideration or
investigation whether or not any formal demand has been made)
against or otherwise involving, directly or indirectly, Seller or
Bank or any of their respective properties or assets or any
judgment, decree, order or injunction against Seller or Bank
that, in either case, individually or in the aggregate, can
reasonably be expected to have a material adverse effect on Bank,
and, to Seller's and Bank's knowledge, there are no existing
facts
<PAGE>
or circumstances that are sufficient to provide a basis for any
of the foregoing.
3.15 Tax Matters.
(a) Definitions. For purposes of this Agreement,
the following definitions shall apply:
(i) The term "Group" shall mean, individually
and collectively, (i) Bank, (ii) Seller, and (iii) any
individual, trust, corporation, partnership or any other
entity as to which Bank is liable for Taxes incurred by such
individual or entity either as a transferee, or pursuant to
Treasury Regulations, Section 1.1502-6, or pursuant to any
other provision of federal, territorial, state, local or
foreign law or regulations.
(ii) The term "Taxes" shall mean all taxes,
however denominated, including, without limitation, any
interest, penalties or other additions that may become
payable in respect thereof, imposed by any Governmental
Authority, which taxes shall include, without limiting the
generality of the foregoing, all income or profits taxes
(including, without limitation, federal income taxes and
state income or franchise taxes), payroll and employee
withholding taxes, back-up withholding and other withholding
taxes, unemployment insurance, social security taxes, sales
and use taxes, ad valorem taxes, excise taxes, franchise
taxes, gross receipts taxes, business license taxes,
occupation taxes, real and personal property taxes, stamp
taxes, environmental taxes, transfer taxes, workers'
compensation and Pension Benefit Guaranty Corporation
premiums, and other obligations of the same or of a similar
nature to any of the foregoing, which the Group is required
to pay, withhold or collect.
(iii) The term "Returns" shall mean all
reports, estimates, declarations of estimated tax,
information statements and returns required to be prepared or
filed in connection with, any Taxes.
(b) Returns Filed and Taxes Paid. All Returns required
to be filed by or on behalf of members of the Group prior to the
Closing Date have been, or will be, duly filed on a timely basis.
Such Returns are true, correct and complete. All Taxes shown to
be payable on the Returns or on subsequent assessments with
respect thereto have been paid in full on a timely basis, and no
other Taxes are owing or payable by the Group with respect to
items or
<PAGE>
periods covered by such Returns or with respect to any period
ending on or before the Closing Date. No security interests,
liens, encumbrances, attachments or similar interests exist on or
with respect to any of the assets of the Group that arose in
connection with any failure or alleged failure to pay any Taxes.
Except as set forth in Schedule 3.15(b), each of Seller and all
other members of the Group has withheld and paid all Taxes
required to have been withheld and paid in connection with
amounts paid or owing to any officer, director, employee or agent
(including, without limitation, any independent contractor,
foreign person or other third Person) in compliance with all tax
withholding provisions of applicable federal, state, local and
foreign law (including, without limitation, income, social
security, employment tax withholding, and withholding under Code
Sections 1441 through 1445). Bank has timely complied with all
requirements under Applicable Laws relating to information,
reporting and withholding and other similar matters for customer
and other accounts (including back-up withholding and furnishing
of Forms 1099 and all similar reports).
(c) Tax Reserves. The amount of the Group's liability
for unpaid Taxes for all periods ending on or before the last day
of the month before the Closing Date (including accruals for any
exposure item) will not, in the aggregate, exceed the amount of
the liability accruals for Taxes, as such accruals are reflected
on the Group's balance sheet. All such accruals are, or will be,
recorded in accordance with generally accepted accounting
principles.
(d) Returns Furnished. Schedule 3.15(d) contains true,
correct and complete copies of the federal and state income tax
returns of Bank, or which include Bank, for all periods that are
open for federal and state tax audit purposes. Seller shall
promptly make available to Buyer for inspection upon request
true, correct and complete copies of all other Returns and other
reports and statements relating to Taxes required to be filed by
Bank. Seller shall also furnish to Buyer promptly after receipt
all income tax audit reports, notices of deficiencies, and
closing or other agreements, as well as draft federal and state
income or gross receipts tax returns for the Group for all
periods ending on and after December 31, 1993 and on or before
the Closing Date. Seller will promptly furnish to Buyer true,
complete and correct copies of any other income tax returns filed
by any member of the Group prior to the Closing Date.
<PAGE>
(e) Tax Deficiencies; Audits; Statutes of Limitations.
Except as set forth in Schedule 3.15(e), (i) no deficiencies
have been asserted with respect to Taxes of the Group that remain
unpaid; (ii) the Group is not a party to any action or proceeding
for assessment or collection of Taxes of the Group members, and
such action or proceeding has not been asserted or, to Seller's
and Bank's knowledge, threatened against the Group or any of its
assets; and (iii) no waiver or extension of any statute of
limitations is in effect with respect to Taxes or Returns of the
Group. Except as set forth in Schedule 3.15(e), the Returns of
the Group for all tax years for which the statute of limitations
has not expired have never been audited by a Governmental
Authority (which term includes any taxing authority), nor is any
such audit in process, pending or, to Seller's and Bank's
knowledge, threatened, and no member of the Group has received
notice that it has not filed a Return or paid Taxes required to
be filed or paid by it.
(f) Tax Elections and Special Tax Status. Except as
set forth in Schedule 3.15(f), Bank is not a party to any safe
harbor lease within the meaning of Section 168(f)(8) of the
Internal Revenue Code of 1954, as in effect prior to amendment by
the Tax Equity and Fiscal Responsibility Act of 1982. Bank is
not a "consenting corporation" under Section 341(f) of the Code.
Except as set forth in Schedule 3.16(f), Bank has not entered
into any compensatory agreements with respect to the performance
of services for which payment thereunder would result in a
nondeductible expense to Bank pursuant to Sections 162(m) or 280G
of the Code or an excise tax to the recipient of such payment
pursuant to Section 4999 of the Code. Bank has not participated
in an international boycott as defined in Code Section 999.
Schedule 3.15(f) contains copies of all Applications for Change
in Accounting Method (IRS Form 3115) filed by the Group since
January 1, 1986. Bank is not and has not been a United States
real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code. Seller has
disclosed on its federal income tax returns all positions taken
therein that could give rise to a substantial understatement
penalty of federal income tax within the meaning of Code
Section 6662. Bank has never been a member of an affiliated
group (other than the affiliated group consisting of Seller and
its Subsidiaries as of the date of this Agreement) during any
part of any consolidated return year. Except as set forth in
Schedule 3.15(f), Bank has never been a member of any unitary
group for state income or franchise tax
<PAGE>
purposes and does not file combined, unitary, or consolidated
returns for state income or franchise tax purposes in any state,
local or territorial jurisdiction. Except as set forth in
Schedule 3.15(f), Bank is not required to file any Returns and is
not liable for any Taxes in any state, local, territorial or
foreign taxing jurisdiction other than California, and political
subdivisions thereof. Except for the Tax Sharing Policy, Bank is
not (and never has been) a party to any tax allocation agreement
within the meaning of Section 1502 of the Code, or any similar
provision of state law. All amounts payable to or by Bank under
the Tax Sharing Policy have been paid.
(g) Disclosure. Schedule 3.15(g) sets forth as of the
date thereof as well as on an estimated basis as of the Closing
Date: (i) a complete schedule of the tax and book differences of
Bank in its assets; (ii) a complete listing of the amount of any
net operating loss, net capital loss, unused investment or other
credits, unused foreign tax credits, or excess charitable
contributions allocable to Bank; and (iii) a complete listing of
the amount of any material deferred gain or loss allocable to
Bank arising out of any deferred intercompany transaction.
Seller shall provide Buyer with sufficient access to its and
Bank's tax records and personnel to enable Buyer to determine the
tax and book basis of Buyer in such assets.
3.16 Employment and Similar Agreements; Obligations
Upon Change in Control. Except as set forth in Schedule 3.16,
there are no employment, consulting, severance or indemnification
agreements or other similar agreements (collectively "Employee
Agreements") between Bank, on the one hand, and any officer,
director, employee, agent or Affiliate of Bank, or any of their
respective family members, on the other hand. Except as set
forth in Schedule 3.16, there are no agreements (including the
Employee Agreements) under which the transactions contemplated by
this Agreement (including, without limitation, the Mergers)
(i) will require any payment by Bank to any officer, director,
employee, agent or Affiliate of Bank, or any other Person, or
(ii) will result in a change of any nature in the rights of any
party under an agreement of Bank with any officer, director,
employee, agent or Affiliate of Bank, or any other Person,
including, without limitation, any acceleration or change in the
award, grant, vesting or determination of options, warrants,
rights, severance payments, or other contingent obligations of
any nature whatsoever of Bank. Except as set forth in
Schedule 3.16, Bank has no agreements with any employee or
officer that are inconsistent with the status of all employees
and officers of Bank being "at-will" employees. Each reference
in this Agreement to "officer", "director",
<PAGE>
"employee" or "agent" of Bank shall include, without limitation,
both current and former officers, directors, employees and agents
(including, without limitation, consultants), as the case may be,
of Bank. Buyer has been provided with true, correct and complete
copies of all Employee Agreements.
3.17 Benefit Plans.
(a) Except as set forth in Schedule 3.17(a), there
are no Plans in which any officers, directors, employees or
agents of Bank participate. The term "Plans" shall include,
without limitation, (i) any "employee benefit plan" as defined in
Section 3(3) of ERISA, (ii) any profit sharing, pension, deferred
compensation, bonus, stock option, stock purchase, severance,
retainer, consulting, health, welfare or incentive plan, policy
or agreement, (iii) any plan or policy providing for "fringe
benefits" to its officers, directors, employees or agents,
including, without limitation, vacation, paid holidays, sick
leave, medical, hospitalization, life insurance and other
insurance plans and related benefits, personal leave, employee
discount, educational benefit or similar programs, and (iv) any
Employee Agreement.
(b) Neither Seller nor any Member of the
Controlled Group does now or did sponsor, contribute to,
maintain, or have any obligation to contribute to any plan that
is or was subject to the provisions of Title IV of ERISA.
(c) Bank does not maintain or contribute to any
welfare benefit plan which provides health benefits to an
employee after the employee's termination of employment or
retirement except as required under Section 4980B of the Code and
Sections 601 through 608 of ERISA.
(d) Each Plan that is an "employee benefit plan",
as defined in Section 3(3) of ERISA, complies by its terms and in
operation in all material respects with the requirements of all
Applicable Laws applicable to the Plan, including, without
limitation, ERISA and the Code.
(e) All reports, forms and other documents
required to be filed with any Governmental Authority (which
includes any taxing authority) or distributed to plan
participants with respect to any Plan (including, without
limitation, summary plan descriptions, Forms 5500 and summary
annual reports) have been timely filed and distributed and are
accurate.
<PAGE>
(f) Except as set forth in Schedule 3.17(e), no
officers, directors, employees or agents of Bank participate in
any Plan with respect to Bank that is intended to qualify under
Section 401(a) of the Code and Section 501(a) of the Code and
each Plan identified in such Schedule and its related trust, if
any, are qualified under Section 401(a) of the Code and
Section 501(a) of the Code and have been determined by the
Internal Revenue Service to qualify. Such determination does not
take into account those provisions of the Code that now apply to
such Plan but which are not yet required to have been implemented
by way of amendments to the Plan document by reason of
Section 1140 of the Tax Reform Act of 1986, as amended. Nothing
has occurred since the date of the determination letter to cause
the loss of the Plan's (or the related trust's) qualification.
(g) All contributions for all periods ending on or
prior to the Closing Date (including, without limitation, periods
from the first day of the current plan year to the Closing Date)
have been made prior to the Closing Date by Bank in accordance
with past practice and the recommended contribution in any
applicable actuarial report.
(h) All insurance premiums have been paid in full,
subject only to normal retrospective adjustments in the ordinary
course, with regard to the Plans for plan years ending on or
before the Closing Date.
(i) With respect to each Plan described in
Schedule 3.17(a):
(1) no prohibited transactions (as defined
in Section 406 or 407 of ERISA or Section 4975 of the Code)
for which a statutory exemption is not available have
occurred which would subject Bank, the Plan or any of Bank's
officers or directors to any material Liability;
(2) no action or claims (other than routine
claims for benefits made in the ordinary course of Plan
administration for which Plan administrative review
procedures have not been exhausted) are pending, or, to
Bank's knowledge, threatened or imminent against or with
respect to the Plan, any employer who is participating (or
who has participated) in any Plan or any fiduciary (as
defined in Section 3(21) of ERISA), of the Plan; and
<PAGE>
(3) neither Bank, nor, to Bank's knowledge,
any fiduciary has any knowledge of any facts which could
give rise to any such action or claim.
(j) Neither Bank nor any Member of the Controlled
Group has any material Liability or, to Bank's knowledge, is
threatened with any material Liability (whether joint or several)
(i) for any lien imposed under Section 302(f) of ERISA or
Section 412(n) of the Code, (ii) for any interest payments
required under Section 302(e) of ERISA or Section 412(m) of the
Code, (iii) for any excise tax imposed by Sections 4971, 4975,
4976, 4977 or 4979 of the Code, (iv) for any minimum funding
contributions under Section 302(c)(11) of ERISA or
Section 412(c)(11) of the Code, or (v) to a fine under
Section 502 of ERISA.
(k) All of the Plans listed in Schedule 3.17(a),
to the extent applicable, are in compliance in all material
respects with the continuation of group health coverage
provisions contained in Section 4980B of the Code and Section 601
through 608 of ERISA.
(l) True, correct and complete copies of all
documents creating or evidencing any Plan listed in
Schedule 3.17(a) and true, correct and complete copies of all
reports, forms and other documents required to be filed with any
Governmental Authority (including, without limitation, summary
plan descriptions, Forms 5500, and summary annual reports for
each of the last three years for all Plans subject to ERISA)
shall be promptly made available to Buyer. To Bank's knowledge,
there are no negotiations, demands or proposals which are pending
or have been made which concern matters now covered, or that
would be covered, by the type of agreements listed in
Schedule 3.17(a).
(m) All expenses and Liabilities relating to all
of the Plans described in Schedule 3.17(a) have been and will on
the Closing Date be fully and properly accrued on Bank's books
and records and disclosed in accordance with generally accepted
accounting principles and in Plan financial statements.
3.18 Labor and Employment Matters. Except as set forth
in Schedule 3.18, (a) Bank is and has been in compliance in all
respects with all Applicable Laws respecting employment and
employment practices, terms and conditions of employment and
wages and hours, including, without limitation, the Immigration
Reform and Control Act ("IRCA"), the Worker Adjustment and
Retraining Notification Act ("WARN"), the statutes referred to in
Section 3.17(a) above, any such laws respecting employment
discrimination,
<PAGE>
equal opportunity, affirmative action, worker's compensation,
occupational safety and health requirements and unemployment
insurance and related matters, except for such noncompliance
which, individually or in the aggregate, cannot reasonably be
expected to have a material adverse effect on Bank; (b) Bank is
not engaged in and has not engaged in any unfair labor practice;
(c) no investigation or review by or before any Governmental
Authority concerning any possible conflicts with or violations of
any such Applicable Laws is pending, nor, to Seller's or Bank's
knowledge, is any such investigation threatened, or has any such
investigation occurred during the last three years and no
Governmental Authority has provided any notice to Seller of an
intention to conduct any such investigation or review, nor, to
Seller's or Bank's knowledge, is there any basis for any such
investigation or review; (d) there is no labor strike, dispute,
slowdown or stoppage actually pending or, to Seller's or Buyer's
knowledge, threatened against or directly affecting Bank; (e) no
union representation question or union organizational activity
exists respecting the employees of Bank; (f) no collective
bargaining agreement exists which is binding on Bank; (g) Bank
has not experienced any material work stoppage or other material
labor difficulty since December 31, 1989; (h) Bank is not
delinquent in payments to any of its officers, directors,
employees or agents for any wages, salaries, commissions, bonuses
or other direct compensation for any services performed by them
or amounts required to be reimbursed to such officers, directors,
employees or agents; (i) in the event of termination of the
employment of any said officers, directors, employees or agents
at or prior to the Effective Time, neither Bank, nor Buyer will
pursuant to any agreement or by reason of anything done on or
prior to the Closing Date or the Effective Time by Bank be liable
to any of said officers, directors employees or agents for so-
called "severance pay" or any other similar payments or benefits,
including, without limitation, post-employment healthcare (other
than pursuant to COBRA) or insurance benefits, and (j) within the
three-year period prior to the date hereof there has not been any
termination of employment of any officer, director, employee or
agent of Bank who receives salary or compensation in excess of
$50,000 per annum or any termination of any officer, director,
employee or agent of Bank except for terminations that cannot
reasonably be expected to have, individually or in the aggregate,
a material adverse effect on Bank.
3.19 Certain Interests. Except for transactions entered
into on an arm's length basis pursuant to normal terms and
conditions (including loans and deposits) and except as set forth
in Schedule 3.19, (i) no current or
<PAGE>
former officer, director, employee, agent or affiliate of Bank
has any material interest in any property, real or personal,
tangible or intangible, used in or pertaining to the business of
Bank (other than through ownership of Bank Common Stock); (ii) no
such Person, if any, is indebted to Bank except for normal
business expense advances; and (iii) Bank is not indebted to any
such Person except for amounts due under normal salary or
reimbursement of ordinary business expenses.
3.20 Offering Circular/Joint Proxy Statement and
Regulatory Applications.
(a) When the Offering Circular/Joint Proxy
Statement referred to in Section 5.1, or any amendment or
supplement thereto, shall be mailed to the shareholders of Buyer
(the "Shareholders") and the Stockholders, and at all times
subsequent to such mailings up to and including the Buyer Meeting
Date and the Bank Meeting Date, (i) such Offering Circular/Joint
Proxy Statement and all amendments or supplements thereto, with
respect to all information set forth therein concerning Seller or
Bank, will comply in all material respects with Applicable Law,
including without limitation the rules and regulations of the
FDIC, and (ii) the information set forth in the Offering
Circular/Joint Proxy Statement concerning Seller or Bank will not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to
make the statements contained therein, in light of the
circumstances under which they were made, not misleading or
necessary to correct any earlier statement with respect to the
same meeting or subject matter.
(b) When the applications for the Regulatory
Approvals are filed, or amended or supplemented, information that
is provided to Buyer by Seller or Bank for inclusion in the
applications for such Regulatory Approvals shall comply in all
material respects with all Applicable Laws and will not contain
any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements contained therein, in light of the circumstances
under which they were made, not misleading or necessary to
correct any earlier statement furnished by Seller or Bank to
Buyer with respect to the same application or subject matter.
3.21 Insurance.
(a) Schedule 3.21 contains a complete list as of
the date hereof of all policies of general liability, theft,
life, fire, worker's compensation, health, directors and
officers, and other forms of insurance owned or held by
<PAGE>
Bank (other than title insurance, FHA mortgage insurance and
private mortgage insurance obtained in the ordinary course of the
lending business of Bank that have been entered into on an arm's
length basis pursuant to normal commercial terms and conditions)
specifying the insurer, amount of coverage, type of insurance,
policy number and any pending claims thereunder involving more
than $50,000 of which Seller or Bank has knowledge.
(b) All policies of general liability, theft,
life, fire, worker's compensation, health, directors and
officers, and other forms of insurance owned or held by Bank
(i) are in full force and effect and all premiums that are due
and payable with respect thereto are currently paid; (ii) are
sufficient for compliance with all requirements of Applicable Law
and of all agreements to which Bank is a party; (iii) are valid,
outstanding and enforceable policies (except as may be limited by
bankruptcy, insolvency, moratorium, reorganization,
conservatorship or similar laws affecting the rights of creditors
of insured depositary institutions generally and the availability
of equitable remedies); and (iv) except as disclosed in
Schedule 3.21(b), will remain in full force and effect until the
Effective Time. No insurer under any such policy or bond has
cancelled or indicated an intention to cancel or not to renew any
such policy or bond effective at any time prior to the Closing
Date or generally disclaimed liability thereunder. Bank is not
in default under any such policy or bond and all material claims
thereunder have been filed in a timely fashion. During the last
three fiscal years, Bank has not been denied or had revoked or
rescinded any policy of insurance.
3.22 Hazardous Materials. Except as set forth in
Schedule 3.22, neither Bank, nor any former Subsidiary (no
representation is made as to former Subsidiaries for the period
of time after they ceased to be Subsidiaries), nor, to Seller's
or Bank's knowledge, any other Person has engaged in any activity
that might reasonably be expected to involve the generation, use,
manufacture, treatment, transportation, storage in tanks or
otherwise, or disposal of Hazardous Material on or from any
property that Bank or any former Subsidiary now owns or leases or
has previously owned or leased or in which Bank now holds any
security interest, mortgage, or other lien or interest
("Property") and, to Seller's and Bank's knowledge, no
(i) presence, release, threatened release, discharge, spillage or
migration of Hazardous Material, (ii) condition that has resulted
or could result in any use, ownership or transfer restriction, or
(iii) condition of actual or potential nuisance, has occurred on
or from such Property, and, to
<PAGE>
Seller's and Bank's knowledge, no condition exists that could
give rise to any suit, claim, action, proceeding or investigation
by any Person or Governmental Authority against Bank, or any
other Person or such Property as a result of or in connection
with any (a) of the foregoing events, (b) failure to obtain any
Governmental Authorizations, (c) violation of any terms or
conditions of such Governmental Authorizations, or (d) other
violation of Applicable Laws relating to environmental matters.
3.23 Investment Securities. Schedule 3.23 contains a
true, correct and complete list as of May 31, 1994 of all
securities owned by Bank of record or beneficially as of the date
hereof (except securities held in any fiduciary or agency
capacity), including, without limitation, securities issued by
the United States or any instrumentality thereof, or any state or
political subdivision thereof. Except as set forth in
Schedule 3.23, Bank has good title to all securities held by it
(except securities sold under repurchase agreements or held in
any fiduciary or agency capacity), free and clear of any
mortgage, lien, pledge or encumbrance. Schedule 3.23 contains a
true, correct and complete list as of the date hereof of all
obligations of Bank that are secured by securities held by Bank
(except repurchase agreements and state and municipal deposits
entered into in the ordinary course of business).
3.24 Loans.
(a) Except as disclosed on Schedule 3.24(a),
(i) each outstanding loan, lease or other extension of credit or
commitment to extend credit of Bank is a legal, valid and binding
obligation, is in full force and effect and is enforceable in
accordance with its terms (except as may be limited by
bankruptcy, insolvency, moratorium, reorganization,
conservatorship or similar laws affecting the rights of creditors
of insured depository institutions generally or equitable
principles limiting the right to obtain specific performance or
other similar relief), (ii) Bank has duly performed in all
material respects all of its respective obligations thereunder to
the extent that such obligations to perform have accrued;
(iii) all documents and agreements necessary for Bank to enforce
such loan, lease or other extension of credit are in existence;
(iv) no claims, counterclaims, set-off rights or other rights
exist, nor, to Seller's or Bank's knowledge, do grounds for any
such claim, counterclaim, set-off rights or other rights exist,
with respect to any such loans, leases or other extensions of
credit, which could impair the collectability thereof, and
(v) each such loan, lease and extension of credit has been, in
all material respects,
<PAGE>
originated and serviced in accordance with Bank's then applicable
underwriting guidelines, the terms of the relevant credit
documents and agreements and Applicable Law.
(b) All loans, leases and other extensions of
credit or commitments to extend credit of Bank made from and
after December 31, 1993 have been and will be made in the
ordinary course of business of Bank consistent with past practice
and adequate reserves have been or by the Closing Date will be
established for any such loans in accordance with generally
accepted accounting principles. Schedule 3.24(b) lists all such
loans, leases and other extensions of credit of Bank made after
December 31, 1993 and on or prior to May 31, 1994.
(c) Schedule 3.24(c) lists all loan commitments of
Bank outstanding as of May 31, 1994. Except as set forth in
Schedule 3.24(c) (with single family loan commitments and
consumer commitments viewed in the aggregate only), (i) as of
April 30, 1994, there are no loans, leases, other extensions of
credit or commitments to extend credit of Bank that have been or,
to Bank's knowledge, should have been classified by Bank in
accordance with Bank's classification standards as in effect on
the date hereof as "Other Assets Especially Mentioned,"
"Substandard," "Doubtful," "Loss" or any comparable
classification, and (ii) as of May 31, 1994, there are no loans
due to Bank as to which any payment of principal, interest or any
other amount is 30 days or more past due. Bank has provided or
made available to Buyer all information concerning the loan
portfolios of Bank in Bank's possession. To the knowledge of
Seller and Bank, such information is true and correct.
3.25 Real Estate Owned. Schedule 3.25 contains a true,
correct and complete list as of May 31, 1994 of all Real Estate
Owned of Bank, stating with respect to each its type and carrying
value. All Real Estate Owned is booked at the lower of cost or
"fair value" less anticipated disposition costs. To Seller's and
Bank's knowledge, none of the buildings and structures located on
Real Estate Owned, nor any appurtenances thereto or equipment
therein, nor the operation or maintenance thereof, violates in
any material respect any restrictive covenants or encroaches in
any material respect on any property owned by others nor does any
building or structure of third parties encroach in any material
respect upon the Real Estate Owned. To Seller's and Bank's
knowledge, no condemnation proceeding is pending or threatened
which would preclude or impair the use of any Real Estate Owned
in any material respects for the uses for which it is currently
being used or is anticipated by Bank to be used. To Seller's and
Bank's knowledge, all Real Estate Owned is adequately maintained
in any material respects and is free from defects which could
materially interfere with the current or future use thereof.
<PAGE>
3.26 Broker's and Finder's Fees. Neither Seller, Bank,
nor anyone acting on their behalf has paid or become obligated to
pay any fee or commission to any broker, finder, intermediary,
financial advisor or financial consultant or other Person (other
than legal and accounting advisors acting as such and other than
Sandler O'Neill & Partners, L.P.) in connection with the
transactions contemplated hereby and, except as stated above, no
Person or entity is entitled to receive from Seller or Bank any
such fee or commission.
3.27 Regulatory Approvals. To the knowledge of Seller,
Seller has no reason to believe, and to the knowledge of Bank,
Bank has no reason to believe, that (a) they would not receive
any of the Regulatory Approvals or (b) any Governmental Authority
would impose a materially burdensome condition in connection with
the grant of any such Regulatory Approval.
3.28 Disclosure. Without limiting any of the
representations and warranties contained herein, no
representation or warranty by Seller or Bank in this Agreement,
no statement contained in any document, certificate or other
writing delivered by Seller or Bank to Buyer or MergerSub
pursuant hereto, and no other information furnished by Seller or
Bank to Buyer or MergerSub pursuant to the provisions hereof or
in connection with the transactions contemplated hereby, contains
any untrue statement of material fact or omits to state any
material fact necessary in order to make the statements herein or
therein, in light of the circumstances under which they were
made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller and Bank
as follows:
4.1 Organization, Etc.
(a) Buyer is a state-chartered bank duly
organized, validly existing and in good standing under the laws
of the State of California. Buyer has all requisite corporate
power and authority to carry on its business and
<PAGE>
is qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which such qualification is
necessary under Applicable Law, except for such jurisdictions in
which the failure to be so qualified or in good standing would
not have a material adverse effect on Buyer. Buyer has the
corporate power and authority to execute and deliver this
Agreement and perform its obligations hereunder and to consummate
the transactions contemplated hereby subject to receipt of any
necessary approvals of Shareholders and the Regulatory Approvals
specified in Sections 5.2(a)(i)(A), (B), (C), (D), (E) and (G)
and 5.2(a)(ii). The deposit accounts of Buyer are insured by the
Bank Insurance Fund of the FDIC to the fullest extent permitted
under Applicable Law.
(b) On or prior to the Closing Date, MergerSub
will be a state-chartered bank duly organized, validly existing
and in good standing under the laws of the State of California;
will have all requisite corporate power and authority to own its
properties and assets and to carry on its business as presently
conducted, and will have the corporate power and authority to
execute and deliver the Plan of Consolidation, to perform its
obligations thereunder and to consummate the transactions
contemplated thereby subject to receipt of any necessary
approvals of Shareholders and the Regulatory Approval specified
in Sections 5.2(a)(i)(A), (B), (C), (D), (E) and (G) and
5.2(a)(ii).
(c) Buyer has previously delivered to Seller and
Bank true, correct and complete copies of its Articles of
Incorporation and Bylaws, as amended to date, all of which are in
full force and effect.
4.2 Binding Effect.
(a) Subject to receipt of any necessary approvals
of Shareholders and the Regulatory Approvals specified in
Sections 5.2(a)(i)(A), (B), (C), (D), (E) and (G) and 5.2(a)(ii),
this Agreement has been duly and validly authorized, executed and
delivered by Buyer and constitutes the legal, valid and binding
obligation of Buyer enforceable against Buyer in accordance with
its terms (except as may be limited by bankruptcy, insolvency,
moratorium, reorganization, conservatorship or similar laws
affecting the rights of creditors of insured depositary
institutions generally and the availability of equitable
remedies. Neither the execution and delivery of this Agreement
by Buyer nor the consummation by Buyer of the transactions
contemplated hereby, nor compliance by Buyer with any of the
provisions hereof will (i) conflict with or result in a
<PAGE>
breach of any provision of Buyer's Articles of Incorporation or
Bylaws, (ii) conflict with or result in the breach of any term,
condition or provision of, or constitute a default under (upon
the giving of notice, the lapse of time or otherwise), or give
rise to any right of termination, cancellation or acceleration
with respect to, or result in the creation of any lien, charge or
encumbrance upon any property or assets of Buyer pursuant to, or
otherwise require the consent of any Person under, any agreement
or obligation to which Buyer is a party or by which its
properties or assets may be bound, or (iii) violate or conflict
with any Applicable Laws subject to obtaining any necessary
approvals of Shareholders and the Regulatory Approvals specified
in Sections 5.2(a)(i)(A), (B), (C), (D), (E) and (G) and
5.2(a)(ii).
(b) The execution and delivery by MergerSub of the
Plan of Consolidation and, subject to the requisite approval of
the shareholder of MergerSub and the Regulatory Approvals
specified in Sections 5.2(a)(i)(A), (B), (C), (D), (E) and (G),
the consummation of the transactions contemplated thereby will be
duly and validly authorized by all necessary corporate action on
the part of MergerSub, and the Plan of Consolidation will be,
upon execution by the parties thereto a valid and binding
obligation of MergerSub, enforceable, against MergerSub in
accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, moratorium,
reorganization, conservatorship or similar laws affecting the
rights of creditors of insured depositary institutions generally
and the availability of equitable remedies. Neither the
execution and delivery of the Plan of Consolidation by MergerSub
nor the consummation by MergerSub of the transactions
contemplated thereby, nor compliance by MergerSub with any of the
provisions thereof will (i) conflict with or result in a breach
of any provision of MergerSub's Articles of Incorporation or
Bylaws, (ii) conflict with or result in the breach of any term,
condition or provision of, or constitute a default under (upon
the giving of notice, the lapse of time or otherwise), or give
rise to any right of termination, cancellation or acceleration
with respect to, or result in the creation of any lien, charge or
encumbrance upon any property or assets of MergerSub pursuant to,
or otherwise require the consent of any Person under, any
agreement or obligation to which MergerSub is a party or by which
its properties or assets may be bound, or (iii) violate or
conflict with any Applicable Laws subject to obtaining the
approval of the shareholder of MergerSub and the Regulatory
Approvals specified in Sections 5.2(a)(i)(A), (B), (C), (D), (E)
and (G).
<PAGE>
4.3 Capitalization. The authorized capital stock of
Buyer consists of (a) 1,000,000 shares of preferred stock,
without par value, of which no shares are issued and outstanding,
and 10,000,000 shares of Buyer Common Stock, of which 1,138,958
shares were issued and outstanding as of March 31, 1994. All of
the outstanding shares of Buyer Common Stock have been duly
authorized and validly issued and are fully paid and
nonassessable (other than as provided in Section 662 of the
California Financial Code). The Buyer Common Stock to be issued
to the Stockholders pursuant to the provisions of this Agreement
has been duly authorized, will be validly issued, fully paid and
nonassessable (other than as provided in Section 662 of the
California Financial Code) and will not be issued in violation of
any preemptive rights.
4.4 Governmental and Regulatory Approvals. Except for
the Regulatory Approvals set forth in Sections 5.2(a)(i)(A), (B),
(C), (D), (E) and (G) and 5.2(a)(ii), and except as may be
required to fulfill its obligations under Section 5.22, no
consent, permit, approval or authorization of, or declaration,
filing or registration with, any Governmental Authority is
required on the part of Buyer in connection with the execution,
delivery and performance of this Agreement by Buyer or the
consummation by Buyer of the transactions contemplated hereby or
on the part of MergerSub in connection with the execution,
delivery and performance of the Plan of Consolidation or the
consummation by MergerSub of the transactions contemplated
thereby, except such as have been obtained or made or as may be
further required as a condition of any such Regulatory Approvals.
4.5 Financial Statements. Buyer has delivered to
Seller and Bank Buyer's audited consolidated balance sheets as of
December 31, 1993, 1992 and 1991, and its audited statements of
income, changes in stockholders' equity and cash flows for the
years ended December 31, 1993, 1992 and 1991, as well as its
unaudited balance sheet as of, and statements of income for the
three-month period ended, March 31, 1994 (the "Buyer Interim
Financial Statements"). Such financial statements have been
prepared from the books and records of Buyer, present fairly the
financial condition of Buyer as of the relevant dates and the
results of operations and cash flows of Buyer for the relevant
periods, all in accordance with generally accepted accounting
principles consistently applied throughout the periods covered,
except as otherwise stated therein and except that the Buyer
Interim Financial Statements do not contain statements of
shareholders' equity or cash flows or footnotes and apply SFAS
115.
<PAGE>
4.6 Offering Circular/Joint Proxy Statement and
Regulatory Applications.
(a) When the Offering Circular/Joint Proxy
Statement referred to in Section 5.1, or any amendment or
supplement thereto, shall be mailed to the Shareholders or the
Stockholders, and at all times subsequent to such mailings up to
and including the Buyer Meeting Date and the Bank Meeting Date,
such Offering Circular/Joint Proxy Statement and all amendments
or supplements thereto, except with respect to the information
set forth therein relating to Seller or Bank, will comply in all
material respects with the provisions of Applicable Law,
including the rules and regulations of the FDIC, and will not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to
make the statements contained therein, in light of the
circumstances under which they were made, not misleading or
necessary to correct any earlier statement with respect to the
same meeting or subject matter.
(b) When the applications for the Regulatory
Approvals are filed, or amended or supplemented, the information
contained therein, other than the information set forth therein
relating to Seller or Bank, shall comply in all material respects
with all Applicable Laws and will not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading or necessary to correct any earlier
statements with respect to the same application or subject
matter.
4.7 Absence of Certain Changes. Except as specifically
required or permitted by this Agreement or as set forth in
Schedule 4.7 hereto, since March 31, 1994 there has not been:
(a) any change in or effect on the business of
Buyer or any occurrence, development or event of any nature that
has had or may reasonably be expected to have, together with all
such other changes and effects, a material adverse effect on the
business, operations, properties, financial condition, results of
operations or prospects of Buyer;
(b) any declaration, setting aside or payment by
Buyer of any cash dividend or distribution in respect of any
capital stock of Buyer;
<PAGE>
(c) any amendment to the Articles of Incorporation
or Bylaws of Buyer; or
(d) any change by Buyer in any accounting
principles, policies or methods, except any changes required by
GAAP or any applicable Governmental Authority that are disclosed
in writing to Seller and Bank.
4.8 Litigation. There are no suits, claims, actions,
investigations or proceedings of any nature by any Person that
are pending or, to Buyer's knowledge, threatened against or
otherwise involving, directly or indirectly, Buyer or any of its
properties or assets or any judgment, decree, order or injunction
against Buyer that, in either case, individually or in the
aggregate, can reasonably be expected to have a material adverse
effect on Buyer, and, to Buyer's knowledge, there are no existing
facts or circumstances that are sufficient to provide a basis for
any of the foregoing.
4.9 Undisclosed Liabilities. Excluding deposits, Buyer
is not subject to any Liabilities of any nature, whether or not
required to be accrued or disclosed under SFAS No. 5, except
(i) as set forth in Buyer's audited consolidated financial
statements as of December 31, 1993 or the Buyer Interim Financial
Statements and (ii) Liabilities which, individually and in the
aggregate, cannot reasonably be expected to have a material
adverse effect on Buyer.
4.10 Compliance with Applicable Laws. The business of
Buyer is not being conducted in conflict with or violation of,
nor has it been conducted in conflict with or violation of, any
Applicable Law or Governmental Authorization, except for any such
conflicts or violations which, individually or in the aggregate,
cannot reasonably be expected to have a material adverse effect
on Buyer.
4.11 Reports. Since January 1, 1990, Buyer has filed
all documents and reports required to be filed by it with the
FDIC and the Superintendent and any other Governmental Authority
under any Applicable Law, except for any failures to make such
filings which, individually and in the aggregate, cannot
reasonably be expected to have a material adverse effect on
Buyer. All such documents and reports, as finally amended or
corrected, complied in all material respects at the time of
filing and at the time of any amended or supplemented filing with
all requirements of their respective forms and with all
Applicable Laws and did not contain any untrue statement of
material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading.
<PAGE>
4.12 CRA Standing. To the knowledge of Buyer, Buyer's
compliance under the CRA should not constitute grounds for the
denial by any Governmental Authority of any Regulatory Approval
or the imposition of a materially burdensome condition in
connection with any such Regulatory Approval.
4.13 Regulatory Approvals. To the knowledge of Buyer,
subject to its consummation of the financing described in
Section 5.22 hereof, Buyer has no reason to believe that (a) it
would not receive any of the Regulatory Approvals or (b) any
Governmental Authority would impose a materially burdensome
condition in connection with the grant of any such Regulatory
Approval.
4.14 Broker's and Finder's Fees. Neither Buyer, nor
anyone acting on its behalf, has paid or become obligated to pay
any fee or commission to any broker, finder, intermediary,
financial advisor, financial consultant or other Person (other
than legal and accounting advisors acting as such) in connection
with the transactions contemplated hereby and no Person or entity
is entitled to receive from Buyer any such fee or commission.
4.15 Disclosure. Without limiting any of the
representations and warranties contained herein, no
representation or warranty by Buyer in this Agreement, no
statement contained in any document, certificate or other writing
delivered to Seller or Bank by Buyer pursuant hereto, and no
other information furnished by Buyer to Seller or Bank pursuant
to the provisions hereof or in connection with the transactions
contemplated hereby, contains any untrue statement of a material
fact or omits to state any material fact necessary in order to
make the statements herein or therein, in light of the
circumstances under which they were made, not misleading.
4.16 Financing. To the knowledge of Buyer, Buyer has no
reason to believe that it will be unable to perform its
obligations under Section 5.22 hereof.
ARTICLE V
COVENANTS OF PARTIES
5.1 Preparation of Offering Circular/Joint Proxy
Statement. Buyer and Bank contemplate that the parties will
prepare an Offering Circular/Joint Proxy Statement (the "Offering
Circular/Joint Proxy Statement") to be mailed to
<PAGE>
the Shareholders and the Stockholders in connection with the
solicitation of proxies from the Shareholders and the
Stockholders to approve the Consolidation. The parties hereby
agree to cooperate with each other in preparing such Offering
Circular/Joint Proxy Statement. Without limiting the generality
of the foregoing, nothing shall be contained in the Offering
Circular/Joint Proxy Statement or any proxy soliciting materials
with respect to any party unless approved by such party, which
approval shall not be unreasonably withheld.
5.2 Pursuit of Regulatory Approvals.
(a) The parties shall cooperate and use their
reasonable efforts to obtain all necessary approvals, consents,
filings, authorizations and the like from Governmental
Authorities required to consummate the Mergers, including,
without limitation, the following:
(i) Consolidation.
(A) the approval of the OCC and the FDIC
of the Consolidation under the National Bank Act and the Bank
Merger Act, respectively;
(B) the approval of the OCC and the FDIC
of the Offering Circular/Joint Proxy Statement under
Applicable Law;
(C) the waiver of the FRB under
Section 3 of the Bank Holding Company Act with respect to the
formation of MergerSub and the Consolidation;
(D) the approval of the Superintendent
of the formation of MergerSub, the Offering Circular/Joint
Proxy Statement, the Consolidation and the sale of Buyer
Common Stock in the Consolidation;
(E) the filing of the Plan of
Consolidation and/or such other documents with the OCC and
the California Secretary of State under the National Bank Act
and the California Corporations Code, respectively;
(F) the approval of the FRB and the
Superintendent of Seller's acquisition of Buyer Common Stock
in the Consolidation under Section 3 of the Bank Holding
Company Act and Sections 700 et seq. of the California
Financial Code, respectively; and
<PAGE>
(G) the approval of the FRB of Seller's
obligations under this Agreement, including but not limited
to, the indemnification obligation under Article VIII hereof
pursuant to the Written Agreement by and between Seller and
the FRB effective April 11, 1994, and the determination of
the FRB and the FDIC that Seller will not be deemed to
control Buyer upon consummation of the Consolidation.
(ii) The Merger.
(A) the approval of the Merger by the
FDIC under the Bank Merger Act;
(B) the filing of a notice with the OCC
regarding the Merger under the rules and regulations
promulgated under the National Bank Act;
(C) the approval of the Superintendent
of the consummation of the Merger under the California
Financial Code; and
(D) the filing of the Plan of Merger
and/or such other documents with the California Secretary of
State and the Superintendent under the California
Corporations Code and the California Financial Code,
respectively.
(b) Buyer shall have primary responsibility for
the preparation of all applications and filings required in
connection with Section 5.2(a), other than those referred to in
subparagraphs (F) and (G) of Section 5.2(a)(i).
5.3 Other Consents. The parties agree to promptly
apply for and diligently seek to obtain all waivers, consents and
approvals of other Persons required in connection with the
transactions contemplated by this Agreement.
5.4 Activities Pending Closing. Except as otherwise
specifically provided in this Agreement or as otherwise required
by Applicable Law, from the date hereof to and including the
Effective Time, Bank shall, as long as this Agreement remains in
effect or unless Buyer otherwise consents in writing:
(a) Conduct its affairs only in the ordinary
course of business consistent with prudent banking practice and
in compliance in all material respects with Applicable Laws,
including, without limitation, making all reasonable
<PAGE>
changes required upon completion of any regulatory examination,
and, subject to the terms hereof, use all reasonable efforts to
preserve intact its present business organization, keep available
the services of its present officers, directors, key employees
and agents and preserve its relationships and goodwill with all
Persons having business dealings with them;
(b) Refrain from issuing or selling or obligating
itself to issue or sell any shares of its capital stock or any
warrants, rights or options to acquire, or any securities
convertible into, any shares of its capital stock, except for the
issuance of shares upon the exercise of Bank Options outstanding
on the date hereof;
(c) Refrain from opening or closing any branch
office, or acquiring or selling or agreeing to acquire or sell,
any branch office or any deposit liabilities, and otherwise
consult with and seek the advice of Buyer with respect to basic
policies relating to branching, site location and relocation;
(d) Not enter into, amend or terminate any
agreement of the type that would be required to be disclosed on
Schedule 3.11(a), or acquire or dispose of any assets or
liabilities, except in the ordinary course of business consistent
with prudent banking practice;
(e) Not cause or suffer to exist any of the things
listed in Sections 3.8(b) through 3.8(h) and 3.8(j) to occur;
(f) Not foreclose upon or otherwise acquire any
Property described in Section 3.22 hereof or any non-residential
property prior to receipt and approval by Buyer of a Phase I
environmental review therefor;
(g) Not change its deposit account interest rate
pricing policies or its loan pricing policies except in response
to changes in the applicable market;
(h) Not issue any commitments for construction
loans or unsecured loans in excess of $100,000 or any commitments
for other loans in excess of $250,000;
(i) Not acquire any investment securities with a
maturity of in excess of three (3) years from the date of
purchase, or acquire any investment security if the acquisition
of such security would cause the average maturity of all
securities purchased after the date hereof to exceed eighteen
(18) months;
<PAGE>
(j) Not make any material change in its interest
rate risk profile as of March 31, 1994; and
(k) Not deviate from policies and procedures
existing as of the date of this Agreement with respect to
(i) classification of assets, (ii) the allowance for possible
credit losses, and (iii) accrual of interest on assets.
Buyer shall respond promptly to any requests made by Bank to
Buyer to waive any of the foregoing and, with respect to requests
made to waive the provisions of paragraphs (h) or (i) above,
shall, to the extent adequate information is available to Buyer
to enable Buyer to do so, respond within three business days
after such request is made.
5.5 Ongoing Financial Disclosure. Bank shall provide
to Buyer, and Buyer shall provide to Seller and Bank, in each
case to the extent permitted by law, as soon as practicable but
in no event later than fifteen (15) days following the end of
each calendar month, from the date hereof through the Closing
Date, copies of all financial statements and other written
information provided to their respective Board of Directors, and
all reports filed with federal or state regulatory agencies.
5.6 Access to Information. During the period of this
Agreement and until the Closing Date, Bank shall furnish to
Buyer, and Buyer shall furnish to Bank and Seller, and their
authorized representatives, on reasonable notice and during
ordinary business hours, full access to their respective premises
and employees and all of their books, records and properties,
including, but not limited to, all loan, investment, accounting,
tax and property records and files. Such examination shall be
made in a manner that will not unreasonably interfere with the
conduct of the business of the parties and shall not affect any
of the representations and warranties hereunder. The parties
shall provide adequate space and facilities and the cooperation
of its personnel, including copying facilities, to the end that
such examination, shall be completed expeditiously, completely
and accurately.
5.7 Confidentiality. Except as contemplated by this
Agreement or as necessary to carry out the transactions
contemplated herein, all information or documents furnished
hereunder by any party to any other party shall be kept
confidential by the party to whom it is furnished (and such party
shall use reasonable efforts to cause its agents and
<PAGE>
representatives to maintain the confidentiality of such
documents) and in the event such transactions are not
consummated, each shall return to the other all information
furnished hereunder and shall not thereafter use the same for any
purpose until such time as such information becomes publicly
available, except to the extent (i) it was known by such other
party prior to being received, or (ii) it is or thereafter
becomes lawfully obtainable from other sources, or (iii) it is
necessary or appropriate to disclose the same to any Governmental
Authority having jurisdiction over the parties or their
Subsidiaries or as otherwise may be required by Applicable Laws
(the party intending to make disclosure in such circumstances
shall give the other parties prompt notice prior to making such
disclosures so that such other parties may seek a protective
order or other appropriate remedy prior to such disclosure), or
(iv) such duty of confidentiality is waived in writing by the
other party.
5.8 Meetings of Stockholders.
(a) Bank shall duly call a meeting of its
Stockholders (the "Bank Meeting") for the purpose of obtaining
the approval of said Stockholders to the Consolidation and all
other matters necessary to consummate the Consolidation, which
meeting shall be held not earlier than ten (10) nor later than
twenty-five (25) business days following the date upon which the
Offering Circular/Joint Proxy Statement is mailed to such
Stockholders. Subject to any requirements imposed by any
Governmental Authorities, Bank shall recommend to the
Stockholders that they vote their shares of Bank Common Stock in
favor of the Consolidation. Notice of the Bank Meeting shall be
accompanied by the Offering Circular/Joint Proxy Statement.
(b) Buyer shall duly call a meeting of its
Shareholders (the "Buyer Meeting") for the purpose of obtaining
the approval of said Shareholders to the Consolidation and all
other matters necessary to consummate the transactions
contemplated by this Agreement, which meeting shall be held not
earlier than ten (10) nor later than twenty-five (25) business
days following the date on which the Offering Circular/Joint
Proxy Statement is mailed to such Shareholders. Subject to any
requirements imposed by any Governmental Authorities, Buyer shall
recommend to the Shareholders that they vote their shares of
Buyer Common Stock in favor of the Consolidation. Notice of the
Buyer Meeting shall be accompanied by the Offering Circular/Joint
Proxy Statement.
<PAGE>
5.9 Compliance with Law. In obtaining the consent of
the Stockholders and Shareholders referred to in Section 5.8
hereof, Bank and Buyer shall, in all material respects, comply
with the provisions of Applicable Law.
5.10 Intentionally Omitted.
5.11 Certain Notifications; Supplemental Disclosure.
After the date hereof through the Closing Date, each party to
this Agreement shall notify the other party promptly both orally
and in writing (i) after becoming aware of the occurrence of, or
the impending or threatened occurrence of, any event that would
constitute a breach on its part of any obligation under this
Agreement or the occurrence of any event that would cause any
representation or warranty made by it herein to be false or
misleading in any material respect if such representation and
warranty were restated at such time, (ii) upon the occurrence of,
or the discovery of, any event that could reasonably be expected
to cause it to be unable to satisfy a condition to the other
party's obligation to proceed with the transactions contemplated
hereby, and (iii) of any matter hereafter arising that if
existing or occurring at or prior to the date of this Agreement
would have been required to be set forth or described in a
Schedule hereto or as an exception to a representation or
warranty made herein. From time to time but not later than two
business days prior to the Closing Date, the parties may
supplement or amend the Schedules hereto in writing to disclose
any event which occurs after the date hereof and prior to the
Closing Date; provided, however, that the Schedules cannot be
supplemented or amended if the event otherwise permitted to be
disclosed has had or might reasonably be expected to have, in the
judgment of the party or parties to whom the representations and
warranties pertaining to such matter were made, a material
adverse significance with respect to such party or parties. If
the Closing occurs and any of the parties had theretofore sought
to supplement or amend the Schedules in accordance with the
foregoing sentence and such supplementation or amendment was not
permitted by virtue of the proviso to such sentence, then, as of
and after the Closing Date, the Schedule(s) shall nevertheless be
deemed to be so amended or supplemented.
5.12 No Shopping.
(a) Bank and Seller shall not, and shall cause
their respective Subsidiaries not to, directly or indirectly,
through any officer, director, employee or agent or otherwise,
(i) solicit, initiate, or encourage any Acquisition Proposal, or,
(ii) subject to the requirements
<PAGE>
imposed by any Governmental Authority, participate in any
negotiation in respect of or cooperate with (including, without
limitation, by way of furnishing any nonpublic information
concerning the business, properties or assets of Bank or any
access to such properties or assets) any Acquisition Proposal,
unless Bank or Seller, as applicable, shall have received a
written opinion of its outside counsel stating that such action
should be taken in order for its Board of Directors to fulfill
its fiduciary duties and then only for a period of ten (10)
business days, at which point Bank, or Seller, as applicable,
must either (A) terminate the negotiations and/or cooperation
with respect to such Acquisition Proposal or (B) having made the
appropriate findings in accordance with Section 7.1(e) hereof,
notify Buyer, in accordance with Section 7.1(e), of its receipt
of a Superior Offer. Seller and Bank shall notify Buyer promptly
by telephone, and thereafter promptly confirm such notification
in writing, if any such information is requested from, or any
Acquisition Proposal or inquiry with respect to any Acquisition
Proposal is received by, Seller, Bank or any Subsidiary and shall
provide Buyer with a reasonably detailed description of the
contents thereof, including without limitation, the identity of
the other persons or entities involved.
(b) Unless Bank or Seller, as applicable, shall
exercise its right to terminate this Agreement
<PAGE>
pursuant to Section 7.1(e) hereof, no Acquisition Proposal shall
be accepted, approved, adopted or recommended by the Board of
Directors of Bank, Seller or any Subsidiary thereof, or presented
by Bank or any Subsidiary, or by their respective Boards of
Directors or managements, to the Stockholders for vote or
approval by written consent, and no such meeting of Stockholders
shall be called or noticed for purposes of taking Stockholder
action with respect to any Acquisition Proposal.
(c) Unless Bank shall exercise its right to
terminate this Agreement pursuant to Section 7.1(e) hereof, the
Board of Directors of Bank shall not rescind the approval of this
Agreement or any of the transactions contemplated hereby, and
Bank shall not withdraw its recommendation to the Stockholders to
vote their shares of Bank Common Stock in favor of the
Consolidation and, unless Seller shall exercise its right to
terminate this Agreement pursuant to Section 7.1(e) hereof, the
Board of Directors of Seller shall not rescind the approval of
this Agreement or of any of the transactions contemplated hereby.
(d) Unless Bank or Seller, as applicable, shall
exercise its right to terminate this Agreement pursuant to
Section 7.1(e) hereof, or except as otherwise required by any
Governmental Authority having jurisdiction with respect to a
party, Bank and Seller shall not, and cause their respective
Subsidiaries not to, prepare or assist in the preparation of or
file or assist in the filing of any notice or application to any
Governmental Authority pertaining to or seeking approval of any
change in control incident to or which would result from any
Acquisition Proposal.
5.13 No Inconsistent Actions. None of the parties
hereto will voluntarily take any action if, to the knowledge of
such party after due inquiry, the effect of such action would be
to cause any of its representations and warranties herein to be
inaccurate in any material respect at the Closing or at any time
prior to the Closing as if such representation and warranty were
restated at such time (except to the extent such representations
and warranties speak as of a specific date, in which case they
shall be deemed to have been restated when required hereunder but
only as of such specific date).
5.14 Taxes; Consent. Seller shall prepare and timely
file all Returns and amendments thereto required to be filed by
the Group on or before the Closing Date. Buyer shall have a
reasonable opportunity to review all Group income tax Returns and
amendments thereto filed during such period and all other Returns
required to be filed by Bank during such period prior to filing.
Seller and each member of the Group shall pay and discharge all
Taxes, assessments and governmental charges upon or against it or
any of its properties or assets, and all liabilities at any time
existing, before the same shall become delinquent and before
penalties accrue thereon, except to the extent and as long as:
(a) the same are being contested in good faith and by appropriate
proceedings pursued diligently and in such a manner as not to
cause any material adverse effect upon the condition (financial
or otherwise) or operations of Bank; and (b) the Group shall have
set aside on its books reserves (segregated to the extent
required by sound accounting practice) in the amount of the
demanded principal imposition (together with interest and
penalties relating thereto, if any).
5.15 Post-Closing Tax Matters.
(a) For purposes of Treasury Regulations
Section 1.1502-76(b), the Consolidation shall be deemed to occur
immediately prior to the opening of business on the Closing Date.
The tax effects of all Closing Date transactions of the Bank
shall be reported on the
<PAGE>
consolidated income tax return of the affiliated group that
includes Buyer rather than that of Seller. Buyer and Seller
mutually agree that their respective income tax Returns will be
filed in accordance with the agreement in the foregoing two
sentences, and that their permanent books and records will also
reflect such treatment.
(b) Seller shall pay all Taxes that may be due
after the Closing Date that are allocable to the period ending on
the day prior to the Closing Date. In order appropriately to
apportion any of these Taxes relating to a period that includes
(but that would not, but for this section, close on) the Closing
Date, the parties hereto will, to the extent permitted by
applicable law, elect with the relevant taxing authorities to
treat for all purposes the day prior to the Closing Date as the
last day of a taxable period of Bank, and such period shall be
treated as a "Short Period" and a "Pre-Closing Period" for
purposes of this Agreement. In any case where applicable law
does not permit Bank to treat the day prior to the Closing Date
as the last day of a Short Period, then for purposes of this
Agreement, the portion of such Taxes that is attributable to the
operations of Bank for such Interim Period (as defined below)
shall be (i) in the case of Taxes that are not based on income or
gross receipts, the total amount of such Taxes for the period in
question multiplied by a fraction, the numerator of which is the
number of days in the Interim Period, and the denominator of
which is the total number of days in the entire period in
question, and (ii) in the case of Taxes that are based on income
or gross receipts, the Taxes that would be due with respect to
the Interim Period, if such Interim Period were a Short Period.
"Interim Period" means with respect to any Taxes imposed on Bank
on a periodic basis for which the day prior to the Closing Date
is not the last day of a Short period, the period of time
beginning on the first day of the actual taxable period that
includes (but does not end on) the day prior to the Closing Date
and ending on and including the day prior to the Closing Date.
(c) If in any period ending after the Closing Date
Bank earns any credit or recognizes any loss which cannot be
applied against its tax liability for such period, and is
permitted by law to carry back such credit or loss to a period
ending on or prior to the day prior to the Closing Date, and if
the Group shall receive a tax reduction for the period to which
such credit or loss is properly carried back, then Seller shall
immediately remit to Buyer that portion of the tax reduction
attributable to Buyer assuming that the amount of the tax
deduction is first attributable to any carryback of the tax
attributes of
<PAGE>
Seller and the remaining members of the Group and second to the
carryback of the tax attributes of Buyer. Seller agrees that it
will cooperate with Buyer and Bank and their respective
representatives, in a prompt and timely manner, in connection
with (i) the preparation and filing of, and (ii) any
administrative or judicial proceedings involving, any return of
tax or information filed or required to be filed by or for Bank
or Buyer.
(d) Buyer and Bank shall file and control any
Returns required to be filed by Bank after the Closing Date
(other than income tax returns for the period ending with the
Closing, which shall be filed and controlled by Seller). Seller
agrees that it shall provide, and shall cause its accountants and
other representatives to provide, to Buyer, and Buyer agrees that
it shall provide, and shall cause its accountants and other
representatives to provide, to Seller, on a timely basis the
information, including but not limited to all work papers and
records relating to Bank, that it or the accountants or other
representatives have within their control and that may be
reasonably necessary or related to (i) the preparation of any and
all Returns, information returns and reports required to be filed
by the other party with governmental agencies and (ii) audits or
other tax determinations or proceedings by or before such
agencies, such information to be provided in the form in which it
has in the past been maintained.
(e) Neither Seller nor Buyer shall cause or permit
Bank and/or the Consolidated Association to undertake any actions
on the Closing Date (other than those contemplated by this
Agreement) that are not in the ordinary course of business of
Bank and/or the Consolidated Association.
(f) Seller agrees not to reallocate any of the net
operating losses of Bank to Seller pursuant to the consolidated
return regulations contained in Treasury Regulations
Section 1.1502-20. Seller further agrees to apportion to Bank a
portion of any applicable consolidated Section 382 limitation
pursuant to Proposed Treasury Regulations Section 1.1502-95 equal
to a pro rate portion of the consolidated net operating loss of
the Group allocated to Bank under Treasury Regulations
Section 1.1502-21.
(g) The obligations of Bank and Seller under the
Tax Sharing Policy shall terminate as of the Closing, except for
the obligation of Bank (in the case of any required payment of
tax to Seller) or Seller (in the case of any required payment for
the use of tax benefits of Bank) to make any payment with respect
to Seller's consolidated
<PAGE>
federal income tax return for 1994. Any payment due from Bank or
Seller, as the case may be, shall be made at the time provided in
the Tax Sharing Policy.
5.16 Subsidiaries. Except in the ordinary course of
business in connection with any foreclosure upon securities
pledged to Bank as security for a loan, from the date hereof
until the Effective Time, without the prior written approval of
Buyer, Bank shall not establish any Subsidiary.
5.17 Transactions with Affiliates and Insiders. From
the date hereof until the Effective Time, Bank shall not, without
the prior written consent of Buyer, make any loan or establish
any relationship of the type or engage or propose to engage in
any transaction of the type that would be required to be
disclosed on Schedule 3.19 had such loan been made, relationship
been established or transaction been entered into or proposed as
of the date of delivery thereof to Buyer.
5.18 Conduct of Business of Buyer. During the period
from the date of this Agreement until the Effective Time, Buyer
shall conduct its affairs only in the ordinary course of business
consistent with past practice and in compliance in all material
respects with Applicable Laws, and shall refrain from
(a) acquiring all or a material portion of the deposit
liabilities of any other entity, and (b) entering into any
agreement to acquire, merge or consolidate with, or sell
substantially all of its assets to, any other entity or to engage
in any other transaction involving a fundamental corporate change
of Buyer. From and after the date of calculation of the Book
Value per Share through the Effective Time, Buyer shall refrain
from (i) subdividing or combining the Buyer Common Stock;
(ii) declaring, setting aside or paying any dividend or
distribution with respect to the Buyer Common Stock; and
(iii) selling or issuing any shares of Buyer Common Stock (other
than pursuant to Section 5.22 hereof and pursuant to options
outstanding on the date of such calculation) at a price less than
the Book Value per Share or selling or issuing any rights,
options or other securities convertible into Buyer's Common Stock
at an exercise price or a conversion price less than the Book
Value per Share.
5.19 Intentionally Omitted.
5.20 Administration of Bank Loans; Reports. The parties
agree that following the Closing, Buyer shall have sole and
exclusive discretion in the management, administration and
disposition of the Bank Loans. Until
<PAGE>
such time as the amount of the Unutilized Closing Reserve shall
have been finally determined, Buyer shall provide Seller, as
Representative, and such other successor Representative(s) as may
be appointed from time to time, with quarterly reports regarding
the status of the Bank Loans, including, but not limited to,
information as to whether, on what date and in what amount any
such Bank Loans are renewed, charged off, or sold, the date and
amount of any recoveries on such charged-off Bank Loans, and the
internal classification given by Buyer to such Bank Loans at the
time of such renewal and as of the date of the report if
different, and such other information as such Representative may
reasonably request.
5.21 Seller's Covenants Regarding the Shares.
(a) Seller hereby covenants with Buyer that,
subject to Seller's right to terminate this Agreement pursuant to
Section 7.1(e):
(i) Seller shall vote the Shares, all
additional shares of Bank Common Stock of which it is the
beneficial owner ("Additional Shares"), and any New Shares (as
hereinafter defined), and it shall cause any holder of record of
the Shares, Additional Shares or New Shares to vote, at every
meeting of the Stockholders and at every adjournment thereof, or
by written consent without a meeting with respect to all such
Shares, Additional Shares, and New Shares, as follows:
(A) in favor of approval and adoption of
the Consolidation, this Agreement and the other transactions
contemplated hereby; and
(B) against any Acquisition Proposal or
similar proposal and against any action or agreement that
would result in a breach in any material respect of any
covenant, representation or warranty or any other covenant or
agreement of Bank or Seller hereunder.
(ii) Seller shall not, and shall not permit
any entity under Seller's control to deposit any of its Shares,
Additional Shares, or any New Shares in a voting trust or subject
any of its Shares, Additional Shares, or New Shares to any
arrangement or agreement with respect to the voting of such
Shares, Additional Shares or New Shares, other than agreements
entered into with Buyer or MergerSub.
(iii) Seller shall not, and shall not permit
any entity under its control to (A) solicit proxies
<PAGE>
or become a "participant" in any "solicitation" (as such terms
are defined in Regulation 14A under the Exchange Act) in
opposition to or in competition with the consummation of the
Consolidation, (B) except as otherwise permitted in
Section 5.12(a)(ii), otherwise encourage or assist any party in
taking or planning any action that would compete with, restrain
or otherwise serve to interfere with or inhibit the timely
consummation of the Consolidation in accordance with the terms
hereof, (C) initiate a Stockholder's vote or action by consent of
Stockholders in opposition or in competition with the
consummation of the Consolidation or (D) become a member of a
"group" (as such term is used in Section 13(d) of the Exchange
Act) with respect to any voting securities of Bank for the
purpose of opposing or competing with the consummation of the
Consolidation.
(iv) Seller agrees not to transfer, sell,
offer or otherwise dispose of or encumber any of the Shares, any
Additional Shares, or any New Shares, except where as a condition
to such transfer the transferee of such Shares, Additional Shares
or New Shares agrees in writing to be bound by the terms of this
Agreement as if such transferee were a party hereto.
(v) Seller agrees that it shall not purchase
or otherwise acquire beneficial ownership of any shares of Bank
Common Stock after the execution of this Agreement ("New
Shares"), including shares acquired pursuant to the exercise of
options, nor will it acquire the right to vote or share in the
voting of any shares of Bank Common Stock other than the Shares
or any New Shares, unless it delivers to Buyer immediately prior
to such purchase or acquisition Seller's written agreement that
any New Shares acquired or purchased by it shall be subject to
the terms of this Agreement to the same extent as if they
constituted Shares.
(b) The parties acknowledge that it will be
impossible to measure in money the damage to the other party if
Seller fails to comply with any of the obligations imposed by
this Section on it, that every such obligation is material and
that, in the event of any such failure, the other party will not
have an adequate remedy at law or damages, and, accordingly, the
parties hereto agree that injunctive relief or other equitable
remedy, in addition to remedies at law or damages, is the
appropriate remedy for any such failure.
5.22 Financing. Buyer shall, on or prior to the Closing
Date, raise $800,000 in cash as additional capital pursuant to a
private placement of shares of Buyer Common Stock (the
"Financing").
<PAGE>
5.23 Further Assurances. Each party hereto shall
execute and deliver such instruments and take such other actions
as the other party or parties, as the case may be, may reasonably
require in order to carry out the intent of this Agreement.
5.24 Indemnification of Directors and Officers.
(a) For five years after the Effective Time, Buyer
shall indemnify, defend and hold harmless after the Effective
Time the present and former officers and directors of Bank (each,
a "Bank Indemnified Party") against all losses, expenses, claims,
damages or liabilities arising by reason of the fact that he or
she is or was a director, officer, employee or agent of Bank to
the full extent then permitted under Applicable Law and by Bank's
Articles of Association and Bylaws as in effect as of the
Effective Time. In the event that any claim or claims are
asserted or made with respect to such persons within such five-
year period, all rights to indemnification in respect of any such
claim or claims shall continue until the final disposition of any
and all such claims. Without limiting the generality of the
foregoing, Buyer, to the full extent then permitted under
Applicable Law, shall periodically advance expenses incurred with
respect to the foregoing to the full extent then permitted under
Applicable Law, provided that the person to whom the expenses are
advanced provides an undertaking to repay such advances if it is
ultimately determined that such person is not entitled to
indemnification. Buyer's obligations under this Section 5.24
shall not be altered by, and shall remain in full force and
effect following, the consummation of the Mergers. If Buyer or
any of its successors or assigns (i) shall consolidate with or
merge into any other corporation or entity and shall not be the
continuing or surviving corporation or 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, proper
provision shall be made so that the successor and assign of Buyer
shall assume the obligations set forth in this Section 5.24.
(b) Notwithstanding any other provision of this
Agreement, the provisions of this Section 5.24 are intended to be
for the benefit of, and shall be enforceable by, each Bank
Indemnified Party and each Bank Indemnified Party's heirs and
representatives.
5.25 Treatment of Transferred Employees Under Buyer's
Employee Benefit Plans. Buyer covenants and agrees
<PAGE>
that as of the Closing Date persons employed by Bank or Seller
immediately prior to the Closing Date who become employees of
Buyer as of the Closing Date ("Transferred Employees") shall be
entitled to participate in all employee benefit plans and
arrangements maintained by Buyer for the benefit of its employees
in accordance with the terms thereof. For purposes of
determining each such Transferred Employee's eligibility and
vesting under such employee benefit plans and arrangements, Buyer
shall recognize such Transferred Employee's service with Bank or
Seller beginning on the date such Transferred Employee commenced
employment with Bank or Seller. Buyer further covenants and
agrees that any pre-existing condition, limitation or exclusion
in its health plans shall not apply to Transferred Employees or
their covered dependents who are covered under similar Bank or
Seller health plans on the Closing Date and who change coverage
to Buyer's health plans at the time such Transferred Employees
are first given the option to enroll in Buyer's health plans.
5.26 Disposition of Bank's Employee Benefit Plans. Bank
or Seller shall take any actions necessary or reasonably
requested by Buyer to cause, on or before the Closing Date, the
termination of all of the employee benefit plans maintained by
Bank and the termination of Bank's participation in employee
benefit plans maintained by Seller, including Seller's 401(k)
Plan, which cover Bank's employees; provided, however, that all
Transferred Employees who are participants of Seller's 401(k)
Plan immediately prior to the Closing Date shall cease
participation in such Plan as of the Closing Date but shall not
receive distribution of their benefits from such Plan until the
earliest to occur of their termination of employment with Buyer,
death, disability, retirement or the termination of Buyer's
401(k) plan. Seller shall maintain responsibility for the
administration of the Transferred Employees' accounts under
Seller's 401(k) Plan until Seller has distributed all benefits
under such Plan to the Transferred Employees as provided herein,
and Buyer shall have no responsibility or liability therefor.
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions to Seller's and Bank's Obligations to
Close. The obligations of Seller and Bank to consummate the
transactions contemplated by this Agreement are subject to the
satisfaction or waiver on or before the Closing Date (or as
otherwise provided below) of all of the following conditions.
<PAGE>
(a) Representations and Warranties, Etc.
(i) All representations and warranties of
Buyer contained in this Agreement shall be true and correct
in all material respects on and as of the Closing Date, with
the same force and effect as though such representations and
warranties were being made on and as of the Closing Date
(except to the extent such representations and warranties
speak as of a specific date, in which case they shall be
deemed to have been made again on and as of the Closing Date
but speaking only as of such specific date). It is
understood and acknowledged that the representations and
warranties being made on and as of the Closing Date shall be
made with respect to the Schedules attached hereto as amended
and supplemented in accordance with Section 5.11.
(ii) Buyer shall have performed and satisfied
in all material respects all covenants and conditions
required by this Agreement to be performed and satisfied by
them at or prior to the Closing Date.
(iii) There shall have been delivered to Seller
on the Closing Date, a certificate executed by the Chief
Executive Officer of Buyer certifying compliance with all the
provisions of this Section 6.1(a).
(b) Regulatory Approvals, Consents. The
Regulatory Approvals set forth in Sections 5.2(a)(i)(A), (B),
(C), (D), (E) (other than the filing with the California
Secretary of State), (F) and (G) shall have been obtained; all
such Regulatory Approvals shall be in effect and no proceedings
shall have been initiated or threatened with respect thereto; all
applicable waiting periods with respect to such Regulatory
Approvals shall have expired; and all conditions and requirements
prescribed by Applicable Law or by such Regulatory Approvals
shall have been satisfied. In addition, the Regulatory Approvals
required by Sections 5.2(a)(i)(F) and (G) shall have been
obtained without the imposition of any conditions that are or
would become applicable to Seller that Seller in good faith
determines would be materially burdensome upon the conduct of the
business of Seller or any Subsidiary of Seller.
(c) Board and Shareholder Approval.
(A) Buyer shall have furnished Seller and
Bank with:
<PAGE>
(i) certified copies of the resolutions
duly adopted by the Boards of Directors of Buyer and
MergerSub approving this Agreement, the Plan of Consolidation
and the transactions contemplated hereby, and directing the
submission thereof to a vote of their respective
shareholders;
(ii) a certified copy of the resolutions
duly adopted by Buyer as the sole shareholder of MergerSub
approving the Consolidation; and
(iii) a certified copy of resolutions duly
adopted by the holders of at least a majority of the
outstanding shares of Buyer Common Stock entitled to vote
thereon, approving this Agreement and the transactions
contemplated hereby.
(B) At least a majority of the outstanding
shares of Buyer Common Stock entitled to vote thereon shall have
approved this Agreement and the transactions contemplated hereby.
(C) At least two-thirds of the outstanding
shares of Bank Common Stock shall have approved this Agreement
and the transactions contemplated hereby.
(d) No Litigation, Etc. There shall be no pending
or threatened actions or proceedings by any Person or
Governmental Authority (or determinations by any Governmental
Authority) challenging or in any manner seeking to restrict or
prohibit the transactions contemplated hereby that can reasonably
be expected to be successful on the merits.
(e) Opinion of Counsel. Seller and Bank shall
have received an opinion addressed to them of Morrison &
Foerster, special counsel to Buyer, dated the Closing Date,
substantially in the form of Exhibit D hereto.
(f) Shareholder Agreement. Buyer shall have
executed and delivered the Shareholder Agreement attached hereto
as Exhibit E.
(g) Deposit of Consideration. Buyer shall have
deposited the Consolidation Consideration with the Exchange and
Paying Agent pursuant to Section 1.6 hereof.
6.2 Conditions to Buyer's Obligations to Close. The
obligation of Buyer to consummate the transactions contemplated
by this Agreement are subject to the
<PAGE>
satisfaction or waiver on or before the Closing Date (or as
otherwise provided below) of all of the following conditions:
(a) Representations and Warranties, Etc.
(i) All representations and warranties of
Seller and Bank contained in this Agreement shall be true and
correct in all material respects on and as of the Closing
Date, with the same force and effect as though such
representations and warranties were being made on and as of
the Closing Date (except to the extent such representations
and warranties speak as of a specific date, in which case
they shall be deemed to have been made again on and as of the
Closing Date but speaking only as of such specific date). It
is understood and acknowledged that the representations and
warranties being made on and as of the Closing Date shall be
made with respect to the Schedules attached hereto as amended
and supplemented in accordance with Section 5.11.
(ii) Seller and Bank shall have performed and
satisfied in all material respects all covenants and
conditions required by this Agreement to be performed and
satisfied by them at or prior to the Closing Date.
(iii) There shall have been delivered to Buyer
on the Closing Date a certificate executed by the Chief
Executive Officers of Seller and Bank certifying compliance
with all the provisions of this Section 6.2(a).
(b) Regulatory Approvals; Consents. All the
Regulatory Approvals (other than the filing with the California
Secretary of State contemplated in Section 5.2(a)(i)(E) and the
filing contemplated in Section 5.2(a)(ii)(D)) for the
transactions contemplated by this Agreement shall have been
obtained without the imposition of any conditions that are or
would become applicable to Buyer, MergerSub, the Consolidated
Association or the Surviving Corporation that Buyer in good faith
determines would be materially burdensome upon the conduct of the
business of Buyer or the Surviving Corporation, or the business
of Bank, as such business has been conducted prior to the
Effective Time or as such business is anticipated to be conducted
after the Effective Time. All such Regulatory Approvals shall be
in effect and no proceedings shall have been instituted or
threatened with respect thereto; all applicable waiting periods
with respect to such Regulatory Approvals shall have expired; and
all
<PAGE>
conditions and requirements prescribed by Applicable Law or by
such Regulatory Approvals shall have been satisfied. All other
consents, approvals, waivers and other actions required from any
other Person in connection with any agreements shall have been
obtained in form determined by Buyer in good faith to be
satisfactory.
(c) Board and Stockholder Approval.
(i) At least a majority of the outstanding
shares of Buyer Common Stock entitled to vote thereon shall
have approved this Agreement and the transactions
contemplated hereby;
(ii) At least two-thirds of the outstanding
shares of Bank Common Stock shall have approved this
Agreement and the transactions contemplated hereby;
(iii) Seller and Bank shall have furnished
Buyer with:
(A) a certified copy of the resolutions
duly adopted by the Board of Directors of Seller approving
this Agreement and the transactions contemplated hereby;
(B) a certified copy of the resolutions
duly adopted by the Board of Directors of Bank approving
this Agreement and the transactions contemplated hereby and
directing the submission thereof to a vote of the
Stockholders;
(C) a certified copy of resolutions
duly adopted by the holders of at least two-thirds of the
outstanding shares of Bank Common Stock approving this
Agreement and the transactions contemplated hereby.
(d) No Litigation, Etc. There shall be no pending
or threatened actions or proceedings by any Person or
Governmental Authority (or determinations by any Governmental
Authority) challenging or in any manner seeking to restrict or
prohibit the transactions contemplated hereby that can reasonably
be expected to be successful on the merits and, in the event the
Enterprise Litigation is still pending, such Litigation shall not
reasonably be expected to have a material adverse effect on the
business, assets or operations of Bank (or the Surviving
Corporation as the successor to Bank).
<PAGE>
(e) Opinions of Counsel. Buyer shall have
received an opinion addressed to it of Manatt, Phelps &
Phillips, special counsel to Seller, and an opinion of Orrick
Herrington & Sutcliffe, special counsel to Bank, each dated the
Closing Date, substantially in the forms of Exhibit F and
Exhibit G hereto, respectively.
(f) Voting Agreements. The directors of Bank who
are record holders of Bank Common Stock shall have executed
Voting Agreements in the form of Exhibit H hereto, pursuant to
which, among other things, such officers and directors shall
agree to vote the shares of Bank Common Stock owned by them in
favor of the Consolidation.
(g) Bank Options. All of the Bank Options shall
have been exercised in full or shall have been terminated or
cancelled.
(h) Employment and/or Noncompetition Agreement.
John McGrath shall have entered into an employment agreement with
Buyer substantially in the form of Exhibit I hereto.
(i) Shareholder Agreement. Seller shall have
executed and delivered the Shareholder Agreement attached hereto
as Exhibit D.
(j) Banking Crisis. There shall not have occurred
and be continuing any general banking moratorium or general
suspension of payments in respect of banks in the United States.
(k) Expense Reports; Payment of Expenses. At
least three days prior to the Closing Date, all attorneys,
accountants, investment bankers and other advisors and agents for
Bank shall have submitted to Bank and Seller (with a copy to
Buyer) estimates of their fees and expenses for all services
rendered in any respect in connection with the transactions
contemplated hereby. Based on such estimates, Bank shall have
prepared and submitted to Seller and Buyer a summary of such fees
and expenses for the transaction. Prior to the Closing, (i) such
advisors shall have submitted their final bills for such fees and
expenses to Bank for services rendered with a copy to be
delivered to Seller and Buyer, and based on such summary Bank
shall have prepared and submitted to Seller and Buyer a final
calculation of such fees and expenses, and (ii) Bank shall have
accrued and paid the amount of such fees and expenses as
calculated above after Seller and Buyer have been given an
opportunity to review all such bills and the calculation of such
fees and expenses, provided that any excess of such fees
<PAGE>
and expenses over the sum of $300,000 plus an amount equal to
one-half of the filing fees associated with the pursuit of the
Regulatory Approvals (the "Excess Expenses") shall be offset
against the Cash Amount payable to the Stockholders in the
Consolidation, and (iii) such advisors shall have released Buyer,
MergerSub, Bank and the Surviving Corporation from liability, or
shall have advised them in writing that, upon payment in full of
such amounts, they shall have no liability for any such fees and
expenses.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement and the obligations of
the parties hereunder may be terminated:
(a) By mutual written consent of the parties at
any time whether or not theretofore approved by the Shareholders
or the Stockholders;
(b) By any party upon the expiration of ten (10)
business days after any Governmental Authority having
jurisdiction over any of the transactions set forth herein in
writing denies or refuses to grant any Regulatory Approval;
(c) By Buyer immediately upon the expiration of
thirty (30) days from the date that Buyer has given notice to
Seller and Bank (i) of Seller's or Bank's material
misrepresentation in respect of any warranty or representation or
material breach of or material failure to satisfy any covenant or
agreement herein or (ii) of any material adverse change in the
business, operations, properties, financial condition or results
of operations of Bank since March 31, 1994 after the occurrence
thereof or (iii) the rendering of any verdict or judgment
(whether or not final) against Bank in, or any settlement by Bank
of, the Enterprise Litigation (net of the amount of any verdict,
judgment or settlement in favor of Bank) for an amount in excess
of $250,000; provided, however, that no termination under this
Section 7.1(c)(i) or (ii) shall take effect if Seller or Bank, as
applicable, shall have fully and completely corrected the grounds
for termination as specified in the aforementioned notice within
the earlier to occur of (i) thirty (30) days after the date of
receipt of such notice and (ii) the date specified in
paragraph (g) below;
(d) By Seller or Bank immediately upon the
expiration of thirty (30) days from the date that Seller or
<PAGE>
Bank has given notice to Buyer (i) of Buyer's or MergerSub's
material misrepresentation in respect of any warranty or
representation or material breach of or material failure to
satisfy any covenant or agreement contained herein or (ii) of any
material adverse change in the business, operations, properties,
financial condition or results of operations of Buyer since
March 31, 1994 after the occurrence thereof; provided, however,
that no termination under this Section 7.1(d) shall take effect
if Buyer or MergerSub, as applicable, shall have fully and
completely corrected the grounds for termination as specified in
the aforementioned notice within the earlier to occur of
(i) thirty (30) days after the date of receipt of such notice and
(ii) the date specified in paragraph (g) below;
(e) By Buyer, Seller or Bank if (i) a Person or a
group of Persons shall have made an Acquisition Proposal that the
Board of Directors of Bank or Seller, as applicable, determines,
based upon the written opinion of its financial advisor, is more
favorable, from a financial point of view, to the Stockholders
than the Consolidation and, based upon the advice of outside
counsel, should be accepted in order to fulfill its fiduciary
duties (a "Superior Offer"), and (ii) Buyer does not make, within
ten (10) days after Buyer's receipt of notice that such Board of
Directors has determined that there is a Superior Offer (which
notice shall include a full description of the consideration
being offered in the Superior Offer and a statement of the
valuation placed upon such consideration by the applicable Board
of Directors after consultation with its financial advisor), an
offer that such Board of Directors determines, after consultation
with its legal and financial advisors, is at least as favorable,
from a financial point of view, to the Stockholders as the
Superior Offer;
(f) By Buyer immediately upon the failure of the
Stockholders to approve this Agreement and the transactions
contemplated hereby at the Bank Meeting or by Bank or Seller
immediately upon the failure of the Shareholders to approve this
Agreement and the transactions contemplated hereby at the Buyer
Meeting; or
(g) Notwithstanding any of the foregoing,
immediately by a party hereto if the Closing has not occurred on
or before December 31, 1994; provided, however, that if the
Closing has not occurred by such date as a result of any delay in
the parties' receipt of the Regulatory Approvals, such date shall
be extended to January 31, 1995.
<PAGE>
7.2 Effect of Termination. Subject to Section 9.9
hereof, in the event of a termination under Section 7.1, this
Agreement shall become void, and there shall be no liability on
the part of any party or any of such party's directors, officers,
employees, agents or stockholders to the other party or such
other party's directors, officers, employees, agents or
stockholders; provided, however, that the obligations of the
parties under Sections 5.7, 7.2, 9.9, 9.10 and 9.11 shall survive
the termination of this Agreement; and provided further that a
termination under Section 7.1(c) or (d) shall not relieve any
party of any liability for a material breach of this Agreement or
for any material misrepresentation hereunder or be deemed to
constitute a waiver of any remedy available for such breach or
misrepresentation.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification of Buyer, the Consolidated
Association and the Surviving Corporation. After the Closing and
subject to Sections 8.4, 8.5 and 9.1 hereof, Seller shall
indemnify and hold Buyer, the Consolidated Association and the
Surviving Corporation and their respective successors, assigns,
officers, directors and employees, harmless from and against
(a) the amount of any verdict or judgment against Bank in or any
settlement against Bank of the Enterprise Litigation (net of the
amount of any verdict, judgment or settlement in favor of Bank)
in excess of $250,000, and (b) any and all claims, losses,
damages, costs, assessments, judgments, awards, liabilities and
expenses (including the costs and expenses of defense, whether or
not successful, such as attorneys' and expert witness fees)
("Losses") resulting from or arising out of or in connection with
(i) any untruth, inaccuracy or breach of any representation or
warranty made by Seller or Bank in this Agreement (other than
those set forth in Sections 3.24(a) (except 3.24(a)(v) as it
pertains to compliance with Applicable Laws) and 3.25 insofar as
they relate to the Bank Loans) as of the Closing Date or in any
agreement or document delivered as of the Closing Date by Seller
or Bank in connection herewith; (ii) the non-performance by
Seller of any covenant contained in this Agreement that is
required to be performed after the Closing Date; and (iii) any
and all Taxes (including without limitation any obligation to
contribute to the payment of any Taxes determined on a
consolidated, combined or unitary basis with respect to a group
of corporations that includes or included Bank) that are
(A) imposed on Seller or any Affiliate of Seller (other
<PAGE>
than Bank) that Buyer or the Surviving Corporation pays, or
otherwise satisfies in whole or in part, or results in liens or
encumbrances on any assets of Buyer or the Surviving Corporation;
and (B) imposed on Bank in respect of its income, business,
property or operations or for which Bank may otherwise be liable
(1) for any Pre-Closing Period (as defined and determined in
accordance with Section 5.15), (2) resulting by reason of the
several liability of Bank pursuant to Treasury Regulations
Section 1.1502-6 or any analogous state, local or territorial law
or regulation or by reason of Bank having been a member of any
consolidated, combined or unitary group on or prior to the
Closing Date, (3) in respect of any post-Closing Period,
attributable to any items of income or gain of a partnership
reporting Bank as a partner, to the extent such items are
properly attributable to periods of the partnership ending on or
before the Closing Date, and (4) attributable to any discharge of
indebtedness that may result from any capital contributions by
Seller (or an affiliate of Seller) to Bank of any intercompany
indebtedness owed to Seller (or an affiliate of Seller) by Bank,
except to the extent provision or reserve in respect thereof is
made in the Financial Statements or the Interim Financial
Statements.
8.2 Indemnification of Seller. After the Closing and
subject to Sections 8.4, 8.5 and 9.1 hereof, Buyer shall
indemnify and hold Seller, and its successors, assigns, officers,
directors and employees, harmless from and against any and all
Losses resulting from, or arising out, of or in connection with,
(a) any untruth, inaccuracy or breach of any representation or
warranty made by Buyer in this Agreement as of the Closing Date
or in any agreement or document delivered by Buyer as of the
Closing Date in connection herewith; and (b) the non-performance
by Buyer of any covenant of Buyer contained in this Agreement
that is required to be performed after the Closing Date.
8.3 Third Party Claims. The obligations of the
indemnifying persons hereunder with respect to claims resulting
from the assertion of any liability by third parties shall be
subject to the following terms and conditions:
(a) The indemnified persons shall promptly give
written notice to the indemnifying person of any assertion of
liability by a third party which might give rise to a claim by
the indemnified persons against the indemnifying person based on
the indemnity agreements contained herein, stating the nature and
basis of said assertion and the amount thereof, to the extent
known. No
<PAGE>
indemnification provided for herein shall be available to any
indemnified person who shall fail to give such notice, if the
indemnifying person was unaware of the assertion of liability to
which such notice would have related and was prejudiced by the
failure to give the notice, but the omission so to notify such
indemnifying person shall not relieve such indemnifying person
from any liability it may otherwise have to the indemnified
person in connection therewith.
(b) Except as provided in Sections 8.3(c) and (e),
in the event any action, suit or proceeding is brought against
the indemnified persons with respect to which the indemnifying
person may have liability under any indemnity agreement contained
herein, the action, suit or proceeding shall, upon the written
agreement of the indemnifying person that it is obligated to
indemnify under the indemnity agreement contained herein, be
defended (including all proceedings on appeal or review which
counsel for the defendant shall deem appropriate) by the
indemnifying person. The indemnified person shall have the right
to employ its or their own counsel in any such case, but the fees
and expenses of such counsel shall be at the expense of such
indemnified persons unless (i) the employment of such counsel
shall have been authorized by the indemnifying person in
connection with the defense of such action, suit or proceeding,
(ii) the indemnifying person shall not have agreed, promptly
after the notice to it provided in subsection (a) above, that it
is obligated to indemnify under any indemnity agreement contained
herein or (iii) such indemnified persons shall have reasonably
concluded that such action, suit or proceeding involves to a
significant extent matters beyond the scope of any applicable
indemnity agreement contained herein, or that there may be
defenses available to it (or them) that are different from or
additional to those available to the indemnifying person, in any
of which events the indemnifying person shall not have the right
to direct the defense of such action, suit or proceeding on
behalf of the indemnified persons and that portion of such fees
and expenses reasonably related to matters covered by the
indemnity agreements contained herein shall be borne by the
indemnifying person, provided, however, that the indemnifying
party shall not be required to pay for more than one firm of
counsel to represent the indemnified parties in any such claim,
action, suit or proceeding. The indemnified and indemnifying
persons shall be kept fully informed of such action, suit or
proceeding at all stages thereof whether or not they are so
represented. The indemnifying and indemnified person shall make
available to the other persons and their attorneys and
accountants all books and records of the indemnifying person
relating to
<PAGE>
such proceedings or litigation and the parties hereto agree to
render to each other such assistance as they may reasonably
require of each other in order to ensure the proper and adequate
defense of any such action, suit or proceeding. The parties
agree to cooperate in such a manner as to preserve in full the
confidentiality of all confidential business records and the
attorney-client and work-product privileges. In connection
therewith, each party agrees that (a) it will use its reasonable
efforts, in any action, suit or proceeding in which it is assumed
or participated in the defense, to avoid production of
confidential business records and (b) all communications between
any party hereto and counsel responsible for or participating in
the defense of any action, suit or proceeding shall, to the
extent possible, be made so as to preserve any applicable
attorney-client or work-product privilege.
(c) In the case of any audit, examination or other
proceeding ("Proceeding") with respect to Taxes for which Seller
is or may be liable pursuant to this Agreement, Buyer shall
promptly inform Seller, and Buyer shall execute or cause to be
executed powers of attorney or other documents necessary to
enable Seller to take all actions desired by Seller with respect
to such Proceeding to the extent such Proceeding may affect the
amount of Taxes for which Seller is liable pursuant to this
Agreement. Seller shall have the right to control any such
Proceedings, and, if there is a reasonable basis therefor, to
initiate any claim for refund, file any amended return or take
any other action which it deems appropriate with respect to such
Taxes. If reasonably requested by Buyer, Seller shall provide to
Buyer an opinion in form and content reasonably acceptable to
Buyer from counsel reasonably acceptable to Buyer that there is a
reasonable basis (as such term is defined for purposes of section
6662 of the Code) for the position that Seller is taking with
respect to such action, and Buyer need not and Seller shall not
take such action until such opinion is delivered to Buyer. Any
Proceeding with respect to Taxes for a period which includes but
does not end on the day prior to the Closing Date shall be
controlled jointly by Seller and Buyer. Notwithstanding any
provision of this Section 8.3(c) to the contrary, Seller shall
not have the right to control any Proceeding, to initiate any
claim for refund, to file any amended return or to take any other
action if, as a result of such Proceeding, claim for refund,
amended return or other action, the Taxes payable by Buyer or
Bank for a taxable period for which Seller is not obligated to
indemnify Buyer or Bank would be likely to be materially
increased.
<PAGE>
(d) Except as set forth in Section 8.3(e) below,
the indemnifying person shall not make any settlement of any
claims without the written consent of the indemnified persons,
which consent shall not be unreasonably withheld unless the
indemnified persons shall have reasonably concluded that the
claim or settlement thereof involves to a significant extent
matters beyond the scope of any applicable indemnity agreement
contained herein.
(e) Notwithstanding the other provisions of this
Section 8.3, Buyer shall have the right to conduct the defense of
the Enterprise Litigation with counsel selected by Buyer and
reasonably acceptable to Seller, but shall not have the right to
make any settlement of the Enterprise Litigation without the
prior written consent of Seller, which consent shall not be
unreasonably withheld.
8.4 Limitations on Indemnification.
(a) Notwithstanding anything contained herein to
the contrary, no indemnifying person shall have any liability
under this Article VIII:
(i) For any Losses or other liabilities to
the extent covered by the proceeds of any insurance carried
by the indemnified person;
(ii) Subject to the provisions of paragraph
(b) below, until the aggregate amount of the Losses for
which such indemnifying person would otherwise be liable
under this Article VIII shall exceed $100,000, in which case
the indemnifying person's obligation shall apply only to
Losses that exceed $100,000.
(b) The limitation imposed by paragraph (a)(ii)
above shall not apply to Seller's indemnity obligation under
Section 8.1(a) hereof, and the amount of any verdict, judgment or
settlement reached in connection therewith that is not subject to
indemnification because it is at or below the $250,000 threshold
set forth in Section 8.1(a) shall reduce the $100,000 threshold
set forth in paragraph (a)(ii) above as it applies to Losses for
which Seller is the indemnifying person.
(c) No indemnified person shall be entitled to
make a claim against any indemnifying person pursuant to this
Article VIII unless a notice of such claim shall have been given
in accordance with Sections 8.3(a) and 9.2 hereof prior to the
applicable Termination Date.
<PAGE>
8.5 Maximum Liability. The maximum liability of the
indemnifying person for Losses and other liabilities under this
Article VIII and any expenses incurred in connection with
investigating, defending or asserting any claim, action, suit or
proceeding incident to any matter indemnified against hereunder,
shall not exceed $2,500,000.
8.6 Right of Set-Off. Buyer shall have the right to
set-off against any amounts payable by Buyer to Seller under
Section 1.2(d) hereof (or to Seller's assignees) the amount of
any Losses and other liabilities incurred by Buyer for which
Buyer is entitled to indemnification pursuant to Sections 8.1(a)
or 8.1(b)(iii) hereof.
ARTICLE IX
MISCELLANEOUS
9.1 Survival of Representations and Warranties. The
representations and warranties of the parties contained in this
Agreement or in any instrument of transfer or other document
delivered in connection with the transactions contemplated hereby
shall survive the Closing for a period of eighteen (18) months,
except that Seller's representations and warranties contained in
Sections 3.15, 3.17 and 3.22 hereof shall survive until the
applicable statute of limitations has expired (the "Termination
Date").
9.2 Notices. Any notice or communication required or
permitted hereunder shall be sufficiently given if in writing and
(i) delivered in person or by overnight delivery or courier
service (ii) sent by facsimile or (iii) deposited in the United
States mail, by certified mail postage prepaid and return receipt
requested (provided that any notice given pursuant to clause (ii)
is also confirmed by the means described in clause (i) or (iii)),
as follows:
To Buyer or MergerSub: Business & Professional Bank
120 West Court Street
P.O. Box 1050
Woodland, CA 95776
Att'n: Michael F. Burkart,
President
Tel: (916) 661-1333
Fax: (916) 661-3069
<PAGE>
With a copy to: Morrison & Foerster
345 California Street
San Francisco, CA 94104
Att'n: Karen L. Masterson, Esq.
Tel: (415) 677-7000
Fax: (415) 677-7522
To Seller: West Coast Bancorp
282 South Anita Drive
Orange, CA 92668
Att'n: John Joseph
Tel: (714) 634-2892
Fax: (714) 634-9242
With a copy to: Manatt, Phelps & Phillips
11355 West Olympic Boulevard
Los Angeles, CA 90064
Att'n: William T. Quicksilver
Tel: (310) 312-4000
Fax: (310) 312-4224
To Bank: Sacramento First National Bank
1440 Ethan Way
Sacramento, CA 95825
Att'n: John McGrath, President
Tel: (916) 920-4111
Fax: (916) 920-8103
With a copy to: Orrick Herrington & Sutcliffe
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, CA 94111
Att'n: Richard V. Smith, Esq.
Tel: (415) 773-5830
Fax: (415) 773-4276
Such notice or other communication shall be deemed given when so
delivered personally, or sent by facsimile transmission, or, if
sent by overnight delivery or courier service, the business day
after being sent from within the United States, or if mailed,
four days after the date of deposit in the United States mails.
9.3 Governing Law; Consent to Jurisdiction. This
Agreement and the legal relations between the parties shall be
governed by and construed in accordance with the laws of the
State of California without taking into account provisions
regarding choice of law.
9.4 Entire Agreement. All exhibits and schedules
referred to in this Agreement are integral parts hereof, and
<PAGE>
this Agreement, together with such exhibits and schedules,
constitutes the entire agreement among the parties hereto with
respect to the matters herein and therein and supersedes all
prior agreements and understandings between the parties with
respect thereto.
9.5 Amendments and Waivers. This Agreement may not be
amended except upon the written consent of (a) each party hereto
prior to the Effective Time and (b) Buyer and Seller after the
Effective Time, except that if such amendment relates to the
Contingent Payment Right, such amendment shall require the
consent of Buyer and the Representative. By an instrument in
writing, Buyer may waive compliance by Seller, Bank or the
Representative, and Seller and Bank, acting jointly, may waive
compliance by Buyer, with any term or provision of this
Agreement, other than of any obligations of Bank relating to the
Contingent Payment Right, which shall require the waiver of the
Representative acting alone, that such other party was or is
obligated to comply with or perform; provided, however, that such
waiver shall not operate as a waiver of, or estoppel with respect
to, any other or subsequent failure. No failure to exercise and
no delay in exercising any right, remedy or power hereunder shall
operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy or power hereunder preclude any
other or further exercise thereof or the exercise of any other
right, remedy or power provided herein or by law or in equity.
The waiver by any party of the time for performance of any act or
condition hereunder does not constitute a waiver of the act or
condition itself. Any of the terms or conditions of this
Agreement may be waived, amended or modified in whole or in part
at any time before or after the approval of the Agreement by the
Shareholders or the Stockholders, to the extent authorized by
Applicable Law, by a writing signed by (i) Buyer, Seller and Bank
prior to the Effective Time and (ii) Buyer and Seller after the
Effective Time, except that if such waiver, amendment or
modification relates to the Contingent Payment Right, such
waiver, amendment or modification shall require the consent of
Buyer and the Representative. Unless required by Applicable Law,
no such waiver, amendment or modification effected after
Shareholder or Stockholder approval shall require further
Shareholder or Stockholder approval.
9.6 Severability. If any provision of this Agreement,
or the application thereof to any Person, place or circumstance,
shall be held by a court of competent jurisdiction to be invalid,
unenforceable or void, the remainder of this Agreement and such
provisions as applied to other Persons, places and circumstances
shall remain in
<PAGE>
full force and effect, subject to Sections 7.2 and 9.1 hereof,
only if, after excluding the portion deemed to be unenforceable,
the remaining terms shall provide for the consummation of the
transactions contemplated hereby in substantially the same manner
as originally set forth at the later of the date this Agreement
was executed or last amended.
9.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute one and the same
instrument.
9.8 Interpretation of Agreement. The article, section
and other headings used in this Agreement are for reference
purposes only and shall not constitute a part hereof or affect
the meaning or interpretation of this Agreement.
9.9 Expenses and Liquidated Damages.
(a) Subject to paragraphs (b) and (c) below,
whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with
this Agreement and the consummation of the transactions
contemplated hereby (including the Mergers) will be paid by the
party incurring such costs and expenses, except that (i) all
costs and expenses of the parties relating to the printing,
shipping and distribution of the Offering Circular/Joint Proxy
Statement up to $20,000 shall be borne two-thirds by Buyer and
one-third by Bank, and thereafter shall be borne exclusively by
Buyer and (ii) the filing fees associated with the pursuit of the
Regulatory Approvals shall be borne one-half by Buyer, on the one
hand, and one-half by Bank, on the other hand.
(b) In the event this Agreement is terminated
pursuant to Section 7.1(c)(i) or (iii) or (d)(i) hereof, the
terminating party or parties, or in the event this Agreement is
terminated pursuant to Section 7.1(e), Buyer, shall be entitled
to reimbursement from the other party or parties for all
reasonable out-of-pocket costs, fees and expenses incurred by
such party or parties in connection with the transactions
contemplated hereby, including the printing, shipping and
distribution of the Offering Circular/Joint Proxy Statement and
the pursuit of the Regulatory Approvals (such fees and expenses
to include all reasonable legal, consulting and accounting fees,
disbursements and expenses) provided that any reimbursement to
which Buyer shall be entitled hereunder shall be paid by Bank.
<PAGE>
(c) In the event this Agreement is terminated
pursuant to Section 7.1(e) hereof, the parties agree that it
would be impracticable or extremely difficult to fix the actual
damages resulting therefrom, and, therefore, the parties agree
that Bank shall pay to Buyer, in addition to the reimbursement
amounts pursuant to paragraph (b) above, as liquidated damages
and not as a penalty, concurrently with such termination, the sum
of $250,000 in respect thereof. The parties hereby further agree
that such amount represents a reasonable endeavor on their parts
to estimate a fair compensation for the foreseeable damages that
might be suffered as a result thereof. Buyer hereby agrees that
its sole remedy therefor shall be the liquidated damages and
reimbursement amounts provided for herein.
(d) In the event this Agreement is terminated
pursuant to Sections 7.1(b) or (d) hereof because of Buyer's
failure to obtain the financing described in Section 5.22 (except
if such failure results from any prohibition or other material
impediment to such financing imposed on Buyer by any Governmental
Authority, other than as a result of Buyer's failure to comply
with Applicable Law), Seller and Bank shall be entitled to
reimbursement from Buyer for all reasonable out-of-pocket costs,
fees and expenses incurred by Seller and Bank in connection with
the transactions contemplated hereby, including the printing,
shipping and distribution of the Offering Circular/Joint Proxy
Statement and the pursuit of the Regulatory Approvals (such fees
and expenses to include all reasonable legal, consulting and
accounting fees, disbursements and expenses) subject to a cap of
$125,000. In addition, the parties agree that it would be
impracticable or extremely difficult to fix the actual damages
resulting therefrom, and, therefore, the parties agree that Buyer
shall pay to Bank, in addition to the reimbursement amounts
above, as liquidated damages and not as a penalty, concurrently
with such termination, the sum of $250,000 in respect thereof.
The parties hereby further agree that such amount represents a
reasonable endeavor on their parts to estimate a fair
compensation for the foreseeable damages that might be suffered
as a result thereof. Seller hereby agrees that its sole remedy
therefor shall be the reimbursement amounts provided for above,
and Bank hereby agrees that its sole remedy therefor shall be the
liquidated damages and reimbursement amounts provided for herein.
(e) Each of the parties hereto acknowledges that
the agreements contained in this Section 9.9 are an integral part
of the transactions contemplated by this Agreement and that,
without these agreements, such party would not enter into this
Agreement.
<PAGE>
(f) For purposes of this Section 9.9, the terms
"costs, fees and expenses" do not include damages that may
otherwise be recoverable by any party as a result of the breach
of this Agreement by any other party.
(g) Except as provided in paragraphs (c) and (d)
above, the rights and remedies provided in this Section 9.9 are
cumulative and not exclusive of any rights and remedies provided
by Applicable Law.
9.10 Dispute Resolution. In the event of a dispute
relating to this Agreement or the interpretation hereof or in the
event any of the parties to this Agreement brings an action or
suit against any other party by reason of the breach of any
covenant, agreement, representation, warranty or other provision
hereof, or any breach of any duty or obligation created hereunder
by such other party, the parties hereby agree to submit the
dispute to binding arbitration under the rules and procedures of
the American Arbitration Association and that, as determined by
the arbitrator (or any court which may thereupon or thereafter
have jurisdiction), the prevailing party shall be entitled to
have and recover from the losing party or parties all reasonable
costs and expenses incurred or sustained by such prevailing party
in connection with such arbitration (or any judicial proceeding),
including, without limitation, legal fees and court costs
(whether or not taxable as such).
9.11 Publicity. The parties hereto will consult with
each other with regard to the terms and substance of any and all
press releases, announcements or other public statements with
respect to the transactions contemplated hereby. The parties
agree further that none of them will release any such press
release, announcement or other public statement without the prior
approval of the other parties, unless such release is required by
law (including the securities laws) and the parties cannot reach
agreement upon a mutually acceptable form of release, in which
event the party releasing the information, announcement or public
statement shall not be deemed to be in breach of this Agreement.
The parties agree further that such approval will not be
unreasonably withheld, and they pledge to make a good faith
effort to reach agreement expeditiously on the terms of any such
press release, announcement or other public statement.
9.12 Binding Effect; Assignment. This Agreement shall
be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns; provided,
however, that, except by operation of law and as
<PAGE>
otherwise expressly provided herein, neither party may assign any
of its rights or delegate any of its duties under this Agreement
without the prior written consent of the other party.
9.13 Third Parties. Each party intends that this
Agreement shall not benefit or create any right or cause of
action or remedy of any nature whatsoever in any Person other
than the parties to this Agreement, including, without
limitation, conferring upon any person the right to remain an
employee of Bank or Buyer, or restraining Buyer or the Surviving
Corporation from changing the terms and conditions of employment
of any person or terminating such person's employment, following
the Effective Time.
9.14 Gender; Number. Whenever the context of this
Agreement requires, the masculine gender shall include the
feminine or neuter, and the singular number shall include the
plural.
9.15 Certain Definitions.
"Acquisition Proposal" shall mean any proposal for a
merger or other business combination involving Bank, or for the
acquisition of a substantial equity interest in, or a substantial
portion of the assets of Bank other than any proposal of Buyer.
"Affiliate" or "Associate" shall have the meaning
assigned thereto in Rule 405, as presently promulgated under the
Securities Act of 1933, as amended.
"agent" of Bank shall have the meaning as defined in
Section 3.16 hereof.
"Agreement" shall mean this Plan and Agreement of
Consolidation and Merger.
"agreement" shall mean with respect to any Person any
note, bond, indenture, license, agreement, lease, contract,
indenture, mortgage, deed of trust, lien, instrument, commitment,
arrangement or other understanding, whether written or oral, to
which such Person is a party or by which its properties or assets
may be bound or affected or under which it or its respective
business, properties or assets receive benefits.
"Applicable Law" shall mean any domestic or foreign,
federal, state or local statute, law, ordinance, rule,
administrative interpretation, regulation, order, writ,
injunction, directive, judgment, decree or other
<PAGE>
requirement of any Governmental Authority applicable, in the case
of Seller or Bank to Seller or Bank, as applicable, and its
respective properties, assets, officers, directors, employees or
agents (in connection with such officers', directors', employees'
or agents' activities on behalf of it) and, in the case of Buyer
or MergerSub, to Buyer or MergerSub, as applicable, and its
properties, assets, officers, directors, employees or agents (in
connection with such officers', directors', employees' or agents'
activities on behalf of it).
"Bank Loans" shall mean all loans, loan commitments and
Real Estate Owned of Bank as of December 31, 1993, a true and
complete list of which is attached hereto as Schedule 9.15.
Schedule 9.15 also sets forth the Recorded Book Value (as defined
in Schedule 1.2(d) hereto) of each such Bank Loan as of such
date.
"Bank Meeting" shall have the meaning as defined in
Section 5.8(a) hereof.
"Bank Merger Act" shall mean 12 U.S.C. { 1828(c).
"Book Value per Share" shall mean the total
shareholders' equity of Buyer as of the end of the month
immediately preceding the Closing Date divided by the total
number of shares of Buyer Common Stock issued and outstanding on
such date, all as shown on the balance sheet of Buyer as of such
date prepared in accordance with generally accepted accounting
principles (including with respect to the accrual of expenses for
the transactions contemplated hereby) to the extent practicable
for monthly management accounts, except that such calculation
shall also take into account the effects of the Financing if such
calculation as of such date does not already do so.
"Buyer Interim Financial Statements" shall have the
meaning as defined in Section 4.5 hereof.
"Buyer Meeting" shall have the meaning as defined in
Section 5.8(b) hereof.
"Closing" shall have the meaning as defined in
Section 1.7 hereof.
"Closing Date" shall have the meaning as defined in
Section 1.7 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
<PAGE>
"Consolidation Consideration" shall have the meaning as
defined in Section 1.2.
"COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1986.
"Damages" shall mean all demands, claims, actions or
causes of action, assessments, losses, damages, Liabilities,
judgments, awards, fines, sanctions, penalties, charges, and
amounts paid in settlement of any such matter, including, without
limitation, interest, penalties, costs, fees and expenses of
attorneys, experts, witnesses, investigators and any other
agents.
"director" of Bank shall have the meaning as defined in
Section 3.16 hereof.
"Dissenter" shall have the meaning as defined in
Section 1.4 hereof.
"Dissenting Shares" shall mean shares of Bank Common
Stock that were not voted in favor of, or otherwise consented to,
the Merger and for which there has been compliance with all of
the relevant provisions of the National Bank Act for asserting
appraisal rights.
"Effective Time" shall have the meaning as defined in
Section 1.8 hereof.
"employee" of Bank shall have the meaning as defined in
Section 3.16 hereof.
"Employee Agreements" shall have the meaning as defined
in Section 3.16 hereof.
"employee benefit plan" shall have the meaning as
defined in Section 3.17(a) hereof.
"Enterprise Litigation" shall mean the lawsuit
(including all cross-claims and other claims) captioned
Sacramento First National Bank v. Enterprise Mechanical, Inc.,
John Blake Harrison, Conkey Companies, Inc. et. al.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"Excess Expenses" shall have the meaning as defined in
Section 6.2(k) hereof.
<PAGE>
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Exchange and Paying Agent" shall have the meaning as
defined in Section 1.6(a) hereof.
"FDIC" shall mean the Federal Deposit Insurance
Corporation.
"Financing" shall have the meaning as defined in
Section 5.22 hereof.
"FHA" shall mean the U.S. Federal Housing Authority.
"Form of Transmittal Letter" shall have the meaning as
defined in Section 1.5 hereof.
"FRB" shall mean the Board of Governors of the Federal
Reserve System.
"Governmental Authority" shall mean any foreign,
domestic, federal, territorial, state or local governmental
authority, quasi-governmental authority, court, government or
self-regulatory organization, commission, tribunal, organization
or any regulatory, administrative or other agency, or any
political or other subdivision, department or branch of any of
the foregoing.
"Governmental Authorizations" shall mean all permits,
licenses and other governmental and regulatory approvals and
authorizations, including, without limitation, all federal,
foreign, state and local authorities required by Applicable Law
to enable Bank or Seller, as applicable, to conduct its business
as presently conducted.
"Governmental Reports" shall have the meaning as defined
in Section 3.6(b) hereof.
"Group" shall have the meaning as defined in
Section 3.15(a)(i) hereof.
"Hazardous Material" shall mean any substance, chemical,
waste or other material which is listed, defined or otherwise
identified as hazardous, toxic or dangerous
under any Applicable Law (including asbestos); as well as any
petroleum, petroleum product or by-product, crude oil, natural
gas, natural gas liquids, liquefied natural gas, or synthetic gas
useable for fuel, and "source," "special nuclear," and "by-
product" material as defined in the Atomic Energy Act of 1954,
42 U.S.C. {{ 2011 et seq.
<PAGE>
"Initial Computation Date" shall mean the third
anniversary of the Closing Date.
"Interim Financial Statements" shall have the meaning as
defined in Section 3.6 hereof.
"IRCA" shall have the meaning as defined in Section 3.18
hereof.
"joint venture" shall mean with respect to an entity any
general or limited partnership or joint venture an interest in
which is owned directly or indirectly by such entity.
"knowledge" when used with respect to any party means
actual knowledge (after inquiry) of any director or of any
officer at the level of senior vice president and above, of such
party.
"Liabilities" shall mean obligations of any nature
(absolute, accrued, contingent or otherwise, and whether due or
to become due).
"Market to Market Amount" shall have the meaning as
defined in Section 1.2(b) hereof.
"Member of the Controlled Group" shall mean each trade
or business, whether or not incorporated, which would be treated
as a single employer with Bank or any of its Subsidiaries under
Section 4001 of ERISA or Section 414(b), (c), (m) or (o) of the
Code.
"Multiemployer Plan" shall mean a plan described in
Section 3(37) of ERISA.
"National Bank Act" shall mean 12 U.S.C. {{ 38 et seq.
"OCC" shall mean the Office of the Comptroller of the
Currency.
"Offering Circular/Joint Proxy Statement" shall have the
meaning as defined in Section 5.1 hereof.
"officer" of Bank shall have the meaning as defined in
Section 3.16 hereof.
"Person" shall include any individual, partnership,
joint venture, corporation, trust or unincorporated organization,
any other business entity and any Governmental
<PAGE>
Authority, in each case whether acting in an individual,
fiduciary or other capacity.
"Plans" shall have the meaning as defined in
Section 3.17(a) hereof.
"Property" shall have the meaning as defined in
Section 3.22 hereof.
"Real Estate Owned" shall mean all real estate or loans
secured by real estate that are classified or would be classified
as: "covered transactions" or "loans to facilitate;" "real
estate owned;" "in-substance foreclosure;" "in-substance
repossession;" foreclosed real estate; real estate acquisition,
or construction arrangements that are accounted for as
investments in real estate; real estate that is held for sale (or
that is intended to be sold within two years); real property
formerly but no longer used for the operations of Bank, real
property originally acquired for future expansion but that is no
longer intended to be used for that purpose; real estate acquired
in any manner for debts previously contracted (even if Bank has
not yet received title to the property), real estate sold when
(i) less than 10% of the total sales price is in cash, (ii) there
is financing by Bank of all or a portion of the sales price on
terms more favorable than those customarily required by Bank when
it is involved only as a lender, or (iii) the transaction does
not transfer from Bank to the purchaser the usual risks and all
or most of the rewards of ownership; receivables resulting from
sales of other real estate owned accounted for under the
installment, cost recovery, reduced profit, or percentage-of-
completion method of accounting in accordance with Financial
Accounting Standards Board (FASB) Statement No. 66, "Accounting
for Sales of Real Estate," when the buyer's initial investment is
less than 10 percent of the sales value of the real estate sold;
other real estate owned sold under contract and accounted for
under the deposit method of accounting in accordance with FASB
Statement No. 66; and any other similar category of loan or real
estate.
"Regulatory Approvals" shall mean the approvals,
consents, filings, authorizations and the like from Governmental
Authorities required to consummate the Mergers.
"Returns" shall have the meaning as defined in
Section 3.15(a)(iii) hereof.
"Scheduled Contracts" shall have the meaning as defined
in Section 3.11(a)(xiii) hereof.
<PAGE>
"Securities Act" shall mean the Securities Act of 1933,
as amended.
"Shareholders" shall have the meaning as defined in
Section 3.20 hereof.
"Stockholders" shall have the meaning as defined in
Section 1.4 hereof.
"Subsidiary" shall mean, as to any particular parent
corporation, any corporation as to which more than fifty percent
of the outstanding stock having ordinary voting rights or power
(and excluding stock having voting rights only upon the
occurrence of a contingency unless and until such contingency
occurs and such rights are to be exercised) at the time is owned
or controlled, directly or indirectly, by such parent corporation
and/or by one or more Subsidiaries, and any general partnership,
limited partnership, association, joint venture arrangement or
trust of any kind with respect to which such parent corporation
or any Subsidiary thereof has an equity or management interest or
as to which any such entity serves as trustee.
"Superior Offer" shall have the meaning as defined in
Section 7.1(e) hereof.
"Surviving Corporation" shall mean Buyer.
"Tax Sharing Policy" shall mean that certain General
Policy Letter No. 13 adopted by Seller in April 1992 governing
"Intercompany Transactions" which has been previously furnished
to Buyer.
"Taxes" shall have the meaning as defined in
Section 3.15(a)(ii) hereof.
"Termination Date" shall have the meaning as defined in
Section 9.1 hereof.
"threatened" shall have the meaning as defined in
Section 3.14 hereof.
<PAGE>
"WARN" shall have the meaning as defined in Section 3.18
hereof.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first above written.
BUSINESS & PROFESSIONAL BANK
By /s/ Michael F. Burkart
Michael F. Burkart, President
WEST COAST BANCORP
By /s/ John Joseph
John Joseph, Chairman
SACRAMENTO FIRST NATIONAL BANK
By /s/ John McGrath
John McGrath, President
PAGE
<PAGE>
SCHEDULE 1.2(b)
Determination of Net Unrealized Gains
(a) For purposes of Section 1.2(b) of the Agreement,
the Net Unrealized Gains in Banks's portfolio of investment
securities as of any date shall mean the "Gross Unrealized Gains"
less the "Gross Unrealized Losses" in such portfolio as of such
date, where the "Gross Unrealized Gains" shall mean the excess of
the "Market Value" of such securities over the amortized cost of
such securities as of such date, and the "Gross Unrealized
Losses" shall mean the excess of the amortized cost over the
"Market Value" of such securities as of such date.
(b) The "Market Value" of Bank's investment securities
shall be determined as follows:
(i) The Market Value of any U.S. Treasury
security or other obligation of any U.S. governmental agency or
corporation held by Bank as of any date shall be equal to the bid
price for such security or obligation on such date as set forth
in The Wall Street Journal for such date.
(ii) The Market Value of any obligation of a state
or political subdivision held by Bank as of any date shall be
determined by Bank obtaining, within seven (7) days after such
date, a written bid for such security as of such date from the
Bank of California, or if a bid cannot be obtained from Bank of
California, within such seven-day period, from either Sanwa Bank
or City National Bank of Beverly Hills.
(iii) The Market Value of any certificate in a pool
of SBA loans held by Bank as of any date shall be determined by
Bank obtaining, within seven (7) days after such date, a written
bid for such certificate from the Government Securities
Corporation of Dallas, Texas ("GSC"); provided that Buyer shall
have the right to obtain an alternative written bid for such
certificate from Duncan Williams Company or Imperial Bank, and,
in the event the bid from Duncan Williams Company or Imperial
Bank differs from the bid make by GSC by five percent (5%) or
more, the Market Value of such certificate shall be equal to the
average of the two bids.
(iv) The Market Value of any other investment
security held by Bank as of any date shall be determined in the
manner set forth in clause (i) above, if appropriate, or by Bank
obtaining, within seven days after such date, a
<PAGE>
written bid for such security as of such date from a bank or
broker to be mutually agreed upon by Buyer, Seller and Bank.
(c) Notwithstanding the foregoing, any Federal Reserve
Bank and Federal Home Loan Bank common stock held by Bank shall
not be deemed to be investment securities for purposes of
Section 1.2(b) of the Agreement.
<PAGE>
<PAGE>
SCHEDULE 1.2(d)
Determination of Unutilized Closing Reserve
1.1 General. For purposes of computing the aggregate
amount of the payment payable by Buyer pursuant to the Contingent
Payment Right delivered to the Stockholders pursuant to
Section 1.2(d) of the Agreement, the Unutilized Closing Reserve
shall mean $3,038,000 less the sum of (a) the amount of any Net
Charge-Offs plus (b) the amount of any Residual Reserve, in each
case, as of the applicable Computation Date, determined in
accordance with the provisions hereof.
1.2 Calculation and Procedure.
(a) Buyer shall calculate the Unutilized Closing
Reserve as of the Initial Computation Date
(or other Computation Date) and, within ten
(10) business days after the Initial
Computation Date (or other Computation Date),
shall deliver to the Representative a
certificate setting forth in such detail as
may reasonably be requested by the
Representative such calculation, including,
but not limited to, (i) a list of all Bank
Loans reflected on the books and records of
Buyer as of the Computation Date, (ii) the
Recorded Book Value of all Bank Loans as of
December 31, 1993 (which shall be the amounts
reflected on Schedule 9.15 to the Agreement),
(iii) the Recorded Book Value of all Bank
Loans as of the Computation Date, (iv) a
statement as to whether any Bank Loan was
renewed since the six-month anniversary of
the Closing Date and, if so, the
classification assigned by Buyer to such Bank
Loan at the time of such renewal (which
classification shall be assigned in
accordance and consistent with Buyer's
policies for assigning classifications to the
remainder of its loan portfolio and real
estate owned), (v) the classification and
reserve, if any, assigned to each such Bank
Loan as of the Computation Date (which
classification and reserve shall be assigned
in accordance and consistent with Buyer's
policies for assigning classifications and
reserves to the remainder of its loan
portfolio and real estate owned), (vi) the
amount of the Net Charge-Offs (including
<PAGE>
Write-Downs, Net Proceeds and Recoveries) with respect to each
Bank Loan from December 31, 1993 to the Computation Date and the
aggregate amount of such Net Charge-Offs during such period, and
(vii) the Residual Reserve for the Bank Loans on an individual
and aggregate basis as of such Computation Date.
(b) The Representative shall have a period of
30 business days after receipt of Buyer's
analysis to review the analysis and Buyer's
calculation of the Unutilized Closing
Reserve. During such period, the
Representative and its accountants and other
agents shall have full access to the loan
files and other papers of Buyer relating to
the Bank Loans and other loans and real
estate owned of Buyer or used in connection
with Buyer's preparation of the analysis and
its calculation of the Unutilized Closing
Reserve. If the Representative shall not
have objected, in writing, within such 30-
business day period, to the amount of Buyer's
proposed Unutilized Closing Reserve, which
objection shall identify the basis of the
objection and any adjustments to the
Unutilized Closing Reserve initially proposed
by Buyer, then Buyer's calculation of the
Unutilized Closing Reserve shall be final and
binding and such Unutilized Closing Reserve
shall be the Unutilized Closing Reserve for
purposes of Section 1.2(d) of the Agreement.
If, however, the Representative shall deliver
such written objection to Buyer within such
30-business day period, Buyer shall notify
the Representative of its approval or
disapproval of the Representative's proposed
adjustments to Buyer's calculation of the
Unutilized Closing Reserve, any disapproval
to be contained in a written objection
delivered to the Representative within
15 business days of Buyer's receipt of the
Representative's written objection. If Buyer
shall fail to notify the Representative in
writing within such 15-business day period of
its approval or disapproval of such proposed
adjustments, the Representative's proposed
adjustments shall be made and Buyer's
proposed Unutilized Closing Reserve as so
adjusted shall be final and binding upon all
parties and shall be the Unutilized Closing
Reserve for purposes of the Agreement.
<PAGE>
(c) If Buyer shall notify the Representative in
writing of its disapproval of such proposed
adjustments within the 15-business day period
set forth in paragraph (b) above, the parties
shall defer calculation of the Unutilized
Closing Reserve until the fourth anniversary
of the Closing Date, at which time the
parties shall employ the same procedure used
on the Initial Computation Date to calculate
the Unutilized Closing Reserve as of such
later Computation Date. If Buyer again
notifies the Representative in writing of its
disapproval of the Representative's proposed
adjustments to Buyer's calculation of the
Unutilized Closing Reserve within the
applicable period, the parties shall defer
calculation of the Unutilized Closing Reserve
until the fifth anniversary of the Closing
Date and shall employ the same procedure used
on the Initial Computation Date to calculate
the Unutilized Closing Reserve as of such
later Computation Date.
(d) If Buyer again notifies the Representative in
writing of its disapproval of the
Representative's proposed adjustments to
Buyer's calculation of the Unutilized Closing
Reserve within the applicable period, the
dispute shall be settled by arbitration in
accordance with the then prevailing
Commercial Arbitration Rules of the American
Arbitration Association and judgment upon the
award rendered in the arbitration shall be
final and binding upon all parties and may be
entered in any court having jurisdiction.
The fees and expenses of the arbitrators
shall be borne equally by Buyer and the
holders of the Contingent Payment Right and,
in the case of such holders, shall be offset
against the amount payable to such holders
under the Contingent Payment Right.
(e) Within ten business days after the date the
Utilized Closing Reserve is finally
determined pursuant to the provisions hereof,
Buyer shall deposit with the Exchange and
Paying Agent funds equal to the Contingent
Payment for payment to the holders of the
Contingent Payment Right as of a specified
payment date (the "Record Holders"). In
addition, to the
<PAGE>
extent Buyer receives any Additional Recoveries with respect to
Bank Loans within the one-year period following the last
Computation Date resorted to by the parties, Buyer shall, within
ten business days after the expiration of such one-year period,
deposit with the Exchange and Paying Agent for payment to the
Record Holders an amount of funds equal to (i) the amount of the
Contingent Payment that would have been payable as of the
expiration of such one-year period, after taking into account
such Additional Recoveries, less (ii) the Contingent Payment
actually paid to the Record Holders pursuant to the terms hereof
provided that no interest shall accrue on the amount of the
Additional Recoveries.
1.3 Definitions. For purposes of this Schedule, the
following terms shall have the meanings ascribed to them:
(a) "Additional Recoveries" shall mean the sum of
(i) for any Bank Loans (including real estate
owned) that are disposed of after the Last
Computation Date and on or prior to the first
anniversary of the Last Computation Date (the
"Additional Recovery Period") the excess, if
any, of the Net Proceeds received by Buyer
upon the disposition of such Bank Loans over
the Recorded Book Value of such Bank Loans as
of such date plus (ii) for any Bank Loans for
which there have been Gross Charge-Offs (as
defined in 1.3(c)) prior to the Last
Computation Date, the amount of such Gross
Charge-Offs that is recovered by Buyer (other
than any amount recovered pursuant to
clause (i)), by repayment or otherwise, prior
to the expiration of the Additional Recovery
Period.
(b) "Bank Loans" shall have the meaning ascribed
to it in the Agreement; provided that any
Bank Loan that is renewed by Buyer any time
after the expiration of the six-month period
following the Closing shall no longer be
deemed a Bank Loan unless at the time of such
renewal Buyer shall, in a manner in
accordance and consistent with Buyer's
policies for assigning classifications to the
remainder of its loan portfolio and real
estate owned, internally classify such Bank
Loan as "Special Mention," "Substandard,"
"Doubtful" or "Loss".
<PAGE>
(c) "Net Charge-Offs" as of any date shall mean
(i) the sum of (A) for any Bank Loan
(including any real estate owned) that is
disposed of after December 31, 1993 and on or
prior to the applicable Computation Date, the
excess of the Recorded Book Value of such
Bank Loan as of such date, if any, over the
Net Proceeds received by Buyer upon the
disposition of such Bank Loan, plus (B) for
any Bank Loan written down or charged off
after December 31, 1993 and on or prior to
the applicable Computation Date, the amount
of such writedown or charge off ("Write
Downs") (the sum of (i)(A) and (i)(B) shall
be referred to herein as "Gross Charge-Offs")
less (ii) the sum of (A) for any Bank Loan
(including real estate owned) that is
disposed of after December 31, 1993 and on or
prior to the applicable Computation Date, the
excess, if any, of the Net Proceeds received
by Buyer upon the disposition of such Bank
Loan over the Recorded Book Value of such
Bank Loan as of such date plus (B) for any
Bank Loan for which there has been a Gross
Charge-Off after December 31, 1993 and prior
to the applicable Computation Date, the
amount of such Gross Charge-Off that is
recovered by Buyer (other than any amount
recovered pursuant to clause (ii)(A)), by
repayment or otherwise, prior to such
Computation Date (the sum of (ii)(A) and
(ii)(B) shall be referred to herein as
"Recoveries").
(d) "Computation Date" shall mean, as applicable,
the third, fourth or fifth anniversary of the
Closing Date.
(e) "Initial Computation Date" shall mean the
third anniversary of the Closing Date.
(f) "Net Proceeds" with respect to any sale or
disposition of a Bank Loan (including real
estate owned) shall mean the gross proceeds
from such sale or disposition, less all out-
of-pocket transaction costs reasonably
incurred by Buyer in connection with such
sale or disposition, including, without
limitation, all sales and/or brokerage
commissions, legal fees, transfer and other
taxes, title insurance, escrow and recording
costs, and
<PAGE>
credits for security deposits and the like reasonably incurred or
given by Buyer in connection therewith.
(g) "Recorded Book Value" of any Bank Loan as of
a particular date shall mean the amount of
such Bank Loan (including, in the case of a
loan commitment, the amount of such
commitment) as shown on the books of the Bank
at December 31, 1993 and reflected in
Schedule 9.15 to the Agreement, (i) plus, as
appropriate, the amount of any additional
advances made by Buyer in an attempt to work
out such Bank Loan, and (ii) less the sum of
(A) the amount of any principal paid thereon
and (B) the amount of any Write Downs
thereof, in each case, during the period from
December 31, 1993 to the specified date.
(h) "Residual Reserve" as of any date shall mean
the reserves assigned by Buyer to the Bank
Loans, on an individual and/or aggregate
basis, in accordance and consistent with
Buyer's policies for assigning reserves to
the remainder of Buyer's loan portfolio and
real estate owned.
<PAGE>
<PAGE>
EXHIBIT A
AGREEMENT TO CONSOLIDATE
between
B&P INTERIM STATE BANK
and
SACRAMENTO FIRST NATIONAL BANK
Under the charter of
SACRAMENTO FIRST NATIONAL BANK
and
Under the title of
SACRAMENTO FIRST NATIONAL BANK
THIS AGREEMENT TO CONSOLIDATE made between B&P INTERIM STATE BANK
(hereinafter referred to as "Interim Bank"), a banking
corporation organized under the laws of the State of California,
being located at 120 W. Court Street, in the City of Woodland,
County of Yolo, State of California, with initial capital of
$__________, divided into ________ shares of common stock
("Interim Bank Stock"), each of no par value, and SACRAMENTO
FIRST NATIONAL BANK (hereinafter referred to as "SFNB"), a
banking association organized under the laws of the United States
being located at 1440 Ethan Way, in the City of Sacramento,
County of Sacramento, in the State of California, with capital of
$_________, divided into _______ shares of common stock ("SFNB
Stock"), each of $5.00 par value, surplus of $_______ and
undivided profits, including capital reserves, of $_______, as of
__________, 1994, each acting pursuant to a resolution of its
board of directors, adopted by the vote of a majority of its
directors, pursuant to the authority given by and in accordance
with the provisions of the Act of November 7, 1918, as amended
(12 U.S.C. section 215), witnesseth as follows:
Section 1. Interim Bank and SFNB (hereinafter referred
to as the "Consolidating Banks") shall be consolidated under the
charter of SFNB. The closing of the transactions contemplated
hereby (the "Closing") shall take place at the offices of
Morrison & Foerster, 345 California Street, San Francisco,
California, on the date fixed therefor pursuant to Section 1.7 of
the Plan and Agreement (as defined below).
<PAGE>
Section 2. The name of the consolidated association
(hereinafter referred to as the "Consolidated Association") shall
be Sacramento First National Bank.
Section 3. The business of the Consolidated
Association shall be that of a national banking association.
This business shall be conducted by the Consolidated Association
at the offices of SFNB which are located at 1440 Ethan Way,
Sacramento, California _____________, and _________________ and
________________.
Section 4. The amount of capital stock of the
Consolidated Association shall be $________, divided into
_________ shares of common stock, each of $________ par value,
and at the time the consolidation shall become effective as
specified in the approval to be issued by the Comptroller of the
Currency (the "Effective Time of the Consolidation"), the
Consolidated Association shall have a surplus of $_________ and
undivided profits, including capital reserves, which when
combined with the Consolidated Association's capital and surplus
will be equal to the combined capital structures of the
Consolidating Banks as stated in the preamble of this Agreement,
adjusted, however, for normal earnings and expenses between
_________________ and the Effective Time of the Consolidation.
Section 5. All assets of each of the Consolidating
Banks, as they exist at the Effective Time of the Consolidation,
shall pass to and vest in the Consolidated Association without
any conveyance or other transfer. The Consolidated Association
shall be responsible for all of the liabilities of every kind and
description of each of the Consolidating Banks existing as of the
Effective Time of the Consolidation.
Section 6. Upon and as of the Effective Time of the
Consolidation, and by reason of the consolidation becoming
effective, (i) each share of SFNB Stock issued and outstanding
immediately prior to the Effective Time of the Consolidation,
except for shares as to which dissenters' rights are perfected
pursuant to 12 U.S.C. section 215 ("Perfected Dissenting
Shares"), shall be automatically converted into the right to
receive the Consolidation Consideration determined in accordance
with Section 1.2 of the Plan and Agreement of Consolidation and
Merger (the "Plan and Agreement"), dated June 22, 1994, by and
between Business & Professional Bank, a California state-
chartered bank ("B&P"), West Coast Bancorp, a California
corporation ("WCB") and SFNB, and (ii) each share of the Interim
Bank Stock issued and outstanding immediately prior to the
Effective Time of the Consolidation, except for Perfected
<PAGE>
Dissenting Shares, shall be automatically converted into one
share of the common stock, $_______ par value, of the
Consolidated Association.
Section 7. Neither of the Consolidating Banks shall
declare or pay any dividend to its shareholders between the date
of this Agreement and the time at which the consolidation shall
be effective, or dispose of any of its assets in any other manner
except in the normal course of business and for adequate value.
Section 8. The following named persons shall
constitute the original board of directors of the Consolidated
Association until the next annual meeting of its shareholders or
until such time as their successors have been elected and
qualify:
Section 9. On and after the Effective Time of the
Consolidation, the Articles of Association of the Consolidated
Association shall read in their entirety as set forth in
Exhibit A hereto.
Section 10. The obligations of Interim Bank to proceed
with the Closing are subject to the satisfaction at or prior to
the Closing of all of the conditions to the obligations of B&P
under the Plan and Agreement, any one or more of which, to the
extent it is or they are waivable, may be waived, in whole or in
part, by Interim Bank.
Section 11. The obligations of SFNB to proceed with
the Closing are subject to the satisfaction at or prior to the
Closing of all of the conditions to the obligations of WCB and
SFNB under the Plan and Agreement, any one or more of which, to
the extent it is or they are waivable, may be waived, in whole or
in part, by WCB and SFNB.
Section 12. Notwithstanding any provision to the
contrary herein, and notwithstanding the fact that the
stockholders of SFNB, Interim Bank and B&P may have ratified and
confirmed this Agreement, this Agreement shall automatically be
terminated and of no further force and effect if, prior to the
Effective Time of the Consolidation, the Plan and Agreement is
terminated in accordance with the terms thereof.
<PAGE>
Section 13. This Agreement shall be ratified and
confirmed by the affirmative vote of shareholders of each of the
Consolidating Banks owning at least two-thirds of its capital
stock outstanding, and by the affirmative vote of shareholders of
B&P owning at least a majority of its capital stock outstanding,
at meetings to be held on the call of their respective boards of
directors; and the consolidation shall become effective at the
Effective Time of the Consolidation.
Section 14. Interim Bank and SFNB agree that solely
for the purpose of completing the merger of the Consolidated
Association with and into B&P or obtaining any necessary
regulatory approval therefor or approving, signing, ratifying or
confirming any related merger agreement or conferring any
necessary or appropriate corporate authority related thereto or
taking any other corporate act or satisfying any other corporate
requirement necessary therefor, the board of directors of the
Consolidated Association, as it will be constituted upon the
effectiveness of the consolidation, may act as such in advance of
such effectiveness, and B&P, the shareholder of the Consolidated
Association upon such effectiveness, may act as such in advance
of such effectiveness.
WITNESS the signatures and seals of said Consolidating
Banks, each hereunto set by its president or a vice president and
attested by its cashier or secretary, pursuant to a resolution of
its board of directors, acting by a majority thereof, and witness
the signature hereto of a majority of each of said boards of
directors:
B&P INTERIM STATE BANK
[SEAL] By:___________________________
President
Attest:
______________________________
Chief Financial Officer
<PAGE>
Directors of B&P Interim State Bank
___________________________ ___________________________
___________________________ ___________________________
___________________________ ___________________________
SACRAMENTO FIRST NATIONAL BANK
[SEAL] By: _________________________
President
Attest:
___________________________
Chief Financial Officer
Directors of Sacramento First National Bank
___________________________ ___________________________
___________________________ ___________________________
___________________________ ___________________________
___________________________ ___________________________
___________________________ ___________________________
___________________________ ___________________________
<PAGE>
<PAGE>
EXHIBIT B
San Francisco, California
________________, 1994
CONTINGENT PAYMENT RIGHT
Business & Professional Bank, a California state-
chartered bank ("Bank"), hereby promises to pay to
________________________ ("Holder"), or Holder's assigns, a cash
payment in accordance with the terms of Section 1.2(d) of that
certain Plan and Agreement of Consolidation and Merger dated as
of June 22, 1994 by and among Bank, Westcoast Bancorp and
Sacramento First National Bank (the "Agreement") and
Schedule 1.2(d) thereto, the terms and conditions of which
Schedule are set forth in full on the reverse side hereof.
Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Agreement.
The holder hereof shall be entitled to a proportionate
share of the Contingent Payments, if any, payable pursuant to
Section 1.2(d) of the Agreement equal to the product of (x) the
Contingent Payment, multiplied by (y) the number of shares of the
common stock of Sacramento First National Bank, $5.00 par value
per share registered in the name of Holder at the Effective Time,
as shown on the books and records of Sacramento First National
Bank (the "Proportionate Share").
[The Contingent Payments to be made hereunder are
subject to a right of set-off in favor of Bank pursuant to
Section 8.6 of the Agreement.] [For inclusion in Seller's
certificate only]
THE RIGHT TO RECEIVE PAYMENT OF ANY FUNDS HEREUNDER IS SUBJECT TO
THE SATISFACTION OF CERTAIN CONTINGENCIES. THERE CAN BE NO
ASSURANCE THAT SUCH CONTINGENCIES WILL BE SATISFIED, AND AS A
RESULT, THAT ANY AMOUNTS WILL BECOME DUE AND PAYABLE TO THE
HOLDER HEREOF PURSUANT TO THE TERMS HEREOF.
This Contingent Payment Right is subject to all of the
terms and conditions contained in the Agreement, including the
those set forth on the reverse side hereof. A copy of the
Agreement may be inspected at the offices of Bank at
_________________________________.
<PAGE>
Attest:
By: _______________,
Secretary<PAGE>
BUSINESS & PROFESSIONAL BANK
Michael F. Burkart,
President
[REVERSE SIDE OF CERTIFICATE]
This Certificate evidences the right to receive the
Proportionate Share of the Contingent Payment defined and
determined in accordance with Section 1.2(d) of and
Schedule 1.2(d) to the Agreement.
Section 1.2(d) of the Agreement defines the Contingent
Payment as "an additional payment in cash of an amount equal to
the quotient of (i) 50% of the Unutilized Closing Reserve
determined in accordance with Schedule 1.2(d) ... up to a maximum
of $1,000,000, divided by (ii) the Outstanding Shares, together
with interest thereon, compounded annually, at the annual rate of
four percent (4%) in excess of the average weekly interest rate
from time to time prevailing for one-year Treasury bills, such
interest tro accrue from the Initial Computation Date to but
excluding the payment date."
Schedule 1.2(d) of the Agreement provides in pertinent
part as follows:
"1.1 General. For purposes of computing the aggregate
amount of the payment payable by Buyer pursuant to the Contingent
Payment Right delivered to the Stockholders pursuant to
Section 1.2(d) of the Agreement, the Unutilized Closing Reserve
shall mean $3,038,000 less the sum of (a) the amount of any Net
Charge-Offs plus (b) the amount of any Residual Reserve, in each
case, as of the applicable Computation Date, determined in
accordance with the provisions hereof.
1.2 Calculation and Procedure.
(a) Buyer shall calculate the Unutilized Closing
Reserve as of the Initial Computation Date (or
other Computation Date) and, within ten (10)
business days after the Initial Computation Date
(or other Computation Date), shall deliver to the
Representative a certificate setting forth in such
detail as may reasonably be requested by the
Representative such calculation, including, but
not limited to,
<PAGE>
(i) a list of all Bank Loans reflected on the books and records
of Buyer as of the Computation Date, (ii) the Recorded Book Value
of all Bank Loans as of December 31, 1993 (which shall be the
amounts reflected on Schedule 9.15 to the Agreement), (iii) the
Recorded Book Value of all Bank Loans as of the Computation Date,
(iv) a statement as to whether any Bank Loan was renewed since
the six-month anniversary of the Closing Date and, if so, the
classification assigned by Buyer to such Bank Loan at the time of
such renewal (which classification shall be assigned in
accordance and consistent with Buyer's policies for assigning
classifications to the remainder of its loan portfolio and real
estate owned), (v) the classification and reserve, if any,
assigned to each such Bank Loan as of the Computation Date (which
classification and reserve shall be assigned in accordance and
consistent with Buyer's policies for assigning classifications
and reserves to the remainder of its loan portfolio and real
estate owned), (vi) the amount of the Net Charge-Offs (including
Write-Downs, Net Proceeds and Recoveries) with respect to each
Bank Loan from December 31, 1993 to the Computation Date and the
aggregate amount of such Net Charge-Offs during such period, and
(vii) the Residual Reserve for the Bank Loans on an individual
and aggregate basis as of such Computation Date.
(b) The Representative shall have a period of
30 business days after receipt of Buyer's analysis
to review the analysis and Buyer's calculation of
the Unutilized Closing Reserve. During such
period, the Representative and its accountants and
other agents shall have full access to the loan
files and other papers of Buyer relating to the
Bank Loans and other loans and real estate owned
of Buyer or used in connection with Buyer's
preparation of the analysis and its calculation of
the Unutilized Closing Reserve. If the
Representative shall not have objected, in
writing, within such 30-business day period, to
the amount of Buyer's proposed Unutilized Closing
Reserve, which objection shall identify the basis
of the objection and any adjustments to the
Unutilized Closing Reserve initially proposed
<PAGE>
by Buyer, then Buyer's calculation of the Unutilized Closing
Reserve shall be final and binding and such Unutilized Closing
Reserve shall be the Unutilized Closing Reserve for purposes of
Section 1.2(d) of the Agreement. If, however, the Representative
shall deliver such written objection to Buyer within such 30-
business day period, Buyer shall notify the Representative of its
approval or disapproval of the Representative's proposed
adjustments to Buyer's calculation of the Unutilized Closing
Reserve, any disapproval to be contained in a written objection
delivered to the Representative within 15 business days of
Buyer's receipt of the Representative's written objection. If
Buyer shall fail to notify the Representative in writing within
such 15-business day period of its approval or disapproval of
such proposed adjustments, the Representative's proposed
adjustments shall be made and Buyer's proposed Unutilized Closing
Reserve as so adjusted shall be final and binding upon all
parties and shall be the Unutilized Closing Reserve for purposes
of the Agreement.
(c) If Buyer shall notify the Representative in
writing of its disapproval of such proposed
adjustments within the 15-business day period set
forth in paragraph (b) above, the parties shall
defer calculation of the Unutilized Closing
Reserve until the fourth anniversary of the
Closing Date, at which time the parties shall
employ the same procedure used on the Initial
Computation Date to calculate the Unutilized
Closing Reserve as of such later Computation Date.
If Buyer again notifies the Representative in
writing of its disapproval of the Representative's
proposed adjustments to Buyer's calculation of the
Unutilized Closing Reserve within the applicable
period, the parties shall defer calculation of the
Unutilized Closing Reserve until the fifth
anniversary of the Closing Date and shall employ
the same procedure used on the Initial Computation
Date to calculate the Unutilized Closing Reserve
as of such later Computation Date.
(d) If Buyer again notifies the Representative in
writing of its disapproval of the
<PAGE>
Representative's proposed adjustments to Buyer's calculation of
the Unutilized Closing Reserve within the applicable period, the
dispute shall be settled by arbitration in accordance with the
then prevailing Commercial Arbitration Rules of the American
Arbitration Association and judgment upon the award rendered in
the arbitration shall be final and binding upon all parties and
may be entered in any court having jurisdiction. The fees and
expenses of the arbitrators shall be borne equally by Buyer and
the holders of the Contingent Payment Right and, in the case of
such holders, shall be offset against the amount payable to such
holders under the Contingent Payment Right.
(e) Within ten business days after the date the
Utilized Closing Reserve is finally determined
pursuant to the provisions hereof, Buyer shall
deposit with the Exchange and Paying Agent funds
equal to the Contingent Payment for payment to the
holders of the Contingent Payment Right as of a
specified payment date (the "Record Holders"). In
addition, to the extent Buyer receives any
Additional Recoveries with respect to Bank Loans
within the one-year period following the last
Computation Date resorted to by the parties, Buyer
shall, within ten business days after the
expiration of such one-year period, deposit with
the Exchange and Paying Agent for payment to the
Record Holders an amount of funds equal to (i) the
amount of the Contingent Payment that would have
been payable as of the expiration of such one-year
period, after taking into account such Additional
Recoveries, less (ii) the Contingent Payment
actually paid to the Record Holders pursuant to
the terms hereof provided that no interest shall
accrue on the amount of the Additional Recoveries.
1.3 Definitions. For purposes of this Schedule, the
following terms shall have the meanings ascribed to them:
(a) "Additional Recoveries" shall mean the sum of
(i) for any Bank Loans (including real estate
owned) that are disposed of after the Last
Computation Date and on or prior to the first
anniversary of the Last Computation Date (the
<PAGE>
"Additional Recovery Period") the excess, if any, of the Net
Proceeds received by Buyer upon the disposition of such Bank
Loans over the Recorded Book Value of such Bank Loans as of such
date plus (i) for any Bank Loans for which there have been Gross
Charge-Offs (as defined in 1.3(c)) prior to the Last Computation
Date, the amount of such Gross Charge-Offs that is recovered by
Buyer (other than any amount recovered pursuant to clause (i)),
by repayment or otherwise, prior to the expiration of the
Additional Recovery Period.
(b) "Bank Loans" shall have the meaning ascribed to it
in the Agreement; provided that any Bank Loan that
is renewed by Buyer any time after the expiration
of the six-month period following the Closing
shall no longer be deemed a Bank Loan unless at
the time of such renewal Buyer shall, in a manner
in accordance and consistent with Buyer's policies
for assigning classifications to the remainder of
its loan portfolio and real estate owned,
internally classify such Bank Loan as "Special
Mention," "Substandard," "Doubtful" or "Loss".
(c) "Net Charge-Offs" as of any date shall mean
(i) the sum of (A) for any Bank Loan (including
any real estate owned) that is disposed of after
December 31, 1993 and on or prior to the
applicable Computation Date, the excess of the
Recorded Book Value of such Bank Loan as of such
date, if any, over the Net Proceeds received by
Buyer upon the disposition of such Bank Loan, plus
(B) for any Bank Loan written down or charged off
after December 31, 1993 and on or prior to the
applicable Computation Date, the amount of such
writedown or charge off ("Write Downs") (the sum
of (i)(A) and (i)(B) shall be referred to herein
as "Gross Charge-Offs") less (ii) the sum of
(A) for any Bank Loan (including real estate
owned) that is disposed of after December 31, 1993
and on or prior to the applicable Computation
Date, the excess, if any, of the Net Proceeds
received by Buyer upon the disposition of such
Bank Loan over the Recorded Book Value of such
Bank Loan as of such date plus (B) for any Bank
Loan for which there has been a Gross Charge-Off
after
<PAGE>
December 31, 1993 and prior to the applicable Computation Date,
the amount of such Gross Charge-Off that is recovered by Buyer
(other than any amount recovered pursuant to clause (ii)(A)), by
repayment or otherwise, prior to such Computation Date (the sum
of (ii)(A) and (ii)(B) shall be referred to herein as
"Recoveries").
(d) "Computation Date" shall mean, as applicable, the
third, fourth or fifth anniversary of the Closing
Date.
(e) "Initial Computation Date" shall mean the third
anniversary of the Closing Date.
(f) "Net Proceeds" with respect to any sale or
disposition of a Bank Loan (including real estate
owned) shall mean the gross proceeds from such
sale or disposition, less all out-of-pocket
transaction costs reasonably incurred by Buyer in
connection with such sale or disposition,
including, without limitation, all sales and/or
brokerage commissions, legal fees, transfer and
other taxes, title insurance, escrow and recording
costs, and credits for security deposits and the
like reasonably incurred or given by Buyer in
connection therewith.
(g) "Recorded Book Value" of any Bank Loan as of a
particular date shall mean the amount of such Bank
Loan (including, in the case of a loan commitment,
the amount of such commitment) as shown on the
books of the Bank at December 31, 1993 and
reflected in Schedule 9.15 to the Agreement,
(i) plus, as appropriate, the amount of any
additional advances made by Buyer in an attempt to
work out such Bank Loan, and (ii) less the sum of
(A) the amount of any principal paid thereon and
(B) the amount of any Write Downs thereof, in each
case, during the period from December 31, 1993 to
the specified date.
(h) "Residual Reserve" as of any date shall mean the
reserves assigned by Buyer to the Bank Loans, on
an individual and/or aggregate basis, in
accordance and consistent with Buyer's policies
for assigning reserves to the
<PAGE>
remainder of Buyer's loan portfolio and real estate owned."
<PAGE>
EXHIBIT C
AGREEMENT OF MERGER
OF
BUSINESS & PROFESSIONAL BANK
(a California state-chartered bank)
AND
SACRAMENTO FIRST NATIONAL BANK
(a national banking association)
THIS AGREEMENT OF MERGER is made and entered into as of
this _____ day of ________, 1994, by and between BUSINESS &
PROFESSIONAL BANK, a California state-chartered bank ("B&P") and
SACRAMENTO FIRST NATIONAL BANK, a national banking association
("SFNB").
W I T N E S S E T H:
WHEREAS, B&P and SFNB, their respective Boards of
Directors, and the sole shareholder of SFNB have approved as
desirable and in the best interests of each corporation that SFNB
be merged with and into B&P by a statutory merger upon the terms
and conditions hereinafter set forth.
NOW, THEREFORE IT IS AGREED AS FOLLOWS:
FIRST: SFNB shall be merged with and into B&P by a
statutory merger (the "Merger") in accordance with the General
Corporation Law of California and 12 U.S.C. section 214a on the
terms and conditions hereinafter expressed. As of the Effective
Time of the Merger (as hereinafter defined), the separate
existence of SFNB shall cease and B&P shall be the surviving
corporation (the "Surviving Corporation").
SECOND: The Merger shall be effective as of _____
__.M. ________, 1994 (the "Effective Time of the Merger"), or on
such day and at such time as soon as possible thereafter on which
this Agreement of Merger and appropriate certificates of its
approval and adoption shall have been filed with the Secretary of
State of the State of California in accordance with Section 1103
of the General Corporation Law of the State of California and the
California Superintendent of Banks in accordance with
Section 2094 of the California Financial Code.
<PAGE>
THIRD: The manner of converting the shares of the
capital stock of B&P and SFNB upon the Merger shall, by virtue of
the Merger and without any action on the part of the holders
thereof, be as follows:
(a) Each share of common stock of B&P issued and
outstanding immediately prior to the Effective Time of the Merger
shall, by virtue of the Merger and without any action on the part
of the holder thereof, continue to be outstanding as one share of
the common stock of B&P, as the Surviving Corporation.
(b) As of the Effective Time of the Merger, each
share of common stock of SFNB then issued and outstanding shall,
by virtue of the Merger and without any action on the part of the
holder thereof, no longer be outstanding and shall be cancelled
and retired and cease to exist.
FOURTH: As of the Effective Time of the Merger, the
Articles of Incorporation and the Bylaws of B&P shall be the
Articles of Incorporation and the Bylaws of the Surviving
Corporation.
FIFTH: The directors and officers of B&P as of the
Effective Time of the Merger shall be the directors and officers
of the Surviving Corporation, each of whom shall serve until his
death, resignation, removal, or until his successor shall be
elected in accordance with law and the Articles of Incorporation
and Bylaws of the Surviving Corporation.
SIXTH: The board of directors of B&P has approved this
Agreement of Merger in accordance with the General Corporation
Law of the State of California. The board of directors and the
sole shareholder of SFNB have approved this Agreement of Merger
in accordance with 12 U.S.C. section 214a.
SEVENTH: Prior to the filing of this Agreement of
Merger with the Secretary of State of the State of California,
this Agreement of Merger may be terminated by the agreement of
the Boards of Directors of B&P and SFNB notwithstanding approval
of this Agreement of Merger by the sole shareholder of SFNB.
IN WITNESS WHEREOF, B&P and SFNB, pursuant to the
approval and authority duly given by resolutions adopted by their
respective Boards of Directors, have caused these
<PAGE>
presents to be executed by the President and by the [Assistant]
Secretary of each party hereto.
<PAGE>
BUSINESS & PROFESSIONAL BANK,
a California state-chartered
bank
By __________________________
President
By __________________________
[Assistant] Secretary
SACRAMENTO FIRST NATIONAL BANK
By __________________________
President
By __________________________
[Assistant] Secretary
<PAGE>
<PAGE>
CERTIFICATE OF APPROVAL OF
AGREEMENT OF MERGER
The undersigned hereby certify as follows:
(1) They are the President and [Assistant] Secretary,
respectively, of Business & Professional Bank, a California
state-chartered bank ("B&P").
(2) The Agreement of Merger in the form attached was
duly approved by the board of directors of B&P.
(3) Pursuant to section 1201(b) of the California
Corporation Code, the Agreement of Merger was entitled to be
approved by the board of directors of B&P alone, without any
requirement of shareholder approval.
(4) B&P has outstanding one class of Common Stock,
without par value, and the number of shares thereof outstanding
is [1,138,958], none of which were entitled to vote on the
Agreement of Merger.
<PAGE>
By __________________________
President
By __________________________
[Assistant] Secretary
The undersigned declare under penalty of perjury that
the matters set forth in the foregoing certificate are true of
their own knowledge.
Executed in the City and County of San Francisco on
______ ____, 1994.
<PAGE>
By __________________________
President
By __________________________
[Assistant] Secretary
<PAGE>
<PAGE>
CERTIFICATE OF APPROVAL OF
AGREEMENT OF MERGER
The undersigned hereby certify as follows:
(1) They are the President and [Assistant] Secretary
of Sacramento First National Bank, a national banking association
("SFNB").
(2) The Agreement of Merger in the form attached was
duly approved by the board of directors and the sole shareholder
of SFNB.
(3) The shareholder approval was by a meeting of the
sole shareholder held on due notice, by the holder of outstanding
shares of SFNB having an aggregate number of votes which exceeded
the number of votes required for approval of the Agreement of
Merger.
(4) SFNB has outstanding one class of Common Stock,
par value $_____ per share, and the number of shares thereof
outstanding is one, and the holder of such share was entitled to
vote on the Agreement of Merger. Pursuant to 12 U.S.C.
section 214a, the percentage vote of such class required to
approve such Agreement of Merger is 66 2/3%.
<PAGE>
By __________________________
President
By __________________________
[Assistant] Secretary
The undersigned declare under penalty of perjury that
the matters set forth in the foregoing certificate are true of
their own knowledge.
<PAGE>
Executed in the City and County of San Francisco on
_____ __, 1994.
<PAGE>
By __________________________
President
By __________________________
[Assistant] Secretary
<PAGE>
<PAGE>
EXHIBIT D
FORM OF MORRISON & FOERSTER OPINION
(a) Buyer is a California state-chartered bank, duly
organized, validly existing and in good standing under the laws
of the State of California. Buyer has all requisite corporate
power and authority to own its properties and assets and to carry
on its business as now conducted and is qualified to do business
as a foreign corporation and is in good standing in each
jurisdiction in which such qualification is necessary under
Applicable Law, except for such jurisdictions in which the
failure to be so qualified or in good standing would not have a
material adverse effect on Buyer.
(b) Buyer has the corporate power and authority to
execute and deliver the Documents and to perform its obligations
thereunder.
(c) The deposit accounts of Buyer are insured by the
Bank Insurance Fund of the FDIC to the fullest extent permitted
under Applicable Law.
(d) MergerSub is a California state-chartered bank,
duly organized, validly existing and in good standing under the
laws of the State of California. MergerSub has all requisite
corporate power and authority to own its properties and assets
and to carry on its business as now conducted and is qualified to
do business as a foreign corporation and is in good standing in
each jurisdiction in which such qualification is necessary under
Applicable Law, except for such jurisdictions in which the
failure to be so qualified or in good standing would not have a
material adverse effect on MergerSub.
(e) The Documents (including the Contingent Payment
Right) have been duly authorized, executed and delivered by Buyer
and MergerSub, as applicable, and constitute the valid and
binding obligations of Buyer and MergerSub, as applicable,
enforceable against them in accordance with their respective
terms, except as may be limited by bankruptcy, insolvency,
moratorium, reorganization, conservatorship or similar laws
affecting the rights of creditors of insured depository
institutions generally and by the availability of equitable
remedies.
(f) The execution, delivery and performance of the
Documents by Buyer and MergerSub will not (i) violate any
provision of Buyer's or MergerSub's Articles of Incorporation or
Bylaws, or (ii) violate or result in the breach of any term,
condition or provision of, or constitute
<PAGE>
a default under, or give rise to any right of termination,
cancellation or acceleration with respect to, or result in the
creation of any lien, charge or encumbrance upon any property or
assets of Buyer or MergerSub pursuant to, or otherwise require
the consent of any Person under, any material agreement known to
us to which Buyer or MergerSub is a party.
(g) All registrations with, consents and approvals of,
notices to, and other actions by, any Governmental Authority
required on the part of Buyer or Merger Sub, including without
limitation the Regulatory Approvals, for the execution, delivery
of performance by Buyer and Merger Sub of the Documents have, as
appropriate, been made, obtained or given.
(h) The authorized capital stock of Buyer consists of
1,000,000 shares of preferred stock, without par value, and
10,000,000 shares of common stock, without par value. The Buyer
Common Stock to be issued to the Stockholders pursuant to the
provisions of the Agreement has been duly authorized, and, upon
issuance in accordance with the provisions thereof, will be
validly issued, fully paid and nonassessable (other than as
provided in Section 662 of the California Financial Code), and
will not be issued in violation of any preemptive rights.
(i) Assuming due authorization and execution of the
Plan of Consolidation by Bank, upon the filing of the Plan of
Consolidation with the OCC in accordance with the Agreement:
(i) the Consolidation will be effective in accordance with the
Agreement, the Plan of Consolidation and 12 U.S.C. section 215;
(ii) each share of stock of Merger Sub issued and outstanding
immediately prior to the Effective Time will be converted as
provided in Section 1.1(ii) of the Agreement; and (iii) each
share of Bank Common Stock issued and outstanding immediately
prior to the Effective Time will be converted as provided in
Section 1.1(iii) of the Agreement, subject to Sections 1.3 and
1.4 thereof.
(j) The Offering Circular/Joint Proxy Statement and
any amendments or supplements thereto (except for the financial
statements and schedules and other financial and statistical data
contained therein, as to which we express no opinion) comply as
to form in all material respects with the provisions of the
Exchange Act applicable to a proxy statement of Buyer pursuant to
the FDIA.
<PAGE>
<PAGE>
EXHIBIT E
SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT (this "Agreement") is
entered into as of June 22, 1994, between West Coast Bancorp (the
"Shareholder"), Business & Professional Bank, a California state-
chartered bank ("State Bank"), and such other persons or entities
that may in the future become parties hereto pursuant to the
terms hereof. Capitalized terms used but not defined herein
shall have the meanings ascribed to them in that certain Plan and
Agreement of Consolidation and Merger (the "Plan") dated June 22,
1994 by and among State Bank, Shareholder and Sacramento First
National Bank, a national banking association and an
approximately 94%-owned subsidiary of Shareholder ("National
Bank").
WHEREAS, Shareholder, State Bank and National Bank are
parties to the Plan, which provides for the acquisition by State
Bank of National Bank by means of the consolidation of a newly-
formed subsidiary of State Bank with National Bank and the merger
of the resulting consolidated association with and into State
Bank (the "Acquisition");
WHEREAS, a portion of the consideration payable to the
shareholders of National Bank, including Shareholder, in the
Acquisition consists of shares of the common stock, no par value
per share, of State Bank (the "State Bank Common Stock");
WHEREAS, the acquisition by Shareholder of the Shares
requires the approval of the Federal Reserve Board (the "FRB")
pursuant to Section 3 of the Bank Holding Company Act and the
California Superintendent of Banking (the "Superintendent")
pursuant to Sections 700 et seq. of the California Financial
Code;
WHEREAS, the acquisition by Shareholder of 25% or more
of the issued and outstanding shares of State Bank Common Stock
or the possession by Shareholder of a controlling influence over
the management or policies of State Bank would require further
such approvals from the FRB and the Superintendent, would
potentially subject State Bank to regulation as a subsidiary of
Shareholder and would have certain other undesirable effects;
WHEREAS, Shareholder has represented to State Bank that
it is not Shareholder's intention or desire to acquire
<PAGE>
25% or more of the issued and outstanding State Bank Common Stock
or otherwise exercise a controlling influence over the management
or policies of State Bank, and it is not State Bank's intention
or desire that Shareholder so acquire such number of shares of
State Bank Common Stock or such influence;
WHEREAS, in light of the foregoing the parties wish to
set forth certain agreements pertaining to Shareholder's
ownership and certain other entities' ownership of State Bank
Common Stock;
NOW THEREFORE, in consideration of the foregoing
recitals and as an essential condition and inducement to State
Bank's and Shareholder's execution of the Plan, and for other
good and valuable consideration, the receipt, sufficiency and
adequacy of which is hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
1. Representations. Shareholder and State Bank represent
and warrant to each other as follows: (i) it has full corporate
power and authority to make, enter into and carry out the terms
of this Agreement; and (ii) this Agreement has been duly
authorized, executed and delivered by it and constitutes its
legal, valid and binding obligation enforceable against it in
accordance with its terms, except as may be limited by
bankruptcy, insolvency, moratorium, reorganization,
conservatorship or similar laws affecting the rights of creditors
of bank holding companies and insured depository institutions
generally and the availability of equitable remedies.
2. Acquisitions of Voting Securities. Shareholder shall
not, and shall not permit any corporation or other entity
controlled by Shareholder (collectively, the "Shareholder Group")
to, directly or indirectly, acquire "beneficial ownership" (as
such term is defined in Rule 13d-3 under the Exchange Act) of any
securities of any class of capital stock of State Bank which are
then entitled to vote generally in the election of directors
(regardless of any contractual restriction regarding voting)
("Voting Securities") (except by way of the Consolidation, or
stock dividends or other distributions or offerings made
available to holders of Voting Securities generally) if the
effect of such acquisition would be to increase the aggregate
voting power in the election of directors of all Voting
Securities then beneficially owned by all members of the
Shareholder Group to 25% or more of the combined voting power of
all Voting Securities then outstanding; provided that the
Shareholder Group may acquire Voting Securities without
<PAGE>
regard to the foregoing limitation if any of the following events
shall occur: (a) a tender or exchange offer is made by any
person or 13D Group (as hereinafter defined) (other than an
affiliate of, or any person acting in concert with, any member of
the Shareholder Group) to acquire Voting Securities which, if
added to the Voting Securities (if any) already owned by such
person or 13D Group, would represent 25% or more of the total
combined voting power of all Voting Securities then outstanding,
or (b) it is publicly disclosed or Shareholder otherwise learns
that Voting Securities representing 25% or more of the total
combined voting power of all Voting Securities then outstanding
have been acquired subsequent to the date hereof, or are proposed
(in a public announcement or filing) to be acquired subsequent to
such date by any person or 13D Group (other than an affiliate of,
or any person acting in concert with, any member of the
Shareholder Group); as used herein, the term "13D Group" shall
mean any group of persons formed for the purpose of acquiring,
holding, voting or disposing of Voting Securities which would be
required under Section 335.405(b) of the regulations promulgated
under the FDIA to file a statement on Form F-11 with the FDIC.
3. Agreement to Vote. Shareholder shall take all such
action as may be required so that all Voting Securities owned by
any member of the Shareholder Group are voted at every meeting of
the shareholders of State Bank and at every adjournment thereof,
and by written consent without a meeting, as follows: (a) with
respect to that number of such Voting Securities that represents
up to 5.0% of the total combined voting power of all Voting
Securities then outstanding, in such manner as it or they, as
applicable, see fit and (b) with respect to the remainder of such
Voting Securities, in the same proportion as the votes cast by
all other holders of Voting Securities who are not members of the
Shareholder Group.
4. No Voting Trusts. Shareholder shall not, and shall not
permit any member of the Shareholder Group to, deposit any Voting
Securities in a voting trust or subject any Voting Securities to
any arrangement or agreement with respect to the voting of such
Voting Securities, other than agreements entered into with State
Bank.
5. No Proxy Solicitations, Etc. Shareholder shall not,
and shall not permit any member of the Shareholder Group to,
(a) solicit proxies or become a "participant" in a "solicitation"
(as such terms are defined in Regulation 14A under the Exchange
Act) in opposition to or competition with the recommendation of
the majority of the directors of State Bank with respect to any
matter; (b) join a partnership,
<PAGE>
limited partnership, syndicate or other 13D Group (other than the
Shareholder Group) for the purpose of acquiring, holding, voting
or disposing of Voting Securities; (c) initiate or propose any
shareholder proposals for submission to a vote of shareholders
with respect to State Bank or propose any person for election to
the Board of Directors of State Bank; (d) initiate any
communication with any customer or supplier of State Bank
regarding matters relating to State Bank with a view towards
interfering with or otherwise adversely affecting the
relationship between State Bank and any such customer or
supplier; (e) otherwise seek to control the management or
policies of State Bank, including, without limitation, taking any
action to seek to obtain representation on the Board of Directors
of State Bank; (f) disclose to any third party or make any filing
with the FDIC or any other regulatory authority disclosing any
intention, plan or arrangement inconsistent with the foregoing;
(g) enter into any discussions, negotiations, arrangements or
understandings with any third party with respect to any of the
foregoing; or (i) request State Bank (or any of its officers,
directors, representatives, employees, attorneys, advisors,
agents, affiliates or associates) to waive, amend or modify in
any material respect any restrictions contained in these
Sections 2 through 6 hereof (or to waive, amend or modify this
clause (i)), if such request must be or is disclosed by the
Shareholder Group to any third party or in any filing with the
FDIC or any other regulatory authority or if State Bank might
reasonably be required to publicly disclose such request.
6. Transfers.
(a) Shareholder shall not, and shall not permit any
member of the Shareholder Group to, directly or indirectly,
offer, sell, pledge, encumber, dispose of, or otherwise transfer
(a "Transfer") any Voting Securities, except
(i) in accordance with the provisions of
Section 7 hereof;
(ii) in "brokers' transactions" (as defined in
Section 4(4) of and Rule 144 under the Securities Act)
provided that no more than 50,000 shares may be transferred
in such transactions during the twelve-month period
following the Closing Date;
(iii) additional blocks of Voting Securities may be
Transferred with the prior written consent of
<PAGE>
State Bank, which consent shall not be unreasonably withheld; and
(iv) in connection with any merger, consolidation,
reclassification, reorganization or similar transaction
involving State Bank;
provided, however, that with respect to a proposed Transfer
pursuant to clause (iii) above, no such Transfer may be made to
any person or entity if, as a result of such Transfer, such
person or entity, together with such person's or entity's
affiliates and associates, would beneficially own Voting
Securities representing more than 5% of the total voting power of
all then outstanding Voting Securities unless the transferee
agrees in writing on behalf of itself and all corporations and
other entities under its control to be bound by the terms of
Sections 2 through 6 of this Agreement as if such transferee, and
the corporations and other entities controlled by such
transferee, were the Shareholder and the members of the
Shareholder Group, referred to therein. Notwithstanding the
foregoing, Voting Securities may be Transferred to another member
of the Shareholder Group provided such member agrees in writing
to be bound by the terms of this Agreement. Should any member of
the Shareholder Group that beneficially owns Voting Securities
cease to be a member of the Shareholder Group, such Voting
Securities shall be immediately transferred to a corporation or
entity that is a member of the Shareholder Group.
(b) Any Transfer of Voting Securities in violation of
this Agreement shall be void and State Bank shall be entitled to
instruct its transfer agent not to record any such Transfer on
the books of State Bank.
7. Rights with Respect to Public Offerings.
(a) Definitions. As used in this Section 7:
(i) The term "Subject Securities" means (A) the
Shares, and (B) any shares of State Bank Common Stock issued
as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a
dividend or other distribution with respect to, or in
exchange for or in replacement of, such Shares, excluding in
all cases, however, any Subject Securities sold by a person
in a transaction in which the rights under this Section 7
are not assigned or sold to or through a broker or dealer or
underwriter in a public distribution or a public securities
transaction; and
<PAGE>
(ii) The term "Holder" means Shareholder and any
subsequent holder of Subject Securities to whom the rights
set forth in this Section 7 have been transferred pursuant
to paragraph (h) hereof;
(b) Requested Underwriting.
(i) In case State Bank shall receive from
Holders, at any time after one year after the date hereof, a
written request that State Bank effect an underwritten
public offering of Subject Securities the aggregate gross
proceeds of which are reasonably expected to exceed
$1,000,000 (the "Offering Amount"), State Bank will:
(A)give written notice of the proposed
underwritten public offering to all other
Holders within seven (7) days after receipt
thereof; and
(B)use its diligent reasonable efforts to
engage an underwriter reasonably satisfactory to
State Bank and Holders and take such other steps
to effect an underwritten public offering of all
or such portion of such Holders' Subject
Securities representing the Offering Amount as
are specified in such request, together with all
or such portion of the Subject Securities of any
Holder or Holders joining in such request as are
specified in a written request received by State
Bank within thirty (30) days after such written
notice is given; provided, that State Bank shall
not be obligated to take any action to engage
such underwriter and effect any such
underwritten public offering pursuant to this
paragraph (b):
(1) In any particular jurisdiction in which
State Bank would be required to execute a general
consent to service of process, to register as a dealer,
or to cause any officer or employee of State Bank to
register as a salesman in effecting such offering;
(2) Within six (6) months immediately
following the consummation of an underwritten public
offering of securities of State Bank;
(3) After State Bank has effected one such
offering pursuant to this paragraph (b);
(4) If State Bank shall furnish to such
Holders a certificate signed by the President of State
Bank stating that in the good faith
<PAGE>
judgment of the Board of Directors it would be seriously
detrimental to State Bank or its shareholders for an underwritten
public offering to be effected in the near future, then State
Bank's obligation to use its best efforts to effect such offering
shall be deferred for a period not to exceed 120 days from the
date of receipt of written request from the Holders; or
(5) If State Bank is unable to obtain the
commitment of an underwriter reasonably satisfactory to
State Bank and Holders to firmly underwrite the
offering.
Subject to the foregoing, State Bank will use its
reasonable efforts to prepare an offering circular covering the
Subject Securities so requested to be offered for sale and obtain
the consent of the California Superintendent of Banking and all
other necessary governmental authorities to such sale within 90
days after receipt of the request or requests of the Holders.
(ii) The offering circular prepared pursuant to a
request of the Holders may include securities of State Bank
being sold for the account of State Bank.
(iii) The right of any Holder to participate in the
offering pursuant to this paragraph (b) shall be conditioned
on such Holder's participation in such underwriting and the
inclusion of such Holder's Subject Securities in the
underwriting to the extent provided herein.
(iv) State Bank shall (together with all Holders
proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected
for such underwriting in the manner set forth above.
Notwithstanding any other provision of this paragraph (b),
if the underwriter advises State Bank in writing that
marketing factors require a limitation of the total number
of shares to be underwritten, then State Bank shall so
advise all Holders of Subject Securities which would
otherwise be underwritten pursuant hereto, and the number of
shares that may be included in the underwriting shall be
allocated fifty percent (50%) to State Bank, or such lesser
percent as is represented by the number of shares State Bank
desires be underwritten, and the remainder among all Holders
thereof in proportion, as nearly as practicable, to the
respective amounts of Subject Securities held by such
Holders. No Subject Securities excluded from the
<PAGE>
underwriting by reason of the underwriter's marketing limitation
shall be included in such underwriting. If any Holder
disapproves of the terms of the underwriting, he may elect to
withdraw therefrom by written notice to State Bank, the
underwriter and the Holders. The Subject Securities so withdrawn
shall also be withdrawn from the offering; provided, however,
that, if by the withdrawal of such Subject Securities a greater
number of Subject Securities held by other Holders may be
included in such underwriting (up to the maximum of any
limitation imposed by the underwriters), then State Bank shall
offer to all Holders who have included Subject Securities in the
underwriting the right to include additional shares in the same
proportion used in determining the underwriter limitation in this
subparagraph (b)(iv).
(c) State Bank Offering.
(i) If at any time, or from time to time,
beginning one year after the date hereof, State Bank shall
determine to conduct a public offering of any State Bank
Common Stock involving sales to thirty-five or more
investors for its own account (other than in a merger or
other reorganization or in connection with any employee
benefit plan), State Bank will:
(A) promptly give to each Holder written
notice thereof (which shall include a list of the
jurisdictions in which State Bank intends to attempt to
sell such securities); and
(B) subject to paragraph (iii) below, use
its best efforts to include in such offering all the
Subject Securities specified in any written request or
requests by any Holder or Holders received by State
Bank within twenty (20) business days after such
written notice is given on the same terms and
conditions as the State Bank Common Stock, if any,
otherwise being sold in such offering.
(ii) The right of any Holder to participate in any
underwritten public offering pursuant to this paragraph (c)
shall be conditioned upon such Holder's participation in the
underwriting and the inclusion of such Holder's Subject
Securities in the underwriting to the extent provided
herein. All Holders proposing to distribute their
securities through such underwriting (together with State
Bank and the other holders distributing their securities
through such underwriting) shall enter into an underwriting
agreement in customary form with the
<PAGE>
underwriter or underwriters selected for such underwriting by
State Bank.
(iii) Notwithstanding any other provision of this
paragraph (c), if the underwriter determines that marketing
factors require a limitation of the number of shares to be
underwritten, the underwriter may limit the amount of
securities to be included in the underwriting by the
Holders. State Bank shall so advise all Holders of Subject
Securities which would otherwise be underwritten pursuant
hereto, and the number of Subject Securities that may be
included in the underwriting shall be reduced and allocated
among all of the Holders, in proportion, as nearly as
practicable, to the amounts of Subject Securities held by
such Holders; provided, however, that the number of Subject
Securities to be included in such underwriting shall not be
reduced below twenty-five percent (25%) of the total number
of securities included in such offering. If in any public
offering under this paragraph (c) that is not underwritten
it will not, in the opinion of State Bank, be feasible to
include all Subject Securities requested to be included in
such offering, the number of Subject Securities that may be
included in the offering shall be reduced and allocated in
the manner described in the preceding sentence subject to
the 25% floor set forth therein. State Bank shall advise
all Holders of Subject Securities which would otherwise be
sold pursuant hereto of any such limitations, and the number
of shares of Subject Securities that may be included in the
offering. If any Holder disapproves of the terms of any
such offering, he may elect to withdraw therefrom by written
notice to State Bank and, if applicable, the underwriter.
If, however, as a result of the withdrawal of such Subject
Securities a greater number of Subject Securities held by
other Holders may be included in such offering (up to the
maximum of any limitation imposed by State Bank or the
underwriters, as applicable), then State Bank shall offer to
all Holders who have included Subject Securities in the
offering the right to include additional shares in the same
proportion used in determining the limitation in this
subparagraph (iii).
(d) Expenses of Offering. All expenses incurred in
connection with any offering pursuant to this Section 7,
including without limitation, all regulatory filing fees,
printing expenses, escrow fees, fees and disbursements of counsel
for State Bank, underwriters' fees, discounts and commissions,
accounting fees and expenses, and expenses of any special audits
incidental to or required by such offering, shall be borne by
State Bank and the selling Holders in proportion to the number of
securities being sold by them in the offering; provided that
State Bank shall not
<PAGE>
be required to pay for any expenses of any underwritten offering
begun pursuant to paragraph (b) hereof if the request therefor is
subsequently withdrawn, unless the Holders agree to forfeit their
rights pursuant to that paragraph (b); provided further that the
Holders may withdraw a request under paragraph (b) hereof if at
the time of such withdrawal the Holders have learned of a
material adverse change in the condition, business or prospects
of State Bank which differs from the information known to the
Holders at the time of their request, in which event the Holders
shall not be required to pay any of the expenses of the offering
and shall retain all rights to require State Bank to conduct an
underwritten public offering of Subject Securities pursuant to
paragraph (b) hereof.
(e) Procedures. If and whenever State Bank is
required by the provisions of this Section 7 to use its
reasonable efforts to effect a public offering of any of the
Subject Securities, State Bank will, as expeditiously as
possible:
(i) Prepare and file with the Superintendent an
offering circular with respect to such securities and use
its reasonable efforts to obtain the consent of the
Superintendent and any other governmental or regulatory
authority to conduct the offering described therein.
(ii) Prepare and file with the Superintendent such
amendments and supplements to such offering circular as may
be necessary.
(iii) Furnish to each Holder and underwriter, if
any, participating in the offering such number of offering
circulars and such other documents as such Holder and
underwriter may reasonably request in order to facilitate
the public sale or other disposition of the Subject
Securities being sold by such Holder and underwriter.
(iv) If applicable, enter into and perform its
obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such
offering, and each Holder participating in such underwriting
shall also enter into and perform its obligations under such
an agreement.
(v) Notify each Holder and underwriter, if any,
of Subject Securities covered by such offering circular at
any time when the offering circular is being circulated of
the happening of any event as a result of which the offering
circular, as then in effect, includes an untrue
<PAGE>
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then
existing.
(vi) Furnish, at the request of any Holder
requesting an underwritten public offering of Subject
Securities pursuant to this Section 7, on the date that such
Subject Securities are delivered to the underwriters for
sale pursuant to this Section 7, (i) an opinion, dated such
date, of the counsel representing State Bank for the
purposes of such offering, in form and substance as is
customarily given to underwriters in an underwritten public
offering, addressed to the underwriters and to the Holders
requesting a public offering of Subject Securities and
(ii) a letter dated such date, from the independent
certified public accountants of State Bank, in form and
substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public
offering, addressed to the underwriters and to the Holders
requesting a public offering of Subject Securities.
(f) Indemnification.
(i) State Bank agrees to indemnify and hold
harmless each Holder of Subject Securities whose Subject
Securities are included in a public offering pursuant
hereto, each of such Holder's partners, officers and
directors, each underwriter of any of the Subject Securities
included in such offering, and each person, if any, who
controls any such Holder or underwriter within the meaning
of the Securities Act or the Exchange Act (hereinafter
collectively referred to as the "Holder-Underwriters"), as
follows:
(A) against any and all loss, liability,
claim (joint or several), damage and expense whatsoever
arising out of any untrue statement or alleged untrue
statement of a material fact contained in the offering
circular (or any amendment thereto), or the omission or
alleged omission therefrom of a material fact required
to be stated therein or necessary to make the
statements therein in the light of the circumstances
under which they were made, not misleading, unless such
untrue statement or omission or such alleged untrue
statement or omission was made in reliance upon and in
strict conformity with written information furnished to
State Bank by any Holder-Underwriter expressly for use
in such offering circular (or any amendment thereto);
<PAGE>
(B) against any and all loss, liability,
claim, damage and expense whatsoever to the extent of
the aggregate amount paid in settlement of any
litigation, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or
omission or any such alleged untrue statement or
omission, if such settlement is effected with the
written consent of State Bank; and
(C) against any and all legal or other
expense whatsoever reasonably incurred in
investigating, preparing or defending against any
litigation, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not
paid under clause (i) or (ii) above, which expenses
under this clause (iii) shall be paid by State Bank as
incurred;
provided, however, that the foregoing indemnity agreement is
subject to the condition that, insofar as it relates to any such
untrue statement, alleged untrue statement, omission or alleged
omission made in the offering circular but eliminated or remedied
in an amended offering circular delivered to such Holder-
Underwriter, such indemnity agreement shall not inure to the
benefit of any underwriter, or any Holder, if a copy of such
amended offering circular was made available to such underwriter
or such Holder and was not furnished to the person or entity
asserting the loss, liability, claim or damage at or prior to the
time the sale to such person or entity was consummated.
In no case shall State Bank be liable under this
indemnity agreement with respect to any loss, liability, claim,
damage or expense with respect to any claim made against any
Holder-Underwriter unless State Bank shall be notified in writing
of the nature of the claim within a reasonable time after the
assertion thereof, if prejudicial to its ability to defend such
action, but failure to so notify State Bank shall not relieve
State Bank from any liability which it may have otherwise than on
account of this indemnity agreement. In case of any such notice,
State Bank shall be entitled to participate at its expense in the
defense, or if it so elects within a reasonable time after
receipt of such notice, to assume the defense of any suit brought
to enforce any such claim; but if it so elects to assume the
defense, such defense shall be conducted by counsel chosen by it
and approved by the Holder-Underwriter or Holder-Underwriters and
other defendant or defendants, if any, in any suit so brought,
which approval shall not be unreasonably withheld. In the event
that State Bank elects
<PAGE>
to assume the defense of any such suit and retain such counsel,
the Holder-Underwriter or Holder-Underwriters and other defendant
or defendants, which may be represented without conflict by one
counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by State Bank, but only if
representation of such Holder-Underwriter and other defendant or
defendants would be inappropriate due to actual or potential
differing interest between such indemnified party and any other
party represented by such counsel in such proceeding.
(ii) Each Holder severally agrees that it will
indemnify and hold harmless State Bank, each officer and
director of State Bank, each person, if any, who controls
State Bank within the meaning of the Securities Act, each
underwriter of Subject Securities included in any offering
pursuant to this Section 7, each person, if any, who
controls such underwriter within the meaning of the
Securities Act, each other Holder, each of such other
Holder's partners, officers and directors, and each person
controlling such other holder within the meaning of the
Securities Act against any and all loss, liability, claim,
damage and expense, up to the amount of the gross proceeds
actually received from the offering by such Holder, to the
extent described in clauses (i)(A) through (i)(C),
inclusive, of this paragraph (f), but only with respect to
statements or omissions, or alleged statements or omissions
made in such offering circular (or any amendment thereto) in
reliance upon and in strict conformity with written
information furnished to State Bank by such Holder expressly
for use in such offering circular (or any amendment
thereto). In case any action shall be brought against State
Bank or any person so indemnified pursuant to the provisions
of this subparagraph (ii) and in respect of which indemnity
may be sought against any Holder, the Holders from whom
indemnity is sought shall have the rights and duties given
to State Bank, and State Bank and the other persons so
indemnified shall have the rights and duties given to the
persons entitled to indemnification by the provisions of
subparagraph (i) of this paragraph (f).
(g) Information by Holder. The Holder or Holders of
Subject Securities included in any offering shall furnish to
State Bank such information regarding such Holder or Holders, and
the distribution proposed by such Holder or Holders, as State
Bank may reasonably request in writing.
(h) Transfer of Rights. The rights granted by State
Bank under paragraphs (b) and (c) hereof may be assigned, in
whole or in part, in writing by any Holder of Subject Securities
or shares convertible into Subject
<PAGE>
Securities to a transferee or assignee of Subject Securities
representing more than 5% of the total combined voting power of
all Voting Securities then outstanding; provided, that such
Transfer is effected in accordance with the provisions of this
Agreement; and provided further, that State Bank is given written
notice by such Holder at the time of or within a reasonable time
after said Transfer, stating the name and address of said
transferee or assignee and identifying the securities with
respect to which such rights are being assigned.
(i) "Market Stand-off" Agreement. Shareholder and
each other member of the Shareholder Group, and each other Holder
of Subject Securities to which the rights under this Section 7
have been assigned, shall, so long as any such person owns more
than 5% of the outstanding Voting Securities of State Bank if
requested by State Bank and an underwriter of State Bank Common
Stock or other securities of State Bank, agree not Transfer any
securities of State Bank held by them during the one hundred
eighty (180) day period from the date of the underwriting
agreement; provided that all Holders holding more than five
percent of the outstanding State Bank Common Stock and all
officers, directors, and employees of State Bank enter into
similar agreements. Such agreement shall be in writing in the
form satisfactory to State Bank and such underwriter. State Bank
may impose stop-transfer instructions with respect to the
securities subject to the foregoing restriction until the end of
said one hundred eighty (180) day period.
8. Covenants of Shareholder Group in Absence of
Regulatory Approval. In addition to rather than in lieu of any
of the other agreements of the parties contained herein,
Shareholder, for itself and for each member of the Shareholder
Group, hereby agrees that, without obtaining the prior written
approval of the FRB and the Superintendent if appropriate,
neither Shareholder nor any member of the Shareholder Group will:
(a) exercise or attempt to exercise a controlling influence over
the management or policies of State Bank; (b) have or seek to
have any employees or representatives serve as an officer, agent
or employee of State Bank; (c) take any action causing State Bank
to become a subsidiary of Shareholder or any member of the
Shareholder Group; (d) acquire or retain any Voting Securities
that would cause the combined interest of Shareholder, each
member of the Shareholder Group and each of their respective
officers, directors, and affiliates, to equal or exceed 25% of
the then outstanding Voting Securities of State Bank; (e) propose
a director or slate of directors in opposition to a nominee or
slate of nominees proposed by the management or board of
directors of State Bank; (f) attempt to
<PAGE>
influence the dividend policies or practices of State Bank;
(g) solicit or participate in soliciting proxies with respect to
any matter presented to the shareholders of State Bank;
(h) attempt to influence the loan and credit decisions or
policies of State Bank, the pricing of services, any personnel
decisions, the location of any offices, branching, the hours of
operation, or similar activities of State Bank; (i) dispose or
threaten to dispose of any Voting Securities in any matter as a
condition of specific action or inaction by State Bank; (j) enter
into any other banking or non-banking transactions with State
Bank, except that deposit accounts may be established and
maintained with State Bank provided that the aggregate balances
of all such accounts do not exceed $500,000 and that the accounts
are maintained on substantially the same terms as those
prevailing for comparable accounts of persons unaffiliated with
State Bank; or (k) seek or accept representation on the Board of
Directors of State Bank.
9. Specific Performance. Each party hereto acknowledges
that it will be impossible to measure in money the damage to the
other party if a party hereto fails to comply with any of the
obligations imposed by this Agreement, that every such obligation
is material and that, in the event of any such failure, the other
party will not have an adequate remedy at law or damages, and
accordingly, each party hereto agrees that injunctive relief or
other equitable remedy, in addition to remedies at law or
damages, is the appropriate remedy for any such failure.
10. Successors and Assigns. Except as otherwise provided
herein, this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors
and assigns and shall not be assignable without the written
consent of all the other parties hereto.
11. Entire Agreement. This Agreement supersedes all prior
arrangements, written or oral, among the parties hereto with
respect to the subject matter hereof and contains the entire
agreement among the parties with respect to the subject matter
hereof. This Agreement may not be amended, supplemented or
modified and no provisions hereof may be modified or waived,
except expressly by an instrument in writing signed by all the
parties hereto. No waiver of any provisions hereof by any party
shall be deemed a waiver by any such party nor shall any such
waiver be deemed a continuing waiver of any provision hereof by
such party.
12. Effectiveness and Termination. This Agreement shall
become effective upon the date of consummation of the
<PAGE>
Consolidation and, except as otherwise provided herein, shall
terminate as to every member of the Shareholder Group on the date
the Shareholder Group owns of record and beneficially Voting
Securities representing 5% or less of the total combined voting
power of all Voting Securities then outstanding, and as to each
other shareholder party hereto, on the date such shareholder owns
of record and beneficially Voting Securities representing 5% or
less of the total combined voting power of all Voting Securities
then outstanding.
13. Miscellaneous.
(a) This Agreement shall be deemed a contract made
under, and for all purposes shall be construed in accordance with
the laws of, the State of California without regard to the
principles of conflicts of laws thereof.
(b) Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or
enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall
be interpreted to be only so broad as is enforceable.
(c) This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but
all of which together shall constitute one and the same
instrument.
(d) All Section headings herein are for convenience of
reference only and are not part of this Agreement and no
construction or reference shall be derived therefrom.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed
and delivered this Agreement as of the date first written above.
STATE BANK:<PAGE>
BUSINESS & PROFESSIONAL BANK, a
California state-chartered bank
By: __________________________
Name: __________________________
Title: __________________________
SHAREHOLDER:<PAGE>
WEST COAST BANCORP, a California
corporation
By: __________________________
Name: __________________________
Title: __________________________
<PAGE>
<PAGE>
Exhibit F
FORM OF OPINION OF MANATT, PHELPS & PHILLIPS
Based upon and subject to the foregoing, we are of the
opinion that:
(a) Seller is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
California, and is a registered bank holding company pursuant to
12 U.S.C. section 1841 et seq.
(b) Seller has the corporate power and authority to
execute and deliver the Documents and to perform its obligations
thereunder.
(c) Bank is a national banking association, duly
organized, validly existing and in good standing under 12 U.S.C.
section 21 et seq. Bank's deposit accounts are insured by the
Bank Insurance Fund of the FDIC to the fullest extent permitted
under Applicable Law.
(d) Bank has the corporate power and authority to
execute and deliver the Documents and to perform its obligations
thereunder.
(e) The Documents have been duly authorized, executed
and delivered by Seller and Bank, as applicable, and constitute
the valid and binding obligations of Seller and Bank, as
applicable, enforceable against each of them in accordance with
their respective terms, except as may be limited by bankruptcy,
insolvency, moratorium, reorganization, conservatorship or
similar laws affecting the rights of creditors of bank holding
companies or insured depository institutions generally and by the
availability of equitable remedies.
(f) The execution, delivery and performance of the
Documents by Seller and Bank will not (i) violate any provision
of the Articles of Incorporation or Bylaws of Seller or the
Articles of Association or Bylaws of Bank, or (ii) except as set
forth in the opinion, violate or result in the breach of any
term, condition or provision of, or constitute a default under
(upon the giving of notice, the lapse of time or otherwise), or
give rise to any right of termination, cancellation or
acceleration with respect to, or result in the creation of any
lien, charge or encumbrance upon any property or assets of Seller
or Bank pursuant to, or otherwise require the consent of any
Person under, any material agreement known to us to which Seller
or Bank is a party.
<PAGE>
(g) All registrations with, consents and approvals of,
notices to, and other actions by, any Governmental Authority
required on the part of Seller or Bank, including, without
limitation, the Regulatory Approvals, for the execution, delivery
and performance by Seller and Bank of the Documents have, as
appropriate, been made, obtained or given.
(h) The authorized capital stock of Bank consists of
2,000,000 shares of Bank Common Stock and 1,000,000 shares of
preferred stock, $10.00 par value per share. All of the issued
and outstanding shares of Bank Common Stock have been duly
authorized and validly issued, are fully paid and nonassessable
(other than as provided in 12 U.S.C. section 55), and were not
issued in violation of any preemptive rights. To the best of our
knowledge, there are no outstanding or authorized subscriptions,
options, calls, rights, warrants, convertible securities or other
agreements or commitments obligating Bank to issue, deliver or
sell, or cause to be issued, delivered or sold, any additional
shares of capital stock or other securities of Bank, or
obligating Bank to grant, extend or enter into any subscription,
option, right, warrant, convertible security or other similar
agreement or commitment. To the best of our knowledge, there are
no outstanding contractual obligations of Bank to repurchase,
redeem or otherwise acquire any outstanding shares of Bank Common
Stock and there are no outstanding stock appreciation rights
granted by Bank.
(i) Assuming due authorization and execution of the
Plan of Consolidation by Buyer and MergerSub, upon the filing of
the Plan of Consolidation with the OCC in accordance with the
Agreement: (i) the Consolidation will be effective in accordance
with the Agreement, the Plan of Consolidation and 12 U.S.C.
section 215; (ii) each share of stock of MergerSub issued and
outstanding immediately prior to the Effective Time will be
converted as provided in Section 1.1(ii) of the Agreement; and
(iii) each share of Bank Common Stock issued and outstanding
immediately prior to the Effective Time will be converted as
provided in Section 1.1(iii) of the Agreement, subject to
Sections 1.3 and 1.4 thereof.
<PAGE>
<PAGE>
Exhibit G
FORM OF OPINION OF ORRICK, HERRINGTON & SUTCLIFFE
The Offering Circular/Joint Proxy Statement and any
amendments or supplements thereto (except for the financial
statements and schedules and other financial and statistical data
contained therein, as to which we express no opinion) comply as
to form in all material respects with the provisions of
Regulation 14A under the Exchange Act applicable to a proxy
statement of Bank.
<PAGE>
<PAGE>
Exhibit H
VOTING AGREEMENT
This Voting Agreement (this "Agreement") dated as of
June 22, 1994, is made by and among Business & Professional Bank,
a California state-chartered bank ("Buyer"), ________________,
the undersigned shareholder ("Shareholder") of Sacramento First
National Bank, a national banking association ("Bank"), and Bank.
WHEREAS, Shareholder is the record and beneficial owner
and has the power to vote the respective number of shares of Bank
common stock, $5.00 par value (the "Common Stock"), set forth on
Schedule A hereto (collectively, the "Shares"), and
WHEREAS, Shareholder desires that the Bank and the
Buyer enter into a Plan and Agreement of Consolidation and Merger
(the "Consolidation Agreement") pursuant to which (i) Buyer will
form a California state-chartered bank as a wholly-owned
subsidiary of Buyer ("MergerSub"), and (ii) MergerSub will be
consolidated with Bank under Bank's national banking association
charter (the "Consolidation").
WHEREAS, Shareholder is executing this Agreement as an
inducement to Buyer to enter into and execute the Consolidation
Agreement.
NOW THEREFORE, in consideration of the execution and
delivery by Buyer of the Consolidation Agreement and the mutual
covenants, conditions and agreements contained herein and therein
and in that certain Irrevocable Proxy of even date herewith made
by and among the parties hereto which is attached hereto as
Exhibit A (the "Irrevocable Proxy") the parties agree as follows:
1. At any meeting of Bank shareholders called to vote
upon the Consolidation and the Consolidation Agreement or at any
adjournment thereof or in any other circumstances upon which such
vote or other approval of the Consolidation or the Consolidation
Agreement is sought, Shareholder shall vote (or cause to be
voted) the Shares set forth opposite his or her respective name
in Schedule A hereto in favor of the Consolidation and the
Consolidation Agreement.
2. At any meeting of Bank shareholders or at any
adjournment thereof or in any other circumstance upon which their
vote or approval is sought, Shareholder shall vote (or cause to
be voted) such Shares against any proposal or transaction which
would in any manner impede, frustrate,
<PAGE>
prevent or nullify the Consolidation, the Consolidation Agreement
or any of the other transactions contemplated by the
Consolidation Agreement.
3. During the period commencing on the date of this
Agreement and ending on the earlier of either (a) the date that
the Consolidation Agreement terminates in accordance with
Article VII thereof or (b) the Effective Time (as such term is
defined in the Consolidation Agreement), Shareholder shall not
transfer (which term shall include, without limitation, for the
purposes of this Agreement, any sale, gift or pledge) any or all
of such Shareholder's Shares or any interest therein, except
pursuant to the Consolidation, unless the transferee agrees with
Buyer that such transferee has acquired such Shares or interest
subject to the Irrevocable Proxy.
4. Shareholder represents and warrants to Buyer that
he or she is the beneficial and record owner of, and has the
power and authority to dispose of, and the unrestricted right to
vote, the number of shares of Common Stock set forth opposite his
or her name in Schedule A hereto.
5. Shareholder hereby agrees that if the shareholders
of Bank vote to approve the Consolidation and Consolidation
Agreement, Shareholder's Shares will, pursuant to the terms of
the Consolidation Agreement, be exchanged for the consideration
provided in the Consolidation Agreement. Shareholder hereby
waives any rights of appraisal, or rights to dissent from the
Consolidation, that he or she may have.
6. Bank represents and warrants to Buyer and
Shareholder that (a) it has the corporate power and authority to
enter into this Agreement; and (b) the execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all
necessary corporate action in respect thereof on the part of
Bank.
7. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given
(and shall be deemed to have been duly received if so given) by
delivery, by cable, telecopier, telegram or telex, or by
registered or certified mail, postage prepaid, return receipt
requested, to the respective parties as follows:
If to Shareholder, to the address set forth on Schedule A hereto.
<PAGE>
If to Buyer:
Business & Professional Bank
120 West Court Street
P.O. Box 1050
Woodland, CA 95776
Att'n: Michael F. Burkart, President
Tel: (916) 661-1333
Fax: (916) 661-3069
With a copy to:
Morrison & Foerster
345 California Street
San Francisco, California 94104
Att'n: Karen L. Masterson, Esq.
Tel: (415) 677-7000
Fax: (415) 677-7522
If to Bank:
Sacramento First National Bank
1440 Ethan Way
Sacramento, CA 95825
Att'n: John McGrath, President
Tel: (916) 920-4111
Fax: (916) 920-8103
With a copy to:
Orrick, Herrington & Sutcliffe
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, California 94111
Att'n: Richard V. Smith, Esq.
Tel: (415) 773-5830
Fax: (415) 773-4276
or to such other address as any of the foregoing parties may have
furnished to the others in writing in accordance herewith, except
that notices of change of address shall only be effective upon
receipt.
8. Shareholder agrees that this Agreement and the
obligations hereunder shall attach to the Shares and shall be
binding upon any person or entity to whom legal or beneficial
ownership of the Shares shall pass, whether by operation of law
or otherwise, including without limitation his or her respective
heirs, guardians, administrators or successors. In the event of
any stock split, stock
<PAGE>
dividend, merger, reorganization, recapitalization or other
change in the capital structure of Bank affecting the Common
Stock, or acquisition of additional shares of Common Stock by
Shareholder, this Agreement and the obligations hereunder shall
attach to any additional shares of Common Stock or other
securities issued to or acquired by Shareholder.
9. Bank and Shareholder hereby agree that Shareholder
will tender to the Bank any and all certificates representing the
Shares and the Bank will inscribe upon those certificates the
following legend: "The shares of Common Stock, $5.00 par value,
of Sacramento First National Bank represented by this certificate
are subject to an Irrevocable Proxy dated as of June 22, 1994 and
to a Voting Agreement of even date therewith. Copies of such
Irrevocable Proxy and Voting Agreement may be obtained at the
principal executive offices of Sacramento First National Bank."
10. No person executing this Agreement who is or
becomes during the term hereof a director or officer of the Bank
makes any agreement or understanding herein in his or her
capacity as such director or officer. Shareholder signs solely
in his or her capacity as owner or holder of the power to vote
Shares.
11. Each of the provisions of this Agreement is
subject to compliance with applicable regulatory conditions.
12. This Agreement may be executed in two or more
counterparts, each of which shall be considered an original but
all of which together shall constitute the same instrument.
13. This Agreement, and all rights and obligations of
the parties hereunder, shall terminate upon the first to occur of
(i) the Effective Time, as defined in the Consolidation
Agreement, or (ii) the date upon which the Consolidation
Agreement is terminated in accordance with Article VII thereof.
14. This Agreement is intended as an exclusive
statement of the terms of the agreement among the parties with
respect to its subject matter, supersedes all prior agreements
with respect thereto and cannot be changed or terminated except
by written instrument executed by the party or parties against
whom enforcement thereof is sought.
15. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the
<PAGE>
State of California without giving effect to the principles of
conflicts of law thereof.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first set forth above.
<PAGE>
BUSINESS & PROFESSIONAL BANK
By: __________________________
Name: ________________________
Title: _______________________
SACRAMENTO FIRST NATIONAL BANK
By: __________________________
Name: ________________________
Title: _______________________
SHAREHOLDER
Name: _______________________
<PAGE>
<PAGE>
SCHEDULE A
Shares of
Shareholder Common Stock Address
<PAGE>
<PAGE>
EXHIBIT A
IRREVOCABLE PROXY
This irrevocable proxy (this "Irrevocable Proxy") dated
as of June 22, 1994 is made by and among Business & Professional
Bank, a California state-chartered bank ("Buyer"), Sacramento
First National Bank, a national banking association ("Bank"), and
the undersigned shareholder (the "Shareholder") of Bank.
WHEREAS, shareholder is the record and beneficial owner
and has the power to vote the number of shares of Bank's common
stock, $5.00 par value (the "Common Stock"), set forth on
Schedule A hereto (collectively, the "Shares"), and
WHEREAS, shareholder desires that the Bank and Buyer
enter into a Plan and Agreement of Consolidation and Merger (the
"Consolidation Agreement") with respect to the consolidation of
Bank with a wholly-owned subsidiary of Buyer ("MergerSub"), and
WHEREAS, the parties are executing this Irrevocable
Proxy pursuant to the Voting Agreement (the "Voting Agreement"),
dated the date hereof, among the parties hereto, to induce Buyer
to enter into the Consolidation Agreement, and
NOW, THEREFORE, in consideration of the execution and
delivery by Buyer of the Consolidation Agreement and the mutual
covenants, conditions and agreements contained herein and
therein, and in that certain Voting Agreement of even date
herewith made by and among the parties hereto (the "Voting
Agreement"), the parties agree as follows:
<PAGE>
AGREEMENT
1. Grant of Irrevocable Proxy;
Appointment of Proxy.
Shareholder hereby irrevocably grants to Buyer and
appoints Buyer (with full power of substitution) his or her proxy
to vote the Shares:
(a) In favor of (i) the Consolidation, (ii) the
execution and delivery of the Consolidation Agreement
and approval of the principal terms thereof, and
(iii) each of the other transactions contemplated by
the Consolidation Agreement; and
(b) Against any proposal or transaction which
would in any manner impede, frustrate, prevent or
nullify the Consolidation, the Consolidation Agreement
or any of the other transactions contemplated by the
Consolidation Agreement.
Shareholder represents that any proxies heretofore
given in respect of the Shares are not irrevocable; and that any
such proxies are hereby revoked.
2. Irrevocability.
Shareholder hereby affirms that this Irrevocable Proxy
is given in connection with the execution of the Consolidation
Agreement and the Voting Agreement, and that this Irrevocable
Proxy is given to secure the performance of the duties of
Shareholder under the Voting Agreement. Shareholder hereby
further affirms that this Irrevocable Proxy is coupled with an
interest and may under no circumstances be revoked. Shareholder
hereby ratifies and confirms all that this Irrevocable Proxy may
lawfully do or cause to be done by virtue hereof. This
Irrevocable Proxy is executed and intended to be irrevocable in
accordance with the provisions of Section 705(e) of the
California Corporations Code.
3. Termination.
This Irrevocable Proxy shall terminate upon the first
to occur of (a) the Effective Time, as defined in the
Consolidation Agreement, or (b) the date upon which the
Consolidation Agreement is terminated in accordance with
Article VII thereof.
<PAGE>
4. Further Actions.
Shareholder agrees to perform such further acts and
execute such further documents as may reasonably be required to
vest in Buyer the power to vote the Shares as contemplated by the
Irrevocable Proxy granted hereby.
5. Governing Law.
This Irrevocable Proxy shall be governed by and
construed and enforced in accordance with the laws of the State
of California without giving effect to the principles of
conflicts of law thereof.
6. Amendment.
Subject to applicable law, this Irrevocable Proxy may
be amended or modified in whole or in part only by an agreement
in writing executed by Bank, Buyer and shareholder.
7. Regulatory Conditions.
Each of the provisions of this Irrevocable Proxy is
subject to compliance with any applicable regulatory conditions,
including, without limitation, to receipt of any necessary
approvals.
8. Binding Effect.
Shareholder agrees that this Irrevocable Proxy and the
obligations hereunder shall attach to the Shares and shall be
binding upon any person or entity to whom legal or beneficial
ownership of the Shares shall pass, whether by operation of law
or otherwise, including without limitation the heirs, executor,
guardian, administrator or successors of Shareholder. In the
event of any stock split, stock dividend, merger, reorganization,
recapitalization or other change in the capital structure of Bank
affecting the Shares, or acquisition of additional shares of
Common Stock by Shareholder, this Irrevocable Proxy and the
obligations hereunder shall attach to any additional shares of
Common Stock or other securities issued to or acquired by
Shareholder.
9. Counterparts.
This proxy may be executed in counterparts and each
such executed copy shall be deemed an original.
<PAGE>
10. Definitions.
Terms used herein and not defined shall have the
meanings assigned to such terms in the Voting Agreement.
IN WITNESS WHEREOF, the undersigned have executed this
Irrevocable Proxy as of the date first set forth above.
<PAGE>
BUSINESS & PROFESSIONAL BANK
By: __________________________
Name: ________________________
Title: _______________________
SACRAMENTO FIRST NATIONAL BANK
By: __________________________
Name: _______________________
Title: _______________________
SHAREHOLDER
Name: _______________________
<PAGE>
<PAGE>
SCHEDULE A
Shares of
Shareholder Common Stock Address
<PAGE>
<PAGE>
EXHIBIT I
EMPLOYMENT AGREEMENT
This Agreement, dated as of June 22, 1994, is between Business &
Professional Bank ("Employer") and John F. McGrath ("Employee").
Capitalized terms used but not defined herein shall have the
respective meanings given them in that certain Plan and Agreement
of Consolidation and Merger dated the date hereof by and among
Employer, Sacramento First National Bank and West Coast Bancorp
(the "Acquisition Agreement"). Employer and Employee agree to
the following terms and conditions of employment:
1. Effective Date. This Agreement shall become
effective as of the Closing Date as defined in the Acquisition
Agreement. In the event that the Acquisition Agreement is
terminated in accordance with its terms, this Agreement shall be
null and void.
2.Period of Employment. Employer shall employ Employee from the Closing
Date through the second anniversary of the Closing Date, unless
Employee is terminated sooner in accordance with Section 5 below.
3.Position and Responsibilities.
(a)Position. Employee accepts employment with Employer as Senior
Executive Vice President and Chief Administrative Officer and
shall perform all services appropriate to that position.
Employee's responsibilities shall include loan portfolio
management, credit administration, and marketing, including
product management, promotion (client development, advertising,
officer calling program, direct mail, seminars, etc.), pricing,
managing distribution channels for products and services, and
defining markets targeted and served. Employee shall also
recruit and select a qualified individual (in concert with the
President) to serve as Employer's Credit Administrator, who will
be responsible for the credit approval process, credit quality,
special assets, and loan portfolio composition. Employee shall
devote his best efforts and full-time attention to the
performance of his duties. He shall report to the President and
Chief Executive Officer of Employer.
(b)Board of Directors. Employee shall serve during the period of
his employment as a member of Employer's Board of Directors. It is
understood and agreed that Employee
<PAGE>
will not receive any additional compensation or fees for such
service.
<PAGE>
(c)Other Activity. Except upon the prior written consent of
Employer, Employee (during his employment with Employer) shall not
(i) accept any other employment; or (ii) engage, directly or
indirectly, in any other business, commercial, or professional
activity (whether or not pursued for pecuniary advantage) that is
or may be competitive with Employer, that might create a conflict
of interest with Employer, or that otherwise might interfere with
Employee's duties or the business of Employer, or any affiliate
of Employer.
4.Compensation and Benefits.
(a)Compensation. Employer shall pay Employee a salary at the
rate of One Hundred Thirty Five Thousand Dollars ($135,000) per year, in
accordance with Employer's regularly established policies. The
Board of Directors of Employer may, in its sole discretion,
direct that Employee also be paid an annual bonus by Employer.
(b)Benefits. Employee shall be entitled to receive Employer's
standard group medical insurance, life insurance, vacation (four weeks per
year), and sick pay (one day per month) in accordance with
applicable benefit plans and Employer's policies, as they may be
amended in Employer's sole discretion. Employer shall assume
Employee's currently accrued vacation and sick pay, it being
understood and agreed that Employer will not provide compensation
in lieu of said accrued vacation time or sick pay. Employer will
continue to pay the premiums on Employee's existing life
insurance policy in the approximate amount of $300,000, subject
to the understanding that the annual premiums shall not exceed
$4,000. Employer shall pay Employee's monthly dues for his
existing memberships at the Del Paso Country Club and the Sutter
Club.
(c)Vehicle. Employee shall be entitled to the exclusive use of an
Employer provided vehicle, and Employer shall pay for normal
maintenance, fuel, and insurance coverage. This shall include
Employee's currently leased Jaguar until the existing closed-end
vehicle lease expires in February of 1995, at which time the
President, in his sole discretion, will determine whether to
continue to provide this vehicle or to replace it with another
vehicle.
(d)Expenses. Employer shall reimburse Employee for reasonable
travel and other business expenses incurred by Employee in the normal
performance of his duties, in
<PAGE>
accordance with Employer's policies, as they may be amended in
Employer's sole discretion.
(e)Stock Options. Employee shall be eligible to participate in
shareholder-approved stock option plans made available to senior
management to the extent determined by the Board of Directors in
its sole discretion. Options granted will be evidenced by a
separate written agreement.
5.Termination of Employment.
(a)By Employer or Employee Not For Cause. At any time, Employer
or Employee may terminate Employee's employment for any reason,
without Cause, as defined below, by providing written notice to
the other party ("Termination Notice"). Such termination shall
become effective six (6) months after the date of the Termination
Notice. For the six-month period subsequent to the date of the
Termination Notice ("Leave Period"), Employer shall place
Employee on a leave of absence with full base salary, and
Employer shall continue to provide Employee the group medical and
life insurance benefits in effect as of the date of the
Termination Notice. All other benefits specified under section 4
of this Agreement shall terminate as of the date of the
Termination Notice. Employer may dismiss Employee without Cause
notwithstanding anything to the contrary contained in or arising
from any statements, policies, or practices of Employer relating
to the employment, discipline, or termination of its employees.
For the six (6) month period after the conclusion of the Leave
Period ("Severance Period"), Employer shall (i) provide Employee
monthly severance payments, less deductions required by law, at
Employee's then monthly salary rate in effect as of the date of
the Termination Notice, and (ii) pay the premiums for Employee's
life insurance benefits and COBRA medical coverage. At the
conclusion of the Severance Period, all obligations of Employer
under this Agreement shall cease. Notwithstanding the foregoing,
if Employee is employed by another employer at any time during
the Severance Period, then Employer shall be obligated to pay
Employee monthly severance payments only to the extent that
Employee's monthly salary payments with the subsequent employer
are less than the monthly salary payments that would otherwise
have been due to Employee under this Section 5.1(a).
(b)By Employer for Cause. At any time, and without prior notice,
Employer may terminate Employee for Cause (as defined below). In
such event, Employer shall pay Employee all compensation then due
and owing through the date of termination; thereafter, all of
Employer's obligations under
<PAGE>
this Agreement shall cease. "Cause" shall include, but not be
limited to, willful neglect of assigned duties and
responsibilities, criminal misconduct, wilful and material breach
of this Agreement, disapproval of Employee's appointment as an
officer or director by any applicable regulatory agency, an order
for Employee's removal as an officer or director by any
applicable regulatory agency, death, and, to the extent permitted
by law, unavailability for work due to extended disability as
defined in Employer's existing Employee Handbook. Employer may
dismiss Employee with Cause notwithstanding anything to the
contrary contained in or arising from any statements, policies,
or practices of Employer relating to the employment, discipline,
or termination of its employees. At Employer's option and in its
sole discretion, Employer may elect to make the termination of
Employee under this section 5(b) effective as of any date up to
six (6) months after the date on which written notice of such
termination and election is given Employee. In such event,
Employee shall be placed on leave and provided the compensation
and benefits as specified in section 5(a) for the Leave Period.
At the conclusion of such Leave Period, all obligations of
Employer under this Agreement shall cease.
(c)Termination Obligations. Employee agrees that all property,
including, without limitation, all equipment, tangible
Proprietary Information (as defined below), documents, records,
notes, contracts, and computer-generated materials furnished to
or prepared by Employee incident to his employment belongs to
Employer and shall be returned promptly to Employer upon notice
of termination of Employee's employment. Employee's obligations
under this subsection shall survive the termination of his
employment and the expiration of this Agreement.
(d)Noncompetition. In the event that (i) Employer or Employee
terminates Employee's employment pursuant to section 5(a), above, or
(ii) Employer terminates Employee's employment pursuant to
section 5(b), above, and elects to place Employee on paid leave
as provided therein, then Employee agrees not to accept
employment with a Competing Entity, as defined below, during the
Leave Period. A Competing Entity is any financial institution
that competes directly against the Bank in the geographical area
comprised of Sacramento and Yolo counties and the cities of
Roseville and Dixon. Should Employee accept employment with a
Competing Entity during the Leave Period, Employer shall be
relieved of any obligation to provide compensation or benefits to
Employee during the Leave Period of the Severance Period, without
prejudice to its right to enforce the noncompetition provisions
of this section 5(d).
<PAGE>
6.Proprietary Information. "Proprietary Information" is all information
and any idea pertaining in any manner to the business of Employer
(or any Employer affiliate), its employees, customers,
consultants, or business associates, which was produced by any
employee of Employer in the course of his or her employment or
otherwise produced or acquired by or on behalf of Employer.
Proprietary Information shall include, without limitation, trade
secrets, product ideas, inventions, processes, formulas, data,
know-how, software and other computer programs, copyrightable
material, marketing plans, strategies, sales, financial reports,
forecasts, and customer lists. All Proprietary Information not
generally known outside of Employer's organization, and all
Proprietary Information so known only through improper means,
shall be deemed "Confidential Information." During his
employment by Employer, Employee shall use Proprietary
Information, and shall disclose Confidential Information, only
for the benefit of Employer and as is necessary to perform his
job responsibilities under this Agreement. Following
termination, Employee shall not use any Proprietary Information
and shall not disclose any Confidential Information, except with
the express written consent of Employer. By way of illustration
and not in limitation of the foregoing, following termination,
Employee shall not use any Confidential Information to solicit
Employer's employees or customers or to compete against Employer.
Employee's obligations under this Section shall survive for a
period of six months after the date of any Termination Notice
given pursuant to Section 5(a) above, if applicable, or for a
period of six months after the date of the termination of
Employee's employment pursuant to Section 5(b).
7. Arbitration.
(a)Arbitrable Claims. All disputes between Employee (and his
attorneys,
successors, and assigns) and Employer (and its affiliates,
shareholders, directors, officers, employees, agents, successors,
attorneys, and assigns) of any kind whatsoever, including,
without limitation, all disputes relating in any manner to the
employment or termination of Employee, and all disputes arising
under this Agreement, ("Arbitrable Claims") shall be resolved by
arbitration. All persons and entities specified in the preceding
sentence (other than Employer and Employee) shall be considered
third-party beneficiaries of the rights and obligations created
by this Section on Arbitration. Arbitrable Claims shall include,
but are not limited to, contract (express or implied) and tort
claims of all kinds, as well as all claims based on any federal,
state, or local
<PAGE>
law, statute, or regulation, excepting only claims under
applicable workers' compensation law and unemployment insurance
claims. Arbitration shall be final and binding upon the parties
and shall be the exclusive remedy for all Arbitrable Claims. THE
PARTIES HEREBY WAIVE ANY RIGHTS THEY MAY HAVE TO TRIAL BY JURY IN
REGARD TO ARBITRABLE CLAIMS.
(b)Procedure. Arbitration of Arbitrable Claims shall be in
accordance with the Employment Dispute Resolution Rules of the American
Arbitration Association ("AAA Employment Rules"), except as
provided otherwise in this Agreement. In any arbitration, the
burden of proof shall be allocated as provided by applicable law.
Either party may bring an action in court to compel arbitration
under this Agreement and to enforce an arbitration award.
Otherwise, neither party shall initiate or prosecute any lawsuit
or administrative action in any way related to any Arbitrable
Claim. All arbitration hearings under this Agreement shall be
conducted in Sacramento, California. The Federal Arbitration Act
shall govern the interpretation and enforcement of this
Section 7. The losing party, as identified by the arbitrator,
shall pay the fees of the arbitrator and the reasonable out-of-
pocket costs incurred by the other party in connection with the
dispute and the arbitration.
(c)Confidentiality. All proceedings and all documents prepared in
connection with any Arbitrable Claim shall be confidential and,
unless otherwise required by law, the subject matter thereof
shall not be disclosed to any person other than the parties to
the proceedings, their counsel, witnesses and experts, the
arbitrator, and, if involved, the court and court staff.
(d)Continuing Obligations. The rights and obligations of
Employee and Employer set forth in this Section on Arbitration shall survive
the termination of Employee's employment and the expiration of
this Agreement.
8.Notices. Any notice under this Agreement must be in writing and shall
be effective upon delivery by hand, upon facsimile transmission
to the number provided below (if one is provided), or three (3)
business days after deposit in the United States mails, postage
prepaid, certified or registered, and addressed to Employer at
the address below or to Employee at the last known address
maintained in Employee's personnel file. Employee shall be
obligated to notify Employer in writing of any change in his
address.
<PAGE>
Notice of change of address shall be effective only when done in
accordance with this Section.
Employer's Notice Address:
President and Chief Executive Officer
Business and Professional Bank
120 West Court Street
P.O. Box 1050
Woodland, CA 95776
Fax Phone No.: (916)661-3069
Tel Phone No.: (916)661-1333
9.Action by Employer. All actions required or permitted to be taken under
this Agreement by Employer, including, without limitation,
exercise of discretion, consents, waivers, and amendments to this
Agreement, shall be made and authorized only by the President or
by his or her representative specifically authorized to fulfill
these obligations under this Agreement.
10.Integration. This Agreement is intended to be the final, complete, and
exclusive statement of the terms of Employee's employment by
Employer. This Agreement may not be contradicted by evidence of
any prior or contemporaneous statements or agreements. To the
extent that the practices, policies, or procedures of Employer,
now or in the future, apply to Employee and are inconsistent with
the terms of this Agreement, the provisions of this Agreement
shall control.
11.Amendments. This Agreement may not be modified or amended, except by a
writing signed by each of the parties. Failure to exercise any
right under this Agreement shall not constitute a waiver of such
right.
12.Successorship and Assignment. This Agreement shall be binding upon
Employer's successors and assigns. Employee shall not assign any
rights or obligations under this Agreement. Employer may, upon
prior written notice to Employee, assign its rights and
obligations hereunder.
13.Severability. If a court or arbitrator holds any provision of this
Agreement to be invalid, unenforceable, or void, the remainder of
this Agreement shall remain in full force and effect.
<PAGE>
14.Attorneys' Fees. In any legal action, arbitration, or other proceeding
brought to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to recover reasonable
attorneys' fees and costs.
15.Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the State of California.
16.Interpretation. This Agreement shall be construed as a whole, according
to its fair meaning, and not in favor of or against any party.
By way of example and not in limitation, this Agreement shall not
be construed in favor of the party receiving a benefit nor
against the party responsible for any particular language in this
Agreement.
The parties have duly executed this Agreement as of the date
first written above.
______________________________
John F. McGrath
BUSINESS & PROFESSIONAL BANK
______________________________
By: Michael F. Burkart
Its: President
<PAGE>
SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT (this "Agreement") is
entered into as of June 22, 1994, between West Coast Bancorp (the
"Shareholder"), Business & Professional Bank, a California state-
chartered bank ("State Bank"), and such other persons or entities
that may in the future become parties hereto pursuant to the
terms hereof. Capitalized terms used but not defined herein
shall have the meanings ascribed to them in that certain Plan and
Agreement of Consolidation and Merger (the "Plan") dated June 22,
1994 by and among State Bank, Shareholder and Sacramento First
National Bank, a national banking association and an
approximately 94%-owned subsidiary of Shareholder ("National
Bank").
WHEREAS, Shareholder, State Bank and National Bank are
parties to the Plan, which provides for the acquisition by State
Bank of National Bank by means of the consolidation of a newly-
formed subsidiary of State Bank with National Bank and the merger
of the resulting consolidated association with and into State
Bank (the "Acquisition");
WHEREAS, a portion of the consideration payable to the
shareholders of National Bank, including Shareholder, in the
Acquisition consists of shares of the common stock, no par value
per share, of State Bank (the "State Bank Common Stock");
WHEREAS, the acquisition by Shareholder of the Shares
requires the approval of the Federal Reserve Board (the "FRB")
pursuant to Section 3 of the Bank Holding Company Act and the
California Superintendent of Banking (the "Superintendent")
pursuant to Sections 700 et seq. of the California Financial
Code;
WHEREAS, the acquisition by Shareholder of 25% or more
of the issued and outstanding shares of State Bank Common Stock
or the possession by Shareholder of a controlling influence over
the
<PAGE>
management or policies of State Bank would require further such
approvals from the FRB and the Superintendent, would potentially
subject State Bank to regulation as a subsidiary of Shareholder
and would have certain other undesirable effects;
WHEREAS, Shareholder has represented to State Bank that
it is not Shareholder's intention or desire to acquire 25% or
more of the issued and outstanding State Bank Common Stock or
otherwise exercise a controlling influence over the management or
policies of State Bank, and it is not State Bank's intention or
desire that Shareholder so acquire such number of shares of State
Bank Common Stock or such influence;
WHEREAS, in light of the foregoing the parties wish to
set forth certain agreements pertaining to Shareholder's
ownership and certain other entities' ownership of State Bank
Common Stock;
NOW THEREFORE, in consideration of the foregoing
recitals and as an essential condition and inducement to State
Bank's and Shareholder's execution of the Plan, and for other
good and valuable consideration, the receipt, sufficiency and
adequacy of which is hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
1. Representations. Shareholder and State Bank represent
and warrant to each other as follows: (i) it has full corporate
power and authority to make, enter into and carry out the terms
of this Agreement; and (ii) this Agreement has been duly
authorized, executed and delivered by it and constitutes its
legal, valid and binding obligation enforceable against it in
accordance with its terms, except as may be limited by
bankruptcy, insolvency, moratorium, reorganization,
conservatorship or similar laws affecting the rights of creditors
of bank holding companies and insured depository institutions
generally and the availability of equitable remedies.
2. Acquisitions of Voting Securities. Shareholder shall
not, and shall not permit any corporation or other entity
controlled by Shareholder (collectively, the "Shareholder Group")
to, directly or indirectly, acquire "beneficial ownership" (as
such term is defined in Rule 13d-3 under the Exchange Act) of any
securities of any class of capital stock of State Bank which are
then entitled to vote generally in the election of directors
(regardless of any contractual restriction regarding voting)
("Voting Securities") (except by way of the Consolidation, or
stock dividends or other distributions or offerings made
available to holders of Voting Securities generally) if the
effect of such acquisition would be to increase the aggregate
voting power in the election of directors of all Voting
Securities then beneficially owned by all members of the
Shareholder Group to 25% or more of the combined voting power of
all Voting Securities then outstanding; provided that the
Shareholder Group may acquire Voting Securities without regard to
the foregoing limitation if any of the following events shall
occur: (a) a tender or exchange offer is made
<PAGE>
by any person or 13D Group (as hereinafter defined) (other than
an affiliate of, or any person acting in concert with, any member
of the Shareholder Group) to acquire Voting Securities which, if
added to the Voting Securities (if any) already owned by such
person or 13D Group, would represent 25% or more of the total
combined voting power of all Voting Securities then outstanding,
or (b) it is publicly disclosed or Shareholder otherwise learns
that Voting Securities representing 25% or more of the total
combined voting power of all Voting Securities then outstanding
have been acquired subsequent to the date hereof, or are proposed
(in a public announcement or filing) to be acquired subsequent to
such date by any person or 13D Group (other than an affiliate of,
or any person acting in concert with, any member of the
Shareholder Group); as used herein, the term "13D Group" shall
mean any group of persons formed for the purpose of acquiring,
<PAGE>
holding, voting or disposing of Voting Securities which would be
required under Section 335.405(b) of the regulations promulgated
under the FDIA to file a statement on Form F-11 with the FDIC.
3. Agreement to Vote. Shareholder shall take all such
action as may be required so that all Voting Securities owned by
any member of the Shareholder Group are voted at every meeting of
the shareholders of State Bank and at every adjournment thereof,
and by written consent without a meeting, as follows: (a) with
respect to that number of such Voting Securities that represents
up to 5.0% of the total combined voting power of all Voting
Securities then outstanding, in such manner as it or they, as
applicable, see fit and (b) with respect to the remainder of such
Voting Securities, in the same proportion as the votes cast by
all other holders of Voting Securities who are not members of the
Shareholder Group.
4. No Voting Trusts. Shareholder shall not, and shall not
permit any member of the Shareholder Group to, deposit any Voting
Securities in a voting trust or subject any Voting Securities to
any arrangement or agreement with respect to the voting of such
Voting Securities, other than agreements entered into with State
Bank.
5. No Proxy Solicitations, Etc. Shareholder shall not,
and shall not permit any member of the Shareholder Group to,
(a) solicit proxies or become a "participant" in a "solicitation"
(as such terms are defined in Regulation 14A under the Exchange
Act) in opposition to or competition with the recommendation of
the majority of the directors of State Bank with respect to any
matter; (b) join a partnership, limited partnership, syndicate or
other 13D Group (other than the Shareholder Group) for the
purpose of acquiring, holding, voting or disposing of Voting
Securities; (c) initiate or propose any shareholder proposals for
submission to a vote of shareholders with respect to State Bank
or propose any person for election to the Board of Directors of
State Bank; (d) initiate any communication with any customer or
supplier of State Bank regarding matters relating to State Bank
with a view towards interfering with or otherwise adversely
affecting the relationship between State Bank and any such
customer or supplier; (e) otherwise seek to control the
management or policies of State Bank, including, without
limitation, taking any action to seek to obtain representation on
the Board of Directors of State Bank; (f) disclose to any third
party or make any filing with the FDIC or any other regulatory
authority disclosing any intention, plan or arrangement
inconsistent with the foregoing; (g) enter into any discussions,
negotiations, arrangements or understandings with any third party
with respect to any of the foregoing; or (h) request State Bank
(or any of its officers, directors, representatives, employees,
attorneys, advisors, agents, affiliates or associates) to waive,
amend or modify in any material respect any restrictions
contained in these Sections 2 through 6 hereof (or to waive,
amend or modify this clause (i)), if such request must be or is
disclosed by the Shareholder Group to any third party or in any
filing with the FDIC or any other regulatory authority or if
State Bank might reasonably be required to publicly disclose such
request.
6. Transfers.
(a) Shareholder shall not, and shall not permit any
member of the Shareholder Group to, directly or indirectly,
offer, sell, pledge, encumber, dispose of, or otherwise transfer
(a "Transfer") any Voting Securities, except
(i) in accordance with the provisions of
Section 7 hereof;
(ii) in "brokers' transactions" (as defined in
Section 4(4) of and Rule 144 under the Securities Act)
provided that no more than 50,000 shares may be transferred
in such transactions during the twelve-month period
following the Closing Date;
(iii) additional blocks of Voting Securities may be
Transferred with the prior written consent of State Bank,
which consent shall not be unreasonably withheld; and
<PAGE>
(iv) in connection with any merger, consolidation,
reclassification, reorganization or similar transaction
involving State Bank;
provided, however, that with respect to a proposed Transfer
pursuant to clause (iii) above, no such Transfer may be made to
any person or entity if, as a result of such Transfer, such
person or entity, together with such person's or entity's
affiliates and associates, would beneficially own Voting
Securities representing more than 5% of the total voting power of
all then outstanding Voting Securities unless the transferee
agrees in writing on behalf of itself and all corporations and
other entities under its control to be bound by the terms of
Sections 2 through 6 of this Agreement as if such transferee, and
the corporations and other entities controlled by such
transferee, were the Shareholder and the members of the
Shareholder Group, referred to therein. Notwithstanding the
foregoing, Voting Securities may be Transferred to another member
of the Shareholder Group provided such member agrees in writing
to be bound by the terms of this Agreement. Should any member of
the Shareholder Group that beneficially owns Voting Securities
cease to be a member of the Shareholder Group, such Voting
Securities shall be immediately transferred to a corporation or
entity that is a member of the Shareholder Group.
(b) Any Transfer of Voting Securities in violation of
this Agreement shall be void and State Bank shall be entitled to
instruct its transfer agent not to record any such Transfer on
the books of State Bank.
7. Rights with Respect to Public Offerings.
(a) Definitions. As used in this Section 7:
(i) The term "Subject Securities" means (A) the
Shares, and (B) any shares of State Bank Common Stock issued
as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a
dividend or other distribution with respect to, or in
exchange for or in replacement of, such Shares, excluding in
all cases, however, any Subject Securities sold by a person
in a transaction in which the rights under this Section 7
are not assigned or sold to or through a broker or dealer or
underwriter in a public distribution or a public securities
transaction; and
(ii) The term "Holder" means Shareholder and any
subsequent holder of Subject Securities to whom the
<PAGE>
rights set forth in this Section 7 have been transferred pursuant
to paragraph (h) hereof;
(b) Requested Underwriting.
(i) In case State Bank shall receive from
Holders, at any time after one year after the date hereof, a
written request that State Bank effect an underwritten
public offering of Subject Securities the aggregate gross
proceeds of which are reasonably expected to exceed
$1,000,000 (the "Offering Amount"), State Bank will:
(A) give written notice of the proposed
underwritten public offering to all other Holders within
seven (7) days after receipt thereof; and
(B) use its diligent reasonable efforts to engage
an underwriter reasonably satisfactory to State Bank and
Holders and take such other steps to effect an underwritten
public offering of all or such portion of such Holders'
Subject Securities representing the Offering Amount as are
specified in such request, together with all or such portion
of the Subject Securities of any Holder or Holders joining
in such request as are specified in a written request
received by State Bank within thirty (30) days after such
written notice is given; provided, that State Bank shall not
be obligated to take any action to engage such underwriter
and effect any such underwritten public offering pursuant to
this paragraph (b):
(1) In any particular jurisdiction in which
State Bank would be required to execute a general
consent to service of process, to register as a dealer,
or to cause any officer or employee of State Bank to
register as a salesman in effecting such offering;
(2) Within six (6) months immediately
following the consummation of an underwritten public
offering of securities of State Bank;
(3) After State Bank has effected one such
offering pursuant to this paragraph (b);
(4) If State Bank shall furnish to such
Holders a certificate signed by the President of State
Bank stating that in the good faith judgment of the
Board of Directors it would be seriously detrimental to
State Bank or its
<PAGE>
shareholders for an underwritten public offering to be effected
in the near future, then State Bank's obligation to use its best
efforts to effect such offering shall be deferred for a period
not to exceed 120 days from the date of receipt of written
request from the Holders; or
(5) If State Bank is unable to obtain the
commitment of an underwriter reasonably satisfactory to
State Bank and Holders to firmly underwrite the
offering.
Subject to the foregoing, State Bank will use its
reasonable efforts to prepare an offering circular covering the
Subject Securities so requested to be offered for sale and obtain
the consent of the California Superintendent of Banking and all
other necessary governmental authorities to such sale within 90
days after receipt of the request or requests of the Holders.
(ii) The offering circular prepared pursuant to a
request of the Holders may include securities of State Bank
being sold for the account of State Bank.
(iii) The right of any Holder to participate in the
offering pursuant to this paragraph (b) shall be conditioned
on such Holder's participation in such underwriting and the
inclusion of such Holder's Subject Securities in the
underwriting to the extent provided herein.
(iv) State Bank shall (together with all Holders
proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected
for such underwriting in the manner set forth above.
Notwithstanding any other provision of this paragraph (b),
if the underwriter advises State Bank in writing that
marketing factors require a limitation of the total number
of shares to be underwritten, then State Bank shall so
advise all Holders of Subject Securities which would
otherwise be underwritten pursuant hereto, and the number of
shares that may be included in the underwriting shall be
allocated fifty percent (50%) to State Bank, or such lesser
percent as is represented by the number of shares State Bank
desires be underwritten, and the remainder among all Holders
thereof in proportion, as nearly as practicable, to the
respective amounts of Subject Securities held by such
Holders. No Subject Securities excluded from the
underwriting by reason of the underwriter's marketing
limitation shall be included in such underwriting. If any
<PAGE>
Holder disapproves of the terms of the underwriting, he may elect
to withdraw therefrom by written notice to State Bank, the
underwriter and the Holders. The Subject Securities so withdrawn
shall also be withdrawn from the offering; provided, however,
that, if by the withdrawal of such Subject Securities a greater
number of Subject Securities held by other Holders may be
included in such underwriting (up to the maximum of any
limitation imposed by the underwriters), then State Bank shall
offer to all Holders who have included Subject Securities in the
underwriting the right to include additional shares in the same
proportion used in determining the underwriter limitation in this
subparagraph (b)(iv).
(c) State Bank Offering.
(i) If at any time, or from time to time,
beginning one year after the date hereof, State Bank shall
determine to conduct a public offering of any State Bank
Common Stock involving sales to thirty-five or more
investors for its own account (other than in a merger or
other reorganization or in connection with any employee
benefit plan), State Bank will:
(A) promptly give to each Holder written
notice thereof (which shall include a list of the
jurisdictions in which State Bank intends to attempt to
sell such securities); and
(B) subject to paragraph (iii) below, use
its best efforts to include in such offering all the
Subject Securities specified in any written request or
requests by any Holder or Holders received by State
Bank within twenty (20) business days after such
written notice is given on the same terms and
conditions as the State Bank Common Stock, if any,
otherwise being sold in such offering.
(ii) The right of any Holder to participate in any
underwritten public offering pursuant to this paragraph (c)
shall be conditioned upon such Holder's participation in the
underwriting and the inclusion of such Holder's Subject
Securities in the underwriting to the extent provided
herein. All Holders proposing to distribute their
securities through such underwriting (together with State
Bank and the other holders distributing their securities
through such underwriting) shall enter into an underwriting
agreement in customary form with the underwriter or
underwriters selected for such underwriting by State Bank.
<PAGE>
(iii) Notwithstanding any other provision of this
paragraph (c), if the underwriter determines that marketing
factors require a limitation of the number of shares to be
underwritten, the underwriter may limit the amount of
securities to be included in the underwriting by the
Holders. State Bank shall so advise all Holders of Subject
Securities which would otherwise be underwritten pursuant
hereto, and the number of Subject Securities that may be
included in the underwriting shall be reduced and allocated
among all of the Holders, in proportion, as nearly as
practicable, to the amounts of Subject Securities held by
such Holders; provided, however, that the number of Subject
Securities to be included in such underwriting shall not be
reduced below twenty-five percent (25%) of the total number
of securities included in such offering. If in any public
offering under this paragraph (c) that is not underwritten
it will not, in the opinion of State Bank, be feasible to
include all Subject Securities requested to be included in
such offering, the number of Subject Securities that may be
included in the offering shall be reduced and allocated in
the manner described in the preceding sentence subject to
the 25% floor set forth therein. State Bank shall advise
all Holders of Subject Securities which would otherwise be
sold pursuant hereto of any such limitations, and the number
of shares of Subject Securities that may be included in the
offering. If any Holder disapproves of the terms of any
such offering, he may elect to withdraw therefrom by written
notice to State Bank and, if applicable, the underwriter.
If, however, as a result of the withdrawal of such Subject
Securities a greater number of Subject Securities held by
other Holders may be included in such offering (up to the
maximum of any limitation imposed by State Bank or the
underwriters, as applicable), then State Bank shall offer to
all Holders who have included Subject Securities in the
offering the right to include additional shares in the same
proportion used in determining the limitation in this
subparagraph (iii).
(d) Expenses of Offering. All expenses incurred in
connection with any offering pursuant to this Section 7,
including without limitation, all regulatory filing fees,
printing expenses, escrow fees, fees and disbursements of counsel
for State Bank, underwriters' fees, discounts and commissions,
accounting fees and expenses, and expenses of any special audits
incidental to or required by such offering, shall be borne by
State Bank and the selling Holders in proportion to the number of
securities being sold by them in the offering; provided that
State Bank shall not be required to pay for any expenses of any
underwritten offering begun pursuant to paragraph (b) hereof if
the request therefor is subsequently withdrawn, unless the
<PAGE>
Holders agree to forfeit their rights pursuant to that
paragraph (b); provided further that the Holders may withdraw a
request under paragraph (b) hereof if at the time of such
withdrawal the Holders have learned of a material adverse change
in the condition, business or prospects of State Bank which
differs from the information known to the Holders at the time of
their request, in which event the Holders shall not be required
to pay any of the expenses of the offering and shall retain all
rights to require State Bank to conduct an underwritten public
offering of Subject Securities pursuant to paragraph (b) hereof.
(e) Procedures. If and whenever State Bank is
required by the provisions of this Section 7 to use its
reasonable efforts to effect a public offering of any of the
Subject Securities, State Bank will, as expeditiously as
possible:
(i) Prepare and file with the Superintendent an
offering circular with respect to such securities and use
its reasonable efforts to obtain the consent of the
Superintendent and any other governmental or regulatory
authority to conduct the offering described therein.
(ii) Prepare and file with the Superintendent such
amendments and supplements to such offering circular as may
be necessary.
(iii) Furnish to each Holder and underwriter, if
any, participating in the offering such number of offering
circulars and such other documents as such Holder and
underwriter may reasonably request in order to facilitate
the public sale or other disposition of the Subject
Securities being sold by such Holder and underwriter.
(iv) If applicable, enter into and perform its
obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such
offering, and each Holder participating in such underwriting
shall also enter into and perform its obligations under such
an agreement.
(v) Notify each Holder and underwriter, if any,
of Subject Securities covered by such offering circular at
any time when the offering circular is being circulated of
the happening of any event as a result of which the offering
circular, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required
to be stated therein or necessary to make the
<PAGE>
statements therein not misleading in the light of the
circumstances then existing.
(vi) Furnish, at the request of any Holder
requesting an underwritten public offering of Subject
Securities pursuant to this Section 7, on the date that such
Subject Securities are delivered to the underwriters for
sale pursuant to this Section 7, (i) an opinion, dated such
date, of the counsel representing State Bank for the
purposes of such offering, in form and substance as is
customarily given to underwriters in an underwritten public
offering, addressed to the underwriters and to the Holders
requesting a public offering of Subject Securities and
(ii) a letter dated such date, from the independent
certified public accountants of State Bank, in form and
substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public
offering, addressed to the underwriters and to the Holders
requesting a public offering of Subject Securities.
(f) Indemnification.
(i) State Bank agrees to indemnify and hold
harmless each Holder of Subject Securities whose Subject
Securities are included in a public offering pursuant
hereto, each of such Holder's partners, officers and
directors, each underwriter of any of the Subject Securities
included in such offering, and each person, if any, who
controls any such Holder or underwriter within the meaning
of the Securities Act or the Exchange Act (hereinafter
collectively referred to as the "Holder-Underwriters"), as
follows:
(A) against any and all loss, liability,
claim (joint or several), damage and expense whatsoever
arising out of any untrue statement or alleged untrue
statement of a material fact contained in the offering
circular (or any amendment thereto), or the omission or
alleged omission therefrom of a material fact required
to be stated therein or necessary to make the
statements therein in the light of the circumstances
under which they were made, not misleading, unless such
untrue statement or omission or such alleged untrue
statement or omission was made in reliance upon and in
strict conformity with written information furnished to
State Bank by any Holder-Underwriter expressly for use
in such offering circular (or any amendment thereto);
(B) against any and all loss, liability,
claim, damage and expense whatsoever to the extent of
the aggregate amount paid in settlement of any
<PAGE>
litigation, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission or any such
alleged untrue statement or omission, if such settlement is
effected with the written consent of State Bank; and
(C) against any and all legal or other
expense whatsoever reasonably incurred in
investigating, preparing or defending against any
litigation, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not
paid under clause (i) or (ii) above, which expenses
under this clause (iii) shall be paid by State Bank as
incurred;
provided, however, that the foregoing indemnity agreement is
subject to the condition that, insofar as it relates to any such
untrue statement, alleged untrue statement, omission or alleged
omission made in the offering circular but eliminated or remedied
in an amended offering circular delivered to such Holder-
Underwriter, such indemnity agreement shall not inure to the
benefit of any underwriter, or any Holder, if a copy of such
amended offering circular was made available to such underwriter
or such Holder and was not furnished to the person or entity
asserting the loss, liability, claim or damage at or prior to the
time the sale to such person or entity was consummated.
In no case shall State Bank be liable under this
indemnity agreement with respect to any loss, liability, claim,
damage or expense with respect to any claim made against any
Holder-Underwriter unless State Bank shall be notified in writing
of the nature of the claim within a reasonable time after the
assertion thereof, if prejudicial to its ability to defend such
action, but failure to so notify State Bank shall not relieve
State Bank from any liability which it may have otherwise than on
account of this indemnity agreement. In case of any such notice,
State Bank shall be entitled to participate at its expense in the
defense, or if it so elects within a reasonable time after
receipt of such notice, to assume the defense of any suit brought
to enforce any such claim; but if it so elects to assume the
defense, such defense shall be conducted by counsel chosen by it
and approved by the Holder-Underwriter or Holder-Underwriters and
other defendant or defendants, if any, in any suit so brought,
which approval shall not be unreasonably withheld. In the event
that State Bank elects to assume the defense of any such suit and
retain such counsel, the Holder-Underwriter or Holder-
Underwriters and other defendant or defendants, which may be
represented
<PAGE>
without conflict by one counsel) shall have the right to retain
one separate counsel, with the fees and expenses to be paid by
State Bank, but only if representation of such Holder-Underwriter
and other defendant or defendants would be inappropriate due to
actual or potential differing interest between such indemnified
party and any other party represented by such counsel in such
proceeding.
(ii) Each Holder severally agrees that it will
indemnify and hold harmless State Bank, each officer and
director of State Bank, each person, if any, who controls
State Bank within the meaning of the Securities Act, each
underwriter of Subject Securities included in any offering
pursuant to this Section 7, each person, if any, who
controls such underwriter within the meaning of the
Securities Act, each other Holder, each of such other
Holder's partners, officers and directors, and each person
controlling such other holder within the meaning of the
Securities Act against any and all loss, liability, claim,
damage and expense, up to the amount of the gross proceeds
actually received from the offering by such Holder, to the
extent described in clauses (i)(A) through (i)(C),
inclusive, of this paragraph (f), but only with respect to
statements or omissions, or alleged statements or omissions
made in such offering circular (or any amendment thereto) in
reliance upon and in strict conformity with written
information furnished to State Bank by such Holder expressly
for use in such offering circular (or any amendment
thereto). In case any action shall be brought against State
Bank or any person so indemnified pursuant to the provisions
of this subparagraph (ii) and in respect of which indemnity
may be sought against any Holder, the Holders from whom
indemnity is sought shall have the rights and duties given
to State Bank, and State Bank and the other persons so
indemnified shall have the rights and duties given to the
persons entitled to indemnification by the provisions of
subparagraph (i) of this paragraph (f).
(g) Information by Holder. The Holder or Holders of
Subject Securities included in any offering shall furnish to
State Bank such information regarding such Holder or Holders, and
the distribution proposed by such Holder or Holders, as State
Bank may reasonably request in writing.
(h) Transfer of Rights. The rights granted by State
Bank under paragraphs (b) and (c) hereof may be assigned, in
whole or in part, in writing by any Holder of Subject Securities
or shares convertible into Subject Securities to a transferee or
assignee of Subject Securities representing more than 5% of the
total combined voting power of all Voting Securities then
outstanding; provided, that
<PAGE>
such Transfer is effected in accordance with the provisions of
this Agreement; and provided further, that State Bank is given
written notice by such Holder at the time of or within a
reasonable time after said Transfer, stating the name and address
of said transferee or assignee and identifying the securities
with respect to which such rights are being assigned.
(i) "Market Stand-off" Agreement. Shareholder and
each other member of the Shareholder Group, and each other Holder
of Subject Securities to which the rights under this Section 7
have been assigned, shall, so long as any such person owns more
than 5% of the outstanding Voting Securities of State Bank if
requested by State Bank and an underwriter of State Bank Common
Stock or other securities of State Bank, agree not Transfer any
securities of State Bank held by them during the one hundred
eighty (180) day period from the date of the underwriting
agreement; provided that all Holders holding more than five
percent of the outstanding State Bank Common Stock and all
officers, directors, and employees of State Bank enter into
similar agreements. Such agreement shall be in writing in the
form satisfactory to State Bank and such underwriter. State Bank
may impose stop-transfer instructions with respect to the
securities subject to the foregoing restriction until the end of
said one hundred eighty (180) day period.
8. Covenants of Shareholder Group in Absence of
Regulatory Approval. In addition to rather than in lieu of any
of the other agreements of the parties contained herein,
Shareholder, for itself and for each member of the Shareholder
Group, hereby agrees that, without obtaining the prior written
approval of the FRB and the Superintendent if appropriate,
neither Shareholder nor any member of the Shareholder Group will:
(a) exercise or attempt to exercise a controlling influence over
the management or policies of State Bank; (b) have or seek to
have any employees or representatives serve as an officer, agent
or employee of State Bank; (c) take any action causing State Bank
to become a subsidiary of Shareholder or any member of the
Shareholder Group; (d) acquire or retain any Voting Securities
that would cause the combined interest of Shareholder, each
member of the Shareholder Group and each of their respective
officers, directors, and affiliates, to equal or exceed 25% of
the then outstanding Voting Securities of State Bank; (e) propose
a director or slate of directors in opposition to a nominee or
slate of nominees proposed by the management or board of
directors of State Bank; (f) attempt to influence the dividend
policies or practices of State Bank; (g) solicit or participate
in soliciting proxies with respect to any matter presented to the
shareholders of State
<PAGE>
Bank; (h) attempt to influence the loan and credit decisions or
policies of State Bank, the pricing of services, any personnel
decisions, the location of any offices, branching, the hours of
operation, or similar activities of State Bank; (i) dispose or
threaten to dispose of any Voting Securities in any matter as a
condition of specific action or inaction by State Bank; (j) enter
into any other banking or non-banking transactions with State
Bank, except that deposit accounts may be established and
maintained with State Bank provided that the aggregate balances
of all such accounts do not exceed $500,000 and that the accounts
are maintained on substantially the same terms as those
prevailing for comparable accounts of persons unaffiliated with
State Bank; or (k) seek or accept representation on the Board of
Directors of State Bank.
9. Specific Performance. Each party hereto acknowledges
that it will be impossible to measure in money the damage to the
other party if a party hereto fails to comply with any of the
obligations imposed by this Agreement, that every such obligation
is material and that, in the event of any such failure, the other
party will not have an adequate remedy at law or damages, and
accordingly, each party hereto agrees that injunctive relief or
other equitable remedy, in addition to remedies at law or
damages, is the appropriate remedy for any such failure.
10. Successors and Assigns. Except as otherwise provided
herein, this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors
and assigns and shall not be assignable without the written
consent of all the other parties hereto.
11. Entire Agreement. This Agreement supersedes all prior
arrangements, written or oral, among the parties hereto with
respect to the subject matter hereof and contains the entire
agreement among the parties with respect to the subject matter
hereof. This Agreement may not be amended, supplemented or
modified and no provisions hereof may be modified or waived,
except expressly by an instrument in writing signed by all the
parties hereto. No waiver of any provisions hereof by any party
shall be deemed a waiver by any such party nor shall any such
waiver be deemed a continuing waiver of any provision hereof by
such party.
12. Effectiveness and Termination. This Agreement shall
become effective upon the date of consummation of the
Consolidation and, except as otherwise provided herein, shall
terminate as to every member of the Shareholder Group on the date
the Shareholder Group owns of record and
<PAGE>
beneficially Voting Securities representing 5% or less of the
total combined voting power of all Voting Securities then
outstanding, and as to each other shareholder party hereto, on
the date such shareholder owns of record and beneficially Voting
Securities representing 5% or less of the total combined voting
power of all Voting Securities then outstanding.
13. Miscellaneous.
(a) This Agreement shall be deemed a contract made
under, and for all purposes shall be construed in accordance with
the laws of, the State of California without regard to the
principles of conflicts of laws thereof.
(b) Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or
enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall
be interpreted to be only so broad as is enforceable.
(c) This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but
all of which together shall constitute one and the same
instrument.
(d) All Section headings herein are for convenience of
reference only and are not part of this Agreement and no
construction or reference shall be derived therefrom.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed
and delivered this Agreement as of the date first written above.
STATE BANK:<PAGE>
BUSINESS & PROFESSIONAL BANK, a
California state-chartered bank
By: /s/ Michael F. Burkart
Name: Michael F. Burkart
Title: President
SHAREHOLDER:<PAGE>
WEST COAST BANCORP, a California
corporation
By: /s/ John Joseph
Name: John Joseph
Title: Chairman
<PAGE>
NEWS BULLETIN
RE: WEST COAST BANCORP
4770 Campus Drive, Ste 100
Newport Beach, CA 92660
From: The Financial Relations Board, Inc.
TRADED: NASDAQ-WCBC
Financial Relations Board, Inc. serves as financial relations
counsel to this company, is acting on the company's behalf in
issuing this bulletin and receiving compensation therefor. The
information contained herein is furnished for information
purposes only and is not to be construed as an offer to buy or
sell securities.
For Further Information:
AT THE COMPANY: AT FRB SAN FRANCISCO:
Frank Smith Lise Needham
Chief Financial Officer 180 Montgomery St., Ste 1050
(714) 730-4492 San Francisco, CA 94104
(415) 986-1591
FOR IMMEDIATE RELEASE
WEDNESDAY, JUNE 22, 1994
WEST COAST BANCORP ANNOUNCES AGREEMENT FOR BUSINESS &
PROFESSIONAL BANK TO ACQUIRE SACRAMENTO FIRST NATIONAL BANK
NEWPORT BEACH, CA, June 22, 1994 -- John Joseph, Chairman of the
Board of West Coast Bancorp, announced the signing of a
definitive agreement among Business & Professional Bank,
Sacramento First National Bank and West Coast Bancorp providing
for the acquisition of its majority owned subsidiary, Sacramento
First National Bank, by Business & Professional Bank. On
consummation of the transaction, the outstanding shares of common
stock of Sacramento First National Bank will be exchanged for
consideration of a combination of approximately $4.0 million in
cash, $2.5 million of common stock of Business & Professional
Bank and up to $1.0 million of a contingent cash payment. The
common stock consideration will be based on Business &
Professional Bank's book value per common share as of the end of
the month prior to consummation of the transaction.
Completion of the transaction is subject to among other things,
the receipt of necessary regulatory approvals from the state and
federal agencies as well as the approval of the shareholders of
both Business & Professional Bank and Sacramento First National
Bank. West Coast Bancorp, the 94% shareholder of Sacramento
<PAGE>
First National Bank, has agreed to vote its shares in favor of
the transaction.
It is expected that the transaction will close during the fourth
quarter of 1994. After completion of the transaction, West Coast
Bancorp will have one operating subsidiary, Sunwest Bank
headquartered in Tustin, California. West Coast Bancorp intends
to contribute a significant portion of the cash proceeds it
receives upon consummation of the transaction as additional
capital to Sunwest Bank. Sunwest Bank is currently operating
under regulatory orders, which require it to increase its capital
levels.
At March 31, 1994, Sacramento First National Bank had $120
million in total assets and $8.8 million in stockholders' equity.
Originally organized in 1983 as a business oriented commercial
bank by founding President John McGrath, Sacramento First
National Bank subsequently acquired Sacramento Valley Bank, N.A.,
by merger in December of 1985. It presently has three banking
offices located in the Sacramento area.
As of March 31, 1994, Business & Professional Bank had total
assets of $121 million. Operating as a wholesale business bank,
it presently maintains three full service banking offices located
in Sacramento, Davis and Woodland. As the name implies, Business
& Professional Bank specializes in a niche market comprised of
professional and general business clients.
